Operators Frustrated with FCC Set-Top Rulings

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Cable operators large and small expressed frustration with the Federal Communications Commission’s rulings late last month that denied most in the industry exemptions from the July 1 integrated set-top ban, while giving Verizon Communications and other telephone companies waivers of the rule for at least one year.

“I am amazed at how little regard is being given to consumers in this process,” said Patrick Knorr, general manager of Sunflower Broadband, a cable operator in Lawrence, Kan.

Knorr continued, “Regulating what companies sell to consumers based on standards makes sense, but mandating that equipment I lease [to customers] meets standards based on specifications that double or triple their costs has no logic.”

Atlantic Broadband, which was also denied a waiver request by the FCC, was “disappointed” with the ruling, spokesman Doug Curran said. “These petitions had been on the FCC’s plate for so long,” he added. “They waited until the last minute to announce their decision.” Atlantic filed its waiver request in December.

On June 29, the FCC denied requests from Sunflower, Atlantic and several other cable companies for waivers on low-end digital set-tops. The agency also shot down the National Cable & Telecommunications Association's request for an industrywide waiver until a standard software-downloadable security technology can be deployed.

After the rulings, Comcast, the largest MSO in the United States, complained publicly about the “arbitrariness and capriciousness” of the agency’s waiver process. The FCC rejected Comcast’s request for a waiver in January and has not officially responded to the MSO’s appeal.

“In short, the commission must explain why it is discriminating in favor of the customers of certain [multichannel-video-programming distributors] at the expense of customers of other MVPDs,” Jonathan Friedman, an attorney representing Comcast, wrote in a July 3 letter to the FCC.

Knorr, who is also chairman of the American Cable Association, said it is illogical for the FCC to require cable companies to deploy CableCARD-based set-tops, which will increase the cost of digital-cable service, given that one of the agency’s stated goals is to encourage the transition to all-digital-video transmission.

Indeed, the FCC justified the omnibus waiver it granted to Verizon, Qwest Communications International and other service providers using the rationale that those operators either already offer digital-only transmission or have promised to make the transition to all-digital networks by Feb. 17, 2009.

Knorr added, however, that he was “grateful” that the FCC will defer enforcement of the integrated set-top ban for Sunflower until Sept. 1.

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