From ptownson Sat Apr 10 04:27:03 2004 Received: (from ptownson@localhost) by massis.lcs.mit.edu (8.11.6p2/8.11.3) id i3A8R3B00933 for ptownson; Sat, 10 Apr 2004 04:27:03 -0400 (EDT) Date: Sat, 10 Apr 2004 04:27:03 -0400 (EDT) From: TELECOM Digest Editor Message-Id: <200404100827.i3A8R3B00933@massis.lcs.mit.edu> To: ptownson X-Spam-Checker-Version: SpamAssassin 2.63 (2004-01-11) on massis.lcs.mit.edu X-Spam-Status: No, hits=-0.8 required=4.0 tests=BAYES_00,MSGID_FROM_MTA_SHORT, TO_MALFORMED autolearn=no version=2.63 X-Spam-Level: Status: R >From editor@telecom-digest.org Fri Apr 9 19:25:08 2004 Received: (from ptownson@localhost) by massis.lcs.mit.edu (8.11.6p2/8.11.3) id i39NP8u27823; Fri, 9 Apr 2004 19:25:08 -0400 (EDT) Date: Fri, 9 Apr 2004 19:25:08 -0400 (EDT) From: editor@telecom-digest.org Message-Id: <200404092325.i39NP8u27823@massis.lcs.mit.edu> X-Authentication-Warning: massis.lcs.mit.edu: ptownson set sender to editor@telecom-digest.org using -f To: ptownson Approved: patsnewlist Subject: TELECOM Digest V23 #174 TELECOM Digest Fri, 9 Apr 2004 19:25:00 EDT Volume 23 : Issue 174 Inside This Issue: Editor: Patrick A. Townson A-la-carte v. Tiering (was Aftermath of DISH/Viacom)-1 (Neal McLain) All contents here are copyrighted by Patrick Townson and the individual writers/correspondents. Articles may be used in other journals or newsgroups, provided the writer's name and the Digest are included in the fair use quote. By using -any name or email address- included herein for -any- reason other than responding to an article herein, you agree to pay a hundred dollars to the recipients of the email. =========================== Addresses herein are not to be added to any mailing list, nor to be sold or given away without explicit written consent. Chain letters, viruses, porn, spam, and miscellaneous junk are definitely unwelcome. We must fight spam for the same reason we fight crime: not because we are naive enough to believe that we will ever stamp it out, but because we do not want the kind of world that results when no one stands against crime. Geoffrey Welsh =========================== See the bottom of this issue for subscription and archive details and the name of our lawyer; other stuff of interest. ---------------------------------------------------------------------- Date: Fri, 09 Apr 2004 08:17:24 -0500 From: Neal McLain Subject: A-la-carte v. Tiering (was The Aftermath of DISH/Viacom)-1 [TELECOM Digest Editor's Note: This is part one of a two part message by Mr. McClain on A-la-carte Tiering. The second part will follow later tonight and is intended for your weekend reading. My thanks to Neal McLain for submitting it. It will probably go in the Telecom Archives as one long item. PAT] Monty Solomon [TD 23:120] wrote: > Subject: SkyFILES: The Aftermath of DISH/Viacom > by Michael Hopkins > This week, consumers got a peek behind the curtain that divides > them from the wizardry of multichannel programming. They've > learned a lot about how "their" channels get chosen -- and > they may begin to push for the chance to pick and choose only > the channels they want instead of paying for dozens of channels > they don't really care to watch. Whereupon [TD 23:121] wrote: > I've been wanting that chance for years and now that I've heard > that ESPN is the most expensive "basic" cable channel I want it > even more. I have no use for sports channels, shopping channels, > channels that aren't in English, soap opera channels, or Fox News. > So why am I paying for them? Multiple choice: (a) Because sports fans, home shoppers, foreign-language viewers, soap-opera fans, and Fox-News viewers are paying for the channels that you like. In the aggregate, all subscribers pay for all of the programming that all subscribers receive. (b) Because the prices you've been hearing about (like ESPN at $2.61) are "license fees" -- wholesale prices that your cable company pays to the program supplier. If each of these services had to stand on its own as a retail product, its price would rise to retail levels. And so would the prices of the channels that you like. (c) Because your cable company's basic subscription charge covers a lot more than just the programming. It also pays for your share of the infrastructure that delivers the programming to your home. This is essentially a fixed charge, largely independent of the cost of the programming, even though your cable company buries it in the basic-service charge. (d) Because your cable company does not connect your TV set directly to the program supplier. It connects your TV set to a tree-and- branch network in which all channels, both analog and digital, are delivered to all subscribers' premises simultaneously. Devices that block access to services that you don't pay for are located at or near your premises; these devices are expensive to implement, particularly for analog channels. Providing them for every subscriber for every analog channel would be prohibitively expensive. (e) Because your elected representatives in the United States Congress have decreed