Daily Variety, September 11, 2003, Thursday
Washington — The Federal Communications Commission nudged the transition to digital and high-definition television a big step forward Wednesday, adopting rules to require compatibility between digital cable systems and digital TV receivers.
Under the new rules, consumers will be able to connect their digital cable wire directly to their digital TV without needing a set-top box to receive most types of cable programming. Interactive features, such as video-on-demand or the electronic program guides provided by many digital cable systems, would still require a cable box.
Consumers also will need to obtain a security card (sometimes called a CableCard) from their cable operator to receive scrambled programming such as HBO. The cards can be inserted directly into the TV itself.
Compliant TV sets, designated "digital cable ready," are expected to be on the market before the end of next year.
The commission hopes making it easier for consumers to connect digital TVs to their digital cable systems will spur sales of digital sets and help lower prices.
"Today's decision by a unanimous commission is a victory for consumers and a major step in the digital television transition," FCC chairman Michael Powell said. "Consumers who want digital television sets will have an easier time connecting them to their cable service and having them work with high-definition and other digital programming."
According to the National Cable & Telecommunications Assn., 60 million U.S. households today can receive HDTV signals from their cable operator. However, fewer than 5 million have all the necessary equipment.
The new rules are based on an agreement negotiated last year between NCTA and the Consumer Electronics Assn.
As with all aspects of the digital TV transition, however, the new rules sparked controversy.
When originally proposed, the deal was opposed by the MPAA because it did not include all the copy-protection measures the studios want incorporated into digital TV services.
The rules adopted by the FCC include a procedure under which copy-protection technologies will be certified by the cable industry's technical arm CableLabs, subject to FCC review. However, the commission also said it would initiate a new rulemaking procedure to determine whether other procedures are needed.
The commission also adopted copying rules proposed by NCTA and CEA. Under those rules, all video-on-demand and pay-per-view programming would be designated "copy never," basic and pay TV services would be designated "copy once," and broadcast programming would have no copy restrictions.
The encoding rules for new services, such as subscription-VOD, will be determined on a case-by-case basis as they become more established in the market. The studios had wanted SVOD to be treated like pay-per-view.
"The intention was to let consumers have the same copying rules tomorrow as they have today," said Ken Faree, head of the FCC's Media Bureau.
Tough battles may also loom on at least two other points.
'Analag hole' open
The Commission voted to prohibit the use of "selectable output control" technology on all digital cable and direct-broadcast satellite systems, leaving open the "analog hole" dreaded by the studios.
Selectable output control allows a cable or DBS provider to turn off the analog output on any device receiving a digital signal. Passing a digital signal through an analog output strips away the copy-protection codes. If a recording is made in analog, it can be re-digitized without copy protection and transmitted over the Internet or to any other digital device.
TV set makers opposed the use of selectable output control because it would effectively make current analog VCRs and TiVo machines obsolete.
"We concluded that, at this time, a flat ban on selectable output control is necessary in light of the extreme consequences of a (cable or DBS system's) use of that tool," Republican commissioner Kathleen Abernathy said.
The FCC also barred the use of "down-resolution" on digital broadcast programming, by which high-definition signals would be converted to standard definition before they could be copied.
The commission will later determine whether down-resolution can be used in non-broadcast programming.
Left hanging for now is whether the FCC will mandate the use of the "broadcast flag" favored by the studios to restrict copying of over-the-air digital signals.
"I plan to deliver to my colleagues a draft decision on the broadcast flag proceeding in the very near future," Powell said. "All affected parties should be aware that this proceeding is in the on-deck circle."