FCC Commissioners Seen as Sympathetic to CableCARD Appeal

Other aggrieved operators may follow Comcast’s lead, said a regulatory lawyer. CE officials said cable isn’t worried about cost, just trying to stall now that deadline extensions are expiring. The deadline is July 1. Verizon is expected to get a waiver, as may some small cable operators, said agency and industry officials. Last week Bend Cable, with about 30,000 cable subscribers, got a waiver.

Comcast’s appeal likely won’t see action before the Media Bureau acts on a slew of pending waiver requests by Charter, Cox, RCN, NCTA, Verizon, a municipal cable operator and others, an FCC official said. Chmn. Martin decides when an appeal gets a hearing, industry and agency sources said. “The chairman’s priority is to complete the review of current waivers rather than reconsider what has been released,” said an FCC staffer. The Commission hasn’t provided a schedule for Media Bureau action on pending waivers, an FCC spokesman said.

Don’t expect most pending requests to be approved, an industry source and an agency official said. A Wed. speech by Martin at CES, and Media Bureau documents released afterward, indicate large cable operators won’t get exemptions. Martin seems cold to cable’s pleadings because the industry is bucking his goals, such as letting customers avoid racy content by offering channels individually or in multiple programming tiers, said an agency staffer. In denying Comcast’s waiver, the Media Bureau order said the request could have gone the other way if the company had said it would use a waiver to provide low cost set-tops to sell family tiers.

“We do not anticipate granting waivers for set-top boxes to be used to access family and ethnic tiers or other offerings where the subscriber must first buy-through tiers other than the basic tier,” the Media Bureau said: “Comcast has not provided us with a description of the procedures that it would implement to ensure that the set-top boxes which would be the subject of such a waiver are used only by subscribers who access the family and ethnic tiers of programming.”

“Other waivers will [probably] be handled consistently” with the Comcast action, said a communications lawyer. But the Bureau may not deny the bulk of pending waivers, he added: “Other MSOs do have different circumstances, however, so what happens with them cannot be prejudged.” Operators may skip the appeals process, since there’s no guarantee Martin will act on appeals before the integration ban takes effect, the lawyer said: “An application for review is difficult to get through the FCC… It’s therefore uncertain the other MSOs would apply for broad review.”

Among pending requests, Verizon’s seems likeliest to be approved, said agency and industry officials. Martin seems to believe that granting the Bell a waiver would help Verizon’s efforts to sell video, competing with cable, another Martin cause, they said. “Verizon will probably get a waiver, based on remarks by Martin,” said a communications lawyer. Its bid for exemption touted its status as a video upstart, a Verizon official noted. “We've really focused on our status as a new entrant bringing a new and improved video service to market,” said Paul Brigner, Verizon exec. dir.- federal regulatory.

The Media Bureau also is likely to grant a waiver to a Cal. municipal cable operator. San Bruno Cable TV Dir. Tenzin Gyaltsen said his request is narrower than Bend’s. At CES Wed., Martin said he’s “sympathetic” to specialized requests from small outfits such as Bend that may have trouble getting needed gear and those moving toward all-digital TV. “We think we have a better case than Bend’s request,” Gyaltsen said, noting that San Bruno wants to be “all-digital” before the Feb. 2009 DTV deadline and will give every customer 2 free stripped-down Motorola DCT-700 boxes, once they arrive, Feb.-April. The FCC denial of Comcast’s request still marked a “setback” for cable, Gyaltsen said: “It’s going to increase costs tremendously across the board. But if they're going [give exemptions to] smaller companies like us who are trying to move faster, that could be good.”

Set-top box makers promised to help cable operators meet integration ban rules. “We are ready to support the cable operators through the transition,” said Jason Friedrich, Motorola asst. dir.-telecom regulation. “We stand ready to provide products to our customers in July in compliance to the FCC’s rules on separable security,” a Scientific-Atlanta spokeswoman said, noting that S-A is “disappointed” in the Media Bureau’s actions. At CES, the company demonstrated CableCARD-enabled boxes that cable operators are testing, she said. Motorola has finished testing and is almost ready to put CableCARD boxes into mass production, a spokesman said: “They're ready for production.” Shipments will start about mid-Feb., he said.

Sony Electronics is glad the FCC denied Comcast a CableCARD waiver, Exec. Vp Michael Williams said in a statement Fri. That puts CE makers “one step closer to competing on a level playing field with cable operators,” he said: “The American consumer will be the ultimate winner.” Martin and the Commission “have shown they are serious about removing barriers to competition, thus implementing Congress’s fundamental desire as expressed in the Telecommunications Act of 1996,” Williams said: “And as the Commission’s decision makes clear, when the CE industry is allowed to compete, innovation increases, prices decrease, and consumers benefit.” - Jonathan Make, Josh Wein