Steve Schultze once enjoyed the ability to record cable television content on the desktop computer in his Cambridge, MA home. But when he moved across the river to Boston, he was forced to switch to a digital cable service that encrypted most of its channels, greatly reducing the utility of his video recording gear.

Schultze, who now works for the Center for Information Technology Policy at Princeton University, writes that his experience is part of a broader trend. For more than a decade, the Federal Communications Commission (FCC) has tried to promote development of third-party set-top boxes—but poorly conceived strategy and cable company foot-dragging has largely foiled that agency.

A final nail in the open set-top box coffin could come soon. The FCC currently prohibits cable providers from encrypting basic cable channels in order to preserve compatibility with third-party devices. But these third-party devices have become increasingly rare, so the FCC is considering dropping the encryption ban altogether.

The cable industry opposes the ban, and it got a boost last month when set-top box manufacturer Boxee announced it had reached an agreement with Comcast that would provide Boxee products with access to encrypted Comcast content. The announcement was significant because Boxee had been a vocal supporter of the encryption ban.

In a recent FCC filing, Schultze argues that the FCC's whole approach to the set-top box issue has been misguided. Rather than regulating set-top boxes themselves, Schultze advocates freeing devices inside the home from the legal control of DRM vendors. He suggests that could be accomplished by requiring cable-supplied set-top boxes to provide an unencrypted video interface to third-party devices. Alternatively, in an interview conducted earlier this month, he told Ars that another solution would be to reform the Digital Millennium Copyright Act (DMCA) to allow the circumvention of DRM schemes.

A failed policy

In 1996, Congress ordered the FCC to establish rules to promote the development of third-party cable set-top boxes. The FCC followed instructions, issuing a series of regulations requiring the cable industry to develop standards that would enable third-party devices to interoperate with the incumbents' networks. TiVo, Boxee, Windows Media Center—let a thousand third-party video devices bloom!

But this approach had a basic problem: the companies developing the standards had a vested interest in seeing them fail. Cable incumbents prefer to have customers use their own proprietary set-top boxes. This gives them maximum control over the customer experience—and, as a consequence, maximum influence over the customer's wallet.

Unsurprisingly, the standards produced by this process haven't worked well. The first-generation standard, called CableCARD, included a DRM scheme that required device manufacturers to submit to a burdensome certification process run by CableLabs, a consortium of cable companies. Moreover, the original CableCARD specification supported only "one-way" communication; devices could receive video content, but they couldn't take advantage of interactive features offered by the cable companies' own set-top boxes.

Third-party devices based on the CableCARD failed to catch on in the marketplace.

So prodded by the FCC, the cable industry began work on successor technologies that address the CableCARD's shortcomings. The industry developed Tru2Way as a complement to CableCARD technology that would allow third-party devices to access interactive services like digital program guides. Tru2Way was so cumbersome that it never caught on. The most enthusiastic Tru2Way supporter, Panasonic, abandoned the spec in 2010.

On to attempt number three. The FCC is now developing a replacement for CableCARD called AllVid. It enjoys the support of a broad coalition of software and consumer electronics companies—but (shock, awe) the cable industry is strongly opposed to the idea. And it's hard to imagine a workable standard will emerge from negotiations between the parties when the cable side of the table has every incentive to scuttle, hobble, or delay the project.

Control freaks

In his conversation with Ars, Steve Schultze pointed to the FCC's Carterfone ruling, which opened the pre-breakup AT&T's telephone network to third-party devices in 1968, as a model for what the FCC is trying to do in the cable business.

"Unfortunately," he told me, "cable is a much more complicated technology than the phone system was or is. And so the cable companies have a lot more latitude to decide what they want to allow and what they want to prohibit."

Indeed, he said, dropping the ban on encrypting basic channels would be "the final step in this progression whereby the cable companies have leveraged their control over their networks and used encryption in particular as a way to dictate what can happen in the home." Boxee has conceded that point, he said, agreeing to give Comcast veto power over the design of Boxee's products in return for at least some access to video content.

Schultze said that cable providers have used the control provided by CableCARD to discourage the introduction of new devices. A number of devices, he said, had been "stuck in the certification queue." He speculated that when the FCC showed a renewed interest in the set-top box market a couple of years back, "CableLabs felt more pressure to certify devices. In the last couple of years, a couple of device manufacturers have made their way through the process."

Schultze also said CableLabs has forced manufacturers to limit device functionality. For example, "in order to be certified to the CableLabs regime you have to agree to respect a copy protection flag, even if the underlying content stream is unencrypted." As a result, he said, "CableLabs-certified devices often can't tune to some of the same channels that non-CableLabs-certified devices can."

Schultze believes that the FCC has been focusing on the wrong interface. Rather than restricting cable firms from encrypting content as it passes from the cable company to the customer's set-top box, Schultze believes cable companies should offer access to unencrypted video to devices inside the home.

"The provider's set-top box (or CableCARD) could still be responsible for decrypting signals in order to prevent service theft," he wrote, "but the video signal emitted from that device could be mandated to be 'in the clear' to any device that wishes to interoperate."

In the meantime, Schultze believes the current encryption ban "serves as a useful safety valve" to cable industry abuses.

Reforming the DMCA

Reforming the DMCA to allow reverse engineering would also address Schultze's concerns.

"The DMCA has foreclosed the development of open devices that decrypt the encrypted channels," he said. It has precluded uses that occur "against the wishes of the content owners but within the legally defined boundaries of accessible fair use and recording."

"If Congress invalidated the DMCA and we could crack HDCP, then it would be very easy for anyone to build a set-top box that just decodes that video signal coming out of the original set-top box," he said. "I think the HDMI port on the back of a set-top box is the closest thing we've got to an RJ-11 jack in the case of the Carterfone."

But, he noted, not all public interest groups agree with this position. Some of them, he said, have conceded the in-home encryption issue to push for the adoption of AllVid. As for Schultze, he worries this strategy is "just repeating the same problem we've had the whole time" because it "gives cable companies a hook on certification and content control."