Dept. of Diminishing Choice: Cable Industry Wants Out of the CableCARD It Invented

(Thinkstock)

If an Internet provider salesman pushed you to get a computer from his company and then pay an unending monthly rent for the machine instead of buying it outright, you’d probably tell him what port he could plug that idea into.

But when a cable or satellite TV service makes the same offer, there’s usually a different response: How much space should I clear out under the TV?

We’re accustomed to renting cable boxes, and tolerating their additional remote controls (sometimes with their own rental fees). We generally pay about $10 a month for just a tuner, or about $20 for a DVR.

Consumers don’t like this, though, and we’ve rallied our government to help. Which it tried to do. Sadly, it hasn’t quite worked out.

Best intentions
In 1996, Congress told the Federal Communications Commission to write rules ensuring that TV subscribers — cable, satellite, whatever — could buy their own hardware instead of having to rent it. The key was a small device, called a CableCARD, that consumers could insert into their own devices to unlock channels delivered over cable.

The logic for allowing consumer-provided hardware to play cable TV remains as clear as ever: Competition works. If hardware vendors have to bid for every customer’s business, quality improves and costs drop. Individuals, en masse, are powerful economic drivers. But if a hardware maker only has to persuade a cable or satellite operator to buy a few million of a given model that will then get rented out to viewers, then the usual feedback loop gets severed. And so you get mediocre devices and $20-a-month DVRs with miserable 50-button remotes.

But the FCC fumbled its congressional mandate. First it left satellite out of the picture, and then it gave cable operators years to botch the “CableCARD” standard they developed to open up the hardware market to third parties.

In the run-up to the release of CableCARD, some electronics manufacturers introduced TVs with CableCARD slots. Then many purchasers discovered that their local cable monopoly couldn’t or wouldn’t activate service for them. Instead of paying at most a couple of bucks a month to park a credit-card-sized authentication and decryption module (think of an oversized version of a phone’s SIM card or, for that matter, a car’s keys) in their set that they’d control with the TV’s own remote, they found themselves coughing up the traditional $10 or so for the same old box.

By 2007, when the FCC finally enforced a planned rule requiring cable operators to use CableCARDs in their own leased boxes, TV vendors had fled the scene. Only TiVo and some smaller makers of tuners and recorders remained to provide alternative cable boxes. And most (except for TiVo DVRs in some Comcast markets) remain cut off from video-on-demand services.

After years of half-baked industry support for CableCARD, finally, the cable industry itself wants out.

A CableCARD. (Wikimedia Commons)

Re-enacting renting
Since last summer — first in standalone legislation, now via amending a must-pass renewal of a law, “STELA,” that keeps broadcast stations on satellite TV — the cable industry has been pushing to end the FCC’s “integration ban” and free cable operators to return to renting boxes that don’t use CableCARDs.

The National Cable & Telecommunications Association makes three basic arguments for this change: First, it’s unfair for cable alone to have this requirement; second, cable boxes without CableCARDs will cost less and use less electricity; and, third, cable operators won’t just abandon TiVo owners, since they currently support some 42 million rented boxes with CableCARDs.

I agree with the cable lobby on that first point. It was a mistake to leave out satellite (it “barely existed when we were writing the initial rules,” emailed Blair Levin, chief of staff to FCC Chairman Reed Hundt from 1993 to 1997). Any successor to CableCARD should cover that, too, the way European Union rules have successfully opened markets for third-party cable and satellite recorders.

NCTA’s second argument is less convincing. Its energy-savings estimates bank on upper-limit EPA guidelines, not real-world usage data. And I’m sorry, but when’s the last time a cable operator passed on savings to subscribers in the form of lower bills?

The last and third talking point here — that the FCC remains “a watchman at the gate,” as NCTA general counsel Neal Goldberg phrased it in a phone interview Monday — becomes a matter of perspective.

TiVo strongly opposes ending the integration ban, which general counsel Matt Zinn said in prepared testimony to Congress would “deprive customers of choice.” However, TiVo would not keel over anytime soon after its conclusion.

Not to be too crude about it, but TiVo can afford to hire lobbyists to get the government’s attention if cable operators start to neglect CableCARD-using customers in what it wants to be the waning years of CableCARD. The same goes for other established manufacturers like Samsung, which last year quietly introduced a $140 video receiver that combines CableCARD support with an array of video streaming apps we’ve yet to see on a leased cable box.

But without air cover from major vendors, smaller operations like Pleasanton, Calif.-based SiliconDust could face serious obstacles. This company sells a $150 HDHomeRun Prime CableCARD tuner that lets you use your computer as a DVR. And what of the presumed stealth startup teams now working in a garage on the next TiVo? They’d be toast.

Round two for CableCARD?
CableCARD could die, but we need the idea and intention behind this standard to live. So what could replace CableCARD? Goldberg pointed to promising ventures some cable operators are running that let viewers watch over the Internet. But the biggest operator among them, Comcast, limits big-screen streaming to video-on-demand offerings, not its full channel lineup. Another option Goldberg noted, having rented or purchased boxes activated through a quick software download, won’t fly with electronics manufacturers unless it gets consistent and nationwide support from this still-balkanized industry.

And don’t forget one issue that keeps coming up in these negotiations: control over the user interface. Said one industry executive with years of experience with such unsuccessful ventures as the FCC’s stalled “AllVid” proposal: “The non-negotiable requirement of the cable operators is that any standard must present their service as if it had been delivered through a set-top box.” In other words, kiss TiVo’s beautiful interface goodbye.

Ultimately, this story is less about technology than about trust. And how much do you trust your cable company to get the technology, the user experience, and the billing right?

Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.

Further reading:
• The Comcast/TWC Merger: As Big Cable Gets Bigger, Your Bill Will, Too
• ‘TV Everywhere’ Takes a Trip to Sochi, but Some Viewers Can’t Tag Along
• Five Ways to Kick the Cable TV Habit and Save Serious Cash
• TiVo Roamio, I Think I Love You