FCC Pushes for Competitive Set-Top Market

The Federal Communications Commission (FCC) delivered a gift-wrapped present to consumer electronics makers Wednesday, rejecting cable giant Comcast’s request to delay implementing FCC rules to provide consumers with a separate security device for set-top boxes.

Comcast had sought FCC permission to waive a July 1 deadline for the company to offer a cable-ready security card that can plug into any set-top box, including those of competitors to Comcast’s boxes. The FCC also said cable companies could deploy a downloadable version of the security device.

“I would also have preferred that the cable industry and the consumer electronics industry agree on a two-way standard that would ensure that subscribers who do not wish to rely on set-top boxes provided by their cable operators can access two-way, as well as one-way, cable services,” FCC Commissioner Kevin Martin said in a statement released at the 40th Annual Consumer Electronics Show in Las Vegas.

Martin added that since he saw no progress on that front, “I think the Commission needs to move forward with its current rules.”

Philadelphia-based Comcast, the nation’s largest cable provider, immediately protested the denial of its waiver request and said it would appeal the ruling.

“We are very disappointed in this regrettable…decision,” Comcast Executive Vice President David Cohen said in a statement. “Millions of American consumers won’t have the opportunity to enter the age of digital television easily and affordable.”

Comcast contends that their entry level set-top boxes will have to re-engineered and in the meantime, “Access to digital programming services like VOD (video on demand), the family tier and electronic program guides will be denied to countless cable customers.”

The Consumer Electronics Association (CEA), on the other hand, praised the decision.

“Competitive device manufacturers are eager to offer exciting new content devices to cable customers, and the FCC has assured consumers that innovation will not be stifled,” CEA President and CEO Gary Shapiro said in a statement. “By taking this action, the FCC ensures that consumers will finally realize the benefits of a competitive market for products that can connect to cable systems.”

In the 1996 Telecommunications Act, Congress mandated the FCC to develop a competitive market for set-top boxes used for watching digital television. Two years later, the FCC ordered cable companies to separate their security from the actual set-top box by putting security on a card.

By separating out security, the FCC hoped to build a competitive market for digital ready televisions and set-top boxes with card slots.

“Back then, Congress and the Commission envisioned consumers being able to walk into their local retail store and buy televisions and set-top boxes from any manufacturer that would work on any cable system,” Martin said. “Today, that vision remains just that, a vision.”

The FCC originally gave cable operators seven years to comply with its 1998 order, followed by two further extensions. The process has also been delayed by cable industry legal challenges to the ruling. The courts eventually upheld the FCC rules.

“This inaction has served to hinder innovation, deter competition and harm consumers,” Martin said.

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