There have been quite a few announcements in recent months about cable’s progress towards deploying tru2way, but unfortunately, there continues to be some confusion in the blogosphere about the future of CableCARDs and exactly how tru2way devices will work.

For example, I see tru2way described as “CableCARD 2.0,” which is cute but not technically correct. I see questions about when there will be a “two-way CableCARD,” when in fact all CableCARDs are capable of accessing two-way cable services such as video-on-demand. I see people expressing expectations that the introduction of tru2way means that CableCARDs will go away, when in fact tru2way devices require use of CableCARDs.

It’s great to know that so many people are passionate about these issues, but the misinformation is a little frustrating.

I thought I would back up and walk through a very brief history of CableCARDs and tru2way, so as to hopefully clear up this confusion.

The Beginning of CableCARDs
In the Telecommunications Act of 1996, Congress sought to foster competition in the set-top box market by enacting a new provision of the Communications Act, section 629, whose purpose was to make set-top boxes available for retail purchase. Specifically, that provision called on the FCC to adopt rules to ensure the commercial availability of “navigation devices” (e.g., a set-top box). But you couldn’t jeopardize the signal security of the provider (e.g., your local cable operator).

The FCC determined that this could be accomplished by separating security (i.e., conditional access) from the function of the device. The security functions would instead reside in a separate security module that you would get from your local provider. These security modules were first known as Point-of-Deployment (POD) Modules and later were named CableCARDs.

An FCC order in 1998 required the cable industry to develop PODs which it did by 2000, but, for a variety of reasons, there were no retail devices built with which the PODs were intended to work. By December of 2002, a “Plug & Play” agreement was reached between major cable operators and major consumer electronics companies setting the stage for the release of the first wave of devices – such as digital “cable ready” television sets – which would work with CableCARDs. These DTVs could be sold (and moved) anywhere in the country and allowed cable subscribers to receive one-way digital cable services without the use of a set-top box by obtaining a CableCARD from his or her cable operator. CableCARDs allowed cable customers to view encrypted digital programming after being authorized to do so by the cable operator.

That “Plug and Play” agreement took effect in the Summer of 2004. As of August 2004, there were approximately 700 CableCARDs deployed by the top 10 MSOs. NCTA just reported new numbers to the FCC and we found that there are 372,000 CableCARDs that the top 10 operators have supplied to date to customers who requested them for Digital Cable Ready TV sets or other CableCARD-compliant products, such as some TiVo digital-video recorders.

In addition, as a result of the FCC’s “integration ban” requiring that cable operators use CableCARDs in their own leased set-top boxes, we just reported that major cable operators have deployed more than 6.2 million digital set-tops with CableCARD conditional-access systems since July 2007.

One-way versus two-way
It’s good to stop here and point out that the 2002 agreement was an agreement for building devices to access one-way cable services such as linear (e.g., TNT, ESPN) and premium (e.g., HBO, Showtime) digital channels, including high-definition channels, but not two-way (“interactive”) services such as video-on-demand.

The reasons for this are long and involved and include technical, business and legal issues, but the short answer is that the cable and CE industries decided to adopt a one-way agreement as a first step to a “two-way” agreement. But agreement on a two-way agreement proved to be much more difficult and complex than a one-way agreement.

In particular, two-way services involve high-value content and we have three affected industries: cable, content providers (such as studios) and consumer electronics manufacturers. Not all of the companies within each industry have all the same views and not all of these industries have the same views. It’s a hard thing to accomplish.

The Story of tru2way
Now, I need to back up one more time and point out that something else was going on at almost exactly the same time. In the fall of 1997, came the beginning of the cable industry’s OpenCable project. Its mission was to provide a set of hardware and software specifications for the next generation of cable’s set-top boxes and other two-way devices. The software involved was called the OpenCable Applications Platform or OCAP, now known as tru2way. The tru2way hardware and software forms the basis for interactivity in two-way retail devices, as well as cable operator devices, and is used in conjunction with – not as a substitute for – CableCARDs which are still needed to provide access to secure cable services.

These are two separate stories
Now, let’s put it all in context. CableCARDs came from a government mandate to separate security from “channel surfing” functionality in set-top boxes, making them available at retail. The CableCARD itself can handle one-way or two-way communication, but the first Digital Cable Ready sets were one-way, because that’s all that was negotiated.

