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FCC Initiates Set-Top Box Proceedings to Implement National Broadband Plan Recommendations

April 26, 2010
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     Among the first items released as part of the National Broadband Plan action agenda, the FCC has adopted a Notice of Inquiry (“NOI”) and a Fourth Further Notice of Proposed Rulemaking (“FNPRM”) to consider changes to its set-top box rules in order to comply with its mandate under Section 629 of the Communications Act to promote a competitive retail market for video navigation devices.  The NOI explores ways to meet this Congressional directive through development and deployment of an “AllVid” adapter to which “smart video devices” can be connected to bring multichannel video programming (“MVPD”) and other services to consumers.  The FNPRM proposes rule changes to address issues with the current CableCARD approach to make it more consumer-friendly while the AllVid technology is being developed.  Each item is considered in turn below.

1.         AllVid Adapter NOI.

            Observing the limited success of the CableCARD approach in achieving the goals of Section 629, the NOI explores adoption of an AllVid adapter as a means to promote video device competition and facilitate deployment of “smart video devices” capable of accessing video from multiple sources, including all MVPD services, the Internet, DVDs, and over-the-air broadcasting.  The objective of the AllVid approach is to develop a standardized interface that enables video navigation devices to bring video from various sources together for ease of selection, recording, and viewing.  

To achieve these goals, the FCC proposes adoption of an AllVid adapter that could act either as a small “set-back” device for connection to a single smart video device or as a gateway allowing all consumer electronics devices in the home to access MVPD services.  The adapter would communicate with the MVPD service, performing the tuning, reception, security and decryption functions that are specific to a particular MVPD, while the smart video device would perform navigation functions, such as presentation of electronic programming guides and search functionality. 

The AllVid adapter would permit consumers to use smart video devices with any MVPD service, which would provide incentives for manufacturers of such devices to enter the retail market.  This approach would also enable MVPDs to innovate within their networks to deliver improved services to subscribers without requiring them to purchase new equipment to access such services.  Thus, in the Commission’s view, the AllVid model would spur the development of a competitive retail market for navigation devices and give subscribers an alternative to leasing or buying devices from their MVPD, lower costs of retail devices required to access MVPD services, and encourage MVPDs and equipment manufacturers alike to develop and innovate without being deterred by the need to consult one another.

In considering the concept of the AllVid adapter, the FCC makes several assumptions about the adapter and seeks comment on the accuracy of its expectations that: (i) AllVid adapters would be small and inexpensive; (ii) MVPDs would provide the adapter to subscribers by including it in the price of service or by offering it for a nominal lease fee or with the option to purchase; and (iii) the AllVid adapter would not be portable for use on other MVPD platforms.

In addition, the Commission seeks input regarding the following issues.

AllVid Equipment.  The FCC envisions that the AllVid device will be configured as either: (i) a small set-back device that is capable of communicating with one TV set or other navigation device and providing at least two simultaneous video streams to allow for picture-in-picture display and viewing on one channel while recording on another channel; or (ii) a whole-home gateway capable of simultaneously communicating with multiple navigation devices and providing at least six simultaneous video streams (allowing picture-in-picture display in three different rooms).  The FCC seeks comment on each of these configurations, whether one approach is better than the other, and whether alternative configurations should be considered.

Physical Connection.  The FCC proposes that 100-BASE-TX Ethernet could act as the physical layer technology used to connect the AllVid adapter with navigation devices because it operates at speeds adequate to allow transfer of multiple high-definition MPEG-2 signals and has developed as a de facto connection for data transmission.  The FCC also seeks comment on whether other technologies, such as Multimedia over Coaxial Cable (“MoCA”) could serve this purpose or whether the FCC needs to mandate a physical layer technology at all.
 
