FCC Chairman Julius Genachowski asked fellow commissioners to lift an encryption prohibition in place since 1994 and the agency last year proposed allowing encryption following requests from companies, including Cablevision Systems and RCN.
Cable companies already encrypt offerings on more expensive channel packages that feature more programming. The FCC had prohibited encryption on basic service so customers wouldn’t need to rent a set-top box to view local stations. The prohibition didn’t hold for satellite providers DirecTV and Dish Network or for cable competitors such as TV services offered by AT&T and Verizon, reported Bloomberg.
Almost one-fifth of 134 households whose cable connections were cut off by RCN during an audit in Chicago last year subsequently contacted the company to subscribe, “clear evidence that they had previously been viewing cable without paying,” the company told the FCC in a filing last year.
All in all, the NCTA in 2004 estimated that about 5% of homes near cable lines accessed service without paying, resulting in almost $5 billion in lost revenue. That was more than 8% of industry revenues that year, according to a filing at the FCC by the trade group.
“By permitting cable operators to join their competitors in encrypting the basic service tier, the commission has adopted a sensible, pro-consumer approach that will reduce overall in- home service calls,” Michael Powell, NCTA President , said in a statement. “Encryption of the basic tier also enhances security of the network which reduces service theft that harms honest customers.”
Encrypting basic service would let Comcast start and stop service remotely, which customers prefer to scheduling an appointment with a technician, Philadelphia-based Comcast said in a filing at the FCC.
Cablevision found that, when it encrypted basic service under a waiver from the FCC, it almost eliminated the need to send crews in trucks to disconnect service, the company told the agency in a filing.
RBR-TVBR observation: As we said back in August, there was absolutely no reason the cable companies shouldn’t be allowed to encrypt—and that it would likely be approved. They have a right to protect their service from theft. The only downside of the ruling is that many less cable repair personnel will be needed to do disconnects that there will likely be significant job losses.