For years, industry pundits have claimed that Cablecard is dead. Cablecard, which enables consumers to get local and premium HD cable television programming directly into TV’s and Media Center PC’s via a digital cable tuner. It seemed poised to unlock consumers from the underpowered, much maligned cable boxes many rent from their cable provider and often loathe today. Yet the reality is there are only 443k 3rd party Cablecard devices in service (4 of those in my own house) and it’s clear the situation is going to get worse before it gets better. Now the new Genachowski-run FCC is stepping in:
New FCC Requests Comment on Video Device Innovation
As Sean Portnoy details in his writeup (with tip of the hat to Ars Technica’s deeper dive) there’s reason to pause and discuss as the FCC is asking for comment. I used to be a big supporter of Cablecard but am increasingly of the opinion they’re right. Cablecard has lacked mass adoption due to death by a thousand cuts, a bureaucratically devised solution to end a monopolistic stranglehold on innovation in the living room. The main reasons as I see it include:
- Cable never wanted it. The Cablecard requirement was foisted on the cable industry by the FCC as a part of the Telecommunications Act of 1996. They dragged their feet until the last possible moment when after many requested and approved delays over 11 years, on July 1, 2007 Cablecard went live.
- Set-Top Boxes are more Profitable when they’re Clunky. There’s a reason why the performance and graphics of your cable box look nearly the same over the past 15 years – in short their costs for each set-top have gone down astronomically while delivering effectively a 1990’s-level user experience. If you analyze SEC filings from major operators, you’ll find that their CapEx has actually reduced over the past 5 years thanks in part to cable box rental being a cash cow. The longer you can keep the hardware in-market, the more profitable it is.
- Not enough Competition to drive innovation. New entrants such as Verizon and AT&T offer more substantial capabilities as a means of differentiating their offering, but their main challenge today is footprint. It’s expensive to wire a new municipality with competing offerings. Some estimates put the costs as high as $600/household.
The Consumer Cablecard Experience
So what about the consumer experience today for Cablecard? How bad is it really? Admittedly the below in aggregate paints a worst-case scenario however roadblocks to consumer adoption abound:
- No Video On-Demand or Interactive Services. Cablecard finally started showing up about the same time large operators started rolling out their on-demand services which don’t work with Cablecard. By it’s nature, Cablecard is a one-way device and can’t talk to interactive services. Integrated services like Twitter and Facebook via your Cablecard are impossible.
- It’s Physical. Cablecard requires you have a credit-card sized unit plugged into your TV/TiVo/Tuner. First generation required one card per tuner. In many cases, you need a “truck roll” in order to get the hardware or go stand in a long line at your local cable office. Not customer-friendly.
- Few Supporting Devices. Until just recently, the qualifications required to get a device certified for Cablecard support were challenging. Take PCs for example – until just a few months ago, OEM Windows PCs had to be pre-certified as ready for Cablecard for the hardware to work until last month. As for HDTV sets, in the increasingly commoditized HDTV set industry, what manufacturer in their right mind would increase their costs and certification requirements by adding Cablecard tuner support?
- PC Cablecard certified Tuners are costly and hard to find. Because of the PC qualification restriction, even if you did have a qualifying PC, you had to know the right place to find a tuner – often on Sony or Dell’s site. The ATI Digital Cable Tuner product that is well known and respected (I use two) has apparently all but disappeared. Other Cablecard-certified PC tuners are hard to find- the most promising from a Kirkland, WA startup, Ceton won’t be available until 2010 and a 2-tuner offering likely around the $300 mark. No wonder there are only 14 3rd Party certified devices for Cablecard
- Setup is too Complicated. Setup requires you have possession of the physical card, you need to seat it in the device, call the cable provider, offering up a long series of IDs and wait for the data to download, sometimes up to an hour. Diagnostics require technical training on part of cable provider’s staff.
- Rental Fees. Cable operators introduced cablecards for free, then started charging a monthly rental fee. In some cases, the cost for two cable cards is comparable to the cost of renting an HD DVR from the cable operator.
The Future (and recommendations to the FCC)
And the future doesn’t appear to be much brighter. The interactive support needed for Video On Demand or Interactive services has been slow to materialize – July 1st 2009’s agreed-upon deadline came and went and Panasonic continues to be the only TV manufacturer to have support for the platform. Ok, so what if you don’t care about getting “Premium” channels such as HBO or Showtime and just want to record Discovery Channel or ESPN? More economical solutions such as the SiliconDust HDHomeRun (which I also really like) in many regions can now only pick up local TV signals. Here in the Seattle area, as of December 8th, all non-local stations are encrypted by Comcast. Reports are Verizon’s FioS will still let you tune but for how long? It’s clear concern among content providers over piracy of their unencrypted HD content is a top driver of this behavior.
So what would I do if I were at the FCC working through this issue? Here’s a quick scorecard cheat sheet for consumer perspective for starters:
|Platform||Supports||Top Pain Point|
|QAM/ATSC||Local Digital TV/HDTV channel tuning via Cable, no hardware required from Cable provider||Cable operators starting to encypt previously available cable channels
(e.g. ESPN, SyFy) with FCC approval
|Basic and Premium Stations
(e.g. HBO, Showtime) with hardware from your provider
|Complicated Setup & high cost product adoption; No VOD/Interactive features|
|Interactive Services with hardware from your provider||Delayed rollout, only one TV in-market supports;
No PC support
- Simplify the Offerings. The fact that these solutions are so confusing and hard to understand is a root issue – build one solution and market it.
- Drop the Cablecard Hardware Requirement. Strong encryption exists today in software. The need for a rented piece of hardware is a dinosaur in the age of online services such as Xbox LIVE.
- Incentivize operators to reboot and innovate. Today’s cable networks are a hodge-podge of mis-matched technology some have described as “Protection through Obfuscation”. Combined with the flurry of acquisitions through the 90’s and 00’s and you have today’s experience – mis-matched channel lineups and product offerings sometimes street by street. The faster the industry can move to a switched, all-IP infrastructure the better.
- Support Federated, Personalized Logins. In the online beta of Fancast Xfinity which launched yesterday, Comcast uses your Comcast.net email and password today, one per household. This limits options for personalized guide listings and integration with other federated services such as Twitter and Facebook. Architect the solution for today’s established and emerging consumption habits.
- Advocate a Multi-screen, Multi-location solution. The replacement should acknowledge the rightful place of multiple devices in consumption of services you’re already paying for – namely PC and mobile devices alongside your TV. Segregation based on screen size is no longer an option.
- Unify the Interactive platform with minimum UX/performance requirements. Blu-Ray discs, BDLive and tru2way all standardized on Java as middleware for the platform. While I won’t get into a debate over the merits of Java, my experience has been poor on BD players with excessively long load times and reports of immature designer/developer tools. Learn from BD and ensure the industry to make the same mistakes with Tru2way.
- Simplify Certification. The existing methods can certainly be improved. I won’t go into details here but have had enough conversations in the industry to know this is a hard problem exacerbated by many factors.
- Recognize need for Consumer Marketing. If consumers don’t know it exists, they won’t use it. The industry learned a lot from the DTV switchover earlier this year. Encourage an ecosystem to flourish.
There is no doubt these are hard problems with very smart people working on solutions. But from a consumer’s perspective, tru2way is lining up to look like more of the same for the next 15 years.
This is just one person’s opinion on the situation and my advice to the FCC. What do you think?
Ed. Note: Fixed table to reflect Cablecard+Tru2way middleware solution (thanks Dave).
Ed. Note 2: Updated Ceton product availability to 2010. (thanks Alexander).