Simpler Set-Tops, Later Date?

Last week, the National Cable & Telecommunications Association (NCTA,) the United States’ official cable television trade organization, submitted a report to the FCC concerning conditional access (the ability to give or deny cable users access to various services and programming tiers.) Today, cable operators purchase set-top boxes that are compatible with the conditional access system that they’ve implemented (usually from Motorola, Scientific-Atlanta or NDS.) Boxes built for one system won’t work on another.

To enable consumers to have a choice of suppliers for set-top boxes, the FCC ruled that cable operators had to separate their conditional access systems from the set-top boxes themselves. The result was CableCARD, a device that provides conditional access for specially-equipped set-top boxes, television sets, DVRs and other products. The current version of CableCARD (1.0) is one-way only, so it doesn’t support video-on-demand, pay-per-view, interactive program guide or DVR functionality. CableCARD 2.0, which will be two-way and will support all of the above features, is due some time in 2006.

Last week’s report from the NCTA discusses another way to enable conditional access, called the Downloadable Conditional Access System, or DCAS. With DCAS, when a compatible device (set-top box, receiver, DVR, etc.) is attached to a cable system, it downloads the necessary software to support that cable operator’s conditional access system. No CableCARD or other hardware is needed.

DCAS is the access control system that pretty much all parties have wanted from the beginning: It doesn’t require cable operators to either toss out their existing set-top boxes or lease CableCARDs to their subscribers, it fully supports two-way operation, and consumers should be able to add compatible equipment to their cable connections without requiring the cable company to send out an installer.

According to the NCTA’s report, DCAS should be deployed nationally by July, 2008 (a date that I think is wildly optimistic.) The cable industry is currently operating under FCC rules that require them to soon replace all their existing integrated set-top boxes with boxes that use CableCARDs for conditional access. With the NCTA’s report, the cable industry is essentially saying that CableCARD will be obsolete by July 1, 2008. The obvious argument that follows is that it makes no sense for cable operators to replace all the existing set-top boxes with models that use CableCARD, only to replace them again two years later.

The not-so-subtle intent behind the NCTA’s report is to get the FCC to back off on its demand that cable operators adopt CableCARD for their own set-top boxes. For consumers, the big question is whether or not the FCC will still require the cable industry to deliver a two-way version of CableCARD. Assuming that CableCARD 2.0 could be delivered to consumers by the end of 2006, that’s at least two years sooner than DCAS. If the cable industry is allowed to skip CableCARD 2.0, companies such as TiVo, which has been planning a CableCARD 2.0-based DVR for some time, will be locked out of the market until late 2008 at the earliest.

The DCAS vs. CableCARD situation is one that bears watching, especially to see how the consumer electronics industry responds to the NCTA’s report and proposed timetable. We may be further away from fully cable-compatible set-top boxes at your local retailer than it looked just a few weeks ago.