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NCTA Appeals Set-Top Waiver Denial

The National Cable & Telecommunications Association continues to fight the FCC's denial of its request for a waiver of the rule mandating that the security and channel-surfing functions of digital set-top boxes must be separated.

In appealing the decision to the commission Monday, NCTA argued that the denial was discriminatory and arbitrary. The FCC's denial of the waiver was the second loss for NCTA, which had already appealed a bureau-level decision denying the waiver.

NCTA, using words like "insidious" and "mishandling," pointed out that the commission has granted 140 waivers, but denied NCTA's request to supply "the very devices for which others were granted waivers."

The FCC had signaled it would not grant a blanket waiver, but would look at requests on a case-by-case basis.

The July 1 deadline has passed, and all the cable operators not getting waivers have to supply boxes that separate out the channel changing from the security, which makes sure viewers are only getting the channels they ask for.

The commission levied the ban on integrated set-tops in an effort to create a retail market in the boxes.

NCTA argues that, while the commission says it is trying to achieve a "common reliance" on the same security technology, it has extended waivers to almost a third of the multichannel video market, including telcos Verizon and Quest.

NCTA also takes issue with the waivers the commission granted to cable systems pledging to go all-digital by 2009, saying that has nothing to do with the goal of common reliance and calls it a "bureau-invented rationale in conflict with law and policy."

NCTA argues that Congress requires the commission to grant waivers to "assist in the development or introduction of [any] new or improved" service, but says that, instead, "The Bureau accepted as justification for waiver every purported innovation by cable’s competitors, but rejected cable’s offerings of more digital cable, more HD channels, more video-on-demand, more digital simulcast, higher Internet speeds, better

competitive phone service, new program networks and truly secure downloadable security that

would be delayed and handicapped without waiver."

The cable industry is working on a downloadable security system that will be easier and cheaper. NCTA argues that forcing the industry to move to a hardware solution will be more expensive to customers. FCC Chairman Kevin Martin concedes the software solution is more elegant, but also says that after several delays of the deadline for the ban, he is concerned that a blanket waiver will further delay the creation of a competitive market for the boxes.

The Consumer Electronics Association, whose members stand to gain business from the ban, took issue with NCTA's appeal.

“After eleven years of delaying consumer access to competitive equipment, this latest NCTA appeal is not surprising," said CEA President Gary Shapiro, "but it is still troubling. By denying NCTA’s waivers, the FCC has spoken clearly for consumers and the public interest.

"As CEA has stated on numerous occasions, competitive device manufacturers are eager to offer exciting new competitive devices to cable customers, and the FCC has assured consumers that innovation will not be stifled. Consumers have long been denied the opportunity to enjoy a competitive market for products that can connect to cable systems."