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Cable Operators

Waiver's In the Cards

1/25/2009 6:00 AM Eastern

Cablevision Systems,
alone among major cable providers, may never be forced to plug CableCards into its own digital set-tops.

The New York-area operator will be allowed to keep deploying set-tops that use smart cards from NDS Group to provide conditional access until the end of 2010 — as long as it simultaneously implements a downloadable-security system — under a waiver extension granted by the Federal Communications Commission this month.

Since July 2007, FCC rules have banned most cable operators from using set-top boxes with integrated security. Instead, MSOs are required to use the removable CableCards that the industry has licensed to consumer-electronics companies, under the FCC's policy of common reliance. Through mid-December, the 10 largest operators had deployed 9.8 million CableCard-based set-tops, according to the National Cable & Telecommunications Association.

Cablevision was among a handful of cable companies that received waivers, with the FCC ruling in January 2007 that the MSO's removable NDS smart cards warranted exempting it from the ban through July 2009.

Last November, Cablevision appealed for an extension to that deadline, which the FCC's Media Bureau granted Jan. 16. Under the exemption, Cablevision will have to begin phasing-in set-top boxes that rely on an “open standard” downloadable security solution by July 1. By the end of 2010, all new set-tops will need to rely on downloadable security.

Cablevision will use an NDS-developed downloadable-security system, and the cable company said NDS will license components “to any vendor that wishes to deploy the system on an open basis.” Cablevision has committed to pay penalties of $5,000 per day if it misses any milestones spelled out in its waiver-extension request.

The Consumer Electronics Association opposed Cablevision's request, arguing that the NDS system doesn't meet the commission's rules for common reliance.

But FCC Media Bureau chief Monica Desai, in a five-page order, said the CEA did not provide specific objections and noted that Cablevision has demonstrated good-faith efforts in complying with agency rules.

“We believe that Cablevision has demonstrated extraordinary efforts stretching back to 2001 to implement the integration ban and to ensure the compatibility of smart-card technology with CableCard devices,” Desai wrote.

While Cablevision is proceeding on downloadable set-top security, it's not certain other MSOs will adopt the approach at this point. Kevin Leddy, Time Warner Cable's executive vice president of technology policy and product management, recently said the economics favor simply continuing on the CableCard path.

“The economics of downloadable security are challenging,” said Leddy, speaking on a panel at the International Consumer Electronics Show. “At this point the cost to a television set for a CableCard slot is a couple of bucks. To put the more complex technology into the television to do downloadable security will probably add more cost.”

Ted Hearn contributed to this article.

September