FCC Grants Waiver on Encryption Rule for Cablevision

The FCC has granted Cablevision a waiver of its encryption rule prohibiting cable operators from scrambling their basic tiers for the cable operator's New York franchise--Bronx and the majority of Brooklyn--which it is converting to all-digital.

The Consumer Electronics Association (CEA) and the Association for Maximum Service Television had opposed the waiver. They argued that it would negatively affect thousands of consumer devices, disenfranchise those consumers and could put some companies out of business. The wavier was announced just as CEA is meeting in Las Vegas for its annual Consumer Electronics Show, and at almost the same time FCC Chairman Julius Genachowski was scheduled for a Q&A session with CEA president Gary Shapiro.

The encryption rule was adopted to insure that viewers with cable-ready sets would not have to buy/rent set-tops to get their programming. But the FCC left room for waivers in some circumstances, and said Jan. 8 that Cablevision had made a strong case for the waiver. Cablevision said the waiver would allow it to connect and disconnect remotely, though that means its subs would have to have either a set-top or a TV set with the CableCARD security hardware.

That strong case included that the move would "reduce costs, improve customer service, reduce fuel consumption and CO2 emissions, alleviate traffic [Cablevision says it made a million service calls last year], and have virtually no negative impact on customers." To make that last point, Cablevision pointed out that 99% of the subs in the New York system had either set-tops or CableCARDS, so the disruption would be minimal.

The FCC said that Cablevision had "cogent reasons" and cited "concrete benefits." It called "compelling" the 99% figure, saying that meant incompatibility between consumer equipment and and the cable service would not be widespread.

The FCC said it was convinced Cablevision would take the necessary steps to mitigate harm to customers, and also said it would be a good test bed for the FCC to "assess the utility of the encryption rule." To that end, Cablevision must report to the commission in 3, 6 and 12 months with reports of how many customer complaints they receive and how they were resolved free of charge with set-tops or CableCARDS, and the impact on all those truck rolls.

The commission has issued three waivers previously, two for systems trying to prevent theft and a third for remote hookups and disconnects.

"We are pleased that the FCC granted our request, which
will benefit customers and decrease costs," said Cablevision in a

Public Knowledge was also pleased, but said that the FCC
should look at the set-top issue more broadly in a rulemaking.

"The unique facts presented in this case by Cablevision
justified granting a waiver for encryption of basic cable service. We are also
pleased that the Media Bureau will monitor Cablevision's commitment to provide
free set-top boxes," said Public Knowledge legal director Harold Feld in a

"At the same time, we are still concerned that the
Commission is proceeding on a case-by-case basis on a variety of set top box

Cablevision's conversion to all-digital service is part of a broader cable
digital transition that has been recognized as part of the Commission's
National Broadband Plan," he said. "It would be much better for the
Commission to take a comprehensive look at all set-top box issues as part of
one rulemaking, as we have suggested."

The commission, in granting the waiver, said that if it did
do the rulemaking as PK suggested, Cablevision "must come into compliance
with any rules subsequently adopted."

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.