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FCC Denies Comcast Again

The Federal Communications Commission (FCC) has again denied a waiver request from Comcast Corp. (Nasdaq: CMCSA, CMCSK) that, if accepted, would have allowed the MSO to continue buying and deploying three entry-level set-top models with integrated security in the wake of a separable security mandate that took effect in July. (See Countdown to 'Seven-Oh-Seven'.)

The agency's Media Bureau originally denied Comcast's request in January. Comcast then sought full FCC review of the matter. The FCC handed down its final opinion and order regarding the Comcast situation yesterday (Tuesday) afternoon. (See FCC to Comcast: 'No Waiver for You' and Comcast Appeals CableCARD Ruling.)

But the story may not end there, as Comcast has threatened to take the FCC to federal court and appeal the decision.

"We are disappointed by today's FCC decision, but we are pleased that we now have a decision that we can appeal to federal court. It is our intention to pursue promptly judicial review of this decision, which we continue to believe imposes significant additional costs on consumers without any corresponding benefit," said Comcast executive vice president David Cohen, in a prepared statement.

Comcast had sought waivers on three low-end, all-digital set-top models that use integrated security: the Motorola Inc. (NYSE: MOT) DCT700, the Scientific Atlanta Explorer 940, and the Pace Micro Technology "Chicago" DC501p. (See Son of 'Waiver Central' .)

Comcast, like other operators, had lamented the significant price difference between those models and CableCARD versions of entry-level set-tops. In addition to the slot and the interface, CableCARD-capable set-tops also contain more memory and processing power than some lower-end integrated security models. (See Boxing Up 'Seven-Oh-Seven' .)

Comcast has also asserted that the costlier boxes could slow down its all-digital transition. The FCC did award an "omnibus waiver" to several other TV service providers, including Verizon Communications Inc. (NYSE: VZ), on the condition that they are currently all-digital or expect to be by Feb. 17, 2009, which is also the date TV broadcasters are scheduled to complete their transition from analog to digital.

In the latest denial of Comcast's request, the FCC said the MSO "has failed to show that a waiver is necessary to assist the development or introduction of new technologies or services." The agency also held that the boxes in question contain advanced two-way functionality for applications such as video-on-demand (VOD) and electronic program guides, and "thus are not the 'low-cost, limited capability' set-top boxes covered under the policy."

The fact that many other operators received waivers on some of the same set-top models that Comcast sought waivers on was not lost on some of the FCC commissioners.

"What we have done... through a series of Bureau-issued orders, is focus on the operator who requested the waiver, rather than the box," reads a joint statement from FCC Commissioners Robert McDowell and Jonathan Adelstein, who still agreed with the decision to deny Comcast's waiver request.

"The result of these inconsistent decisions is that consumers will be treated differently, based on where they live and which MVPD [multichannel video programming distributor] they choose. This inconsistent application of the waiver policy does not further Congress' goal of promoting a national retail market for these devices," the statement read.

In his statement on the matter, FCC commissioner Michael Copps addressed "one procedural issue raised by our decision" with Comcast, which ended up taking more than 500 days to complete, start to finish. While the statute requires the commission to grant any waiver request within 90 days, the FCC ended up denying the request.

"But even though our decision complies with the letter of the law, I do not think it is consistent with its spirit. I therefore note my view that a better practice would be to issue a grant or denial of a Section 629(c) waiver request within 90 days," said Copps, who also approved the order [emphasis in original].

— Jeff Baumgartner, Site Editor, Cable Digital News

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