that your cable company must carry the signal of every television broadcast station in your local market, including home- shopping stations and foreign-language stations. (f) Because your elected representatives in the United States Congress have decreed that the owner (for example, Walt Disney Company) of a major broadcast television network (for example, ABC) can force your cable company to carry, and pay for, co-owned non-broadcast program services (for example, ESPN) as a condition for allowing your cable company to carry the broadcast-network programming. (g) All of above. Several recent posts here on TD have posed the same question that raises above: why don't cable television (and DBS) companies offer their services on an a-la-carte basis, so that subscribers can pick and choose only the channels they wish to watch? The answer to every one of these questions is essentially the same as my answer to 's question: (g) All of above. Many of the recent posts have centered on the wholesale price ("license fees") of the programming. License fees are indeed a significant cost item, and they are the primary reason for rise in cable and DBS retail rates. But many other items also affect the cost of cable television and DBS services: - Broadcast must-carry and retransmission-consent regulations. - Access-channel carriage requirements. - Non-broadcast programming contract carriage requirements. - Infrastructure costs. - Tier access control costs. These items profoundly affect the way CATV and DBS companies operate their businesses and the way they price their products. Yet little has been said about them in previous posts. So here's a rambling essay about them. ======================================= GLOSSARY OF TERMS USED IN THIS POST ======================================= BASIC The lowest, most widely-available tier of television programming offered by a CATV or DBS. Called: "Basic" by most CATV companies. "Total Choice" by DirecTV. "America's Top 60" by EchoStar (Dish Network). "Cable Favorites" by VOOM. The FCC's definition, as it applies to cable television, is at 47 CFR 76.901 . CATV Cable television company or service. CFR Code of Federal Regulations. . CHURN The tendency for CATV and DBS subscribers to change programming choices frequently (add a tier here, drop a tier there). DBS Direct Broadcast Satellite company or service: DirecTV . EchoStar (Dish Network) . Sky Angel . VOOM . DMA Designated Market Area: the local market area of a commercial television broadcast station as defined by Nielsen Media Research. Most DMA boundaries follow county/borough/parish boundaries, but some large counties are split. Examples: Boston . Jacksonville . Shreveport . DROP The CATV cable entering a building from a utility pole or from an underground distribution facility, or the cable within an MDU complex that interconnects a junction box with an individual living unit. FCC Federal Communications Commission. . LFA Local Franchising Authority: an entity legally authorized under state law to grant and enforce a cable television franchise. Typically a municipal, township, or county government, but may be a separate quasi-governmental entity designated by one or more local governments. MDU Multi-Dwelling Unit: apartment building, condominium building, hotel, motel, college dorm, mobile home park, RV park, marina, hospital, retirement facility, hospice facility, etc. MSO Multi-system operator: a company that owns and operates two or more cable television systems. MVPD Multichannel Video Program Distributor: CATV or DBS. As defined by the FCC, this term also includes MMDS ("Wireless Cable") and OVS (Open Video Systems); however, for the purposes of this post, I include only CATV and DBS. NAB National Association of Broadcasters. . NCE Non-commercial educational broadcast television station. NCE stations are typically, but not necessarily, affiliated with PBS. NRTC National Rural Telecommunications Cooperative. . O&O Owned and operated: a commercial television broadcast station owned and operated by a television network. PEG Public, Educational, and Government, as in public-, educational-, and government-access channels. STB Settop box: a device provided by a cable television company to control access to one or more tiers. An STB may include other functions such as channel tuning, signal descrambling, or addressability. SUB Subscriber. TIER A group of one or more television channels offered by an MVPD to its customers. Upper tiers (tiers above the basic tier) are available only to subscribers who also subscribe to ("buy through") the basic tier. ======================================== BROADCAST MUST-CARRY REGULATIONS RETRANSMISSION-CONSENT REGULATIONS (CATV and DBS) ======================================== Federal regulations generally specify: - Every CATV lying within the DMA of any full-power commercial television broadcast station must carry the signal of that station at the request of the station licensee. This request may take either of two forms, at the option of the station licensee: a "must-carry" notification (in which case the CATV must carry the signal pursuant to generic FCC-promulgated must-carry regulations), or a "retransmission-consent" agreement between the CATV and the station licensee (in which case the agreement governs). Both forms of this request legally can (and most do) stipulate that the CATV must carry the signal in the basic tier. [1,2] - Every CATV lying within the Grade B contour of (or within 50 miles of) any NCE television broadcast station must carry the signal of that station, and it must carry it in the basic tier. If the CATV lies outside of any NCE's Grade B, it must import at least one NCE. [1] - Every DBS which carries any television broadcast station in any DMA must carry every television broadcast station in that DMA. This request may take either of two forms, at the option of the station licensee: "must-carry" notification (in which case the DBS must carry the signal pursuant to generic FCC-promulgated must-carry regulations), or a "retransmission-consent" agreement between the DBS and the station licensee (in which case the agreement governs). All such stations must be carried on contiguous (although not necessarily adjacent) channels. [3] The result of these regulations is that: - If you subscribe to a CATV, you get, and pay for, every full-power commercial and NCE television broadcast station in your DMA whether you want it or not. - If you subscribe to a DBS local tier, you get, and pay for, every full-power commercial and NCE television broadcast station in your DMA whether you want it or not. This includes home-shopping stations, foreign-language stations and religious stations. ======================================== PEG-ACCESS-CHANNEL CARRIAGE REQUIREMENTS (CATV only) ======================================== Federal regulations permit any LFA that's authorized to regulate one or more CATVs to designate one or more channels on each CATV for PEG access. LFAs typically specify that PEG-access channels must be placed in the basic tier. Furthermore, they often specify that PEG-access channels must be partially funded by the CATV company. - Public access is typically funded by the CATV company through the franchise fee. In some cases, the CATV company also provides additional funds (over and above the franchise fee) for such items as studios, equipment, and personnel. - Educational access programming, provided by local educational institutions, may be funded by the institutions, by the franchise fee, or by a combination of both. - Governmental access programming, provided by local governmental agencies, may be funded by the agencies, by the franchise fee, or by a combination of both. The result of these regulations is that if you subscribe to any CATV, you get, and pay for (either through your cable bill or through your tax dollars), every PEG-access channel designated by your LFA. Federal regulations limit the franchise free to 5% of gross revenues. Most LFAs impose the full 5%, and most CATVs pass it through to their subscribers. "Gross revenue" includes all revenue that the CATV derives from all sources: all tiers of programming, all installation charges, all equipment rental, and all incidental revenue such as returned-check fees. It also includes the amount that the CATV collects from its subscribers to pay the 5% franchise fee, so the effective rate that hits the subscriber's bill is about 5.26%. . ======================================== NON-BROADCAST PROGRAMMING CARRIAGE CONTRACT REQUIREMENTS (CATV and DBS) ======================================== Most non-broadcast programming carried by MVPDs is supported by two revenue streams: subscriber fees and advertising. MVPD companies carry advertising-supported non-broadcast program services pursuant to contracts with the program suppliers. In theory, each MVPD can pick and choose the program services it wishes to carry; however, the specific requirements of those contracts severely limit the choices: - All contracts specify the license fee: the wholesale price the MVPD must pay to the program supplier. Most services are priced on a per-channel-per-sub-per-month basis. Larger MVPD companies usually get volume discounts; discounts are also available for carrying multiple-channel packages from the same supplier. Most license fees are less than a dollar, although they vary widely: at the low end, some services (religious, NASA-TV, Classic Arts Showcase) are free to all MVPDs; at the high end, ESPN is well above $2.00. Shopping channels usually pay the MVPD a commission on their sales. - Many contracts specify time periods ("avails") during which MVPDs can insert advertising messages ("local ad insertions"). Avails often occur adjacent to advertising carried by the program supplier. If the MVPD does not utilize an avail, advertising by the program supplier passes by default. By selling local advertising, MVPDs can partially recover the license fee, although they rarely, if ever, recover the entire license fee. - Most program contracts specify that the programming must be carried in the basic