A very short Notice of Inquiry and notice of a proposed rulemaking last week has both confused most US analysts and brought derision from others. In it the FCC talked about an AllVid adapter which would allow any form of video to come into a home, and be adapted to any other device.
The derision comes from critics that don’t want to see the FCC interfere with the telecommunications equipment market, and who think that there are plenty of devices on the market which do exactly what the FCC has described ‘ such as the Apple TV or Roku device.
But the decision comes after long years of the US public suffering at the hands of a DRM lock in that hoisted pay TV set top boxes way above their commercial value. Motorola bought General Instrument in 1999, and has maintained a 50% plus market share in cable TV set tops ever since. Because it supplied the conditional access (DRM) no other set top providers could attach to system encrypted with its system, until a few years ago Motorola actually licensed the encryption to outsider UK set top maker Pace, under pressure from Comcast.
But the FCC made its own move, one which has not been considered wholly successful, when it separated conditional access from the set top function with a ruling under which it created CableCards, tiny cards that look like PCM/CIA cards, which managed decryption. Devices sold into the US market can now incorporate these cards so that any encryption may be used with any device.
The FCC now wants to further separate the functions of devices from the underlying services, and sees multiple services attaching to multiple devices, so DVB-C cable or DVB-S satellite, working alongside a selection of IP delivered video formats. We cannot imagine such a device being clever enough to connect to a fully blown IPTV service such as Mediaroom, but we can see it working with Over The Top services, which we are expecting to arrive in volume over this Summer in the US.
This is tantamount to the Canvas design in the UK, pushed by the BBC and BT, or the HbbTV technology in Europe. Both of these are designed to allow for hybrids and make way for OTT services to get straight to a TV. In Europe this work has all come from broadcasters and its motives are really about ensuring the survival of consumer eyeballs staying with traditional viewing, even as they drift to the internet. In the FCC’s case the motive is entirely about ensuring competition in its market place, but the outcome may end up just the same.
Part of the mission in the first instance is to make the existing CableCard set up easier for consumers to work with before laying the ground work to build a new technology layer. But the FCC has clearly seen the objective very differently from the European OTT initiatives, focusing on a unit which can either be separate or built into one of the major household devices, so that any video can be viewed across a wide variety of devices. Canvas and HbbTV are shooting for one set top to cope with and integrate similarly standardized services, in hybrid configuration with one of the major broadcast delivery methods.
Canvas doesn’t have to deal with issues like including protocols like Adobe streaming, HTML 5.0 and Microsoft Silverlight, since it can decide what technology it wants to use (Adobe Flash) and enforce that. Both Canvas and HbbTV (Hybrid Broadcast Broadband TV) also require a back channel to offer interactivity with programming, and in some instances, this is seen as the main function ‘ to view a broadcast program, and then pull IP and IP video services from the internet, from links in that broadcast service, though it doesn’t have to be this way, and in some intended uses for it appear more like a store front. Interestingly the FCC has also referred to its ‘AllVid’ adapter as a store front, so that subscription to remote services can be managed through it. The FCC says that it is also pushing an interim measure to improve CableCard which would make its pricing and billing more transparent.
Whatever the FCC ‘intends’ the AllVid adapter to be, it will almost certainly end up overtaken by market events and it may never come to fruition.
If Apple and Google, along with Hulu, all move to put IP video onto a commercial footing this Summer, and that is added to all the online film viewing services such as Netflix and Blockbuster, there will suddenly be a new route to market for broadcasters, and more pressure than ever on Pay TV operators like cable, hence the need for TV Everywhere services to be launched. And in competition this intense, standards are likely to be needed, and the obvious one is HTML 5.0, despite the dominance of Adobe Flash video at the present. Apple refused to embrace Flash video and consumers tend to vote with Apple on these issues. At worst there will be two major OTT formats, although the approach to adaptive streaming may vary widely.
We suspect that there will be little need for standardization to appear with FCC sponsorship, and right now the Pay TV operators want to slow this market, not accelerate it, if they can.
By supporting the idea of customers acquiring multiple video services in their home, and to be able to move freely from service to service based purely on preference rather than installed equipment, the FCC is putting its weight behind further video fragmentation, and existing stakeholders will be furious and try to bury this approach.
Which is why we expect the calls for comment to be largely negative and be designed to slow this initiative down.
This week the FCC also kicked off its Universal Service Reform, whereby it diverts the funding from providing plain old telephone service into a way of providing broadband for US consumers as part of the National Broadband Plan. It issued another Notice of Inquiry and Proposed Rulemaking to begin creating the Connect America Fund (CAF). The NOI seeks comment on how that model could be adapted to determine levels of universal service support on broadband.