Communication Protocol.  The FCC proposes reliance on Internet Protocol (“IP”) as the communications protocol between the AllVid adapter and navigation devices.  Like Ethernet, IP is the de facto standard protocol for data transmission, current and next-generation audio-visual equipment is capable of handling IP communication, and the protocol is familiar to hardware and software developers, which could lead to a thriving retail market for smart video devices.  The FCC seeks comment on whether IP or some other protocol should serve as the standardized communication protocol between the AllVid adapter and navigation devices.

Encryption and Authentication.  The FCC proposes digital transmission content protection over Internet protocol (“DTCP-IP”) as the logical choice for content encryption and device authentication under the AllVid approach, but seeks comment on whether another solution would be better to prevent content theft in the AllVid-connected home network.  The FCC also seeks comment on whether it would be practical to give each navigation device its own specific key to prevent a situation in which an entire model of navigation devices would need to be deauthorized if a key is compromised.  It also seeks comment regarding the selection of a third party to administer the public key database and suggestions on entities that could handle this task.

Content Ordering and Billing.  Given that MVPDs need the ability to verify that their subscribers have actually ordered pay-per-view and subscription content, the FCC seeks comment on what specific methods could be used under the AllVid approach to meet this need.

Service Discovery.  Tivo has proposed that Universal Plug and Play (“uPnP”) protocols are the obvious technology choice to allow a navigation device to discover MVPD content on an AllVid network.  Tivo explains that the only protocols the FCC would need to adopt for service discovery are “gateway advertisement,” which allows a gateway to announce its presence to consumer devices on the home network, and “service browsing,” in which a consumer device can browse and access the available services on the gateway.  The FCC seeks comment on this proposal and on whether other service discovery protocols should be considered.

Content Encoding.  Noting the recent controversy over Apple’s decision not to include Adobe’s flash codec compatibility on the iPad, the FCC seeks comment on whether it should specify the formats of audio-visual codecs and, if so, which codecs the Commission should require navigation devices to handle.

Intellectual Property.  The FCC seeks comment on intellectual property issues related to proposed standards for the AllVid adapter, including how long it would take and how much it would cost to develop necessary standards, whether a requirement that all rights holders license their relevant intellectual property on reasonable and nondiscriminatory terms would allow the market to flourish and provide adequate incentives for innovation, and whether the Commission has the legal authority to mandate such terms.  The FCC also requests input on whether patent pools exist for any technologies that might be adopted, the licensing fees charged by patent holders for these technologies, and which parties hold those rights.

Navigation Device Economics.  To respond to contentions that a competitive retail market for navigation devices is destined to fail because consumers are not interested in owning navigation devices, the FCC seeks comment on this assessment, including whether consumers prefer to lease at government-regulated “cost-plus” rates, whether they want to avoid the risk of obsolescence of navigation devices, and whether their inability to “port” a retail navigation device when they change service providers limits the attractiveness of the retail option.  The FCC also seeks data on consumer behavior when faced with a lease versus purchase decision concerning navigation devices and similar consumer electronics equipment.  Assuming that MVPDs will want to continue offering devices for lease or sale that have greater functionality than the AllVid adapter, the FCC seeks comment on whether it should require those devices to attach to the network through the AllVid adapter and how doing so might affect the economics of the retail and leasing markets. 

The FCC also seeks comment on consumer expectations with respect to navigation devices.  Does the universe of navigation devices include televisions, set-top boxes (including DVRs), and home theater computers or could additional devices perform navigation device functions?  Are there specific minimum functions that navigation devices need to perform?  Should there be different classifications of navigation devices based on the minimum functionality of such devices?  What steps can the Commission take to increase economic and energy efficiencies that will allow consumers to connect fewer devices to their TV set by consolidating functionality into one device?

The FCC also seeks comment on whether MVPDs would have an advantage in providing set-top boxes because they would be performing the home installation whereas consumers would have to install devices purchased from retail outlets themselves.  Do MVPDs earn a profit on home installations or, if not, would self-installation of retail devices by subscribers save MVPDs money? 