tier. This requirement supports the programmers' advertising: for the purpose of setting advertising rates, the programmer counts every subscriber as a "viewer" whether or not the subscriber ever actually views the programming. - Many contracts are tied to retransmission-consent agreements for broadcast programming: as a condition for carrying an O&O broadcast station, every MVPD also must agree to carry (and pay for) non-broadcast advertising-supported programming offered by the station's owner. The number of possible tie-ins this situation creates is absolutely astounding: Disney (ABC), Viacom (CBS), General Electric (NBC, Paxson, Telemundo), and News Corporation (FOX) each owns non-broadcast program services. Disney: . General Electric: . News Corporation: . Viacom: . This issue was, of course, a major factor in the recent squabble between Viacom (CBS) and EchoStar (Dish Network). - Some contracts do permit carriage on an upper tier, but they often specify a higher license fee. These higher fees can be so onerous that an MVPD essentially has no choice: the only economically feasibly way to carry the programming is to put it in basic. One notably aggressive company in this regard is Discovery Communications, Inc. (Discovery Channel and its spinoffs). Notwithstanding higher license fees, all DBS companies and most CATV companies offer one or more extra-charge upper tiers in addition to the basic tier (although some older, smaller CATVs may still offer only one tier, a so-called "fat basic" tier). Many upper tiers are organized around some sort of common theme; for example, movies, sports, foreign language, or a multiplexed bundle of co-branded channels (e.g., Starz! and its spinoffs). For regulatory purposes, even single-channel "premium" services (e.g. HBO, Showtime, pay-per-view) are treated as separate tiers. Tiering provides subscribers with some degree of a-la-carte choice (although certainly not to the extent that would like). In order to ensure that they have sufficient revenue to meet infrastructure costs, MVPDs require every subscriber to "buy through" the basic tier before purchasing any upper tier. Tiers devoted to sports programming have been the source of much controversy: MVPDs try to minimize their basic-tier retail rates by placing sports on a sports tier, while programmers demand that their programming be put in basic. ESPN has been at the center of this controversy for years. ESPN's owner (Walt Disney Company) also owns the ABC television network and several O&O television broadcast stations. This gives it the power to bundle ESPN with ABC, forcing MVPDs to carry ESPN in the basic tier as a condition for getting retransmission consent for the O&Os. Consequently, most MVPDs currently carry ESPN (and some or all of its spinoffs) in the basic tier. Every CATV I've ever been associated with carries it there. Both DirecTV and EchoStar carry it there (VOOM is still negotiating carriage rights; Sky Angel doesn't carry it). ESPN's license fee has been rising 20% per year for the past two or three years, making it one of main reasons why CATV basic-tier prices keep going up. And it's not just CATV prices that keep rising, notwithstanding EchoStar's "don't-feed-the-pig" cartoon: DirecTV just went up $3.00. The current battle between YES Network and Cablevision Systems is the latest chapter in this controversy, although it's not directly comparable to the Disney/ESPN/ABC situation in that the programmer (in this case, the New York Yankees) is not a broadcast network. The result of all this is that: - If you subscribe to any MVPD, you get, and pay for, every advertising-supported non-broadcast programming service in the basic tier (including ESPN) whether you want it or not. - If you also subscribe to any upper tier, you get, and pay for, every advertising-supported non-broadcast programming service in that tier whether you want it or not. - If you subscribe to a Cablevision-owned CATV in the New York City area, you're about to get, and pay for, YES Network whether you want it or not. But so does every other subscriber. In the aggregate, all subscribers to each tier pay for all of the programming in that tier. And all basic subscribers contribute equally to the MVPD's infrastructure costs. ======================================== MVPD INFRASTRUCTURE COSTS (CATV and DBS) ======================================== Programming may be a big item in an MVPD's budget, but it's certainly not the only item. MVPDs must meet the normal operating expenses common to any business: administrative overhead, advertising, payroll, employee benefits, customer care, customer billing, maintenance, public relations, government relations, insurance, legal services, rent and lease expense, utilities, vehicle expense. And, of course, they must produce operating margins sufficient to cover amortization, depreciation, interest, taxes, and profit. Beyond these items, MVPDs incur costs unique to their respective business models: - DBS companies own and operate satellite distribution facilities. Each DBS