Market Insight

70% of US cable set-top box installed base uses cableCARD

February 17, 2015

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70% of US cable set-top box installed base uses cableCARD

By the end of 2014, the number of cableCARDs in MSO-supplied set-top boxes (STBs) amongst top 9 US cable operators has reached 51.5 million. This represents 70% of the STB installed base of these cable operators, grown from just 4% in 2007, and excludes integration ban-exempt STBs such as a thin-clients and DTAs (Digital To Analogue Converters). On the other hand, a comparable figure for retail-purchased CE devices using cableCARDs remains to be just under 0.62 million.

The FCC (Federal Communications Commission) aimed to create an open retail market for cable STBs in the US by banning cable operators from using boxes with integrated conditional access (CA) from July 2007. It mandated that they use separable conditional access modules known as cableCARDs, instead. These were also to be made available to consumers for use in their own STBs or other devices purchased at retail. Before the cableCARD mandate, which is also known as the ‘integration ban’, the integrated CA meant that operator leased STBs were the only option for consumers to access a particular pay TV service.

Our Analysis:

Latest data further re-enforces that the Integration Ban has been unsuccessful in creating a retail market for cable STBs in the US. While the mandate provided consumers with choices, the significant majority, over 99%, have opted to continue leasing STBs from their cable provider. There are two key reasons for this: Firstly, leasing a STB has no upfront cost and in the short-to-mid-term is substantially cheaper than the most widely available retail options. These are TiVo’s Roamio DVR at USD199.99 plus USD14.99 monthly service fees or USD499.99 for lifetime service, and the Moxi DVR at USD599 with no service fees. Secondly, there is a substantial difference in user experience offered by an operator-provided STB versus a retail device. Operator-provided STBs typically run dedicated software (middleware) on the box which integrates them with service provider’s core technology platform enabling access to operator services such as multiscreen, network DVR or VOD. A retail STB cannot offer this level of integration, and instead remains restricted to a more basic experience.

The cableCARD mandate has also proven to be expensive for cable operators, who see cableCARD as an un-necessary replication of CA, at the expense of substantial added costs and CAPEX used to buy compatible STBs and cableCARD modules. .

Due to operator pressure and its failure to create a retail STB market, the FCC has agreed to abandon the cableCARD mandate with effect from late 2015. This means that the use of cableCARDs will become optional. The US regulator is now looking into alternative cost-effective methods such as DCAS (downloadable conditional access system), as a continued effort in creating an open market, but by taking into account learnings from the past.

DCAS is not a new concept. PolyCipher, a video-encryption joint venture created by Comcast, Cox and Time Warner Cable, has been working on a DCAS solution since 2004, before it was taken over in CableLabs in 2009. While various commercial implementations of DCAS are already available in the market such as Cisco’s DCAS, an agreed standard framework is still absent. The basic principle and rationale behind DCAS is the same as cableCARD: to ensure interoperability and reusability of devices across operators and platforms, and this time even more platforms including DTH and IPTV. In the absence of a standard, the flexibility and openness of DCAS will remain at risk. This is because of a potential danger that CA vendors may come up their own individual implementations of DCAS and possibly create the kind of ‘vendor lock in’ that the CableCARD mandate sought to block.

The motivation to deploy DCAS is natural for pay TV operators as it is economically and technically more efficient. DCAS relies on an open-architecture, vendor-agnostic approach to implement conditional access (CA). Instead of having the need to implement a particular CA-system specific hardware architecture in the STB, DCAS uses software which is securely downloaded from the network to the consumer device or STB carrying an embedded DCAS standard element. This means that operators will need to deploy DCAS compatible STBs, should they want to support this technology. STBs with DCAS support are already present in the market. Cablevision and Charter have already deployed DCAS, from Cisco, to select markets after gaining waivers form the FCC. Comcast and TWC have also shown an interest in the technology, and are likely to deploy, once the Integration Ban expires. The downloadable aspect of DCAS is particularly appealing to service providers as it enables centralised deployment and management of CA, and also allows for convenient and cost-effective handling of compromised security events through software-based revocation and renewal of CA – as opposed to physical STB or smartcard replacement. DCAS also enables the simultaneous support of multiple CA and/or DRM systems, making it a much more promising and future-proof approach to content security, for both traditional pay TV services as well as multiscreen content. Multiscreen video services are increasingly becoming core to the pay TV offer and should be seen as a natural extension to traditional TV. A content protection system that extends CA and DRM, enabling centralised management and control of both traditional and multiscreen content security is going to be the likely future choice for pay TV operators.

DCAS will also make the switching and migration of CA systems relatively easier, potentially making CA vendor deals with operators less ‘sticky’ than they used to be. This can encourage more competition across CA vendors making the US content security market more open and competitive. Once the Integration Ban has expired, the North American cable market is likely to continue the use of cableCARD with the migration towards DCAS to happen gradually over a period of time.




North America USA
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