Douglas Crockford

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NCTA 2004

On May 2-5, the National Cable and Telecommunication Association held its annual show in New Orleans. It is smaller than the NAB show, but much better focused. The show is attended by Cable Operators, Programmers, Cable Equipment Manufacturers, and Government.

Ten Years Later

Many of the speeches mentioned the progress made by the Cable Industry over the past 10 years. I attended the 1994 show, so I have experienced the changes. (See my 1994 report.)

In 1994, Ray Smith, CEO of Bell Atlantic, was talking about the phone companies moving into the distribution of television programming using ADSL after his attempt to acquire TCI (the largest MSO at the time) failed. Also, DSS (Digital Satellite Service) began operation. Also, Cable was under intense regulatory pressure from the government to reform. The cable operators had reached the limits of coax and analog line amplifiers, and had to upgrade to digital technology in order to withstand the attacks from the Telcos, the Satellites, and the Government.

In 2004, the Telcos are no longer a threat. Cable is much stronger in phone service than the Telcos are in video. Cable also remains much larger than Satellite, and has better technology for interactive services. The mood at this year's show was very upbeat. The digital transition was successful, and the industry is reaping the benefits. HDTV will bring new subscribers and new sources of revenue. There is still competition, but Cable is better for it.

Government Issues

Cable's biggest worry going forward is the Government. Cable is a monopoly service, and so is subject to regulation. Historically, the cable industry used abusive business practices, which resulted in the Congress passing the Cable Communications Act of 1984, and the Cable Television Consumer Protection and Competition Act of 1992, and the Telecommunications Reform Act of 1996. Since then the Cable Industry has significantly cleaned up its act, but the threat of government interference retains.

The Government and the Cable Industry are struggling with these issues:

A la Carte

The term a la carte is French, meaning that the items on the menu are individually priced. Cable services are usually bundled or tiered, meaning that you get several services for a single price. There are people at the FCC and in Congress who believe that this practice forces consumers to pay for channels they don't want. They think that it would fairer to allow viewers to pay for only the channels they want

The Cable Industry and Viewers would be harmed by an a la carte policy. It is bad for cable operators because it will reduce the attractiveness of cable to advertisers. Also, a la carte pricing will make many channels unprofitable, which will ultimately reduce the viewer's choices.

The motivation of the FCC in this case is based on a lack of understanding of the business relationship between Cable Operators and Programmers.

Indecency

This year at the Super Bowl Half Time show, Janet Jackson flashed her right breast on live television. This gave the Religious Right an opportunity to pressure the government to exert more censorship over all programming. Cable is less regulated than Broadcast in this respect, but Cable Operators are worried that they may become subject to fines and other penalties, or that they may lose subscribers if programs become uninteresting.

This issue became mixed-up with the a la carte issue with the suggestion that Viewers are forced to subscribe to indecent channels that they don't want. The Cable Operators are offering to block offensive channels at their own expense.

Brand X

An Internet Service Provider (ISP) called Brand X Internet Services wanted to offer internet services to cable subscribers with cable modems. The Cable Operators wanted to offer their own internet services and did not want competition, so they refused Brand X. The FCC agreed with the Cable Operators. (I believe that the FCC is a highly political organization. It is sensitive (at times) to the needs of the industries it regulates. It has little knowledge of or sympathy for internet companies.)

The U.S. Court of Appeals for the Ninth Circuit decided against the FCC. NCTA wants to take the case to the Supreme Court. They are arguing that internet services delivered through cable are not telecommunications services, which is silly. It is reasonable that the cable system should be open to all ISPs.

Digital Media Consumers' Rights Act

U.S. Representatives Rick Boucher (D-VA), John Doolittle (R-CA), Spencer Bachus (R-AL) and Patrick Kennedy (D-RI) introduced the Digital Media Consumers' Rights Act with the announced goal of protecting the Fair Use rights of the users of copyrighted material and, thereby enabling the consumers of digital media to make use of it in ways that enhance their personal convenience.

If passed, the bill will benefit Viewers, Manufacturers, and Cable Operators. The Studios are against it. The bill will remove some of the legal authority of Digital Rights Management systems.

Must Carry

Cable Operators are sometimes required to carry broadcast channels from their service area, fulfilling Cable's original Community Antenna function. DTV permits multicasting, in which a broadcaster transmits multiple programs within a single digital band. The Must Carry rules don't currently deal with this practice. This will become more of an issue when analog broadcasting stops in 2009 (or later).