company incurs huge capital outlays before it can hook up even one customer. It must obtain (at auction) an FCC license and an orbital slot assignment for each satellite. It must purchase the satellite, pay to have it launched, and pay a premium for launch insurance. [4] It must construct uplink facilities and satellite ground-control ("telemetry, tracking and command") facilities. It must construct video-signal reception, production, editing, storage, processing, and playout facilities. Once it begins operations, it must amortize those capital outlays, and it must operate and maintain all of those facilities. And it must control access to its services by accurately connecting each authorized receiver, and by detecting and prosecuting unauthorized receivers. - CATV companies own and operate ground-based distribution plants. Each CATV incurs huge capital outlays before it begins operations. It must obtain, from the LFA (and in some states, from the state government), the legal right ("franchise") to operate on public rights-of-way. It must register its proposed operation with the FCC. It must construct video-signal reception and processing facilities ("headend"). It must construct outdoor distribution facilities ("outside plant") extending from the headend to every customer's premises. Once it begins operations, it must amortize those capital outlays, and it must operate and maintain all of those facilities. It must pay for pole-attachment rights ("pole rental") for aerial outside plant (often a CATV's third largest expense after personnel and programming), and it must pay for contractor-hotline ("one-call") notification services for underground outside plant. [5] It must assume responsibility for the technical integrity of wiring inside customer premises even though it may not own it. [6] And it must control access to its services by accurately connecting each subscriber, and by detecting and prosecuting unauthorized connections. I call these costs "infrastructure costs." These costs exceed the cost of programming, often by a factor of two, sometimes even more. Furthermore, these costs are largely independent the number of channels carried. MVPDs recover infrastructure costs from two sources: subscription fees and local ad insertion. That means they need as many basic subscribers as possible, all of whom are exposed to as many advertising-supported programming sources as possible. To borrow a term from the print-media industry, MVPDs need "circulation." An exchange of messages here on TD underscores this point: Monty Solomon [TD 22:718] (quoting "Rising Sports tab Ups Cable TV Rates - GAO" by Jeremy Pelofsky, WASHINGTON, Oct 24), wrote: > The Arizona Republican (sic) has argued that the 70 million > U.S. cable subscribers should have an "a la carte" selection > of channels. Whereupon [TD 22:719], I wrote: > Gee, I wonder if the Arizona Republic would be willing to sell > its newspaper on an "a la carte" basis, so readers (like me) who > have no interest in sports or classified ads could order only > the sections we want? To which [TD 22:720], Paul Robinson , responded: > There is a difference. The sports section in the newspaper is created > either by the same wire services that they subscribe to or by their > own reporters and doesn't cost a whole lot extra. The sports channels > on cable networks are additional costs to the cable operator that they > have to pass on to everyone because they have to pay for every > subscriber. In other words, it costs an MVPD more (per-sub) to carry full-time television sports channels in its basic tier than it costs a newspaper (per-copy) to produce a sports section. That may be, but it doesn't change the fact that newspapers and MVPDs both need circulation to meet their respective infrastructure costs. > And let's not forget the price of a newspaper is basically the cost of > the paper it's printed on, and the newspaper would lose money if it > had to make costs on the circulation price, or your daily newspaper > would cost about $2.50 a copy. Which equals about $75.00 per month. Care to conjecture what 30 or 40 channels of basic cable would cost if program suppliers and MVPDs had to rely on subscription fees alone? > Advertisements such as classified ads bring down the cost of the > paper. Advertisements on CATV and DBS channels bring down the cost of CATV and DBS service. Paul Robinson might have mentioned another reason why a newspaper would not offer its publication on an "a la carte" basis: the operational task of actually executing such a procedure. If a hypothetical newspaper actually offered to provide each reader with a customized edition that included only the sections that the reader ordered, how would it do it? Perhaps it could install a computerized control system that would assemble each reader's paper at the printing plant, identify it with a label, and hope that the delivery people don't get things mixed up. Or maybe it could deliver complete papers to some poor paperboy, and assign to him the job of removing the unwanted sections. Ok, ok, I'm