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FCC relents, lifts basic tier encryption ban

Tue, 10/16/2012 - 1:08pm
Brian Santo

After years of relentless cable industry lobbying, the FCC finally acceded to cable’s request to lift its ban on encrypting the basic tier – with provisions.

The order applies only to cable operators with all-digital systems, regardless of size.

After Congress passed the Cable Television Consumer Protection and Competition Act of 1992, the FCC implemented the ban, with the intent of assuring that the many cable subscribers who were getting cable without a set-top box could continue to do so.

As cable technology progressed, the ban became increasingly problematic.

Having to transmit unencrypted signals also means having to dispatch technicians to turn service on or off – an expensive proposition. Cable also began to provide more services that were frequently dependent on the installation of a set-top box. That basic tier content was in the clear, while all other content that was encrypted also served to complicate the argument in the ’90s and early ’00s about third-party retail boxes that don’t necessarily work on all cable operators’ networks, an issue that led to the CableCard.

In 2010, Cablevision petitioned for, and was granted, a waiver of the prohibition against basic tier encryption, given that after having gone all-digital, substantially all of its customers had set-tops anyway.

Along with the digital transition, other trends have led to increasing adoption of set-tops among consumers. They include the adoption of cable’s more sophisticated services (including various on-demand schemes and various types of interactivity) and broader subscription to higher tiers (leaving fewer basic-only subscribers).

The FCC in its recent order determined that the public benefit of being able to have their service turned on and off from a remote location, rather than having to schedule an appointment with a cable technician, is compelling enough to lift the ban.

Cablevision told the FCC that since it received its waiver, 99.5 percent of its deactivations were performed remotely. Comcast predicted that encrypting its basic service tier will allow the company to perform nearly half of its activations and 90 percent of its deactivations remotely.

But while the number of people insisting on cable service but rejecting the installation of a set-top has diminished significantly, it hasn’t reached zero, so the FCC is maintaining some consumer protection measures.

Any operator that begins to encrypt their basic tiers will have to offer CPE, for free for a limited time, to any subscriber who currently does not have a set-top box. The top six MSOs will also have to offer equipment that is compatible with IP-enabled clear-QAM devices provided by third parties.

The FCC order said, “We intend that this requirement will provide an opportunity for affected consumers to make informed choices about whether to purchase a CableCard-compatible device, lease a set-top box from their cable operator, or use another method to access the broadcast and other channels carried on the basic service tier (for example, by accessing the signals over the air or via another MVPD).”

American Cable Association President and CEO Matthew Polka said: “The FCC’s decision is a true win-win for consumers and cable operators, especially providers of cable service in high-cost rural areas. ACA expects at least some of its members to take advantage of this ruling soon after it takes effect.”

Polka extolled the benefits of remote service activation and added, “Equally important is that the FCC ruling will mean that cable operators can expect to see a reduction in theft of service, which should benefit paying consumers who are effectively shouldering the costs imposed by signal thieves.”

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