Furthermore, the FCC requests comment on the assertion that the cost of bringing navigation device functionality into television sets exceeds what consumers are willing to pay at retail and seeks data on consumer purchasing behavior regarding home entertainment equipment.  To what extent are consumers willing to pay for additional functionalities in the equipment they purchase? Would the AllVid concept change the economics of consumer preferences?  How much would an Allvid adapter cost?  How much would it cost to add AllVid compatibility to a navigation device?  Should the cost of an AllVid adapter and charges for installation by the MVPD be calculated according to the Commission’s rate regulation rules in rate-regulated communities?  Finally, do economic or technological factors dictate that AllVid adapters would have to be provided by the MVPD or can they also be sold at retail?

Content Presentation.  The FCC notes that much of the innovation in television reception devices is related to the provision of easy-to-use graphical user interfaces that allow device manufacturers to distinguish their products from one another by providing a better user experience.  However, MVPDs argue that the availability of multiple graphical user interfaces would create customer confusion with regard to who they should call when experiencing problems with the user interface, that deploying a standard user interface across the MVPD’s footprint makes consumer education and support easier, and that marketing agreements often require the MVPD to provide certain content within the electronic program guide. 

The FCC asks what steps should be taken to minimize potential consumer confusion with respect to who they should contact with product and service issues with retail devices.  Should the Commission adopt rules governing the way MVPD content is presented?  What steps can be taken to protect agreements between MVPDs and content providers?  Is there a way to balance the MVPD’s interest in improved customer service and adherence to its marketing contracts against the consumer benefits that result from the ability of consumer electronics manufactures to differentiate their products from competitors?

The FCC also seeks comment regarding the intellectual property issues associated with electronic programming guides.  MVPDs disagree with the Consumer Electronics Association’s claims that consumers already pay for programming guide data as part of their subscription fees, that the data is not subject to intellectual property protection, and therefore that MVPDs should provide such data in a form that would allow competitive devices to display the data as they wish.  Are there specific proposals or compromises that would address these issues and achieve the objectives of the NOI proceeding?  For example, would it be reasonable for MVPDs to charge separately for guide data, thereby saving subscribers who use third-party data from having to pay for the same data twice?

Other Issues.  The FCC seeks comment on any additional standardization issues that need to be addressed in implementing the AllVid regime.  For example:

  • How would the AllVid adapter resolve resource conflicts/priorities in the event that seven people want to watch programming on seven different devices on a home network that is only equipped to handle six separate video streams? 

 

  • Would the FCC need to adopt new standards to allow for transmission of closed captioning data, parental control data and EAS messages (including Common Alerting Protocol-formatted EAS messages) within the AllVid network? 
  • Should the Commission require navigation devices in the AllVid system to include over-the-air ATSC tuners consistent with consumer expectations that such equipment should be capable of receiving over-the-air broadcast services? 

 

  • Will differences in MVPD delivery technologies (e.g., the one-way distribution model used by Direct Broadcast Satellite providers) require specific MVPDs to include functionality beyond what is necessary for conditional access, tuning, reception and decoding of video signals in the AllVid adapter for subscribers to be able to access those MVPDs’ services?
  • What steps can the FCC take to accommodate technological innovation in the AllVid system over time?

 

Enforcement.  The National Broadband Plan established a December 31, 2012 deadline for MVPDs to offer AllVid equipment to subscribers.  The Commission seeks comment on whether it should adopt additional enforcement measures other than existing forfeiture mechanisms (e.g., denying extensions of certain CableCARD waivers) to ensure that MVPDs are able to deploy AllVid equipment to all new subscribers and to any subscribers who request such equipment following the deadline.  The Commission also requests input regarding how it can prevent an overabundance of waiver requests from the AllVid requirement similar to those that were filed in response to the set-top box integration ban.

