Cable Operators Weigh Options in Wake of Media Bureau CableCARD Denials

The Bureau temporarily waived the rule, which requires set-top boxes to support separable security like CableCARDs, for pay-TV providers including Verizon, Qwest and some cable operators who operate or have pledged to operator all-digital systems before broadcasters’ DTV transition (CED June 29 Special Bulletin p1). It denied another batch of requests, giving some operators until September to get into compliance.

Lack of a commission vote on a Comcast petition for reconsideration of an earlier bureau denial has left a faint glimmer of hope for a reprieve despite the July 1 deadline having come and gone. “I don’t know how optimistic anybody is about the outcome of that, but it’s Comcast, so you never know,” a cable attorney said.

Companies that didn’t apply for waivers and those like Massillon that got none are trying to comply with the rule as they weigh their next steps, the lawyer said. “I don’t think there’s any more options than compliance for the time being, and examining legal options or what opportunities there are with the FCC.”

At Massillon, customers signing up soon for digital cable still will have integrated security boxes installed in their homes, President Robert Gessner said. The company, like many others, has some integrated security boxes that already have been in customers’ homes that it can redeploy, he said. “We have converters that have been previously deployed. There is a supply. It is not very large,” he said. The same likely is true at other cable systems, a lawyer said. At Comcast, new digital cable customers might get either CableCARD or an integrated security box. “We are deploying both CableCARD-equipped boxes as well as redeployed boxes with integrated security, consistent with FCC rules,” a spokeswoman said.

Operators cannot buy integrated security boxes secondhand, an issue the bureau clarified Friday. Small cable operators that once could get old boxes on the secondary market will be hurt by this shift, Gessner said: “Those have always been a blessing to operators who don’t have access with a lot of capital.”

Used gear brokers such as Adams Global Communications stopped buying used boxes months ago, Adams President Chris Shirling told us, adding that Adams has stopped filling orders for used integrated security boxes. “We were very careful in making sure we did not acquire too many units we would not be able to move,” he said: “We passed on a lot of opportunities to buy excess inventory from some of the larger systems.” It could take more than three years for a secondary market in CableCARD-enabled boxes to emerge, he said, though technological evolution could speed that process.

Meanwhile, BendBroadband, a poster child for cable operators pledging to go “all digital” next year, detailed some of its plans in an FCC filing released Monday. The bureau granted BendBroadband’s waiver request on the condition that it finish moving to all digital service by January 1, 2009. That might be a tough deadline to meet, CEO Amy Tykeson said in a sworn declaration to the FCC released Monday. “A termination date of New Year’s Eve 2008, during the holiday period when many consumers are distracted and away from home, would unnecessarily cause greater difficulty, disruption and customer confusion, she said. Tykeson’s better idea: Move the “termination date” to February 2009, when broadcasters are going digital. BendBroadband’s transition is underway, she said. In early June, the company stopped offering analog service to new customers. It is running promotions to get existing analog customers to switch voluntarily to digital service.

The FCC fielded some 11th-hour waiver requests last week. The latest came Friday from RC Technologies, an offshoot of the Roberts County Telephone Cooperative Association in South Dakota that is building out a “wireless cable” system and using the advanced MPEG-4 codec. RC Technologies wants a waiver through 2012 so the new service, now boasting zero digital subscribers, can get off the ground. Also last week, Sunman Telecommunications asked the FCC to waive the CableCARD requirement temporarily.