No Set-Top Waiver for Comcast

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Las Vegas -- Comcast's quest to avoid deploying only CableCARD-enabled set-top boxes died Wednesday at the Federal Communications Commission after chairman Kevin Martin said he opposed granting any more "blanket" waivers.

Martin said he supported limited waivers for small cable operators having set-top-acquisition problems and for other operators with plans to reclaim all analog bandwidth within two years.

"I think the commission should be saying no to some of the largest carriers. Comcast has a waiver in front of us where they are asking just for a further delay without any kind of a date certain on when they will be able to develop downloadable security. I think it's time for us to move forward," Martin said here at the 40th International Consumer Electronics Show.

Just hours after Martin spoke, the commission rejected Comcast's waiver but issued modified waivers to Cablevision Systems and small MSO Bend Cable Communications.

"We appreciate the chairman's positive response to Cablevision's request and believe this action is in the interest of all Cablevision customers," Cablevision said in a prepared statement.Comcast wanted a waiver for inexpensive set-tops that wouldn't rely on the external CableCARD to house signal-security technology. The company argued that its integrated box would save consumers millions of dollars as the nation's largest cable operator endeavors to transition millions of analog subscribers to an all-digital platform.

"We are very disappointed in this regrettable FCC Media Bureau decision," Comcast executive vice president David Cohen said in a prepared statement. "This amounts to an FCC tax of hundreds of millions of dollars on consumers with no countervailing benefits. We will seek full commission review immediately.”

At some point, Comcast can take the FCC to court, but assistance from Congress would, if availing, probably happen a lot faster.

Under FCC rules, Comcast must rely on CableCARD set-tops starting July 1, 2007. Martin told reporters downloadable signal security could be used in lieu of CableCARDs.

Paul Gallant, a former FCC Media Bureau official who is now a media analyst with Stanford Washington Research Group, said the FCC's ruling was "clearly a loss for big cable. Their ability to deploy low-cost set-tops is important to their long-term strategy to go all-digital."

He added that although the ruling wouldn't derail cable's effort to reclaim analog-channel capacity, "it does raise the cost of doing that."

Martin, who sat on Comcast's request for several months, said Congress ordered the FCC to promote consumer choice in the acquisition of set-tops and digital TVs that plug directly into any cable system without a set-top. He suggested that forcing cable operators to rely on CableCARDs would achieve both goals.

"I think [denying waivers] will allow for more innovation on the consumer-electronics side, and that's what consumers want and that's what Congress expected," Martin said in a sitdown discussion with Consumer Electronics Association president Gary Shapiro. "We've got a series of waivers that are in front of us. I think the commission shouldn't just provide blanket waivers to the whole industry at this point for further delay of rule that was really adopted back in 1998."

Martin said small cable operators having problems securing CableCARD boxes merited waivers, as did cable operators planning to go all-digital before local TV stations had to on Feb. 17, 2009.

"I do think the commission should be sympathetic to some of the burdens we might end up placing on some of the small cable operators," he added.

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