Meanwhile, tru2way comes from a decade of development and was focused on developing specifications that would allow interactive services to be deployed – and interactive services are two-way by definition. Two-way Plug & Play negotiations have been going on for some time, since the one-way agreement was finally settled.

In the meantime, the tru2way specification emerged as an option for building two-way Digital Cable Ready devices. Major CE companies such as Panasonic, Samsung, LG, and Sony have agreed to use tru2way technology to build two-way Digital Cable Ready devices (IT companies such as Intel have also endorsed tru2way). And, as noted, tru2way devices still require a CableCARD for security.

After all, without such security, you can’t have content. Cable operators typically have contracts in place that they have to guarantee conditional access and other limits on unauthorized distribution.

So, there you go. It’s understandable that there’s confusion over CableCARDs. After all, customers with Digital Cable Ready devices represent probably less than 1% of cable customers. But I hope this post will serve to bring some clarity to the issue. If anyone wants a more detailed history, the best one I have seen can be found here.

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Just met with Robert Scoble of fast company.tv . . . fun to meet with one of the leading bloggers in the tech sphere, and we both agreed that more conversations between those of us who do Washington policy work and those who do (and write about) technology should take place.  We covered the usual suspects . . . net neutrality, media and first amendment issues etc.  And we talked about how technology has changed, not just since we were teenagers but in the last five years, and what’s coming down the road.  My basic pitch:  the trend of the last 10 years is that consumers have more competition and more choice than ever before, and it is not likely that trend would continue with more government regulation.

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Recently, I mentioned the PointSmart.ClickSafe. Summit, which took place in Washington, D.C.  Here is some more information about what took place.

Joe Laramie, from the Internet Crimes Against Children Task Force, spoke at the Summit, appearing on a panel entitled “Children’s Online Safety in Context: The Health/Prevention Science View.” In this interview, he speaks about the best ways to address cyberbullying. During his panel, he noted that law enforcement has to be careful about addressing online safety concerns. Both intent and content must be weighed, he cautioned, and teachers and parents should be the first line of defense.

Alan Simpson, Director of Policy for Common Sense Media, moderated a panel during the Summit on the topic “The Parent View: Defining Best Practices in Online Safety and Literacy.” Common Sense was one of our partners in putting together the Summit, along with the Internet Keep Safe Coalition (iKeepSafe) and Cable in the Classroom. In this video, he offers some advice for parents.

There was general agreement by speakers that education is the best weapon in addressing online safety. Dr. Michael Rich, Director of the Center on Media and Child Health, said that we can’t rely on legislative fixes, hardware fixes or software fixes; instead we have to fix user firmware - the mindset of parents and children.

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On Friday morning, Tom Tauke took to Verizon’s blog to post thoughts on the rumored FCC decision reversing the bureau’s suggested dismissal of cable’s complaint about the telco’s “retention marketing”.  NCTA President Kyle McSlarrow drafted a response here and on Verizon’s blog.  The back and forth went on late into the night with Kyle posting his final word after 8pm.

Due to the relatively unprecedented nature of this direct, and public, debate between major industry players, a lot of people took notice.

Sidecut Reports called it a tussle that only telecom policy wonks could love.

Maybe it’s a tussle that only telecom policy wonks could love, but if you are at all involved in the regulatory sphere you’ve just got to love that the battle of the corporate titans has now moved, Web 2.0 style, into the blogosphere, with Verizon and the Cable companies now using blogs to take pokes at each other…  If you are really interested in the argument, follow the links and join the conversation. We are going to spend the rest of the day worrying whether or not direct competitor blogging means that pundits are out of a job — again!

From the Technology Liberation Front:

Verizon’s Tom Tauke and NCTA’s Kyle McSlarrow take to fisticuffs in their comments (well worth reading and remarkably… candid) on the Verizon Policy Blog after Tom asked “Will Cable and FCC Thwart Consumer Choice?”

Dave Zatz at Zatz Not Funny writes:

In the talking typing heads policy battle currently raging across the blogosphere, I hereby declare the NCTA as winner. I actually have very little interest or knowledge of the topic at hand, however there can be only one… and Verizon’s lobbyist is still ending sentences with two spaces, while Cable’s lobbyist linked his rival’s blog. (Bonus 1/2 point to Cable for using WordPress, though they haven’t upgraded to 2.5.* yet.)

