Adelstein, McDowell Criticize FCC CableCARD Waiver Denial

Adelstein and McDowell seemed to disagree with Desai. The commissioners described as flawed a bureau policy of granting waivers to cable and phone companies going all- digital before the Feb. 17, 2009, broadcast TV transition. Cheap boxes like Motorola’s DCT-700, Scientific-Atlanta’s Explorer 940 and Pace Micro’s Chicago model are meant “to help cable’s own digital transition,” not “force cable companies to complete their digital transitions by the deadline” for TV stations, they wrote. “We think the bureau reached the correct result when it determined that the subject boxes, although low-cost, are not ‘limited capability’ boxes. Unfortunately, the Bureau orders did not stop at this analysis, but rather continued to grant waivers for these boxes for certain applicants and not others.”

In its order the FCC said the bureau correctly found the boxes for which Comcast sought exemption not to have limited use because they allow for VoD, switched digital, electronic program guides and other interactive features. “Comcast, however, misconstrues the term ‘limited capability boxes’ to mean boxes providing the capabilities that the vast majority of its subscribers may want,” it said. The order said the company needs no exemption from rules barring the combination of navigation and security features in digital set-tops, since Comcast has been selling digital cable in all its markets since February 2006. The order dismissed concerns that digital cable prices will rise because CableCARD set- tops cost more.

Adelstein and McDowell joined Comcast in voicing alarm at potentially higher bills. The company likely will pass on the expense of costlier set-tops to customers, while other pay-TV providers’ subscribers won’t be affected, they wrote. “That result doesn’t make sense,” they said. McDowell hopes set-top box prices will fall as manufacturers introduce two- way plug and play devices, he said in an interview. The FCC is mulling how to facilitate arrival of that technology, subject of a recent rulemaking notice. “We're in an interim period here, so hopefully as the commission creates some certainty that will help to bring costs down,” McDowell said. “We can also move in the direction of downloadable security, and in the long run that will bring costs down for consumers.” McDowell said the joint concurrence may have been his first. Adelstein’s office said he has a history of issuing joint statements with Republicans, having done so with Chairman Michael Powell and Commissioner Kathleen Abernathy when they held those positions at the FCC between 2001 and 2005.

The FCC action “imposes significant additional costs on consumers without any corresponding benefit,” said a written statement by Comcast Executive Vice President David Cohen. “We are disappointed by today’s FCC decision, but we are pleased that we now have a decision that we can appeal to federal court.” The company has told the FCC that CableCARD rules could cost consumers $300 million yearly; the consumer electronics industry maintains that the integration ban will strengthen competition for set-tops at retailers. Comcast’s criticism of bureau waiver policy was echoed by Adelstein and McDowell. “We concur in this order because of the inconsistent and arbitrary application of the waiver standard,” they wrote.

Desai said FCC rules let the bureau judge each waiver request on its merits, even if that means different outcomes for petitions involving the same model boxes. Sections 1.3 and 76.7 of the Code of Federal Regulations allow a “broader” review of each request, which “includes consideration of all of the circumstances that may justify waiver in a particular case,” she wrote Tuesday in a communique to Comcast lawyer Jonathan Friedman, responding to a scathing letter from him. “We have not ‘favored’ telco video providers, as you allege,” wrote Desai. “Unlike Comcast, each of these entities either has already deployed or has committed to deploy an all- digital network.” Friedman wrongly complained that the bureau didn’t act on Comcast’s request in 90 days, she said. Section 629(c) of the Communications Act mandates FCC action within that period only when there is “'an appropriate showing’ that such waiver is necessary,” she wrote. The bureau found Comcast’s request didn’t meet that standard, she added.

Even so, the FCC should have acted in 90 days, Copps said. “Even though our decision complies with the letter of the law, I do not think it is consistent with the spirit,” he wrote. FCC Chairman Kevin Martin is believed to have held up release of the order while he considered how to react to the joint concurrence, said an FCC official. Another FCC official said the 700 MHz auction and other commission priorities may have delayed issuance of the order. Martin also had health problems this summer, said Media Access Project President Andrew Schwartzman. But the FCC could have acted sooner, said Schwartzman. “It ill serves the public or the affected industries for the commission to take weeks and even months to make ‘editorial corrections’ on decisions.” - Jonathan Make