FCC Grants Adams Waiver for Refurbished Boxes

The FCC late Friday granted a waiver to Adams Cable
Equipment (ACE) to sell refurbished integrated set-top boxes both to cable
operators, which the FCC banned several years ago in an effort to create a
retail market for set-tops.

According to a source familiar with the waiver, it is
limited to the 50,000 boxes Adams has in current inventory, and is conditioned
on the following: Adams also has to make the boxes available directly to its
cable operator partners' subs; those operators have to publicize the fact that
they are available at retail, and to support them if a sub buys them directly
from Adams. Cable ops must also continue to support non-integrated CableCARD

Adams must also provide the FCC with data on the sales of
those refurbished boxes.

As another condition, cable operators are prohibited from charging any service fee in conjunction with integrated security boxes covered by the ACE waiver, "because our analysis is based on the fact that this waiver will save consumers money over time; if a cable operator charges a monthly service fee related to the box (e.g., a service fee for programming guides or for digital service), then the consumer would face an inflated cost that may not result in the savings on which this waiver is premised," the FCC wrote in the order.

"The FCC's decision provides an outlet for integrated boxes that were stranded by the integration ban when the Bureau ruled in June 2007 that cable operators could not treat refurbished set-top boxes as new," said attorney Paul Hudson with Davis Wright Tremaine, which represented Adams. "The waiver gives cable operators access to low-cost, two-way set-top boxes, including DVRs, such as Motorola DCT 2000, 2524, 6200, and 6416s, which can be used as an alternative to one-way DTAs to facilitate transitions to all-digital networks. Previously, this relief had only been available to Baja Broadband, a cable operator in the Southwest."

The waiver request dates from fall 2011.

"We are excited to be a part of this win-win for consumers and cable operators," said Adams COO Mike Adams.

Adams had not wanted it limited to existing inventory.

"I'm gratified that the Bureau granted the waiver, but may at some point ask them to lift their restriction of the relief to the 50,000 boxes in ACE's inventory," said Hudson. "If 50,000 of these boxes would be good for consumers, then 200,000 refurbished boxes would be that much better.  The restriction is unnecessary because there is no risk of refurbished boxes undermining the cable industry's common reliance on CableCARDs now that they have deployed 40 million CableCARD devices.  Cable operators that want to take advantage of this waiver should get in now while ACE still has boxes left."

Adams sells integrated security boxes starting at $49.99 for a DCT2000, a digital cable box originally made by Motorola, according to an Adams Web page listing integrated set-tops available for purchase by Baja Broadband customers.  Among other models for sale from Adams are the DCT2500 ($89.99), and the Motorola DCT6412 and DCT6416, which both contain DVRs and fetch $299.99.

"We find it persuasive that ACE plans to sell refurbished, integrated set-top boxes to subscribers at a much lower price than consumers could lease from their cable operators over time," the FCC said, noting that the Media Bureau, in its most recent cable price survey, reported that the price for leasing equipment to receive the expanded basic service from a cable operator is, on average, $7.29 per month, and that the price continues to rise.

The FCC granted the waiver just ahead of The Independent Show, which runs July 28-31 in San Diego.

Jeff Baumgartner (Multichannel News) contributed to this report.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.