FCC: Set-Top Waivers for All-Digital Providers

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The Federal Communications Commission late Friday granted waivers of the July 1 integrated set-top ban to multichannel-video providers that currently have all-digital networks -- or are planning to convert to all-digital transmission by February 2009 -- while denying requests by the National Cable & Telecommunications Association and 10 cable operators.

The agency’s Media Bureau ruled on several-dozen pending waiver requests from cable operators and telephone companies less than two days before the ban goes into effect.

The blanket waiver for video providers that are either all-digital now or pledge to be by Feb. 17, 2009, lists more than 120 companies, including Verizon Communications. The group also includes some cable companies, including Liberty Cablevision of Puerto Rico.

The agency said encouraging an all-digital conversion “will facilitate the DTV transition” -- the FCC mandate requiring broadcasters to provide digital-only transmission by February 2009. All-digital networks will also “enable expanded service offerings, promote efficient use of the spectrum, deliver broadband services, spur competitive entry and expand universal service,” according to the FCC.

Earlier this year, the agency granted waivers on similar grounds to three small operators -- Oregon’s BendBroadband, Alaska’s GCI and Texas’ OneSource Communications -- which have committed to eliminating analog-video transmission by the beginning of 2009.

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 have indicated that the operator's appeal will be rejected.

Meanwhile, the FCC denied the NCTA’s request for an industrywide 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.”

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 note that cable operators have indicated that the migration to all-digital networks will be gradual regardless of whether their waiver request is granted. Based on this information, we are unable to conclude that the costs of compliance with the integration ban would significantly delay the availability of these services.”

The FCC also swatted down the NCTA’s assertion that CableCARD-based set-tops would only end up costing consumers more, and that the cable industry should be allowed to wait until less-expensive downloadable security technologies are commercially available.

“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 agency said.

The FCC did leave a bit of breathing room for smaller operators. It agreed to delay enforcement of the ban for Minnesota-based Crosslake Communications, which sought a deferral because, the operator said, set-top manufacturers were prioritizing orders from the largest cable providers.

The bureau indicated that the FCC would defer enforcement of the July 1 deadline for small cable operators that “can demonstrate that they have placed orders for set-top boxes that comply but that their orders will not be fulfilled in time for them to comply with the deadline.”

In another order, the agency turned down requests from nine cable operators for waivers on low-end set-tops: Atlantic Broadband; Bresnan Communications; Suddenlink Communications; Knology; Armstrong Utilities; Cable & Communications and Mid-Rivers Telephone Cooperative; NPG Cable; Orange Broadband Operating and Carolina Broadband; and Sunflower Broadband.

The FCC rejected these, saying that integrated devices are not “necessary” for introducing new or improved services. Furthermore, the agency said, two-way set-tops do not meet its definition of low-cost, limited-capability boxes.

For those nine operators, however, the agency said, “Given the impending deadline” it would defer enforcement of the rule until Sept. 1.

A 10th cable operator, Massillon Cable TV, was denied its request for a waiver to use the 3,255 integrated set-top boxes -- valued at $473,000 -- it had in inventory as of June 1. The FCC noted that Massillon may amend its waiver request to seek a deferral based on difficulties in obtaining CableCARD-based set-tops.

Finally, the FCC granted Guam Cablevision a limited waiver until Dec. 31, 2009, citing its “typhoon-prone location” and noting that the island has faced “extraordinary devastation” in recent years.

In a prepared statement, FCC chairman Kevin Martin said, “The bureau's actions today implement the statutory requirements to facilitate a competitive market for set-top boxes in a reasonable and consistent manner.”

Martin also 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 slideshows of family vacations on their TV sets.”

Earlier Friday, the FCC issued a notice of proposed rulemaking soliciting comment on proposals from the NCTA and Consumer Electronics Association for making two-way cable services available to consumer-electronics devices.

Martin said establishing a standard for two-way cable will make the set-top-box market even more competitive, to “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.”

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