Perhaps the most salient point, and possibly the briefest, was made by Insight Communications CEO (and NCTA Executive Committee Member) Michael Willner (a blogger himself) after Tom and Kyle suggested taking the debate offline.

NO! Resist going back to the old Washington ways!! Don’t settle this in a beltway gin mill. This is the 21st Century and we all want a front row seat!!

We wouldn’t consider it.  When Kyle launched this blog, he spelled out its purpose clearly.

But we didn’t start this blog just to tell you all that. We launched this blog to talk about telecom policy. Today’s vibrant public policy discussions are driven by conversation and debate taking place online, so we hope this blog will contribute to that dialogue. We’ll be talking about proposed legislation and regulation at the federal, state, and local level. We’ll voice our support for changes that would lead to a better, more competitive technology landscape. When we think legislation is unnecessary or detrimental, we’ll talk about that, too. And, while we will certainly express our views, our goal is to have a dialogue… So, we’ll… invite people with whom we may not agree to engage in debates across their blogs and ours. We’re looking to cross post ongoing exchanges in an effort to provide you with the kind of information that helps you decide for yourself.

This was obviously an example of that, but this is only one salvo in a much broader and ongoing discussion and debate over telecom issues.  Keep your eyes peeled, there’s more to come.

(On two sidenotes, you can find NCTA’s statement on the FCC Decision here.  A sidenote to Dave Zatz: We’re big fans of WordPress, but haven’t upgraded due to a dependency on one plug-in that hasn’t yet upgraded.  Hopefully we’ll find a 2.5 compatible plug-in soon.  I’m working on it.)

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[Ed. Note: This is in response to a post on Verizon’s Policy Blog, by Tom Tauke.]

Tom, I have great respect for you but your blog this morning was a little over the top.

“Thwart consumer choice?” C’mon, Tom. This is really about Verizon trying to thwart competition . . . again.

Here is what is really going on. For the first time in history, Verizon’s entrenched incumbent position in the phone marketplace is being challenged successfully by cable competitors providing digital phone service, a relatively new marketplace development that gives consumers more choice, better value, and — according to J.D. Power and Associates — provides consumers greater satisfaction in every region of the United States. Not to put too fine a point on it: Verizon is losing customers.

Naturally, you’ll do everything you can to retain them. I get that. But, the law is very clear: Verizon can market to its heart’s content 362 days of the year to its customers. However, when customers make a decision to leave you, you are obligated to honor their decision to request that their phone number be transferred to their new provider, and respect their privacy by porting their current number within 4 days without harassing them with marketing retention calls. Congress, on a bipartisan basis, and the FCC have previously recognized that integrity in the number porting process is essential for true competition to flourish.

You are right that this is about consumer choice . . . but when consumers have made a choice, they deserve to have their choice implemented. That’s why there are rules preventing you from undermining that choice by invading their privacy.

You also call this an “intriguing” development. You refer of course to a decision that has not yet been announced (although there have been press reports). I agree that it is “intriguing.” First, this is a rare “restricted” proceeding. That means no one is supposed to speak to anyone at the FCC about this proceeding unless all parties to the complaint are present. It’s “intriguing” that someone in the FCC apparently leaked a decision that apparently goes against Verizon. And it is “intriguing” that the leak was apparently choreographed in a way that gives Verizon a shot at debating this in the press and the blogs.

One solution we should all agree on is to reduce the “porting interval” – the period of time it takes to shift a phone number from the losing provider to the winning provider, regardless of whether it is a shift from a phone provider to a cable provider or the other way around. That’s what consumers really want and deserve. And, the temptation for mischief is reduced. I invite you to work with us to ensure the FCC actually makes a decision soon to shorten the ridiculously long 4 days that consumers are forced to tolerate for simply making a choice in favor of the competition.

