31 August 2007

CATV vs television manufacturers

Speaking of standoffs ... there is an interesting one that is brewing. Under the auspices of Docket 97-80, the FCC has been seeking competition in the set-top box market. The initial approach has been to require a retail market for set-top boxes through a standardized interface. This was successful in the telephone CPE market and resulted in "Cable Cards", which currently are one-way and do not support interactive services and limit the way in which cable companies can manage cable spectrum, especially in light of increasing demand for high definition television channels. There are two strategies for overcoming this: one proposed by the consumer electronics industry and one by the cable industry. In the Third Further Notice of Proposed Rulemaking (FCC-07-120, dated 29 June 2007), the FCC sought to move the parties to conclusions. In this article Brian Smith of the Consumer Electronics Association (CEA) compared the consequence of the approaches:
Cable does not want their services "disaggregated," i.e. allowing the CE device to become, in their view, a filter for the way they present and market services to the consumer. For example, they do not want their UI to be modified by the CE products, and they want everything on the UI to be available for the consumer to order and pay for. Cable wants copy protection and output control flexibility that they say is necessary for them to compete with other service providers.

CE and IT manufacturers believe that customers should have a choice in the blend of capabilities that they pay for in their products. They don't think that the combination of OCAP middleware and future cable conditional access software should totally control the TV and its access to other services/peripheral devices, or the home network. They don't think CableLabs should be able to unilaterally establish or change the specifications for what constitutes an Integrated cable ready receiver or the test process for approving them. CE wants all downloaded Cable applications to be thoroughly tested on CE devices for robustness.

The comment period for this has now come to an end, which (presumably) prompted this article in Forbes. Quoting the article:

The federal government may be forced to intervene in a long-running dispute between cable companies and the consumer electronics industry over how Americans will someday use their television sets to buy movies, shop and access other services.

The two sides have been at an impasse for nearly four years. And the stalemate continues despite several rounds of negotiations between individual companies and the two industries' powerful Washington lobbyists.

"We have absolutely no agreement with cable right now," said Julie Kearney, senior director at the Consumer Electronics Association. "As far as we are concerned, there is still a huge gulf between our position and what cable envisions."

On one hand are the large cable providers such as Comcast Corp., Time Warner Cable Inc. and privately owned Cox Communications Inc.

They are pitted against household electronics names such as Sony Corp., Pioneer Corp. and Sanyo Electric Co. Ltd.

Both cable providers and television makers believe that controlling the digital programming guide, effectively a television's menu system, is key to guiding the viewer towards products and services they can buy. And both refuse to give up that control.

By the way, this was foreshadowed in this FCC report (Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming).

So, what action, if any should the FCC take? Do you see similarities between these actions and developments taking place in the wireless industry?

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