Months of Talks Generate Steps to Advance Digital TV Transition, Benefit Consumers, Provide Market Certainty, and Bring New TVs to Market

Washington, DC – Consumers will be able to buy digital TVs (DTVs) that connect to digital cable without a set-top box, and enjoy easy access to high-definition television (HDTV) services offered by cable operators, as a result of an agreement entered into today by major consumer electronics companies and cable multiple system operators (MSOs).

The agreement, which sets the stage for a national “plug-and-play” standard between digital television products and digital cable systems, will help speed the transition from analog to digital television and establish much-needed marketplace, technical, and regulatory certainty for the cable and consumer electronics (CE) industries.

The terms of the agreement are embodied in a Memorandum of Understanding (MOU) agreed to by 14 consumer electronics companies, representing the majority of HDTV sales in the United States, and seven major cable operators, representing more than 75 percent of all cable subscribers. (See list of companies, attached.)

The MSO – CE Manufacturer Agreement consists of a package including (1) voluntary commitments by the signatories and (2) proposals for rules to be adopted by the Federal Communications Commission (FCC) that, once adopted, would resolve other issues.

Specifically, the joint recommendations include a set of technical standards for cable systems and “cable-ready” DTV products (and testing procedures to assure compatibility); a proposed regulatory framework for support of digital TV receivers, digital recorders with secure interfaces and other devices on cable systems; a draft security technology license to ensure that high-value content can be transferred securely in the home network by consumers; and “encoding rules” to resolve pending copyright-based concerns about home recording and viewing.

In addition to proposing regulations to assure consumer access to plug-and-play digital TV over cable, the parties agreed to begin working together immediately on standards for future interactive digital cable TV products.

Negotiations were conducted directly among company representatives and facilitated by their respective trade associations, the Consumer Electronics Association (CEA) and the National Cable & Telecommunications Association (NCTA).

“When implemented, this agreement will provide the certainty the cable and CE industries need to build products and develop services to spur the digital transition, while preserving the ability of both industries to create innovative products and services on a timely basis in the rapidly-changing digital environment,” said the signatories in a letter to FCC Chairman Michael K. Powell. “We hope the agreement…will hasten the day when all consumers can enjoy the benefits of the digital television world.” Read Powell's Response

Both industries are urging the FCC to adopt regulations for a national plug-and-play digital cable TV standard corresponding to the comprehensive package of standards presented today. Representatives of the parties to the agreement today filed the agreement with the Commission.

The agreement benefits consumers, the parties said, because it will ensure that the next generation of digital television sets will receive one-way cable services without the need for set-top converter boxes; enable consumers to receive HDTV signals with full image quality and easily record digital content; allow for an array of new devices easily to be connected to the new HDTV sets; permit access to cable’s two-way services through digital connectors on high-definition digital TV sets; encourage manufacturers to speed the production of new sets and services for delivery to the market; and ensure that digital cable services will remain easy to access and use by consumers.

The parties also said their agreement will encourage the development and distribution of high quality digital content. A key element of the agreement relates to secure digital interfaces that protect consumers' home recording rights along with copyright owners' rights to secure their digital content. Major cable system operators have agreed to support recordable IEEE 1394 connections on high-definition set-top boxes. In turn, digital TV manufacturers have agreed to support FCC labeling regulations that specify Digital Visual Interface (DVI)/High-bandwidth Digital Content Protection (HDCP) (or HDMI/HDCP when available) display interfaces with copy protection controls in future cable ready HDTV products. Moreover, the agreement establishes “rules of the road” on home recording rights and proposes copy protection rules for digital content that are based on existing law and studio-CE agreements and which are applicable to all multichannel video programming distributors.

The signatories said the agreement would provide certainty and marketplace stability, to the benefit of consumer electronics and cable companies. In addition to specifying the required digital inputs and connectors on the new HDTV sets and converter boxes, the agreement establishes a path for a joint process to develop technical specifications for interactive services; standardizes and streamlines technical processes to enable devices to inter-operate with each other and allow those devices to be used by consumers regardless of the cable system by which they are served; creates a self-certification process for manufacturers to ensure compatibility between digital television products and digital cable systems; and helps cable operators establish a strong presence in the retail market.

"This agreement will advance the digital TV transition by making it easier for cable consumers to access digital TV services, including HDTV. Additionally, it will provide cable companies with an important retail presence to compete with direct broadcast satellite," said Robert Sachs, president and CEO of NCTA. "The agreement would not have been reached without the strong encouragement and support of House Energy & Commerce Committee Chairman Billy Tauzin, House Telecommunications Subcommittee Chairman Fred Upton, FCC Chairman Michael Powell and other government officials," Sachs said.

"This recommendation to the FCC is good news for consumers. It represents a true leadership effort on the part of both the cable and consumer electronics industries to advance the digital TV transition," said CEA President and CEO Gary Shapiro. "A national portable, plug-and-play digital cable standard for high-definition TV receivers, recorders and other products is a laudable accomplishment. This is great for consumers, great for cable operators, and great for set-makers. This agreement stands as the single-most important step in moving the DTV transition forward to date."

Assuming that the FCC promptly adopts the industry recommendations, national implementation of the proposed regulations should ensure the availability of plug-and-play nationwide digital TV cable products and services beginning in 2004.