One other thing: you make the usual “apples to oranges” argument that because cable is engaged in win-back marketing when a cable video customer decides to switch to FIOS service, Verizon should be able to market during the porting interval for phone service. Oh, and you also throw in the same old tired refrain of “rising cable prices.” Are you really unaware that Verizon’s video service is priced about the same as cable providers? Did you miss the press release where Verizon announced perhaps the greatest video price hikes in the country last year? And, of course, what you also leave out is that a FIOS customer won’t cancel service until Verizon has already wired up the house and is ready to turn on (or has turned on) the service. So, it’s a done deal at that point. Of course the cable company may try to win back the customer. But it’s not doing it with inside information.

Intriguing? You bet.

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We’re still about a week away from the summer solstice, but it sure feels like summer already. The massive heatwave in Washington, D.C. this week helped set the tone, but the available programming on broadcast television also contributes.

It’s no secret that cable programming has been doing very well in recent years, especially as compared to broadcast television. Just one example is the growing number of honors that cable has won over the years.

Lost, The Big Bang Theory and The Office have gone bye-bye for a while and instead we can look forward to I Survived A Japanese Game Show and Dance Machine. But one way to make it through the summer TV doldrums is to turn to cable television. I am reminded of this by two items from this week. On Monday, the NY Times‘ David Carr pointed out it’s a Golden Age for TV? Yes, on Cable. Yesterday, Hamilton Nolan noted on Gawker: Cable: The Old New Big Thing.

Carr said this:

However, for anybody with cable — and that includes most of us — television is in something of a golden age. Cable networks other than the fancy subscription services like HBO and Showtime used to be the realm of stupid human tricks and commercials for six-minute abs, but networks have shot by them in the race to the bottom.

Channels like TNT, AMC, FX and others came up with their own versions of “Trading Places” and carved out niches, sometimes huge ones, by letting viewers know that narrative, quality and drama have not gone off the grid.

And Hamilton said this:

Networks must, by design, try for mass appeal. Cable channels can target their audiences much more effectively. The scary thing for networks is that even specialized cable channels no longer represent just a niche audience any more; they are almost as plugged into the mainstream as the networks themselves.

The success of cable is built on serving niches. As Carr said, those niches can get collectively pretty big.

The Cabletelevision Advertising Bureau has a handy chart on its website showing the effect of summer: Ad-Supported Cable Viewing Shares Heat Up In The Summertime. It looks at all dayparts, but if we examine just one metric, we see that primetime ratings for ad-supported cable networks increased 17% from November ‘06 to July ‘07, while broadcast ratings went down 33% for that same time period.

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Several years ago, the cable industry launched the “Take Control. It’s Easy.” campaign in order to educate the public about TV parental controls. We operated in the belief that the best way to address concerns about what kids watch on TV was to educate and empower parents and caregivers to make decisions about what and when kids watch television.

One year ago, we expanded those efforts into the online environment by launching the PointSmart.ClickSafe. initiative, which focused on media literacy and online safety. At that time, the cable industry promised to collaborate with two nationally-recognized Internet safety expert groups - iKeepSafe and Common Sense - to convene a national inter-industry online safety “summit” meeting.

That promised summit is taking place on Tuesday here in Washington, D.C. What’s interesting about the event is that it brings together representatives from technology companies, child advocacy and parents groups, educators, health researchers and policymakers to share and develop best practices for keeping children safe and smart online. The conversation should be interesting and you can follow the action online, as the PointSmart.ClickSafe Summit will be webcast.

Go to the event website and follow the link, starting at 8:30 a.m. (ET) on June 10.

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NCTA President & CEO Kyle McSlarrow will participate in a National Press Club “Newsmaker” Media Briefing today at noon (ET).

In his address, entitled “Cable’s Broadband Platform: Innovation for the Consumer,” he is expected to challenge the notion that there is a rivalry between innovation taking place at the edge of or in the network. In contrast, he will discuss the notion of an interactive “Internet ecosystem.” He will also discuss new developments in tru2way.

His speech will be webcast through this link [Archive available at this link for 6 months].

UPDATE: It’s also being streamed at C-SPAN’s site. The text of the speech has been posted at NCTA’s website.

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As Time Warner cable this week begins their trial of tiered Internet pricing in Beaumont Texas, the blogs are aflutter over the various caps Time Warner has proposed.  Time Warner’s plans start with caps at 5 gigabytes and go up to 40 gigabytes. Going over the cap will cost $1 per gigabyte.  Time Warner is also bringing transparency to usage by giving customers a gauge that will allow them to monitor their bandwidth consumption the way cell providers allow you to track your minutes.

