You’ve probably seen these deals from time to time, if you’re a serious bargain sniper online. Brief periods where the latest-and-greatest TiVo is sold, typically from an obscure-but-reptuable retailer, for an insanely-low price like $99.

I finally was able to lock in the purchase on one, a TiVo HD Premier for just $99. To compare, the standard retail price is $299. So, what’s going on here? I’m going to argue TiVo not only knows, but is totally happy and encouraging this practice.

TiVo said long ago that they were transitioning to having two roles in the industry. First, a cell phone-like contract model, as well as an embedded model to sell TiVo integration with HDTV manufacturers. TiVo has succeeded on the first front, and struggled on the second. Licensing TiVo firmware to third-parties failed in the DVD Recorder era, with those boxes winding up being coveted for their subscription-free rates, as well as the ability to do more than TiVo’s own boxes (primarily, their ability to burn unencrypted DVD Video discs of recordings, even recordings transferred from other TiVo units in a house).

Odds are, if you have a TiVo HD already, it is already out of, or close to the end of its contract. TiVo doesn’t have many HD subscribers. With only a few hundred thousand CableCARD users in the United States, most of those account for probably the vast majority of TiVo HD users. Let’s face it, very few people are using TiVo HD with ATSC (over-the-air) HD, those people have (or should have) defected to Windows 7 Media Center, and its free ATSC recording.

So, what is TiVo to do? The same thing the federal government is doing… triggering inflation.

Think about it. Customer A is a TiVo subscriber. His contract is up, but there’s no incentive for him to renew his contract (TiVo runs budgets to close to the bone to do that). Because of the economy, he’s not likely to upgrade TiVo boxes. However, Customer A sees a $99 offer for a TiVo HD Premier. He then goes onto eBay, and finds that first-gen TiVo HD boxes are selling for $99. Customer A sees it as a nearly-free upgrade, and sells his TiVo HD on eBay, and buys the $99 TiVo HD Premier box.

In case you’re wondering… I’m Customer A. But, ideally (for TiVo) so are thousands of other TiVo users.

Enter Customer B. Customer B can’t afford a TiVo HD at retail. He/she (I’m just going to use she to make this simple) would like a TiVo, and is willing to pay the $14.99/month service fee, but can’t afford the box. She then goes on eBay, and finds a ton of TiVo HD units selling for $80 to $100. She sees this as a great deal, and buys a TiVo HD. Ideally, she’s smart enough to also add on a SquareTrade plan, in case the TiVo’s hard drive fails three months after purchase.

Now, TiVo wins big time here, as does Customer A and B. The producer surplus is a big win for TiVo, because they just picked up a new subscriber at the $14.99/month near-pure profit. TiVo also didn’t have to subsidize a box for Customer B. All TiVo had to do was give Customer A a brand new TiVo HD Premier at-cost.

Best of all, these releases are so brief that TiVo doesn’t have to worry about customers being gunshy of buying a TiVo HD Premier at $299. These sales are so short, that the average joe will not even hear about them, let alone anxiously hit reload on sites that provide news on deals (ahem).

So, TiVo gets to play a fun game of price discrimination, meanwhile I get a shiny new TiVo with better features. And, someone else gets to enjoy paying $14.99/month to TiVo forever. Full disclosure: I threatened to cancel TiVo and bargained my way down to paying only about $9.99/month… no, I didn’t tell them who I was or what I do to get it.

Update: Hours after this post, TiVo dramatically changed their terms of service, making much of this article obsolete. See the following blog post to recap.

Unfortunately, when you hit the Read More link, the article was nothing more than an editorial… and even concluded that its initial premise (of getting to the bottom of this) wasn’t really found. Great way to lure in readers, Entrapet?

Even that said, I don’t buy the premise which they were making. That premise was that TV Pack 2008 was meant to train OEMs in the United States on what Windows 7 Media Center would entail, and give European customers DVB-T tuning support. And, also that OEMs were informed that they would want to avoid shipping TV Pack 2008 to customers, because of its unreliable state.

This is the point where I put my hand on my face and sigh a lot. First, OEMs must never have gotten that memo, if Entrapet HD is to be interpreted correctly… because everyone from HP to top-tier premium HTPC manufacturers have been shipping TV Pack 2008 since when it started shipping. Two, bad behavior doesn’t justify good intentions. TV Pack 2008 is buggy, everyone knows that… that’s why Microsoft starts to stutter when you ask about it. It doesn’t mean that it was a beta or developer preview.

Why? Because Microsoft releases developer previews and betas all the time. If they wanted OEMs to not ship a product, they’d do that like they always do. And, unlike Entrapet’s assertion that only enthusiasts are ticked about TV Pack 2008… that’s quite false. Many average people bought into the Vista Media Center and CableCARD waves, looking to replace their TiVo. Now they get nothing but FUD about the solution, well until recently. Now they’re told to just wait (and pay) for the bug fixes in Windows 7.

Here’s my take. And, this is only my take, not something I’m going to write off as “getting to the bottom of it.” I think that at some point, Microsoft realized Vista had failed. So, the team began working on Windows 7.

