Capital Currents - The new FCC 'video device' inquiry
TiVo wins but consumers lose.
Circuit City has risen from the grave. The new FCC inquiry on video device competition calls Congress “prescient in enacting Section 629 in 1996.” Nonsense. Tom Bliley, then chair of the House Commerce Committee, was merely carrying out the wishes of his Richmond, Va., constituent – Circuit City.
Circuit City didn’t like the idea that cable set-top boxes were leased rather than sold to home subscribers, and it wanted a piece of that market. As the FCC’s notice of inquiry recites, the retail market never developed – even after the cable industry and the consumer electronics industry spent years developing the standard for the CableCard interface – a device designed to protect the security of premium programming. That’s really all the CableCard does. In a CableCard receiver, tuning and control messaging over the out-of-band channel is done by the TV receiver.
But now the FCC has embarked on a far more ambitious – and, I would say, naïve – path to redesign the way cable networks and home networks work. This new approach, outlined in the Docket No. 10-91 notice of inquiry, relies on a set-back device that the FCC calls an AllVid adapter. While the AllVid device started out conceptually as “network agnostic” and able to work on cable, satellite and fiber, the FCC has backed off from that absurdity to recognize that “each adapter would be system-specific to a particular multichannel video programming distributor.” This new regime would apply to all MVPD technologies, including satellite, fiber and IPTV – not only cable.
Instead of only the security being separated from the consumer-owned equipment, the FCC would put the tuning and control communications in the MSO-supplied AllVid device, as well. It would turn the TV set into a dumb monitor. It would also require that devices like digital video recorders and home network routers be in a separate box from the MSO-supplied device, depriving consumers of the convenience and efficiency of today’s cable boxes that have built-in DVRs and routers. The big winner would be TiVo.
So the FCC envisions a home network with users stationed remotely at devices like TV displays and DVRs, communicating with a gateway called an AllVid device. The viewer in the bedroom would tell the gateway device in the basement what program to send to the bedroom. That interface would have to carry enough information so that the gateway knows that the bedroom display is entitled to render that program, taking into account parental control requirements, as well as conditional access and copy control.
A standardized “remote user” interface will certainly be more complex than the CableCard interface. In fact, various industry standards bodies are working on versions of such an interface. But, meanwhile, another industry standards body is working on an interface for a nextgeneration CableCard-like security module, but based on a tiny microSD card format rather than the CableCard’s big PCMCIA format.
One reason that subscribers don’t want to buy and own cable and satellite set-top boxes is that the technology keeps evolving. The FCC recognizes that consumers don’t want to get stuck with obsolete technology that doesn’t work with the latest and greatest service. In the FCC’s plan, the MVPD would replace the AllVid device to support the new service. But when new services come along, consumers would be stuck with an obsolete remote user interface. How long would it take to create version 2.0 of the interface with an updated list of services? Would replacement of AllVid devices have to wait for version 2.0 of the interface? What about the standardized interface that is built into the consumer’s home video product – could the consumer’s home video product be updated to implement version 2.0 of the interface?
While there will be customized versions of the AllVid device for each MVPD technology, the FCC seems to think that all home networks will use dedicated Ethernet wired technology. This one-size-fits-all approach would stifle the consumer choice that is evident today in the deployment of home networking technology. Coaxial cable, home phone lines, powerlines and wireless are all competing for market share in the emerging home networking market.
The FCC document is merely a notice of inquiry. It doesn’t propose a specific rule. That would come in the next step: a notice of proposed rulemaking. The FCC staff will have to review comments and reply comments before proposing any rules to the five commissioners. The FCC has released an agenda calendar for documents tied into its National Broadband Plan. It optimistically calls for a notice of proposed rulemaking in this proceeding during the fourth quarter of 2010, a schedule which is unlikely to be met. In fact, if the comments reflect the concerns I have, we may never see a proposed rule. But if we do, it might be called “The TiVo Promotion, Protection and Preservation Rule.”