FCC To Allow Basic Cable TV Encryption

NEW YORK ( TheStreet) - The Federal Communications Commission (FCC) has announced that, for the first time, it will allow Cable TV providers to scramble their basic television services. But, not all cable providers all at once. And there might be an alternative.

The death of unscrambled basic cable is something the industry has been lobbying for for decades. It allows them to upgrade the ancient, analog-based distribution systems to all-digital cable networks.

The six largest cable companies - AT&T ( T), Charter Communications ( CHTR), Comcast ( CMCSA), Cox, Time Warner Cable ( TWC) and Verizon ( VZ) will soon be allowed to begin encrypting basic cable signals. To avoid a widespread panic among current basic-tier subscribers the FCC is proposing some interesting possibilities.

The FCC says that when a cable provider scrambles its previously open channels it must also provide an unscrambled signal via IP (Internet Protocol). With or without special hardware.

It's a very big win for a number of companies, including NYC-based Boxee, which makes hardware that would benefit from unencrypted, over-the-air TV signals. The NCTA (National Cable and Telecommunications Association) had strenuously argued against the idea.

There is also the possibility that cable providers might be required to provide free, new converter boxes (or CableCARDs) to basic tier customers for a five-year period.

Smaller cable operators, including Bright House and Cablevision ( CVC), are exempt from this new plan - for now. The FCC is hoping the smaller carriers will follow the lead of their larger cousins but conceded it would consider looking into the situation again if it had to.

--Written by Gary Krakow in New York.

>To submit a news tip, send an email to: tips@thestreet.com.

Gary Krakow is TheStreet's senior technology correspondent.

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