But, at the same time, they realized that they promised Europe DVB-T, and Hauppauge wanted to offer the HD PVR with Media Center. Oh, and the CableCARD people were fuming about their $3,000 systems not working right. An update had to be made.

And, so it was made. Unfortunately, like the rest of Vista, it too was a failure, due to countless bugs and problems (those are the bugs and problems that we TV Pack 2008 users suffer/suffered with… and Microsoft still has yet to fully admit to… and probably won’t until legal obligations/memories are long in the past). So, faced with splitting the difference, the HD PVR support was gutted (removing the H.264 components) and TV Pack 2008 went to the OEMs in Europe. Everyone else got the code bits to look at, but only because Microsoft wanted something to show for three years of work.

My advice to Microsoft: Give any CableCARD owner a free upgrade to Windows 7. That will start to heal the awful track record of TV Pack 2008, even for those still waiting for its features.

I haven’t heard official word from Microsoft, but I can confirm that TV Pack 2008 is absent from SP2. It’s not clear why the Media Center team didn’t add this. Microsoft has confirmed to me that TV Pack 2008 will not be included in Service Pack 2, see update at the end of the article.

As I’ve noted in the past, TV Pack 2008 adds a lot of cool features, ClearQAM support, the ability to mix and match analog, CableCARD, ClearQAM, and ATSC tuners all in one system. In fact, it’s an excellent way to get around the CableCARD DRM problem that Media Center still haves. A user with TV Pack 2008 can have ClearQAM tuners record content from most channels, while the CableCARD tuners will still (needlessly) add DRM to CableCARD-only channels.

The only problem? Microsoft refuses to offer a public download of TV Pack 2008. It still isn’t clear if you’re breaking the law, in Microsoft’s opinion, if you download TV Pack 2008 elsewhere. It is clear that they’re only offering it directly to OEMs, with the purchase of a new computer.

Microsoft still says they’re getting back to me on this, and many other questions that you submitted. When they do, I’ll be sure to follow-up on this.

Also, I have no idea if Microsoft will about-face and add TV Pack 2008 to the final release of Vista Service Pack 2. I am simply reporting on what I have seen from the first wave of beta releases.

Update: Microsoft just confirmed to me that they have no plans to add TV Pack 2008 to Windows Vista SP2. I’m still waiting to hear back why this update is any different than the Bluetooth and Storage feature packs, which are being added to SP2. Doubt I’ll hear anything you’ll want to read.

I’ve beaten to death the problem in prior posts, just run a quick search on CableCARD to see all of them. But, safe to say, that if you were holding out for a CableCARD system because of this problem… you’re going to be holding out until Windows 7 for Microsoft to put the fix in.

And, with that, I’m going to transfer a few TV shows wirelessly to my MacBook Pro, from my TiVo HD. And, I feel great about signing that 1-year contract with TiVo right now, because it will be long over before Microsoft fixes their setup, to do what my TiVo can do all day long.

Issue Recap: Media Center normally only copy-protects shows that have been flagged as such (like shows on HBO… premium channels). However, when a CableCARD is inserted into Media Center, Windows then copy-protects all shows… including unencrypted broadcast content. The FCC has said that CableLabs should not be doing this, pointing the finger at Microsoft. Microsoft has not explained why other CableCARD vendors (TiVo) do not have to do this, while they do.

Microsoft’s unofficial workaround is to physically remove the CableCARD when you want to record a show, sans the added/unnecessary DRM and copy protection.

The response? Not good, in my opinion. Here’s the chat transcript.

A: We work closely with CableLabs and our other partners to ensure that our solution maintains the right balance between compliance with their standards, the needs of the content providers, and providing a good experience for our users. Unfortunately, I can’t speak for or comment on the policies or decision of other solutions.

Q: To be clear, I’m not asking about other solutions. I’m asking why CableCARD on Media Center encrypts unencrypted content. The FCC has said cable operators can’t do that.

A: *Crickets Chirping*

Okay, I made the last answer up (they refused to respond). Granted, the right people to answer the question may not have been in the chat. However, the lack of answers to this all-year-long is not isolated to this chat. Since CableCARD went live on Media Center, Microsoft has stonewalled addressing the situation.

It’s sad. Really. Others started following up, in hopes of getting Microsoft to clarify (and not ignore just me), but they just started ignoring all OCUR/CableCARD questions.

But, enough about me bragging, the TV is dead after all. But, wait! I had the foresight to get a Best Buy Product Service Plan (PSP). I’ll let you know how it goes on getting that resolved. Best Buy has my TV, and they’re currently expecting to have it back to me in about 10 days (not unreasonable really).

So, now I’m TV-less, TiVo-less, right? Wrong. Sure, I have Windows Media Center, but I can’t get all my channels on that without CableCARD.

In comes Slingbox. With Slingbox, all my PCs, Macs, and my WIndows Mobile phone just shifted the TV onto my screen, all via Wi-Fi. I have full control of my TiVo HD, just as if I was sitting in front of the (now absent) TV.

