Paul Gluckman

Nagravision, which supplies conditional-access systems and DRM technology to pay-TV operators, thinks the downloadable-security system that Cablevision is developing “may have merit” as a successor to CableCARD, “but only if wider participation in its development occurs,” it told the FCC in an ex-parte filing Tuesday. Nagravision thinks “such a downloadable system is achievable in a reasonably short time frame and has committed to participate in an endeavor to define it,” it said. The FCC in January extended Cablevision’s CableCARD waiver to December 2010, to give the company more time to develop the downloadable security system and deploy it in its service area. Nagravision wants the FCC to require that Cablevision and NDS “participate in a technical standards-setting process with other affected parties to develop a single, nationally portable, ‘downloadable’ system as a successor” to CableCARD, it said. “Moreover, the commission should continue to require cable operators to rely on a single, common, nationally available conditional access technology when a new system succeeds the existing CableCARD system.” Cablevision has said its downloadable security proposal is based “on an open standard that will work with third-party devices as well as unaffiliated security technology.” Cablevision has promised to keep supporting CableCARD devices after it deploys downloadable security, “ensuring a nationally available and portable security solution for Cablevision customers in addition to the open, downloadable security that Cablevision is implementing.” Throwing out Cablevision’s CableCARD waiver, as the CEA wants the commission to do, would “impede” the development of downloadable security, Cablevision has said.

The courts or the International Trade Commission or the Patent and Trademark Office, not the FCC, are the proper venues for challenging DTV patents if one deems they're not being licensed on reasonable and nondiscriminatory (RAND) terms, DTV licensors’ heavy hitters told the FCC in written comments Monday. All, including ATSC, Funai, LG, MPEG LA, Philips, Qualcomm, Thomson and Zenith, urged the commission to deny a Vizio-Westinghouse Digital petition that the FCC initiate a rulemaking to regulate the patent fees and impose fines on licensors that don’t comply.

Some would-be vendors vying for one of six regional FCC contracts to perform “basic in-home converter box installation services” want to know if they'll be required to serve an entire region or just a single state within that region. That’s according to the nine pages worth of questions, released Tuesday, that bidders posed on the commission’s request for quotes. The commission is using part of the $90 million set aside in the economic stimulus package for DTV “education and outreach” to pay for the contracts (CD March 30 p6).

NTIA agreed to pay $2.4 million in stimulus money to its vendor IBM to produce 15 million more non-embossed DTV coupon cards at 16 cents each, said a March 16 contract amendment just posted at the agency’s Web site. The stimulus package included $490 million to fund the redemption of 12.25 million more coupons. The 15 million are to be delivered to NTIA by April 6, the amendment said. Since the 15 million are being paid for with stimulus money, IBM must comply with reporting requirements under the American Recovery and Reinvestment Act, the amendment said. Not later than 10 days after the end of each calendar quarter, IBM, starting July 10, must submit a report to the Commerce Department listing the total amount of recovery money it received and “a detailed list of all projects or activities for which recovery funds or obligated,” it said.

Though new rules give the NTIA “additional flexibility” to distribute DTV coupons other than through the mail, it’s doubtful those distribution methods will include sending coupons electronically, agency officials told a media briefing Tuesday. The rules changes give the NTIA the freedom, for example, to give away coupons to residents of single-room-occupancy buildings, said Bernadette McGuire- Rivera, associate administrator of the NTIA’s Office of Telecommunications and Information Applications. The NTIA is “putting our focus on the unready households,” which Nielsen says now number about 4 million (CD March 23 p13), McGuire- Rivera said. “We also know from the Nielsen data that these groups are not big Internet users,” she said. “I know that there are a lot of people who are very interested in having a, quote, downloadable coupon that someone could go to their computer and get that coupon. Based on our research so far, that doesn’t seem like a mechanism that would be widely used by these groups, so that might not justify whatever cost it would be to set that up.” The NTIA spent just over $190 million of the $490 million allocated for new DTV coupons in the economic stimulus package to clear its backlog of coupon requests and began processing the last orders from its waiting list last Saturday, Gomez said.

A DTV coupon program rule change gives the NTIA “additional flexibility with respect to the manner with which it distributes coupons to U.S. households,” besides by first- class mail, the agency said, without specifying the alternatives. An NTIA spokesman declined comment. Sources have said the agency resisted pressure from the incoming Obama administration to devise electronic coupons because officials worried they would be vulnerable to waste, fraud and abuse.

Of the $650 million in the economic stimulus package for the DTV coupon program, $490 million will pay for the actual coupons, new NTIA data show. That’s enough “recovery funding” for 12.25 million additional coupons, making about 46 million total with the original 33.5 million that the DTV Transition and Public Safety Act provided for. The new money raises the total for coupons to $1.83 billion from $1.34 billion. At the 55.4 percent redemption rate through Tuesday, 25.5 million coupons of the 46 million would be used. The 22 cents per envelope that the NTIA will pay IBM to mail 4.6 million envelopes under a Feb. 27 contract amendment (CD March 10 p4) is the cost to upgrade each mailing from “standard” rate to first class, including the postage and the envelope, an agency spokesman said. It started using the upgrades last week to begin clearing the backlog of coupons on the waiting list, he said.

Sirius XM and DirecTV have “a number of opportunities” to work together through Liberty Media, which owns large stakes in both companies, Sirius XM CEO Mel Karmazin said Thursday in an earnings call. His company has “an excellent working relationship” with DirecTV CEO Chase Carey and has “had discussions” with him “over the last few days,” and with Liberty Media CEO Gregory Maffei, about teaming up, Karmazin said.

The Obama administration is putting “real pressure” on the NTIA and its vendors to devise an electronically downloadable converter box coupon that would speed delivery of the vouchers to consumers, said an official with intimate knowledge of the coupon program. The administration thinks it’s antiquated in the Internet age to send coupons through the U.S. Postal Service, even at the faster first-class rate, the official said. The Obama transition team broached the idea of an electronic coupon in early January when it began pushing for DTV delay legislation that would also require the NTIA to send coupons by pre-sorted first-class mail rather than use the slower, less-costly “standard” rate that the agency used for all of 2008, the official said. But the NTIA and contractor IBM have resisted electronic coupons for fear they carry a high risk of waste, fraud and abuse, the official said. The main worry is electronic coupons are hard to track and the NTIA would be unable to tie them reliably to the database of residential addresses it uses now to process the physical coupons, the official said. The NTIA will pay IBM $1.02 million through March 31 to mail 4.6 million coupon-bearing envelopes by pre-sorted first-class at 22 cents apiece, a Feb. 27 contract amendment said.

The NTIA has removed requests for 3.5 million converter- box coupons from the waiting list since it began compiling the list Jan. 4, including 146,200 in the 72 hours ended midnight Sunday, the agency said Monday. Still, orders for 4.1 million coupons remained on the waiting list Sunday night, it said. Redemption rates for coupons expiring in the week ended Feb. 20 soared to new record highs of 68.2 percent among over-the-air- only TV households and 66.5 percent for the program overall, the NTIA said. But average daily orders have dwindled since Congress passed the DTV Delay Act and President Barack Obama signed it into law (CD Feb 12 p7). Fewer than 61,000 coupons a day were ordered in the week ended Feb. 25, the NTIA said. That’s down from a high of 534,000 average daily coupons ordered in the first week of January amid the flurry of media reports that the coupon program had reached its funding ceiling.