Broadcasters, Set-Makers Back Gemstar

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Washington-A broadcaster group and TV-set makers are coming to the defense of Gemstar International Group Inc. in its battle with Time Warner Cable over the stripping of Gemstar's electronic program guide from broadcast signals.

In recent Federal Communications Commission filings, the pro-Gemstar faction said Time Warner must be stopped to protect competition in the EPG market.

"Such a policy is necessary to ensure that consumers equipped to use independent EPGs will not be thwarted by cable business interests," said the Association for Maximum Service Television (MSTV), an organization helping broadcasters make the transition to digital TV.

The Consumer Electronic Association also weighed in, saying, "Time Warner's actions.are anti-competitive because they have the effect of eliminating competitive alternatives and create a barrier to entry."

Gemstar's EPG is distributed over a portion of the broadcast spectrum called the vertical blanking interval, or VBI. The information, downloaded at night when the TV is off, is stored in sets, VCRs and TV-VCR combinations that contain Gemstar's technology. Cable subscribers and off-air viewers can access the EPG data using their remote controls.

After Time Warner started blocking Gemstar's VBI signal, the EPG company filed a petition March 16 urging the MSO to desist. Calling Time Warner's action "deliberate and malicious," Gemstar said Time Warner's aim was to force subscribers to lease or buy digital boxes that contain the cable operator's EPG, rather than allowing them to obtain Gemstar's product for free.

Central to the dispute is the cable industry's authority over the VBI. Gemstar claims must-carry rules require cable operators to pass through VBI content without degradation. The cable industry says the law grants it near-total authority.

Backing Time Warner, the National Cable Television Association said cable operators control the VBI except for "program-related" information more or less specific to what might currently be on the TV screen. Gemstar's EPG provides programming information for many, if not all, channels on a cable system.

"An electronic program guide that lists the programming for all channels on a system and is downloaded during the middle of the night from the VBI of a channel that the subscriber may never watch is not, under any reasonable definition, program-related,'" the NCTA said.

Urging the FCC to reject Gemstar's petition, the NCTA said Gemstar is using a "regulatory gimmick" to obtain free carriage instead of negotiating an agreement.

The NCTA also attacked Gemstar's claim that its EPG is protected by a provision in the Telecommunications Act of 1996 designed to ensure the commercial availability of navigation devices.

That law was intended to promote the sale of competing set-top boxes that could receive programming services provided by the cable operator, the NCTA claimed, and not meant to require cable operators to distribute EPGs viewed via equipment already on the market.

"Nothing in the [navigation-devices] law expressly compels-or authorizes the commission to compel-carriage of any programming or other cable service," NCTA said.

Time Warner told the FCC Gemstar had no legal standing to use must-carry rules to compel cable carriage of its EPG.

"The carriage rights.belong to broadcasters, not to third parties," Time Warner said. "The statute nowhere entitles parties other than broadcasters to enforce carriage rights."

Time Warner also disputed Gemstar's contention that the navigation-device rules mandated mandatory carriage of its EPG.

"The intent [of the rules] was not to make [cable operators] do whatever might promote unaffiliated equipment vendors' sales," Time Warner said. "Rather, Congress and the commission intended to promote consumers' ability to purchase set-top boxes and other navigation devices at retail, rather than being forced to lease such devices from [cable operators]."

The dispute has figured to a degree into America Online Inc.'s proposed $152.8 billion deal to buy Time Warner Inc.

The Walt Disney Co. circulated Gemstar's petition on Capitol Hill as an example of potential problems between AOL-Time Warner and unaffiliated content providers. However, Disney said it does not oppose the merger.

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