Alternative Proposals.  Because several MVPDs have suggested that the FCC should encourage market-driven solutions to achieve the goals of Section 629 rather than adopting a specific technology mandate, the FCC seeks alternative proposals to the AllVid concept that could lead to the implementation of a competitive market for smart video devices by the December 31, 2012 deadline.  For example, would the movement of functions away from navigation devices and into the cloud or network (e.g., a cable headend) represent a viable alternative to the gateway approach?  What impact does the AllVid concept have on downloadable security solutions?  Are there specific incentives that the Commission could adopt that would expedite market negotiations while addressing the shortcomings of the current CableCARD regime? 

CableCARD Regime.  Given that the Commission expects AllVid devices to replace CableCARDs over time, the FCC seeks comment on the future of the CableCARD regime.  Should it consider eliminating its CableCARD rules, and if so, when would such a change be appropriate?  Taking into account consumer expectations regarding the lifespan of their devices, can the AllVid or any other approach be implemented in a way that limits the number of CableCARD devices that become obsolete?

Authority.  Finally, although Section 629 gives the Commission broad discretion to adopt regulations to promote a competitive market for navigation devices, several parties have argued that it lacks the authority to require MVPDs to disaggregate their programming guides and allow retail devices to repackage their content.  The Commission seeks further comment on its authority with respect to the proposals set forth in the NOI.

Comments and reply comments in the NOI proceeding will be due 60 and 90 days, respectively, after publication of the item in the Federal Register. 

2.         CableCARD FNPRM.

While the NOI begins the process of implementing an AllVid solution as a successor to the CableCARD system, the FNPRM proposes interim rule changes to the existing CableCARD regime to improve its operation until the AllVid system is developed and in place.  Specifically, the FCC seeks to implement interim measures that would: (1) ensure that retail devices have comparable access to linear channels provided by the cable operator; (2) make CableCARD pricing and billing more transparent; (3) streamline CableCARD installations; and (4) clarify CableCARD certification requirements.  The FNPRM also proposes to allow cable operators greater choice in the specific interface they include in HD-capable set-top boxes by permitting IP-based solutions that will enable connectivity with the multitude of IP devices in consumer homes.  It also seeks comment on proposed changes that are intended to encourage cable operators to transition to all-digital platforms in order to provide improved services to consumers.

Because both the cable and consumer electronics industries have invested heavily in CableCARD technology, the FCC does not believe that it should abandon this approach in the near-term.  Rather, it seeks comment on some adjustments that will extend the viability of the CableCARD system while the Commission works on a successor solution for retail navigation devices that are compatible with MVPD services.  Nonetheless, the FCC seeks confirmation of its tentative conclusion that the outdated CableCARD technology does not represent a viable long-term solution for creating a competitive retail market for navigation devices.  It also seeks comment on its proposal to reform the existing CableCARD system as an interim solution until a new model is developed.  The FCC also asks whether any previous challenges to the rules have been rendered moot by technological or marketplace developments.

As indicated above, the FCC is considering proposed rule changes to address the following issues.

Switched Digital Video.  Unidirectional digital cable devices (“UDCPs”) generally cannot access linear channels delivered using switched digital (“SDV”) technology; however, private industry negotiations have led to market-based solutions to allow certain types of UDCPs to access SDV programming through operator-provided tuning adapters.  The FCC seeks comment on whether these solutions are working, the costs of tuning adapters necessary to access such programming, and whether any Commission action is necessary to ensure consumers with UDCPs have access to linear channels delivered through SDV technology.  Tivo suggests a solution to require cable operators to allow retail CableCARD devices to receive out-of-band communications from the cable headend and transmit out-of-band communications to the headend over IP, which would allow subscribers with compatible UDCPs to access all linear content without the need for any equipment beyond a CableCARD.   The FCC seeks comment on this proposal, and whether it would discourage investment by cable operators in SDV technology.

CableCARD Pricing and Billing.  The FCC proposes rules requiring cable operators to charge equivalent and transparent prices for CableCARDs regardless of whether consumers purchase a retail device or lease their device from the cable operator.  Cable operators would be required to list the fee for CableCARDs as a line item on subscriber bills separate from the rental fee for the navigation device itself.  This proposal is intended to ensure that cable operators are allocating equipment costs fairly and that subscribers are aware of and can compare retail options to leasing a device from their cable operator.  The FCC also seeks comment on how cable operators should determine charges for a CableCARD as well as whether it has authority to impose these requirements.

