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By Chris Forrester - April 29, 2010
The Federal Communications Commission (FCC) looks “increasingly likely” to ban the set-top box as it is currently deployed in the US.
“The FCC appears increasingly likely to ban the pay-TV set-top box as we currently know it from the US market,” suggests a report from IMS Research. “The new ‘AllVid’ system would use DLNA & DTCP-IP to create an open-standard secure home video network where the proprietary parts of the set-top box are moved to a pay-TV gateway, leaving a simple DMA (or TV with integrated DMA functions) on the client end. The proposed rule will likely completely change the structure of the $4.7 billion US pay-TV set-top box market,” says IMS.
“The FCC has latched on to the disruptive technology formed when DLNA is combined with DTCP-IP and a form of high-bandwidth no-new-wire networking (such as MoCA or HomePNA, and possibly 5GHz 802.11n, G.hn, or other powerline networking in the future), and seems determined to use the opportunity to mandate the end of the pay-TV digital set-top box as it has existed since its inception. The Commission’s goal is simple: They wish to allow any CE manufacturer’s devices to access pay-TV content, which the Commission believes would foster competition and innovation in ‘smart video devices’.
“What will replace the set-top box in the FCC’s ‘AllVid Concept’ is a ‘Pay-TV Gateway’ that translates from the platform-specific modulation and encryption (Conditional Access) to DLNA & DTCP-IP,” adds the report. “The set-top box will be replaced with Digital Media Adapters that support the same protocols. An increasing number of televisions and Blu-Ray players are also including DLNA & DTCP-IP support.”
According to Stephen Froehlich, a senior analyst for IMS Research’s Consumer Electronics group: “The effects of a ban on traditional pay-TV set-top boxes would be massive, as this regulation would enshrine what was already an extremely disruptive technology. Such a ban would directly affect more than 40 million set-top box shipments and $4.7 billion worth of sales annually. It would also enable much more rapid adoption of the same model in other countries.”
Froehlich continues: “However, almost all of the industry participants I have spoken with understand that the move to open standards adds significant value for both consumers and pay-TV operators and are therefore preparing for this transition. Most suppliers of set-top boxes and set-top box components also supply the broadband gateway industry, putting them in a good position to compete in the new landscape. However, it is important to note that the new rule, if written correctly, will significantly decrease the overall cost of customer premise equipment (CPE) in US homes by minimizing the number of MPEG decoders and associated intellectual property fees per TV, which will in turn reduce the revenues available to the combined set-top box and gateway industry. The total financial impact of the new FCC rule depends both on its details and future innovation. Assuming that the new regulation allows the market to develop naturally by allowing content providers to provide their own user interface over an open-standard remote UI protocol, the general trend will be that the value-adding functions will move from the MPEG decoder to the broadband gateway or to servers on the ‘cloud’.”
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