CEA BOARD TO RECONSIDER SUIT ON DTV TUNER MANDATES

With agreement believed possible as early as next week on DTV-cable interoperability rules, Thomson spokesman said his company hoped that development would turn CEA tide against fighting FCC in court. Spokesman said that although there was no “formal written agreement yet” on DTV-cable interoperability “there have been very good discussions” toward finalizing multi-industry proposal for submission to FCC, perhaps by Nov. 4. “It’s our estimation if that happens, there’s really no reason for CEA to continue their [legal] charge here,” spokesman said.

Whether FCC has statutory jurisdiction to impose tuner mandates, as CEA has argued it doesn’t under All-Channel Receiver Act (ACRA), is “an open question,” Thomson spokesman conceded. But he said “once we get cable interoperability worked out, it’s our contention that we need to lay down our arms, march hand in hand and make this thing work. Obviously, not everybody in our industry feels that way.” Zenith spokesman repeated his company’s assertion that FCC mandate was in best interest of smooth DTV transition and that DTV tuner costs would be in parity with those of analog tuners when phase-in requirements were complete in 2007. He also conceded there were significant “philosophical differences” within CEA membership on debate.

CEA Pres. Gary Shapiro was unspecific when asked to comment for this report whether his video board had agreed to revisit litigation at its next regular meeting, as sources we polled had contended. Without mentioning Thomson or Zenith by name, he said “it’s no secret” 2 major member companies didn’t see eye to eye with others on board whether to fight FCC in court. He said only that board had “agreed that the issue could be reconsidered in the future, as can almost any issue.”

Shapiro in recent interview defended court action. He said FCC had had “a tough track record” defending challenges brought against it before D.C. Appeals Court, and not all decisions had gone Commission’s way. CEA contention that Commission had no statutory authority under ACRA to impose DTV tuner mandates was only one argument, he said. He said that even if FCC were found to have such jurisdiction, Commission “didn’t follow the process” or failed to “develop a record necessary to issue a rule like that.” Of possible legal options to block Commission’s tuner mandate, Shapiro said CEA went with suit early on and “consciously decided not to go back to the FCC” with reconsideration petition because it believed there was little likelihood “the result would change.”

Thomson and Zenith are “entitled” to oppose CEA policy seeking to block DTV tuner mandates in courts, Shapiro said: “They have worked against us and asked us not to file suit, but were voted down from the beginning on that one.” He said Thomson and Zenith since had tried lobbying CEA to withdraw litigation, which he said was authorized by CEA executive board 2 weeks before FCC’s Aug. 8 decision. When Commission’s ruling came down, Shapiro said, CEA decided “it was our job on a legal basis to fight it.” But at same time, he said, set-makers had been trying to “turn lemons into lemonade” and had “been trying very hard to make this [mandate] work.”

Shapiro said from his perspective in top CEA post, “it’s obviously easier if all your members agree.” But he said “we have an overwhelming majority” that was “reaffirmed” at CEA board meetings 2 weeks ago in San Francisco “that the lawsuit is fine the way it is for the time being.” He said CEA position “can always change.” Even if it were to withdraw the suit, Shapiro said he expected numerous groups would “come out of the woodwork on both sides” of debate to take up legal fight for and against FCC. He said litigants might include consumer groups and individual set-makers that were “vehement” in their opposition to tuner mandates and Commission’s authority to impose them. “Whether CEA is involved as an entity” in suit against Commission, Shapiro said, “I'd be surprised if this isn’t challenged.” Moreover, he said, when HDTV legislation is considered in next Congress, “I'd be surprised if anyone in the consumer electronics industry would want to give away [any ground] on something like this. So, strategically from a political point of view, it makes a lot of sense to challenge this.”

As for arguments why legal fight might not be prudent, Shapiro said Thomson and Zenith had expressed concern that a prolonged court challenge might alienate FCC and stack odds against CE industry in future decisions. He said “anyone in Washington knows that this is a ridiculous argument.” He said not only did “every major group in town” that disagreed with Commission actions “have a right” to appeal them, but CEA had harmonious working relationship with FCC and its staff on diversity of other issues “on a regular basis.”