By a vote of 5-0, the FCC voted last Friday to allow encryption of basic cable services on digital cable systems while adopting certain protections to enable cable subscribers who receive basic services without set-top boxes to view encrypted signals. Although the FCC permits cable operators to encrypt premium or other high-tier programming, it has banned encryption of basic services in the interest of allowing subscribers to access local programming without having to rent set-top boxes. Cable operators, however, have complained that the ban against encrypting basic signals has promoted enough signal theft to result in $5 billion in losses that represent eight percent of the industry’s annual revenue. In adopting Friday’s order, the FCC predicted not only that incidents of theft would be reduced but that the amended rules would benefit cable operators and customers “by significantly reducing the number of truck rolls associated with provisioning service and significantly reducing the need for subscribers to wait for service calls.” (By encrypting signals, cable operators can use remote control to activate/deactivate service or to respond to other service requests.) To ensure that subscribers without set-top boxes will not lose access to their basic signals, the new rules require cable operators to offer customers who subscribe only to basic tiers their choice of a set-top box or CableCARD “on up to two television sets without charge for two years from the date of encryption.” Subscribers to higher-tier services who access basic tiers on a second television without the use of a set-top box must be offered a free set-top box or CableCARD for one year. Affected subscribers who receive Medicaid will be entitled to that benefit for five years. Under a set of voluntary commitments that were offered by the nation’s top six cable operators and adopted as part of the FCC’s order, providers of third-party, IPenabled cable access devices that are unable to decode encrypted signals (such as Boxee) will be granted access to the cable operators’ security technology. Among other things, cable operators will be required to enable IP devices to access encrypted basic tier channels through the use of commercially-available software upgrades. All IP-related conditions will sunset in three years “unless the Media Bureau determines . . . that the IP-enabled device protections remain necessary to  protect consumers.” As American Cable Association President Matthew Polka lauded the FCC’s decision as “a true winwin for consumers and cable operators,” National Cable & Telecommunications Association CEO Michael Powell commended the agency for adopting “a sensible, pro-consumer approach that will . . . accelerate cable operators’ transition to all-digital networks.”