Despite all this complaints about Time Warner’s trial and claims its caps are way too low have been ringing around the Internet.

Exactly how much bandwidth do you consume?  It’s hard to say as the number various from user to user.  However, Plus.net put together a nice little graphic showing you what a single Gigabyte gives you - including 4 hours per day of web browsing, 10 song downloads per week, e-mail, Internet radio usage, etc.

What does all that equal?  Well, NCTA member BendBroadband operated with a tiered structure and found that 91% of their customers consumed less than 10GB per month.  BendBroadband found that 99.5% of their users consume less than 100GB per month and now uses that as their cap.

Somewhere above the 91% consuming 10GB per month, and the .5% consuming more than 100GB lies the heaviest Internet users.  Estimates in various studies suggest that 5-10% of Internet users consume half or more of all bandwidth.  Much of that traffic - though specific estimates vary greatly - consists of P2P (peer to peer) connections exchanging files.   A study by SafeNet, Inc. suggests the overwhelming majority of P2P traffic may also be illegal content:

But 90 percent of P2P downloads are still of illegally copied content, according to David Hahn, vice president of product management at SafeNet Inc., which tracks the networks.

Hahn said 12 million to 15 million people are file-sharing across the world at any one time, mainly on the BitTorrent and eDonkey networks. The attraction of file-sharing is not just that it’s free - there’s also content available that can’t be had by legal means, like TV shows that haven’t aired in Europe.

Absent an exact figure of P2P usage, and whether or not you accept SafeNet’s 90% estimate, one thing is undeniable - a small percentage of Internet users are placing a burden on other users.  That is one reason a number of P2P applications providers are working to identify ways to make P2P a better and more efficient means of distributing content.  We believe that is a worthwhile pursuit, which is why NCTA and various cable companies are participating in a “P2P Best Practices” effort led by the Distributed Computing Industry Association.

In many of the articles written about the Time Warner experiment, detractors point to the number of movies than can be downloaded as a specific reason the cap is too low.  An average movie downloaded legally from iTunes is around 1-1.5 GB.  A 40GB cap would allow you to download more than 30 movies per month (or one a day) if that’s all you did.  Most people, however, don’t consume one movie per day, let alone 30 per month.

Mark Cuban, one of the founders of Broadcast.com and a web pioneer, points out the folly of this argument in a post on his blog yesterday.

Its been amusing to read all the blog posts with the math telling all of us just how many standard def or high def movies tiered subscribers will be limited to. You can have 2 or 3 of your favorite SD TV shows per day, or X number of HD movies per month. Say what? 

I have news for all of you that want to dedicate their internet connections to downloading movies. There is a new and exciting development. Its called an Application Specific Integrated Video Service (ASIVS). What is an ASIVS ? Its a computer dedicated specifically to downloading and playing both standard definition and high definition video. You connect it to a network that is dedicated to delivering GIGABITS PER SECOND of high quality video with ZERO buffering. It’s amazing, it always works and connects right to your standard def or High Definition TV, easily. Most of the systems I have seen have a pretty good programming guide and scheduling system and they will let you download AS MUCH VIDEO AS YOU WANT, limited only by the size of its hard drive!!

If you haven’t heard of the ASIVS, its because most people call it a DVR.

If downloading TV shows is so important to you, add a DVR to your cable or satellite service for 5 bucks a month and download all you want. If you want to watch those shows on your laptop, connect the composite video out in your DVR to the composite in on your laptop. Same with movies.

Can’t download movies illegally, tough.

The internet is a great resource for unlimited quantities of video. Downloading video is an internet given right. Using the internet to fill up your PC turned DVR at the expense of the performance of every user around you is not.

Mark’s right on the money with this.  Using the Internet to download video is your right and prerogative.   Using your Internet connection to consume all the available bandwidth and degrade your neighbor’s Internet experience simply isn’t.

As for Time Warner’s caps, are they too low?  Time Warner will soon find out.  They have described this as a test and will determine whether the model works and whether the caps are sufficient.  Unlike many of their critics online, Time Warner is unwilling to pronounce something a failure before even giving it a chance to prove itself.

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