10 MSOs Receive POD-Rules Waivers

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Washington-The Federal Communications Commission last week gave 10 cable operators and 133 systems temporary relief from rules designed to promote the retail sale of advanced set-tops.

The FCC said the waivers would generally serve the public interest, because mandating immediate compliance would force some operators to scratch some networks from analog or digital tiers.

"We do not believe it would be in the public interest for subscribers to lose a significant number of channels at this time to accommodate duplicate programming," the agency said in a seven-page order by William Johnson, deputy chief of the Cable Services Bureau.

Cable operators are overwhelmingly complying with FCC rules by duplicating scrambled analog programming on digital tiers. That method allows subscribers with set-tops purchased at retail to use operator-provided digital point-of-deployment modules to view scrambled analog programming-typically premium channels such as Home Box Office or Showtime.

Cable chose the duplication approach because equipment suppliers declined to build analog PODs to descramble analog programming funneled through hybrid boxes.

Stuart Feldstein, an attorney based here who filed waivers for three MSOs, said an important outcome was the fact that the FCC called digital duplication an acceptable means of complying.

"We all hoped that was the case," he said, adding that the commission could have mandated use of analog PODs.

The Consumer Electronics Association wanted the FCC to reject waiver bids, arguing that analog-POD technology was available. Circuit City Stores Inc. also filed in opposition, claiming that operators could have pressed suppliers for analog PODs Waivers ranged from a few months to more than one year. None goes beyond Dec. 31, 2001. Their duration was derived from several factors, including the status of system rebuilds.

In an important caveat, the FCC ordered cable operators with newly rebuilt systems to duplicate existing analog programming on the digital tier before they add digital networks. That mandate would potentially reduce the duration of the waivers.

"In the end, I think it was fair and rational," Feldstein said.

AT & T Broadband, Time Warner Cable, Cox Communications Inc. and Charter Communications Inc. obtained waivers.

The FCC did not disclose the number of basic or digital subscribers actually or potentially affected. The first batch of waivers covered 228 systems, but MSOs later withdrew requests for 95 systems.

The 228 systems serve 3.6 million basic and 304,000 digital subscribers.

The FCC's action means that customers in waiver communities that get scrambled analog services will not be able to use operator-supplied digital PODs to view the services with hybrid boxes purchased at retail.

The burden on subscribers is largely theoretical, as cable set-tops are not yet widely available at retail.

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