FCC to Comcast: 'No Waiver for You'

LAS VEGAS -- Consumer Electronics Show (CES) -- The Federal Communications Commission (FCC) appears determined to enforce its rules requiring cable operators and consumer electronics makers to use the same type of separable security in set-top boxes and cable-ready TVs.

On Wednesday night the Commission announced it had denied a waiver request filed by Comcast Corp. (Nasdaq: CMCSA, CMCSK), though the agency added that Comcast could amend its request. (See FCC Denies Comcast Waiver.)

Only hours earlier, FCC Chairman Kevin Martin made it clear to reporters at CES that he was not in favor of "blanket waivers" and mentioned Comcast by name. "Comcast has a waiver in front of us where they're asking for a waiver, for a delay, without any kind of a date certain on when they'll be able to develop downloadable security," Martin said.

Under the FCC's rules regarding set-top security, cable operators have until July 1 to start relying on CableCARDs -– removable security modules -– to provide conditional access security for TV content. This, the FCC says, is intended to spur competition, providing an even playing field between cable set-top boxes and retail-bought, cable-ready TVs. (See Comcast & Cox Deal Set-Tops at CES and Cable MSOs Fight for Set-top Status Quo.)

"We've got a series of waivers in front of us, and I think that the Commission shouldn't just provide blanket waivers for further delay of a rule that was adopted back in 1998," Martin explained, while chatting on stage with Consumer Electronics Association (CEA) president Gary Shapiro.

Martin's point is that this separable security rule has been delayed for years, and more delays will only stall innovation on the part of device makers.

In his remarks to the media on Wednesday, Martin drew a parallel to the innovation in telephones that occurred when standards were set for all home phones to use the same kinds of wall plugs, etc. Once the end user device was no longer solely provided by the phone company, innovation flourished, Martin said.

A few hours later, the FCC put out statements that Comcast's waiver had been denied and that it would be held to the July 1 deadline for implementing CableCARD security in its set-tops. That means the operator needs to replace any set-tops in its network where the security features are not a removable part of the device's hardware by July 1.

The Commission also commented on two other waiver requests. One was a limited waiver granted to Cablevision Systems Corp. (NYSE: CVC), which is using a SmartCard system that doesn't comply with the FCC's rules. However, the Commission found that "there is good cause to temporarily grandfather Cablevision's use of its separated security solution until July 1, 2009."

A third waiver request, made by Central Oregon's BendBroadband , was granted. The Commission noted that Bend is migrating to an all-digital network by 2008, and that the migration will necessitate set-top technology changes. Also, the FCC was sympathetic to smaller operators in its comments, noting the difficulties that "small cable operators may face in complying with the July 1, 2007, deadline for separated security because manufacturers prioritize orders from the largest providers."

Martin, though, wasn't all smiles following the FCC's work on these waivers. The CableCARD security method only allows for one-way security, and so doesn't address the interactive applications that are becoming more popular with cable operators.

Chairman Martin says he'd prefer the MSOs and consumer device makers to agree on a two-way security method, and not just something that would benefit regular TV viewing.

But that hasn't happened so far, and Martin is determined that shouldn't hold up the set-top rules enforcement. "In the absence of real progress on either of these issues, however, I think the Commission needs to move forward with its current rules," he said in a prepared statement released Wednesday evening.

— Phil Harvey, Managing Editor, Light Reading