Verizon Gets a Pass, Many Cablers Don’t
FCC Rulings on Set-Top Box Waivers Spare Few Established Operators
By Todd Spangler -- Multichannel News, 7/8/2007 8:00:00 PM
In this story:
NCTA REBUFFED
COMCAST: FCC 'INCONSISTENT’
With about 30 hours to go before the July 1 deadline, the Federal Communications Commission declined requests from the National Cable & Telecommunications Association and 10 cable operators for waivers to the agency’s ban on digital set-top boxes with integrated security functions.
At the same time, the agency granted a waiver for low-end set-tops with embedded security until Dec. 31, 2009, to more than 120 companies — including Verizon Communications — on the grounds that they either currently operate all-digital networks or have promised to make the transition by Feb. 17, 2009.
The agency said all-digital video providers will support the FCC’s mandate requiring broadcasters to provide digital-only transmission by February 2009. All-digital cable and telco TV networks will also “enable expanded service offerings, promote efficient use of the spectrum, deliver broadband services, spur competitive entry and expand universal service,” the FCC said.
The FCC had previously granted waivers to three small cable operators — Oregon’s BendBroadband in January, and Alaska’s General Communication Inc. and Texas’s OneSource Communications in May — that committed to eliminating analog video transmission by the beginning of 2009. However, it wasn’t until June 29 that the agency explicitly granted exemptions to all multichannel-video programming distributors that offered the same guarantee.
Verizon got its paperwork in just under the wire: The telco informed the agency on June 29 — the day the FCC issued the orders — that it would move to all-digital video distribution by the digital-TV changeover date.
Its FiOS TV service currently provides a “small subset of channels” in analog format, intended as a “convenience” to customers who want to watch programming on second or third TV sets without needing an extra set-top.
In a July 3 letter to the FCC, Jonathan Friedman, an attorney representing Comcast, said the agency’s treatment of the Verizon waiver request “raises serious questions about the integrity of the waiver process.” He noted that Verizon, in its original petition and other previous filings, had not committed to go all-digital by Feb. 17, 2009.
“Curiously, Verizon finally made that commitment in an ex parte filed with the commission on June 29, 2007 — the very same day it received its waiver request,” Friedman wrote.
Asked to respond, Verizon director of external communications Brian Blevins said the company has had an “ongoing dialogue” with the agency since early May about moving FiOS TV service to all-digital transmission. “The FCC’s interest in granting waivers based on commitments to going all-digital has been obvious since the first such waiver was granted on Jan. 10,” he said.
| Source: Federal Communications Commission |
| APPROVED |
| All-digital multichannel video distributors and those that have promised to be all-digital by Feb. 17, 2009, are exempt until Dec. 31 of that year. HD and DVR boxes are exempt until July 1, 2008. This group of more than 120 includes Verizon, Qwest Communications, other telcos, and some cable operators. |
| Guam Cablevision received a waiver until Dec. 31, 2009, because of its “typhoon-prone location.” |
| DENIED |
| NCTA’s industrywide waiver request was denied. “We do not believe … that the NCTA should be able to shield itself from the clear directives in the commission’s rules … by continuing to assert that a better approach is on the ever-expanding horizon,” the FCC said. |
| Nine cable operators, including Atlantic Broadband, Bresnan Communications and Suddenlink Communications, were denied waivers on low-end set-tops. The FCC said it will defer enforcement of the ban for these operators until Sept. 1. |
| Massillon Cable TV was denied its request for a waiver to use the 3,255 integrated set-top boxes in inventory as of June 1. |
| DEFERRED |
| Crosslake Communications, a small Minnesota operator, was granted a deferral on enforcement of the ban until it can receive CableCard-enabled set-tops from manufacturers. |
NCTA REBUFFED
Meanwhile, the FCC denied the NCTA’s request for an industry-wide waiver, saying, “The arguments [the NCTA] makes are not adequately novel or changed from assertions that it has made to support previous extension requests to justify further relief, and it does not reflect developments in the market.”
Commenting on the rulings, NCTA senior vice president of communications and public affairs Rob Stoddard reiterated the association’s claim that the integrated set-top ban will cost operators and their customers hundreds of millions of dollars.
“There’s nothing in these decisions to stave off a $600 million set-top box tax likely to affect the great majority of cable customers while providing no benefit to consumers,” Stoddard said in a statement. “In addition, customers are being treated differently based on the provider to which they subscribe, the unfortunate outcome of a flawed process.”
American Cable Association CEO Matt Polka said the FCC’s “inexplicable” move will result in higher fees to small operators’ subscribers.
“Policymakers at the FCC appear out of touch with consumers in underserved areas whose cable companies are already trying to manage the costs of upgrading their facilities to provide advanced voice, video and data services, and to prepare for the digital transition,” Polka said in a statement.
The NCTA, among other things, had argued that granting waivers of the separable-security requirements would help cable operators to accelerate their move to all-digital networks. But the FCC was not swayed: “[W]e are unable to conclude that the costs of compliance with the integration ban would significantly delay the availability of these services.”
COMCAST: FCC 'INCONSISTENT’
The FCC did not address Comcast’s appeal of the January decision denying its waiver request for three low-end digital set-tops, but reports said the operator’s appeal will very likely be rejected by commissioners.
Comcast attorney Friedman criticized the agency’s “inconsistent and irreconcilable rationales” for waiver grants. Specifically, he said Verizon’s claim that it could not comply with the separable-security mandate was “preposterous.”
“Verizon is an enormous competitor … [it] knew full well what its obligations were under the commission’s rules and has proven itself perfectly capable of controlling the design and development of equipment used in its FiOS TV network,” Friedman wrote.
The June 29 waiver orders, Friedman said, “underscore the arbitrariness and capriciousness of the current waiver process.”
For smaller operators, the FCC left a bit of breathing room, indicating that it would defer enforcement of the ban for those that placed orders for CableCard-enabled set-top boxes but did not receive them by July 1.
FCC chairman Kevin Martin, in a statement, cited the purported benefits of the ban: “In a new era with a competitive set-top box market, consumers will enjoy greater choice and reap the benefits of exciting and innovative features — such as the ability to watch Internet videos or view slide shows of family vacations on their TV sets.”
Also on June 29, the FCC said it will solicit comment on proposals from the NCTA and the Consumer Electronics Association for making two-way cable services available to consumer-electronics devices.
Martin said that establishing a standard for two-way cable will make the set-top-box market even more competitive. This will “ensure that subscribers who do not wish to rely on set-top boxes provided by their cable operators can access two-way, as well as one-way, cable services,” he said.
