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Waiver Fallout

Jeff Baumgartner
The Bauminator
Jeff Baumgartner
7/9/2007
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The U.S. ban on set-tops with integrated security may have gone into effect on July 1, but this story is far from over.

As expected, cable interests were quick to chime in after the Federal Communications Commission (FCC) granted a last-minute "Omnibus" waiver to Verizon Communications Inc. (NYSE: VZ) and a cadre of other service providers that are all-digital or pledged to be so by Feb. 17, 2009. (See Verizon & Others Get Their Waivers.)

"Unfortunately, under the FCC Media Bureau's decisions, once again big companies like Verizon are the winners, and small market cable companies and their consumers are the losers," said American Cable Association (ACA) president and CEO Matthew Polka, adding that small operators would be forced to charge $2 to $3 more per month for set-tops that use the CableCARD security platform.

National Cable & Telecommunications Association (NCTA) senior vice president Rob Stoddard added: "There's nothing in these decisions to stave off a $600 million set-top box tax likely to affect the great majority of cable customers while providing no benefit to consumers."

Meanwhile, Comcast Corp. (Nasdaq: CMCSA, CMCSK), still hot about the denial of its request for a waiver for certain models of low-end set-tops, issued a nastygram to the FCC on July 3, arguing it was "preposterous" that Verizon received a waiver while the cable MSO did not. To quote the letter:

Verizon is an enormous competitor, began building its video services from scratch during the period when the separate security requirement was in effect, knew full well what its obligations were under the Commission's rules... and yet apparently did nothing over the past three years to get boxes with separate security developed.


Giving Verizon a waiver "raises serious questions about the integrity of the waiver process," the MSO added, pointing out that Verizon's waiver covers low-end boxes through Dec. 31, 2009, and more advanced high-definition and digital video recorder boxes for a one-year period.

For its part, Verizon reportedly claimed it had ongoing discussion with the FCC about a waiver based on its going all-digital, although it did not appear to have much in the way of a Plan B in the works short of getting the all-important waiver. (See 'QIP' Quip? )

We might soon find out if Comcast's complaint turns into a favorable result for the MSO. Recall that Comcast is seeking full FCC review of the matter, but nothing has come of it yet. FCC chairman Kevin Martin has already said he intended to submit his vote before the July 1 deadline. (See Martin Rocks the Vote.)

In another interesting telco-related tidbit in the wake of the deadline, AT&T Inc. (NYSE: T) apparently believes its IP-based U-verse video service is immune to the ban on set-tops with integrated security.

Now that the CableCARD era is fully underway, we'll be keeping our eyes on eBay Inc. (Nasdaq: EBAY) to see if any consumers take it upon themselves to remove those modules and sell them off to the highest bidder. But nothing doing so far.

But you can get your hands on a Motorola HD-DVR box (the pre-CableCARD kind) if you don't mind parting with at least a C-note. At last check, the bidding was holding steady at $115.01.

But buyer beware. Obtaining that box is one thing. Good luck getting it authorized to work on a cable system.

— Jeff Baumgartner, Site Editor, Cable Digital News

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