being cynical: it's obviously cheaper and more reliable to deliver a complete newspaper to every subscriber. By the same token, it would be cheaper and more reliable for an MVPD to deliver all television channels to all subscribers in one big fat basic tier. That said, however, there are indeed reasons why an MVPD would place certain special-interest programming and/or high-cost programming in an upper tier. Arguably, sports programming qualifies on both counts. Consequently, many CATV companies and all DBS companies offer sports tiers as well as other tiers. ======================================== ACCESS CONTROL (CATV ONLY) ======================================== In a CATV network, signals are transported by electrical conductors for at least part of the route. Electrical conductors are subject to an immutable law of physics: the higher the frequency, the higher the signal attenuation. This law forces a technical tradeoff: the wider the band of frequencies one wishes to carry over a network, the shorter the permissible length of the network. To illustrate this point, compare a standard telephone access line with a CATV trunk line: - A telephone line (copper twisted-pair) can carry a relatively narrow band of analog signals (up to about 8 KHz) over a distance of many miles without any intermediate amplification. - A CATV trunk line (0.75-inch coaxial cable) can carry a wide band of signals (up to a GHz or so) over a distance of almost half a mile. Longer trunks can be implemented only by adding amplifiers every 2000 feet or so. A CATV trunk line costs far more to manufacture, install, and maintain than a pair of copper wires of comparable length. It would be economically impossible for a CATV company to provide a separate trunk line to each individual customer. Consequently, the CATV company connects all of its customers to a tree-and-branch coaxial network consisting of one or more trunk lines. Every signal that any subscriber might want must be present on that network. The basic tier (and, in some cases, one or more upper tiers) of every CATV system is distributed in analog format. Each analog signal is carried in one standard 6-MHz NTSC television channel, accompanied by a monaural or BTSC stereo audio signal. CATV channels are numbered 1-158, occupying the frequency band 54-1002 MHz. This format is compatible with consumer-owned analog TV sets, VCRs, and DVRs (although not all consumer-owned equipment is capable of tuning all 158 channels). . Devices called "taps" are located throughout the network at locations near potential customers. Each tap can serve one or more customers within a radius of about 300 feet. When a potential customer signs up for CATV service, a "drop" cable is used to extend the signal from the tap to the customer's premises. Typical tap-and-drop situations include: - Utility pole: the tap is placed at the pole (often a joint pole shared with electric power and/or telephone facilities). The drop cable (typically self-supporting RG-6 designed for overhead installation) extends the signal to the customer's premises. . - Pedestal: the tap is placed inside a pedestal located near the property line (typically adjacent to telephone and electric power pedestals). The drop cable (typically RG-6 designed for direct- burial installation) extends the signal to the customer's premises. . - Junction box: the tap is placed inside a locked junction box located on the premises of an MDU facility. The drop cable (typically RG-59 or RG-6) extends the signal to the customer's unit. Access to the basic tier is controlled by physically connecting or disconnecting the drop cable. When you sign up for cable service, a technician visits your premises to connect the drop to the tap. When you disconnect service, a technician visits your premises to disconnect the drop from the tap. On a rule-of-thumb average, each premises visit by a technician costs the company about $50.00. Access to upper tiers is controlled by some sort of blocking device installed at the output of the tap, or at some downstream location. Over the years, several types of channel-blocking devices have been developed. They're all expensive, and, in varying degrees, vulnerable to hacking. Four systems are in common use today: NEGATIVE TRAP (N-TRAP) This term describes a small passive device installed at the tap to block a tier of one or more analog channels. . Two or more n-traps can be connected end-to-end to block more than one tier. Note that an n-trap *blocks* the tier; consequently, an n-trap must be installed at every subscriber premises that *doesn't* subscribe to the tier. N-traps exhibit an unfortunate side effect: they attenuate carriers in adjacent channels (lower adjacent visual; upper-adjacent aural). The severity of this problem increases with frequency, and becomes unacceptable above about 200 MHz. A CATV company using n-traps must meet the up-front cost of purchasing and installing them. The company must then dispatch a technician to install or remove some combination of n-traps every time a