They're calling it the best thing to happen to the digital television transition since the Grand Alliance.
The cable and consumer electronics industries, responding to a longstanding FCC order, revealed a set of rules and technical standards they say will greatly reduce the need for set-top boxes, create a copyright-protection regime that will satisfy both Hollywood and consumers, and ensure that expensive TVs already sold will keep on working.
"This agreement actually wears down, totally, probably the largest obstacle or bump to HDTV," said Gary Shapiro, president of the Consumer Electronics Association.
In a Dec. 19 press conference that bordered on celebration, industry representatives said the deal calls for most cable systems to coordinate their standards to the point that the TVs manufactured under the new regime will work nationwide. Consumer electronics manufacturers similarly pledged to make the TVs that will plug into walls all over the country without extra hardware.
Without the agreement, set-top boxes would continue to plague the living rooms of anyone who subscribes to digital cable. One industry player likened the current situation to every municipality in the country having a different voltage and frequency for electricity, and every toaster needing a special adapter unique to its location.
For both sides, it means benefiting from coherent and coordinated research. And the next step, the participants said, is to develop standards for interactive features.
The deal was rumored to be completed months ago, when industry insiders would only say the deal was "this close," as they held thumb and forefinger inches apart. One person familiar with the negotiations said that all the basics of the deal were in place for some time, but the industries pored over the deal word by word to eliminate future guesswork and ambiguity.
The two sides in the deal have a colorful history, made clear in FCC filings, of blaming one another for the delays in reaching the deal. Cable companies said the technology for universal plug-and-play TVs was already available, and that the manufacturers wanted to unfairly reap the rewards of tomorrow's interactive technology. The manufacturers countered that cable strangled competition with proprietary standards that benefited only entrenched set-top box makers, namely Scientific-Atlanta and Motorola (which are not signatories to the deal). And the manufacturers scoffed at a cable industry initiative, announced in late 2001, for retail availability of set-top boxes with promises to buy them back if the user moved somewhere with an incompatible cable system.
The FCC must still approve the deal, and it will take into consideration comment by the public and other parties that were not privy to the negotiations, such as satellite video providers and content producers. The participants in the deal said they hoped for a quick approval from the FCC so that they could begin developing the new cable systems and TV sets. They estimated availability of the new equipment at about two years away.
Among the provisions, participants said, was that legacy sets already purchased would continue to work. But that could mean some compromises on the copyright-protection front. The deal would end the scrambling of signals, support IEEE 1394 (FireWire) connections on HD set-top boxes, and forbid "selectable output control," which allows restrictions on outputs to be triggered on a program-by-program basis.
But the Motion Picture Association of America, a zealous advocate of strict copyright protection, was withholding comment until it could review the entire 70-page agreement.
The comments of the dealmakers stressed the potential demise of the set-top box. However, external hardware could be necessary for advanced services, future interactivity and security of premium channels. For example, cable operators must support devices with point-of-deployment (POD) security modules, a longstanding FCC goal that cable had resisted.
At the press conference announcing the deal, the answers to many questions about copy protection and other technical issues wound back to the wonderful consumer potential of HDTV. Participants were unable to promise that piracy would be eliminated.
"The agreement established 'rules of the road' on home recording rights and proposes copy protection rules for digital content that are based on existing law and studio-CE agreements," the CEA said in a release.
Those road rules, based on the "5C" scheme endorsed by some content providers in the past, seem to indicate that details must still be fleshed out:
"Obviously, there are people who may take extreme positions, but we have come to what we believe is the appropriate resolution and balance between allowing consumers to have what they reasonably expect to be able to record, and yet having a mechanism to be able to have content providers innovate in a way and in a set of products and have a mechanism for those to be judged to be appropriate for the consumers' interests, and, if, so, allowed to go forward," said Mark Coblitz, Comcast Corp. senior vice president for strategic planning.