Every so often, a new set-top manufacturer attempts to enter the cable industry, flush with the moxie to snatch market share from incumbent suppliers Motorola Inc. and Scientific-Atlanta Inc.
They'll break the duopoly, they say. Their invention is usually cheaper, or more muscular, or both.
Pretty soon after that, new suppliers slam into a big, seemingly immovable roadblock: They learn that making a digital set-top isn't as easy as stocking up on chips, a chassis, a power supply and a reference design.
The barrier is the jumble of jargon known as "conditional access and encryption."
Some people just say "conditional access," tacitly including the encryption part of the process. Others refer to the techniques by brand name — "DigiCipher," in the case of Motorola; or "PowerVu" and "PowerKey," in S-A's lingo.
In one big, evident translation, conditional access and encryption is digital-speak for protecting premium services from theft.
More specifically, conditional-access mechanisms determine whether customers are authorized to receive a premium service. On the condition
that customers pay for service, they get access
to it.
In other words, conditional access is the door guard. No pay, no see.
Encryption, not surprisingly, is the top-secret mixing of digitized video bits to make premium services undecipherable to pirates. It is the secret sauce of conditional access.
In general, here's how conditional access and encryption works in digital-cable systems.
First, TV shows are digitized, then compressed. To secure the shows (the "payload") for the long, air-and-ground trip to consuming homes, an algorithm
— a string of secret numbers — is applied. Algorithms disarrange the digitized video bits in a way that, with any luck, is known only the headend equipment and associated set-tops.
This payload padlock happens in two steps. First, a set of security techniques protects the content as it travels by satellite to the headend; there, a piece of equipment called an "integrated receiver/decoder," or "IRD," decodes it. The IRT then re-encrypts the shows for their ride, over the cable plant, to the digital set-top box.
If the conditional-access mechanism authorizes the box to receive the premium content, the encrypted information is decrypted (unscrambled).
In the old days of analog set-tops, an addressable controller generally handled conditional access. Encryption was called "scrambling."
But back to the eager, new set-top manufacturer with the big plans to unseat the incumbents.
Usually, their success necessitates a gentle (or not-so-gentle) nudge on the incumbents by an MSO who wants the new supplier's product.
That's because conditional access and encryption systems come in two parts: A headend controller (scrambler), and a secret spot within the digital box that knows the "key" to unscramble the encryption algorithm (unscrambler).
To go with a new digital set-top manufacturer, then, MSOs need to either replace the headend part — an unlikely cost proposition, if digital TV is already being delivered — or encourage the incumbents to share their secret sauce.
Despite the barriers, some succeed. Pace Micro Technologies plc, Panasonic Consumer Electronics and Pioneer New Media Technologies Inc., for instance, all make set-tops that work with Scientific-Atlanta's equipment; Time Warner Cable had a lot to do with that.
And Sony Corp. is a set-top supplier to cable because Cablevision Systems Corp.'s technologists insisted on a conditional-access and encryption system that wasn't made by the incumbent suppliers.
The last of the MSOs to go to digital, Cablevision didn't have to fuss with replacing expensive headend equipment so as to attract new set-top suppliers. Yet, Sony is a supplier only to Cablevision, because all of the other MSOs had already spent capital on headend equipment to support their digital-video installations.
There isn't really a bad guy here. Maligning Motorola and S-A for protecting their cash cow — set-tops — is like maligning the cable industry for protecting its cash cow — premium content.
Still, it's the existing state of conditional access and encryption that dissuades the big consumer-electronics brands from bringing competitively priced set-tops to the industry, and it's conditional access and encryption that makes MSOs grumble about feeling like hostages to the incumbent supplier duo.
The hostage logic is best phrased in an old joke among cable's technical ranks, about the just-as-old issue of when new set-top features will be delivered.
MSO to supplier: "When can I have them?"
Supplier: "Six months."
MSO: "Six months from when?"
Supplier: "From every time you ask."
This was funnier, of course, when there weren't video competitors lurking at every corner, luring cable customers with features that cable doesn't have — and are available now, rather than within six months.
The ability to be aggressively competitive is vital. So is the need to secure the stuff of aggressive competition. This problem is real. And as with every ridiculously complicated problem, the answer will require creativity and vigilance.
