INDUSTRIES DIVIDED ON CABLE-CE PLUG-AND-PLAY AGREEMENT

The rulemaking represents “a historic opportunity for the FCC to move the DTV and HDTV transitions over the long hill they have faced,” the CE groups said, and “it is now up to the Commission whether these enterprises crest the hill and gather speed, or roll back down.” But the MPAA was among the groups yelling not so fast on FCC enactment. Contrary to the CEA-CERC contentions that the plug-and-play agreement “achieves balanced copy protection outcomes as a subset of conditional access,” MPAA said the proposed encoding rules were “substantially objectionable.” Among other points, MPAA said the agreement “perpetuates the use of unprotected analog outputs” for “enhanced definition” content “without a means for retirement of such outputs… This aspect of the agreement makes it impossible for content providers to require protection of this content also.”

CEA and CERC said the risk of inaction on the proposed agreement was “greater than that of mere delay.” Saying the FCC already had ordered phase-in of ATSC tuners in all TV sets starting July 1, 2004, the groups said “it has been widely acknowledged that this order would be of significantly more tangible benefit to consumers if digital cable tuners could also be built into these receivers on the same time schedule.” Such functionality “can be accomplished at relatively trivial cost and would serve 70% of the consuming public,” the filing said.

The encoding rules in the agreement were derived from the Digital Millennium Copyright Act, CEA and CERC said. They said the rules reflected “private sector negotiations involving all of the motion picture companies” and adaptations “to protect the particular legitimate expectations of consumers receiving programming” via digital and HDTV multichannel video program distributors (MVPDs), including satellite providers. The proposed encoding rules “also account for the incentive of MVPDs to innovate,” CEA and CERC said.

MPAA disagreed, saying the rules “would inhibit innovation and interfere with the market’s ability to find innovative solutions to complex technical issues.” Moreover, MPAA said it feared the proposal would “preempt the valid workings of the emerging digital marketplace by mandating a single set of encoding rules for all content protection technologies and all distribution methods, for all time.” The proposal also would “interfere with or prohibit private efforts to deal with compromises of protection technologies, to deal with the problem of analog connections and to develop new methods of delivering content to consumers and different business models capable of serving different consumer constituencies.”

There also was a fundamental disagreement between the CE and movie industries on the “down-resolution” practice. CEA and CERC praised the agreement for banning it as it applied to programs originating as free over-the-air terrestrial broadcasts. Although the agreement is silent on down- resolution of content through MVPDs and other services, CEA and CERC urged the FCC to impose a total ban on public interest grounds. However, MPAA criticized the agreement’s ban of down-resolution of over-the-air content as being incompatible with the proposed broadcast flag regulations. It also said such “discriminatory prohibition” was unfair to the licensors of HDTV content for over-the-air broadcasts.”

Meanwhile, the NAB and MSTV said they were “greatly disappointed” that the industry standard developed by set manufacturers defining the parameters of a “cable-ready” DTV receiver wasn’t included in the CEA-NCTA agreement, “to the tremendous detriment of cable consumers and the DTV transition.” Inclusion of that industry standard would “all but assure over-the-air reception capability,” NAB and MSTV said. They asked the FCC to amend the proposed rules to require over-the-air reception capability. They said the lack of 8-VSB tuning capability in “cable-ready” receivers would “be contrary to the public interest, frustrate expectations of consumers and leave them with less capable devices, undermine the DTV tuner mandate and slow the DTV transition.” NAB and MSTV also asked that the proposed rules be amended to include PSIP standards-based navigational data in the digital broadcast stream.

NCTA urged the Commission to adopt the proposals promptly, saying the Assn.’s agreement with manufacturers provided many consumer benefits, including creating “rules of the road” on home recording rights and proposing copy- protection rules. “The agreement creates a path for rapid development of the next generation of digital TV products and relieves CE manufacturers of their concerns about delay in the process,” NCTA said. It said any method used to close the “analog hole” shouldn’t put cable operators at a competitive disadvantage with DBS, saying the FCC’s rules, including down-resolution rules, should apply to all multichannel program video distributors, including DBS.

Strongly supporting the agreement were Zenith and Comcast, which said it wasn’t limited to one-way digital devices. “Many of the key provisions and compromises contained in the agreement, such as those on encoding rules, digital connectors, cable plant specifications and consumer education, provide the essential foundation for the cable and consumer electronics industries to reach a solution for two- way devices,” Comcast said.

However, the Satellite Bcstg. & Communications Assn. (SBCA) said the agreement didn’t reflect its views or those of DBS and content providers, yet nevertheless intended to impose its tenets on parties “excluded” from the negotiations. “The Commission should revise the MOU [memorandum of understanding] so that stakeholders not involved in the negotiations process can have their views reflected in the agreement,” the SBCA said. If the FCC chooses to act, it should impose rules on the cable and CE industries that participated, SBCA said.