December 14, 2011

ACA: Encryption of Basic Tier is Good, But Give Flexibility to Small Operators

The American Cable Association (ACA) filed more comments this week pertaining to Federal Communications Commission (FCC) proposals to allow all-digital cable systems to encrypt the basic tier voluntarily. ACA is concerned that various consumer-centric safeguards under FCC consideration would come with high and disproportionate costs and would make encryption, which will help operators monitor for signal theft and respond to consumer service requests remotely, a less attractive option than for larger operators. (For more, see ACA Likes Voluntary Encryption of Basic Tier for All-Digital Cable Providers).

“Although the FCC’s proposed encryption conditions may be suitable for many larger and mid-sized operators, for smaller operators they would impose higher costs and burdens that would reduce the benefit of basic tier encryption,” said ACA President and CEO Matthew Polka, in a statement. “By adding some flexibility to its rules to take into account the different circumstances faced by smaller operators, the FCC can ensure that the benefits of basic tier encryption are available to all operators, not just the larger ones.”



Among other things, as a condition of encrypting the basic tier, the FCC would like cable operators to offer free set-top boxes for extended periods to consumers that subscribe only to the basic tier and to other customers that have additional TV sets that today can display basic programming without a set-top box. The FCC has proposed free set-top box offers lasting up to one year in some cases and up to five years in others. The costs of providing boxes for free for an extended period of time would disproportionately impact smaller and rural-based cable operators because they lack the scale economics enjoyed by clustered cable systems located in some of the largest designated market areas.


In its comments, ACA stated that the FCC can mitigate the disproportionate impact on smaller operators who encrypt the basic tier by reducing the timeframe during which small operators must forgo charging eligible customers for set-top boxes or CableCards and allowing smaller operators to fulfill the requirement to provide free set-top boxes by using the least expensive equipment available for purchase in the market, including refurbished devices that have integrated conditional access security.