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Ferree has a big cable list

FCC Media Bureau Chief Ken Ferree is tackling the digital-television transition as if he has consulted an organizational guru. He has a checklist of DTV's problems that he plans to tackle one-by-one.

Two weeks ago, the commission approved rules drafted by Ferree's office and mandating that digital tuners eventually be built into nearly all sets. Confident the rule will prevent the flood of analog-only sets from delaying the day when most homes receive digital TV, he has now moved to the next item on his list, which is just as down and dirty: the interoperability between cable and broadcast digital TV.

But the cable list has a few other items, including deciding what cable's obligations to carry local broadcasters' digital programming should be and providing copy-protection measures for broadcast signals.

"We have lots of balls in the air, and some are fast approaching the point where they will come to rest. One of those balls is cable compatibility," Ferree said earlier this month.

This could get nasty. The cable industry, broadcasters, and TV-set manufacturers have lingering disagreements on how digital televisions should receive cable service.

At issue are:

  • Standards for security "pods" necessary to activate cable service for so-called "plug-and-play" service.
  • Whether cable systems, to ensure that all plug-and-play DTV sets work in any part of the country, must offer set-topboxes using the same technical specifications as those sold by retailers.
  • Copy-protection measures that cable will require manufacturers to incorporate into sets, VCRs and other equipment.

With the DTV-tuner mandate demonstrating that the FCC will impose regulations when industry can't agree, Ferree is hoping the recent example will be enough to prompt free-market solutions.

"There's a golden opportunity for the industries to resolve some issues and keep the commission out of it," Ferree said.

Reaching those deals is a tough challenge. For example, plug-and-play products would allow customers to attach a cable wire without using a separate converter box obtained from the local cable franchise. But they have become the object of endless debate among the industries.

Set makers and retailers accuse the cable industry of sabotaging intra-industry negotiations over universal OpenCable specifications needed for making plug-and-play sets.

The National Cable & Telecommunications Association's latest effort to eliminate a 2005 deadline for stopping the offering of channel-surfing boxes with incorporated security pods is the latest example of cable's tough stance, the set makers and retailers add. Pods are little more than receptacles for coded electromagnetic cards that activate a television for subscription-TV service.

The pod-separation mandate was imposed because the FCC wanted retailers to have incentive to introduce their own channel-surfing boxes loaded with new interactive features. But NCTA says the separation requirement will unjustly add more than $70 to a customer's cost and blames equipment makers for not yet figuring out how to make money from the set-top market.

"The commission's rationale is no longer valid," NCTA General Counsel Neal Goldberg wrote to Ferree earlier this month.

But retailers say the ban remains necessary if retailers are to compete with cable suppliers in the set-top market.

Equipment makers and retailers also argue that cable systems should not be allowed to build boxes from standards that offer potentially more features than possible under OpenCable. In part, cable's critics fear that consumers won't be able to use a box purchased in one part of the country when they move to another if each cable system has its own proprietary technology. But NCTA argues that cable systems everywhere will support OpenCable in addition to proprietary systems.

FCC Chairman Michael Powell, whose philosophy generally would lead him to shun this kind of market dispute, has made it clear that pushing DTV implementation is his priority, and he told Rep. Edward Markey (D-Mass.) that he will act if need be.

Finally, the FCC may have to decide whether cable can require equipment manufacturers to sign the "Pod-Host Interface" license, which would obligate manufacturers to implement strict copy- protection measures.