CEA Blasts NCTA CableCARD Waiver Bid as ‘Anti-Competitive’

This is the 4th time cable has sought a CableCARD delay at the FCC in its campaign to “defy congressional will,” CEA Pres. Gary Shapiro said in a statement. The move is “in line” with other attempts -- including waiver requests by Charter and Comcast -- to skirt or delay the July 2007 integration ban, he said: “While NCTA claims this delay would benefit consumers, we believe this action is anti- competitive, anti-consumer and may stifle the success of the transition to digital television.” Shapiro said the gesture proves “once again” that cable is no friend of competition. “As Congress intended, common reliance will benefit consumers by enabling manufacturers to provide a broad array of products that can connect to cable systems featuring innovative new features for competitive prices,” he said, urging the FCC to do “what’s best for competition and consumers and deny this request.”

Panasonic CTO Paul Liao -- whose company backed Comcast’s waiver request on low-cost set-tops -- declined comment on the NCTA filing, pending more review. But Panasonic is sensitive to “hardships” that would face CE makers spending heavily to deploy CableCARD-ready DTV sets rendered unnecessary if the NCTA gets a waiver, Liao told us Wed. at the DisplaySearch HDTV Conference in Beverly Hills. He said his company also realizes the potential hardships for consumers, to whom many CE makers would have to pass along CableCARD costs rendered useless by an FCC waiver. Panasonic signed a DCAS license, and the NCTA filing cites a Liao quote from a CableLabs press release in which he hailed DCAS. Thomson -- another backer of Comcast’s waiver request -- declined comment.

NCTA’s “instant waiver” request urges extension of the CableCARD deadline to Dec. 31, 2009, or when cable operators begin deploying DCAS, whichever is first. The Charter and Comcast waiver requests address only to low-cost, limited- functionality set-tops, but granting NCTA’s would have the same sweeping effect as the U.S. Appeals Court, D.C., throwing out the CableCARD rule, as cable has asked that court to do, over strenuous CEA opposition. The court has yet to render a decision in that case, which was argued May 11.

Verizon -- no ally of cable -- has argued “persuasively” in its own open-ended waiver request that a delay would “spare consumers from pointlessly bearing the massive costs of an interim transition to CableCARD-slotted leased boxes with no corresponding consumer benefit,” NCTA said. Within one or 2 years after the July 2007 integration ban’s implementation, CableCARDs will be “superseded by a more efficient and cost-effective downloadable security solution,” NCTA said. By Dec. 2009 -- when the waiver lapses or DCAS has been deployed -- “the record will be clarified with respect to many relevant technological and competitive issues now undergoing change,” NCTA said: “The Commission will by then be able to see for itself whether downloadable security has been widely deployed and adopted in consumer products.” And after the Feb. 2009 analog cutoff and further progress by cable operators toward all-digital networks, the Commission “will be better able to judge the continued need for integrated set-top boxes to facilitate the digital transition,” NCTA said.

NCTA acknowledged some may say granting its request would mark a 3rd extension of the integration ban -- the 4th, as CEA calls it. But “Congress did not demand or even suggest an integration ban be imposed” on multichannel video program distributors (MVPDs), NCTA said: “Nor did Congress seek to dictate technological specifications preferred by certain electronics manufacturers.”

Despite “significant progress” on DCAS, “much remains to be done” before it reaches consumers nationwide, and the system won’t be ready before July 2007, NCTA said. Denying the NTCA waiver request “would only delay” DCAS, “and thereby increase the number of costly physically separated devices that must be produced in the absence of a waiver,” NCTA said. Cable uses many of the same employees and testing facilities “for a range of technology projects,” including DCAS, CableCARD, OCAP and R&D on “new and innovative services and software,” NCTA said: “These resources are already strained by the variety and pace of current activities independent of the integration ban. If the requested waiver is not granted, the cable industry would be forced to shift personnel and other resources away from DCAS towards implementation of the integration ban for all of its digital set-top boxes. This would dramatically slow progress on DCAS.”

NCTA Pres. Kyle McSlarrow was blunt in a cover letter to FCC Chmn. Martin urging him to back the waiver request. The FCC “rarely has had such a clear-cut opportunity to help consumers, to advance the digital transition, and to ensure fair and robust competition,” McSlarrow said: “I recognize that it would be easier for the Commission simply to rest on the fact that a decision was made almost a decade ago. But in 2006, the integration ban is a complete anachronism.”

The market will ensure buyers of CableCARD-ready DTVs are serviced by cable operators, McSlarrow said. But do viewers want a costlier box requiring “the additional step” of securing and attaching a CableCARD? Of course not,” he said: “The idea is laughable. Yet, here we are, simply continuing down a path set almost a decade ago and continuing to fruitlessly attempt to micromanage a marketplace that has long since left regulators behind.”