Plug and Play

When the FCC asked the Consumer Electronics industry for a schedule for the availability of digital TV sets, the Consumer Electronics industry gave a stalling answer, saying that they could not make TV sets until they knew how cable was going to work. The fact was that they did not want to commit to making the TV sets until there was consumer demand.

The FCC called their bluff by ordering CE and Cable to work together on a Digital Cable Ready standard. Cable did not want this either. They want to control the consumer through their own set top box. They created a Plug and Play standard to satisfy the FCC order, and committed to later producing Plug and Play II, which would specify the standard for interactive services.

Digital Cable Ready

It is much too early to be Digital Cable Ready (DCR). The cable companies are supposed to have Cable Cards available on July 1, but they will discourage people from using them. For example, the cards will not be available at their retail presences in stores like Best Buy and Circuit City.

It is good for consumers that the Cable Operators discourage the use of DCR because at this time the only thing you can do with it is watch TV. You cannot access the interactive program guide or other services. You cannot use the DVR functions. A DCR set is inferior to a digital STB.

Just having DCR in the set will make set up and use more complicated because there will be two remote controls battling for the same functions. The DBS companies hate DCR. The cable companies also hate DCR.

Sony told me that if you have an ATSC tuner, the additional expense for Plug-and-Play is

Digital Home

The computer companies are leading what they hope will be the next big thing after HDTV: The Digital Home. This is the total integration of computers, television, and smart building functions. This is the topic of the Connections 2004 Conference.

NCTA put together their own demonstration of this, which they called The Broadband Home, emphasizing the external connection instead of the underlying technology. The demonstration consisted of a house with multiple TV sets in every room.

There was a bathroom mirror with an HDTV display built in. There was a jacuzzi bathtub with an HDTV display built in. They had a set top box on the side of the tub. With all the cooling vents, it did not look very water proof. You don't want a set top box in the bath.

STB

The evolution of the set top box is still continuing. There was lots of experimentation in user interfaces. I had a long talk with UI designer from Digeo. I gave him advice on how to make his UI better.

Microsoft is trying to get their Windows Media Center into the set top box. The Microsoft guy had a difficult time running his demo because he kept pointing his remote at the screen instead of at the STB. It makes sense in a way, because the screen is where we focus our attention. It would be nice if the IR receiver was in the TV, which would then pass the signal to the STB, DVD player, VCR, stereo, etc.

CableLabs is pushing OCAP, which puts a Java Virtual Machine in the STB. Java is not a good choice for this application, but it is a safe choice. Microsoft hates Java, so it is petitioning to extend OCAP to include their own language, C#. (See http://www.opencable.com/howto/)

Systems are still too difficult to set up and use. The problem gets worse as the number of devices and features increases.

PVR/DVR

This is the most important innovation in TV since color. It is more important at this time than High Definition. It gives Viewers significantly more control over what they watch. It is the only form of Interactive TV that people value. PVR will become a standard feature in STBs. As disk drive capacity increases, the techniques for distributing programs to the home will change. The cable companies want to control the PVR. It is unclear what impact this will have on Plug-and-play. Multiroom DVR may be the central core of the Digital Home. It will also be the battleground of DRM.

TiVo, which first perfected the DVR, seems to be unable to compete effectively against Cable and Satellite Operators with similar products.

Jargon

homes passed = the number of homes that could potentially subscribe

SVOD = Subscription Video on Demand

AO = Additional outlet

plant = cable system

VoIP = Voice over IP

PPV = Pay per View

HSD = High Speed Data

HSI = High Speed Internet

footprint = market area; size of the business; the whole business

DBS = Direct Broadcast Satellite

DVR = Digital Video Recorder

DRM = Digital Rights Management

STB = set top box

OCAP = Open Cable Applications: A Java VM in the STB.

IPG = Interactive Program Guide

The Eighth Floor = The five FCC Commissioners

DOCSIS = Data Over Cable Service Interface Specification

churn = lost subscribers

Conference Notes

Cable's Broadband Home

When the bits go marching in--transitioning to all digital

And the actual retail prices is...

Leaders to the Nth Degree

Encoding: The original digital transition

CAB's Viewer Survey

Life shifting: Component consideration in intelligent home entertainment networks

Do the bureaus form a cabinet? Consensus & convergence at the FCC

Building and leveraging today's advanced cable

Using standards based protocols for open application development

FCC Legal Advisors

The best ways to market HDTV

Next year's show is in San Francisco.