FCC Opens Set-Top Box Competition

The FCC has decided to stop cable companies from distributing set-top boxes tied to their services. Cable operators, of course, plan to appeal.

The Federal Communications Commission has denied a request from cable operator Comcast to be exempt from new regulations intended to open competition in the marketplace for cable set-top boxes. Although Comcast plans to appeal the decision, as of July 1, 2007, cable operators will be forbidden from providing customers with set-top boxes which lock customers to their service via integrated security features.

The ban has been several years in the making, and comes from consumer electronics manufacturers who argued they should be allowed to develop and market set-top boxes for use with cable television services and sell those boxes directly to consumers. Customers would then hook connect to their cable provider’s network using CableCard (available now) or another interface provided by the cable operator, and they’d be all set. In theory, this would foster competition and spur the development of new features—like DVR functionality, IPTV, media-sharing via in-home networks, etc.—in set-top boxes.

Comcast and other cable operators have battled against third-party set-top boxes, claiming the FCC’s mandates are contradictory: competition in the set-top box market and low-cost set-top box systems. The cable industry claims CableCARDs will cost consumers over $600 million a year as they pay $2 to $3 per card to access cable services; the FCC counters that cable companies don’t have to use CableCARD: they’re free to use any system which separates security from a set-top box’s “navigation” features.

The most touted alternative to CableCARD is DCAS, which uses software-based security to protect cable provider’s content, but cable operators haven’t rolled out broad deployments of DCAS technology. A low-cost alternative to DCAS is already on the market from Beyond Broadband Technology, but cable providers haven’t embraced it either.

If the FCC’s ban on integrated security goes forward and sticks, expect to see a rush of consumer electronics and media center manufacturers jump on the CableCARD bandwagon, offering systems which connect directly to cable services without the need for awkward IR-pod workarounds which control cable boxes via simulated remote controls and which may offer cable customers more advanced and sophisticated TV functionality.