FCC to allow cable operators encrypt signals

The FCC released new rules on Friday allowing cable operators to encrypt all their channels in an attempt to fight theft and reduce service calls. Cable companies already encrypt offerings on more expensive channel packages that feature more programming, but they are not allowed to encrypt basic service so customers wouldn't need to rent a set-top box to view local stations.

The National Cable & Telecommunications Association in 2004 estimated that about 5 percent of homes near cable lines accessed service without paying, resulting in almost $5 billion in lost revenue. That was more than 8 percent of industry revenues that year, according to a filing at the FCC by the Washington-based trade group. The organization's members include the biggest U.S. cable operator, Comcast, No. 2 provider Time Warner Cable Inc. (TWC) and Cablevision Systems Corp. (CVC), a New York-area provider.

"By permitting cable operators to join their competitors in encrypting the basic service tier, the commission has adopted a sensible, pro-consumer approach that will reduce overall in- home service calls," Michael Powell, president of the trade group, said in an e-mailed statement. "Encryption of the basic tier also enhances security of the network which reduces service theft that harms honest customers."

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