FCC Backs Time Warner Over Gemstar

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Ending a long dispute, the Federal Communications Commission ruled Thursday
that Time Warner Cable is not required to transmit an electronic program guide
embedded in analog-TV signals by Gemstar-TV Guide International Inc.

The unanimous decision was a clear setback for Gemstar, which filed an FCC
complaint early last year when Time Warner began stripping the company's EPG on
cable systems in multiple states.

Gemstar, the dominant on-screen-navigation provider, sought a ruling from the
commission that Time Warner was required to carry its EPG when inserted into the
vertical-blanking interval of analog-broadcast signals under the agency's cable
must-carry rules.

Consumers view the EPG information by owning TV sets or video recorders
equipped with Gemstar's guide technology. Gemstar claimed that by stripping its
free service, Time Warner was attempting to force cable subscribers to pay for a
Time Warner-provided EPG.

Time Warner urged the FCC to rule that Gemstar's EPG was not entitled to such
carriage and that cable operators are entitled to remove EPGs from the
analog-broadcast-video signal.

Time Warner said EPG carriage should be the outcome of private negotiations
between the companies.

The issue erupted in March 2000 when Gemstar accused Time Warner of illegally
stripping the EPG on nine cable systems in eight states. Time Warner
subsequently reversed its decision to give the FCC time to settle the
dispute.

The battle also raged while Time Warner Inc. was trying to merge with
America Online Inc.

About one year after filing the complaint, Gemstar asked to withdraw it, but
Time Warner countered by urging that the FCC reject Gemstar's request and issue
a ruling. Although the FCC granted Gemstar's motion to withdraw its complaint,
the agency decided to issue a ruling based on Time Warner's request for a
ruling.

In the decision, the FCC said cable operators are required to carry
program-related material in the VBI accompanying the primary video service of
local TV stations that elect must-carry.

But the commission added that the services offered by Gemstar's EPG --
including programming information on numerous cable-system channels, along with
promotions and advertising -- went far beyond the FCC's three-part test for
determining whether Gemstar's EPG met the definition of program-related.

Essentially, the test says program-related material must be centered on the
program currently being viewed.

'Gemstar concedes that very little of its material is uniquely related to the
programming of the broadcast station carrying it,' the agency said in a 13-page
decision.

The FCC cautioned that its decision was limited to the facts presented in the
dispute between Time Warner and Gemstar and that it was not granting Time Warner
license to strip any EPG service provided to cable subscribers through local TV
signals.

'Gemstar uses a particular analog technology and video channels for delivery
of its EPG material, and the record in this proceeding is limited to those
facts,' the FCC said.

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