FCC Grants Charter Waiver of Set-Top Box Integration Ban for Downloadable Security

On April 18, 2013, the Federal Communications Commission (FCC) Media Bureau granted Charter Communications a two-year waiver of the “integration ban” requirement (that most leased set-top boxes include CableCARDs), in order to facilitate the deployment of downloadable security. The waiver authorizes Charter to deploy set-top boxes containing both integrated security and the chips needed for downloadable security, so that the company can build up simulcrypt systems which can deliver services to both CableCARD devices and to downloadable security devices. The waiver was granted on conditions agreed to by Charter, including to continue support for CableCARD devices and to make downloadable security available for retail devices.

The Order is also of interest to all cable operators because the Bureau effectively acknowledges that the D.C. Circuit’s EchoStar decision, described in our previous advisory, has vacated not only the “plug and play” technical and encoding rules but also undermined the CableCARD support rules adopted by the FCC in 2010, such as rules for a home networking output, self-installation, multistream CableCARDs, switched digital video solutions, uniform CableCARD fees, and bring-your-own-box discounts.

Background
Section 629, adopted as part of the Telecommunications Act of 1996, directs the FCC to “adopt regulations to assure the commercial availability … of converter boxes, interactive communications equipment, and other equipment used by consumers to access multichannel video programming and other services offered over multichannel video programming systems, from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor.” As part of its implementing rules, the FCC required MVPDs to provide a stand-alone “security element” (implemented by cable operators by offering CableCARDs) that could be used by retail navigation devices to unscramble a customer’s subscription services. To try to provide assurance that this separated security would work, the Commission also imposed an “integration ban,” which requires cable operators to use separable security in their new two-way, leased set-top boxes. This “common reliance” requirement was intended to promote an environment conducive to retail navigation devices.

The FCC’s rules do not require cable operators to use any particular type of separable security, and the FCC has previously deemed downloadable security to be a compliant separable security solution. However, Charter sought a temporary waiver to deploy set-top boxes containing both integrated security and the capability for downloadable security as it built up a new downloadable security system. The FCC previously granted Cablevision a similar temporary waiver to facilitate Cablevision’s deployment of downloadable security. Charter’s waiver petition explained that Charter’s unique footprint—which includes many low density rural systems and fewer subscribers per system than its peers—made it especially important to direct investment into downloadable security.

Charter’s downloadable security system
Charter’s downloadable security plan includes several features designed for “common reliance.” It will use key ladders available in microchips to establish a secure download path, with the chip providing a hardware root of trust. Charter committed that the code for Charter’s downloadable security will be made available royalty-free to facilitate easy inclusion in readily-available commodity chips, that the downloadable security technology will be commercially-available on a non-discriminatory basis to manufacturers of retail devices, and that the requirements necessary for such devices to access Charter’s cable services will be publicly available. Charter’s plan specifically enables the key ladder to be included in the same chips used for Cablevision’s downloadable security system. Charter also selected a software-based security for use with this hardware root of trust in order to prepare for a time when software-only solutions may meet the requirements of content providers.

Charter plans to use a simulcrypt system, which employs two forms of encryption for the same content on the same plant. Both before and after the waiver period, one encrypted side of the system will use legacy security to keep supporting existing subscriber equipment (including CableCARD-enabled leased and retail devices) and the other encrypted side will use the new security to reach new devices with downloadable security capability.

The Waiver
The Commission found that “Charter does not need a waiver in order to implement a downloadable security system as long as such system complies with the integration ban.” While Charter does need a waiver for its proposed plan to use integrated security prior to launching downloadable security, the Commission granted that waiver subject to a series of conditions described below that it believed would encourage the development of retail devices that can use downloadable security, assure continued CableCARD support, and deliver additional benefits to Charter subscribers.

Of particular interest for all cable operators is the fact that the Bureau found it in the public interest to condition the waiver on Charter’s continued compliance with its 2010 CableCARD support rules for self-installation, multi-stream CableCARDs, switched digital video solutions, uniform CableCARD fees, home networking outputs, and the bring-your-own-box discount requirement, “irrespective of the D.C. Circuit’s decision in Echostar.” As we previously advised, the D.C. Circuit’s Echostar decision arguably vacated all of these rules, and the Bureau’s Charter waiver order effectively acknowledges that uncertainty.

The specific conditions reflecting Charter commitments and certain Commission reporting requirements include:

Charter must submit periodic reports on good faith negotiations with one or more CE manufacturers that intend to develop a downloadable box for retail. It must also provide semi-annual progress reports on deployments.
The necessary elements for the downloadable security system must be available on an open, royalty-free basis.
Charter must continue indefinitely to support simulcrypt, the legacy plug and play technical rules (not the encoding rules), CableCARD self-installation, M-Card, switched digital video solutions, uniform CableCARD fees, the HD set-top box IP output requirement, and the bring-your-own-box discount. When a retail downloadable box is available, Charter need no longer provide CableCARDs to new retail devices, if it provides adequate documentation to the FCC showing the availability of the device at a price “comparable” to retail CableCARD devices.
Charter must also meet its voluntary “public interest” commitments: to transition all its systems to all-digital within 9 months after the end of the waiver period, and to make broadband Internet access service of 100 Mbps or greater available to 200,000 additional homes before the expiration of the two-year waiver period.

The Commission expresses its hope that Charter will lead the way in creating an industry-wide downloadable security system that other cable operators will also adopt, to avoid creating a “fractured” market for retail availability of navigation devices.

DWT represented Charter in obtaining the waiver.