subscriber adds or drops a tier (at that rule-of-thumb cost to the company of $50 per trip). Finally, the company must conduct regular at-least-once-a-year audits of its outside plant to detect missing n-traps and prosecute illegal hookups (once a semester in college towns). POSITIVE TRAP (P-TRAP) This term describes a small passive device installed at the tap (or downstream from the tap) to unblock one analog channel. In physical appearance, a p-trap is identical to an n-trap, but its function is exactly the opposite: instead of blocking a channel, a p-trap unblocks it. It does this by trapping out a scrambling carrier that has been inserted into the channel at the headend; this carrier is sometimes frequency- and/or amplitude-modulated with various squeaks and warbles to increase the effectiveness of the scrambling. A p-trap affects only one channel; to unblock a tier of two or more channels, a separate p-trap is needed for each channel. Because a p-trap unblocks the channel, a p-trap must be installed at every subscriber premises that *does* subscribe to the channel. P-traps exhibit an unfortunate side-effect: they remove some of the visual sidebands in the vicinity of the interfering carrier, resulting in some loss of picture detail. A CATV company using p-traps can avoid the up-front costs of installing n-traps because p-traps are needed only for subscribers who take the tier. But p-trap security becomes less effective over time as stolen p-traps proliferate in the underground economy, and as p-trap functions are replicated by hackers or local TV-repair shops. ANALOG SETTOP BOX (STB) Also known as converter, decoder, or descrambler. This term describes an active device that is usually placed near the customer's television equipment to control access to one or more analog tiers by descrambling signals that have been scrambled at the headend. Every analog STB manufacturer uses a different scrambling scheme; some use several. Most scrambling schemes operate on the vestigial-sideband visual carrier after modulation: by attenuating the amplitude of the horizontal sync pulses below the amplitude of the blackest picture content, unauthorized TV sets can't synchronize properly. A single analog STB can descramble any number of analog channels; thus it can reduce the cost of access control when several channels must be controlled. Some STBs also incorporate extra features such as infrared-remote control, channel selection, channel-number display, and addressable control. Analog scrambling systems exhibit an unfortunate side effect: either they do not scramble the aural carrier, or they do not completely obliterate the visual signal, or both. Unless additional blackout circuitry is included in the STB, this situation allows an unauthorized viewer to hear the sound and glimpse occasional bits of the picture; this has been the cause of much controversy, particularly if the visual content is offensive to an unauthorized viewer. A CATV company using analog STBs must either lease or purchase them, and then it must incur a big up-front capital cost to install them. Once installed, they aren't very secure. Hackers have compromised just about every analog STB design that's ever been manufactured, and bootleg boxes are readily available in the underground economy. As I write this: - Google lists 67,000 links for "cable TV descrambler". - eBay reports "72 items found for cable tv descrambler". - Outfits like universaldescramblers.com are still in business. . Even such reputable publications as Sound&Vision and Wired accept classified ads for bootleg STBs. About the best defense that analog STBs have against signal theft is the fact that there are so many different incompatible scrambling schemes out there that even the hackers get confused. Even legal analog STBs are a big expense item in a cable company's budget. FCC rate-regulation rules stipulate that STBs are to be amortized over seven years, but few of them actually last that long. Many of them come back in unusable condition (the cabinet is cracked and coated with sticky dried coke, the interior is full of dead cockroaches, the line cord is knotted beyond hope, and the remote was the dog's favorite chew-toy). Others get "lost" (but they magically reappear at flea markets, serial numbers obliterated). DIGITAL SETTOP BOX (STB) In the past decade or so, CATV companies have begun to deploy "digital cable" services for delivery of upper-tier channels. Every digital cable subscriber gets a digital STB that acts as a frequency-converter for analog channels and as a tuner/demuxer/decoder for digital signals. Each digital data stream is assigned a virtual "channel" number, although this number has nothing to do with the actual CATV channel that carries the digital data stream. For CATV companies, digital STBs offer several advantages: - Digital signals are less vulnerable to noise and distortion, so that higher trunk and distribution frequencies and/or longer trunk runs (deeper amplifier cascades) are possible. - Video signals can be digitally compressed, so