    CableCARD Installations.  To address concerns that the cost of CableCARD installation for retail devices is more than that for leased devices, the FCC proposes rules requiring cable operators to allow self-installation of CableCARDs in retail devices if it allows self-installation for leased set-top boxes, and where professional installations are necessary, requiring technicians to arrive with at least the number of CableCARDs requested by the customer.  CableCARD installation costs are significant, so the FCC seeks comment as to why many operators require professional CableCARD installation.  The FCC also seeks comment on whether and how it should enforce these requirements.

Multi-Stream CableCARDs.  The FCC proposes to require cable operators to offer multi-stream CableCARDs.  Such cards are readily available and, because they allow devices to tune to multiple channels, can reduce equipment fees paid by subscribers by enabling them to use only one CableCARD per device rather than two or more.  The FCC seeks comment on this tentative conclusion.

CableCARD Device Certification.  In response to criticism concerning the cost and complexity of the CableCARD certification process, the FCC proposes to streamline the process by clarifying that qualified testing facilities may only refuse to certify products based on their failure to comply with FCC-adopted procedures for UDCPs and that conformance tests outside the FCC-adopted procedures are at the UDCP manufacturer’s discretion.  The FCC seeks comment on this proposal as well as other proposed solutions to streamline the CableCARD certification process.

Interface Requirements.  The Commission’s current rules require cable operators to include the IEEE 1394 interface on all high-definition set-top boxes they deploy.  Based on recent evidence that other approaches will provide consumers with the functionality the IEEE 1394 interface was intended to provide, such as home networking, the FCC tentatively concludes to modify its interface requirement to allow cable operators to include any of (i) an IEEE 1394 interface, (ii) an Ethernet interface, (iii) Wi-Fi connectivity, or (iv) USB 3.0 on all high-definition set-top boxes provided to customers.

 The FCC seeks comment on this proposal and whether there are other interfaces that would further home networking goals.  The FCC also tentatively concludes that it should require cable operators to enable bi-directional communication over these interfaces and proposes that, at a minimum, these interfaces should be able to receive remote control commands from a connected device.  It also proposes to require these outputs to deliver video in any industry standard format to ensure the video made available over these interfaces can be received and displayed by devices manufactured by unaffiliated manufacturers.  It seeks comment on whether these proposals will improve the functionality of retail consumer electronics devices and whether cable operators could implement these changes at little cost with firmware upgrades.  If so, is January 1, 2011 a reasonable effective date for such a rule change?  If not, the FCC encourages commenters to propose an alternative effective date for these anticipated rule changes. 

Deployment of HD-Capable One-Way Devices.  Noting that the Commission’s primary basis for granting waivers of the set-top integration ban was to provide economic incentives for cable operators to transition to all-digital platforms to permit more effective use of system capacity, the FCC seeks comment on measures it can take to encourage the digital transition and make it easier for operators to increase broadband speeds and introduce other new services to subscribers.  Specifically, it proposes to allow operators to deploy new, one-way, integrated navigation devices that have HD-functionality but not recording functions.  Cable operators would still be required to offer CableCARDs to any subscriber that requests them and to offer CableCARD support for any DVR or bi-directional devices they offer for lease or sale.  This limited modification would allow cable operators to offer increased broadband speeds and more high-definition programming without substantially affecting the retail market for CableCARD devices.  The FCC seeks comment on this proposal, including its impact on the retail market for navigation devices and whether such relief should be limited to smaller cable systems with an activated capacity of 552 MHz or less.
 
Comments and reply comments in response to the FNPRM will be due 30 and 45 days, respectively, after publication in the Federal Register.

We would be pleased to respond to any questions regarding these matters.