The much anticipated deadline for the FCC’s integrated cable set top box initiative (officially labeled Commercial Availability of Bidirectional Navigation Devices) has come and gone, and it appears as if Verizon is the biggest winner. The integrated set top box initiative is a mandate from the FCC to try to spur competition for cable set top boxes, by disaggregating the security features from the set top box, and thus making them more suitable for retail distribution through consumer electronics retailers. The new rules went into effect on July 1st and only apply to new set top boxes. Cable providers will now have to offer a separate security card, labeled CableCard by CableLabs, which gets inserted into set top boxes to provide necessary conditional access. The FCC’s thinking is that the current lease model for STBs, employed by most MSOs, is harmful to consumers, whereas these new rules will now allow consumers to pick and choose STBs on their own. The ultimate goal is to create competition for STBs, which hopefully leads to lower pricing and better features. The cable industry argues otherwise, and claims these rules will have the opposite effect.

Verizon was able to gain a waiver from these rules for FiOS video service. In fact the FCC issued a blanket waiver for all multichannel video operators who are either all-digital already, or who have committed to going all-digital by the February 2009 transition deadline for digital broadcasting. This conceivably gives Verizon and other TelcoTV operators who are digital ready, a competitive advantage, because they have one less significant burden which is now faced by their competitors, including Comcast, Cablevision, and other cable MSOs. The FCC also granted conditional waivers to smaller cable companies who can demonstrate that they have placed orders for compliant STBs, but were unable to take delivery before the July 1 deadline.