Washington-In a surprise move last week, the Federal Communications Commission postponed for at least two weeks the launch of an inquiry on the regulatory classification of Internet access via cable.
The delay was requested by FCC commissioner Gloria Tristani, who wanted to postpone action until after a vote on the America Online Inc.-Time Warner Inc. merger. The FCC is expected to rule on the transaction in the middle of next month.
In the end, Tristani compromised by agreeing to delay the cable item for two weeks, at which time the FCC is expected to seek public comment on whether cable operators should be required to provide access to competing Internet-service providers.
Separately, the FCC last week voted to adopt consumer labels for digital television sets and establish rules for the insertion of copy-protection methods in commercially available digital set-top boxes.
Frustrated by industry delay, the FCC crafted its own labels designed to inform consumers about the capabilities of DTV sets once connected to cable systems.
Though FCC officials said the labels they fashioned would minimize confusion, the cable industry said they could have the opposite effect, angering consumers that bring home DTV sets and learn that they lack two-way interactive capability.
Although the FCC adopted the rules unanimously, Commissioner Susan Ness issued a statement warning about another problem with the labels. It's possible that DTV sets bearing the FCC labels might not be equipped with tuners allowing off-air reception of digital signals, she warned.
"In my opinion, a digital-television receiver that carriers a label blessed by the [FCC] should be able to receive an over-the-air digital signal," Ness said. DTVs without off-air tuners should have warning labels, she added.
The FCC decided to step in after the Consumer Electronics Association effectively backed out of an agreement it reached in May with the National Cable Television Association on two labels designed to distinguish between DTV sets with and without interactive features.
The CEA and NCTA devised one label that said "Digital TV-Cable Connect." A DTV set with this label can display digital-cable programming, but cannot perform two-way interactive functions because it lacks the "IEEE 1394" interface.
The second CEA-NCTA label said "Digital TV-Cable Interactive." A DTV set bearing this label would be equipped with the 1394 interface and would be fully two-way.
The three FCC labels are: "Digital Cable Ready 1" for DTV sets without the two-way interface; "Digital Cable Ready 2" for sets with the two-way interface; and "Digital Cable Ready 3" for sets in the design phase that would contain features from digital set-top boxes.
FCC officials said its labels must be attached to DTV sets, but acknowledged that explanations for the labels would likely be found in instruction manuals that consumers would not read until they arrive home with their purchases.
In a statement, NCTA president Robert Sachs said the new FCC labels were counterproductive and would confuse consumers when they shop for DTV sets.
Sachs said the FCC's labels do not properly distinguish between one-way and two-way capable DTV sets.
"It's unfortunate that the FCC's labels do not highlight this distinction, because it goes to the heart of the information that consumers need most," Sachs said.
Years ago, the cable industry had to deal with angry consumers who purchased "cable-ready" analog TV sets, but discovered that such readiness was limited. Once connected to cable, the sets would not display picture-in-picture features, and when connected to video cassette recorders, they would not allow consumers to record one channel while viewing another.
Cable industry sources said they were disappointed the FCC did not seek public comment on its three labels before adopting them.
A broadcast industry source said the FCC should have required that all DTV sets be built with the 1394 interface. The source also complained that the FCC has not done its job to ensure full compatibility between cable systems and DTV sets.
In another action, the FCC said its rules did not bar Cable Television Laboratories Inc. from requiring makers of digital set-tops to install some measure of copy protection encryption inside the box.
The FCC was asked to rule that the mandated integration of copy protection inside the box violated rules that require the separation of signal security from channel-surfing functions to promote commercial set-top sales.
Hollywood studios applauded the FCC's action. Filmmakers are concerned that without adequate safeguards, its products could be endlessly duplicated in digital without degradation.
The cable industry share Hollywood's concerns because cable operators don't want to lose access to digital content.
But the CEA fears that programmers could use the license to place restrictions on home copying. An FCC source said the CableLabs license can block all copying, allow copying on a one-time basis, or allow unlimited copying.
"We maintain that the FCC has no legal authority to grant CableLabs permission to mandate copy-protection schemes," said CEA spokesman Jeff Joseph. "We would just rather negotiate a blanket agreement with Hollywood that allows for usual and customary home-recording rights."
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