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Open Standard Pay-TV Gateway Replaces STB

According to a new IMS Research assessment, the FCC has adopted the disruptive technology formed when the "open" home network standard DLNA is combined with DTCP-IP and seems determined to use the opportunity to mandate the end of the "closed" pay-TV digital set-top box (STB).

The FCC goal: enable any consumer electronics (CE) manufacturer's devices to access pay-TV content, which the Commission believes would foster meaningful new competition and innovation in smart video devices.

The current restrictive vendor-centric service delivery model will be replaced by the FCC's non-restrictive AllVid concept -- which is a Pay-TV Gateway that translates from the platform-specific modulation and encryption (Conditional Access) to DLNA & DTCP-IP.

The proprietary STB will be replaced with standards-based Digital Media Adapters that support the same protocols. An increasing number of TVs and Blu-Ray players are also including DLNA & DTCP-IP standards support.

According to Stephen Froehlich, a senior analyst at IMS Research "The effects of a ban on traditional pay-TV set-top boxes would be massive, as this regulation would enshrine what was already an extremely disruptive technology."

Such a ban would directly effect more than 40 million STB shipments and $4.7 billion worth of sales annually. It would also enable much more rapid adoption of the same device model in other countries.

Froehlich continues, "However, almost all of the industry participants I have spoken with understand that the move to open standards adds significant value for both consumers and pay-TV operators and are therefore preparing for this transition. Most suppliers of STBs and related components also supply the broadband gateway industry, putting them in a good position to compete in the new landscape."

It's important to note that the new rule, if written correctly, will significantly decrease the overall cost of customer premise equipment (CPE) in U.S. homes by minimizing the number of MPEG decoders and associated intellectual property fees per TV.

Assuming that the new regulation allows the market to develop naturally by allowing content providers to provide their own user interface over an open-standard remote UI protocol, the trend will be that the value-adding functions will move from the MPEG decoder to the broadband gateway or to servers in the cloud.

The FCC views the new progressive policy as a revision to its previously-failed efforts to create an open market for STBs -- as previously mandated in Section 629 of the U.S. Telecommunications Act of 1996.

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