The FCC should ‘have better things to do than micromanage the mar...

part because Sec. 304 of the 1996 Communications Act “has never been enforced and in part because it’s unclear just how big a market there is for consumer-purchased set-top boxes when the boxes can be leased from the cable company at regulated rates for a couple of dollars a month,” the editorial said. “The regulatory machine nonetheless marches on. And unless the FCC takes action on a number of waivers requested by the cable companies, the industry faces a $600 million annual bill to comply with a regulation with no real purpose. That’s right: $600 million, which will of course be passed along in higher rates for consumers.” To promote competition, the FCC wants cable companies to use set-tops requiring a CableCARD, it said: “Never mind that the cost is high and the benefits to anyone are dubious.” Cable has had run-ins with FCC Chmn. Martin over a la carte pricing and extension of obscenity rules to cable channels, the editorial said: “This lends the CableCARD shakedown a flavor of political payback -- especially coming from what is supposed to be a deregulatory, free-market-oriented FCC.” The FCC and Martin “could do the economy a favor by worrying less about political gamesmanship and more about getting on with the deregulation the telecom industry needs,” it said. In a rebuttal letter, CEA told the Journal its editorial “argues for reversing Congress’ effort to liberate consumers forced to lease cable boxes, but it ignores the consumer benefits such competition would bring. Cable has won 2 delays from the FCC to enforce the integration ban and now wants a 3rd, CEA said. “The perverse theory -- consumers will pay more and innovation will suffer if cable can no longer maintain its set-top box monopoly -- is unworthy of your endorsement,” it told the paper. Cable wants to “preserve the lucrative income stream from renting consumers set top boxes,” CEA said: “Congress wanted consumers to have choice so it mandated a competitive cable box market. Cable proposed CableCARD as a solution. But through litigation and waiver requests, cable has tried to kill its stalking horse. The FCC correctly concluded that requiring cable companies to put CableCARDs in their own set- top boxes guarantees that cable will finally make the cards work. Like the child killing its parents and claiming special favors as an orphan, the cable industry obtained repeated delays with false promises and now criticizes the very solution it proposed simply because their efforts to delay were successful.” Cable claims that enforcing the CableCARD rule will amount to a $600 million tax on consumers are “wildly exaggerated,” CEA said. A competitive market “will lower, not raise, equipment prices, and only a monopoly would argue the reverse,” it said: “The incredible after- Thanksgiving sales on consumer electronics (with the notable exception of cable boxes) proves the efficacy of such competition. Indeed, consider the competition from the analogous standards set for home telephone interconnection which freed us from high prices and boring black phones.”