Which reminds me, I haven’t yet poked and prodded TiVo over why they haven’t added Slingbox functionality to the TiVo software stack. I shouldn’t need to own a Slingbox to do all this… but hey, that’s a familiar mantra here, I only have a TiVo because Microsoft won’t fix CableCARD DRM.

Even though I only have the low-end Slingbox AV, it works great for handling the different HD and non-HD content feeds. The Aspect Ratio menu lets me break through common headaches, like DTV video that is 480i… but got recorded in 720p. If that sounds like greek to you, don’t worry, it just means that you don’t have to look at a bunch of black bars (letterboxing and pillarboxing). You just see the TV, and it can sit on top of other windows at all times if you chose.

I mentioned awhile ago that when TiVoToGo went HD, I would get one… Windows Media Center’s lack of placeshifting with CableCARD is downright unacceptable. QAM solutions like HDHomeRun barely work… and wind up with four cable drops going to a single PC.

Plus without Comcast hinderings, eSATA can take the place of FireWire.

So folks, I know the TiVo options, but tell me your favorite tools. The first thing I’ll want to do is tear apart an HD-encoded TiVo file, of course. That actually is one of my main concerns, despite a good hour or two of research, I haven’t found any talk of .tivo extraction with a TiVo HD.

Update: TiVo HD is ordered and on its way. I opted for the $199 refurbished unit on a monthly plan, versus a lifetime subscription unit. While the lifetime unit is a better deal (even taking into account the future value of that money in a savings account, and that TiVo units upgrade an average of four years)… you are taking the risk that TiVo will be around in four years, at the same pricing structure.

With sites placing TiVo on a deathwatch within the past two years, and TiVo’s reducing fees, it doesn’t make sense to take the risk on lifetime service right now. Oh, and they won’t let you add lifetime to a refurbished unit, artificially adding $100 to the cost of the service.

CableCARD has a problem, it requires DRM on every channel and recording. Microsoft says they want to provide TV DRM-free, but CableCARD requires the DRM. So how can Christopher Price come up with a solution? Well, because. Mostly, because I’m sick and tired of having to have multiple receivers and seven cable drops for a single TV and a single PC.

Here’s how CableCARD works. CableCARD is an advanced tuner with QAM at its core. It has an analog tuner, a QAM tuner, and a digital tuner for pulling in compressed channels (or, channels spread across the spectrum for optimization). Ideally, you should be able to record, without DRM, the non-encrypted channels (things like HBO, which the providers mandate are encrypted, have to stay encrypted).

But, CableLabs doesn’t see it that way. They mandate all recordings from a CableCARD receiver contain DRM. Yeah, even those over-the-air channels. CableLabs justifies that because the tuner data is copyrighted, and the only way to encrypt the channel data is to encrypt everything. Right. And because humans can swim must mean they can breathe underwater too. Anyways, I’ll leave mandating decrypting CableCARD to the FCC and Congress. I’m here to find a solution for Media Center.

Now, as we know, when you remove the CableCARD from an OCUR tuner, the encryption goes away. This is because the channel data is no longer being pulled from the CableCARD, it’s being pulled from Microsoft’s EPG. Also, the QAM mapping is being manually scanned, rather than deciphered from the CableCARD mapping.

But, pulling the CableCARD each time we want to record without encryption is not sustainable. The user gets frustrated quickly. So, here’s my solution: Give the user the option to not use the CableCARD when it isn’t necessary.

Essentially, Microsoft doesn’t have to use the CableLabs data when it isn’t needed. It’s only needed for the non-QAM digital channels. So, only use it when you need to! The result is that Analog and QAM channels are deferred to the MS EPG and the automatic QAM scan (which OCUR can do without the CableCARD anyways). The result? Analog and QAM channels are not DRM’ed, and only the channels you wouldn’t be able to receive without the CableCARD, are indeed encrypted with DRM.

This can be handled by a simple setting under Media Center > Settings > TV > DRM. Simply ask the user if they want to disable encryption when possible. Notify the user that this will require additional resources at times (to download the MS EPG and scan the QAM channels).

I hope Microsoft seriously considers adding this. The only other option for Microsoft would be to offer QAM tuners in addition to a CableCARD tuner… something they are considering. This is costly both for Microsoft and the consumer, and in my opinion, totally needless.

So, Microsoft let OCUR be OCUR whenever Media Center does not need to use the CableCARD. That’s the fix, and it’s that simple.

What Comcast was doing, was counting each offering of an HD On Demand program as counting as a “channel”. Since satellite On Demand programming is not as expansive as cable (due to the inherent limitations of satellite technology), Comcast turned a molehill of comparison into a mountain.

Worse, Comcast didn’t even advertise On Demand programming as separate channels. Instead, On Demand is billed as “Channel 1″, a singular channel. So, recently Comcast changed their tune. Now they claim to offer “More HD Choices” than satellite providers.

The truth is, cable is catching up, but still behind satellite. Satellite providers aren’t fully in the clear, as DirecTV downsamples HD content (what’s known as HD Lite) in order to push more channels to customers.

I personally don’t know who to chose when I pick providers for my new house. I may wind up going with DirecTV if their Windows Media Center integration doesn’t DRM everything (a la CableCARD)… I’m not holding my breath though.