that several video streams (virtual channels) can be crammed into each 6-MHz channel. - Scrambling is 100% effective. Unauthorized signals are simply not decoded; either the digital STB generates a black-burst video signal to replace each unauthorized video signal, or the operating software simply refuses to respond to a request for an unauthorized video signal. - Access control is implemented in software; consequently, tier upgrades and downgrades can be accomplished remotely without a site visit. Many tiers or combinations of tiers can be accommodated. - Digital STBs are (at least so far) more secure than any of the analog schemes described above. This is due, in part, to the fact that access control is implemented in software. This doesn't prevent hacking attempts, but it makes it a lot more difficult than it was back in the analog-box days. Furthermore, each digital STB must be connected to a phone line so that it can call home on command. Digital STBs do, in fact, make individual-channel a-la-carte offerings technically feasible within (but only within) the digital tiers. Digital STBs are more expensive than analog STBs, and they're subject to the same kind abuse that subscribers inflict on analog STBs. Nevertheless, it is inevitable that digital distribution will eventually replace analog for all CATV channels. For the time being however, the cable industry is still stuck with analog for the basic tier, and at least some of the upper tiers. Which means it's going to have to continue dealing with n-traps, p-traps, and analog STBs for some time to come. [TELECOM Digest Editor's Note: Part two of this essay will be presented later tonight. PAT] ------------------------------ TELECOM Digest is an electronic journal devoted mostly but not exclusively to telecommunications topics. It is circulated anywhere there is email, in addition to various telecom forums on a variety of networks such as Compuserve and America On Line, Yahoo Groups, and other forums. It is also gatewayed to Usenet where it appears as the moderated newsgroup 'comp.dcom.telecom'. TELECOM Digest is a not-for-profit, mostly non-commercial educational service offered to the Internet by Patrick Townson. All the contents of the Digest are compilation-copyrighted. You may reprint articles in some other media on an occasional basis, but please attribute my work and that of the original author. Contact information: Patrick Townson/TELECOM Digest Post Office Box 50 Independence, KS 67301 Phone: 620-402-0134 Fax 1: 775-255-9970 Fax 2: 530-309-7234 Fax 3: 208-692-5145 Email: editor@telecom-digest.org Subscribe: telecom-subscribe@telecom-digest.org Unsubscribe:telecom-unsubscribe@telecom-digest.org This Digest is the oldest continuing e-journal about telecomm- unications on the Internet, having been founded in August, 1981 and published continuously since then. Our archives are available for your review/research. We believe we are the oldest e-zine/mailing list on the internet in any category! URL information: http://telecom-digest.org Anonymous FTP: mirror.lcs.mit.edu/telecom-archives/archives/ (or use our mirror site: ftp.epix.net/pub/telecom-archives) Email <==> FTP: telecom-archives@telecom-digest.org Send a simple, one line note to that automated address for a help file on how to use the automatic retrieval system for archives files. You can get desired files in email. ************************************************************************* * TELECOM Digest is partially funded by a grant from * * Judith Oppenheimer, President of ICB Inc. and purveyor of accurate * * 800 & Dot Com News, Intelligence, Analysis, and Consulting. * * http://ICBTollFree.com, http://1800TheExpert.com * * Views expressed herein should not be construed as representing * * views of Judith Oppenheimer or ICB Inc. * ************************************************************************* ICB Toll Free News. Contact information is not sold, rented or leased. One click a day feeds a person a meal. Go to http://www.thehungersite.com Copyright 2004 ICB, Inc. and TELECOM Digest. All rights reserved. Our attorney is Bill Levant, of Blue Bell, PA. ************************ --------------------------------------------------------------- Finally, the Digest is funded by gifts from generous readers such as yourself who provide funding in amounts deemed appropriate. Your help is important and appreciated. A suggested donation of fifty dollars per year per reader is considered appropriate. See our address above. Please make at least a single donation to cover the cost of processing your name to the mailing list. If you donate at least fifty dollars per year we will send you our two-CD set of the entire Telecom Archives; this is every word published in this Digest since our beginning in 1981. All opinions expressed herein are deemed to be those of the author. Any organizations listed are for identification purposes only and messages should not be considered any official expression by the organization. End of TELECOM Digest V23 #174 ******************************