View Full Version : FCC unties cable boxes from cable companies

14th January 2007, 07:45

FCC Rejects Comcast's Appeal On Cable Set-Top Box Rule (http://money.cnn.com/news/newsfeeds/articles/djf500/200701101926DOWJONESDJONLINE001143_FORTUNE5.htm)
January 10, 2007: 07:26 PM EST


WASHINGTON (Dow Jones)-The U.S. Federal Communications Commission Wednesday denied the request of Comcast Corp. (http://www.engadget.com/search/?q=comcast) (CMCSA CMCSK) to be exempt from new rules aimed at creating a marketplace for cable television set-top boxes.

The decision to reject the waiver application of the largest cable companies is the latest in a growing series of incidents over which FCC Chairman Kevin Martin and the cable industry have been at loggerheads.

Starting July 1, cable operators will be required to provide set-top boxes that don't include integrated security features that link the box to that operator.

The FCC believes that by separating the set-top box from the cable operator, a marketplace would be created in the sales of the boxes, which could lead to driving down the prices consumers pay for cable television.

Several major consumer electronics manufacturers have argued that if set-top boxes weren't directly linked to the provision of cable service, they could enter the set-top market. Consumers could get a cable card from their service provider that they could insert into a set-top box purchased at a consumer electronics store. The cards would ensure that consumers could only access channels that they paid for.

Comcast had appealed to the FCC, saying that cable cards are soon to be made redundant by technology that would allow the security features of the card to be downloaded directly.

The industry's lobby group, the National Cable & Telecommunication Association, has estimated that the FCC rule will cost consumers an extra $600 million a year, based on an estimate of $2 to $3 per card.

The FCC rejected this argument, but did leave Comcast the right to appeal.

In a statement late Wednesday, Comcast said it was "very disappointed" and called the FCC's decision "regrettable."

"The rejection of this waiver means millions of American consumers won't have the opportunity to enter the age of digital television easily and affordably," the company said. "This amounts to an FCC tax of hundreds of millions of dollars on consumers with no countervailing benefits."

Comcast said it will immediately seek a full FCC review.

The FCC did conditionally approve a waiver request from a smaller cable operator, Bend Cable Communications, which said it planned to make the full transition to a digital signal by 2008.

This transition is seen by the FCC as a higher priority than the creation of a market for set-top boxes.

The FCC also said it would delay enforcement action against other smaller cable operators that have placed orders for new-style boxes with manufacturers, but have been told they won't be ready by July 1.

Earlier Wednesday, speaking at a question-and-answer session at the Consumer Electronics Show in Las Vegas, Martin said that he was not likely to grant the waivers of the largest players in the cable industry who have asked for them simply because they think a better technology is around the corner.

The deadline has already been extended twice; companies were initially supposed to have been compliant by July 1, 2005.

The dispute over set-top boxes is the latest in a rapidly deteriorating relationship between Martin and the cable industry.

In December, Martin pushed through reform of the cable TV franchising process, which makes it easier for telephone companies to provide video services and compete with cable operators.

And Martin has repeatedly said that the cable industry is the only industry the FCC regulates in which rates have consistently increased while all others have dropped off in the last decade.

-By Corey Boles, Dow Jones Newswires; 202-862-6637; corey.boles@dowjones.com