RCN Seen Getting Waiver OK at FCC
A second cable operator may get an FCC waiver to encrypt all channels. RCN now wants (CD Aug 16 p13) to follow Cablevision’s lead and be able to turn on and off service remotely, cutting down on signal theft and the expense and pollution of sending out technicians. Commission approval of RCN’s new request seems likely, and there will probably be less opposition to the move expressed than Cablevision faced in 2009, industry lawyers and an analyst said in interviews Tuesday. They said the regulator seems unlikely to start a rulemaking to examine whether it’s worth keeping a ban on operators encrypting channels in the basic tier. RCN wants out of that ban in Chicago and New York, where it’s gone all-digital.
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Other operators still may eventually seek waivers, industry officials said. They noted an earlier expected wave of requests never materialized (CD April 20/10 p6), after the commission in January 2010 approved Cablevision’s request. RCN is the only cable company to seek an exemption and cite the Cablevision waiver. Both companies cited the environmental benefits of fewer “truck rolls” for technicians to activate and deactivate service. There are “substantial environmental savings” to scrambling broadcast and other channels on the basic-programming tier, RCN said. A spokeswoman for the Media Bureau, which granted the Cablevision waiver, had no comment.
"RCN’s fleet of customer service vehicles would otherwise consume millions of gallons of gas annually, producing significant air pollution and traffic congestion,” the company said. “These costs, too, would be compounded because of the nature of RCN’s service areas: the overall number of visits in RCN’s Chicago and New York service areas is higher than the national average, because urban areas,” with a high portion of multiple dwelling units, “are characterized by more frequent disconnections for customer moves or because of nonpayment.” The company said many of its broadband subscribers who don’t buy video appear to be stealing cable service, based on the rates of requests to turn on service when the operator physically cut off service.
Such showings of cable theft have prompted the commission to approve previous requests by other cable operators, made before Cablevision’s, a longtime industry lawyer said. He noted that the 1992 Cable Act banned scrambling networks on the basic tier. “Normally you have to demonstrate a large theft-of-service problem” to get an exemption, the attorney said. “The Cablevision waiver represents another way to go” when an all-digital system seeks an exemption, he said. “We'll probably be seeing more of them, as more companies start to go all-digital.” RCN representatives had no comment.
After seeking public comment on the request, the bureau probably will approve it, said lawyers for other cable companies and for nonprofits that participated in the Cablevision proceeding. The Cablevision request was either opposed by or concerns were expressed from CEA, Media Access Project, Public Knowledge and the Association for Maximum Service TV. Neither CEA nor NAB, which has since absorbed MSTV, had comment. At initial glance, “I think it’s going to be quite non-controversial,” MAP Senior Vice President Andrew Schwartzman said. Public Knowledge, if it submits any comments, likely will keep them short, said attorney John Bergmayer.
"Our concern remains process” at the FCC for addressing such requests, Bergmayer said. “If the commission’s rules are outdated, it should update them” via a rulemaking, he added. “It’s just making things harder for itself.” It probably takes as much staff work on the Cablevision and RCN requests as doing a rulemaking, he said. “This is not the type of issue that really ought to be dealt with on an ad-hoc, case-by-case basis,” he said. “But I don’t see any glaring problems with the substance of the waiver."
Cable operators likely held off filing waivers in past years, and that may soon change as more systems are going all-digital, said analyst Sam Rosen of ABI Research. “The regulatory environment is much more favorable for waivers than it was a few years ago.” With the FCC’s AllVid proceeding effectively paused, and more Internet-connected TV sets being sold,
"I think they view the environment as both pro-business and pro-technology,” Rosen said of operators and the FCC. “So they are more comfortable making these requests than they might have been."
Going all-digital creates some subscriber confusion, given the need for a newer TV set or an inexpensive set-top box with a digital tuner to keep getting service, analysts said. “The transition also creates significant animosity among a certain segment of the customer base,” said Pike & Fischer’s Tim McElgunn. RCN said it will give such subscribers a set-top or CableCARD for a year at no charge. Midcontinent Communications is among the smaller and mid-sized operators that have already gone all-digital, McElgunn noted. He and Rosen noted that larger operators like Bright House Networks, Cox Communications, Mediacom, Suddenlink and Time Warner Cable are in varying stages of such moves, with Comcast appearing to be the most advanced.