Despite last-minute lobbying by the cable industry in the United States, after more than a decade of delays, new regulations have come into effect aimed at opening up the set-top box market to increased competition. The Federal Communications Commission is now calling for more progress on enabling a retail market for interactive television services.

If a cable television customer in the United States wants a new set-top box, their operator must now provide them one with a slot for a CableCard. The aim of CableCard is to create a more open market for cable receivers. CableCard could also enable customers to plug their cable connection directly into a compatible television, digital video recorder, computer or other consumer electronic device.

The Telecommunications Act of 1996 required the Federal Communications Commission to enable electronics companies to compete with the leased set-top boxes provided by cable operators.

The legislation required the FCC to “assure the commercial availability to consumers of multichannel video programming and other services offered over multichannel video programming systems… from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor”.

Cable operators had previously relied on conditional access security systems built into set-top boxes to protect their subscription services. This provided them, and their main suppliers, Motorola and Scientific Atlanta, with an effective monopoly on supplying the decoders.

The FCC then stipulated that the security mechanism reside on a separate card that fits into a slot in the set-top box. Such conditional access modules are already common in other markets. By separating out security functions, it hoped to create a viable horizontal retail market for cable ready televisions and set-top boxes.

In 2003 the cable industry finally agreed on the CableCard specification, based on the credit card size PCMCIA devices used on some laptop computers. However, the cable industry continued to lobby the FCC to delay implementation.

The CableCard regulation finally came into effect on 1 July 2007. Even as the deadline approached, some companies were requesting concessions. While the FCC granted waivers to some smaller operators, it denied a request from the National Cable and Telecommunications Association for a general exemption for all cable operators.

Telephone company Verizon, which offers a cable television service through its FiOS fibre optic network, successfully argued that it is providing competition to incumbent cable operators.

While some manufacturers have been putting CableCard slots in high-definition televisions, and customers have been able to get cards from their operators, comparatively few have so far been installed.

Many industry observers predict that CableCard will actually have little impact. Some argue that consumers are not looking for an open retail market and prefer to lease devices such as digital video recorders through their cable subscription.

But consumers have been poorly served by the slow speed of innovation and the limited choice of products. This has limited the deployment of advanced interactive television services in America.

The availability of CableCard could help companies like TiVo, which produce third-party digital video recorders.

CableCard is also seen as an opportunity by set-top box company Digeo, which is planning to release a new digital video recorder that will also compete directly with the offering of cable companies.

It could also enable home computers to function more effectively as home media centres, able to integrate with cable services as well as broadcast signals. Many computer manufacturers are waiting to see how the market develops.

CableCard is intended to create a more dynamic market and will in theory make such equipment portable between different cable operators.

However, the basic version of CableCard only allows viewing of channels. It does not support two-way services, such as video on demand, which cable operators have been promoting as a distinct differentiator.

That may not be such an issue, as third party providers can offer video streaming and download services over a standard broadband connection.

For access to interactive cable services, the industry is still waiting for a single standard to be deployed. OCAP, the OpenCable Application Platform specified by CableLabs is based on MHP, the Multimedia Home Platform developed in Europe.

Cable operators in the United States are promising to deploy OCAP in the networks over the next few years.

That could allow new models of televisions and other devices to access interactive services from cable companies directly, without the need for a standalone set-top box.

The FCC has invited comment on proposed standards to ensure bidirectional compatibility of cable television systems and consumer electronics equipment. This would support access to two-way features, including electronic programming guides, video-on-demand, pay-per-view and other interactive television capabilities.

The commission is also seeking comments on whether this should also apply to non-cable services and whether there are technical solutions that are network agnostic and deployable across satellite, internet protocol and hybrid services.

“This is a rulemaking that can wait no longer,” commissioner Michael Copps said in a statement. He noted that 11 years after the original ruling by Congress, “consumers cannot walk into their local retailer and purchase a television set that will receive two-way digital cable services like VOD, PPV, and EPGs — as well as other acronyms that haven’t been invented yet — without renting a set-top box from their local cable operator.”

“Right now, two companies dominate the market for interactive cable equipment,” he observed. “Opening up that market to competition would bring in scores of new companies to compete and innovate, which ultimately would mean higher quality products at lower prices.”

He said that while one-way equipment was a start, it is not where we need to be. “The world is not only going digital, it’s becoming increasingly interactive. More and more of the services that consumers are demanding require equipment that can talk back to their provider,” he said. “We need a two-way solution.”