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NCTA Seeks Waiver Reversal

Jeff Baumgartner
7/31/2007

The National Cable & Telecommunications Association (NCTA) , taking steps similar to those of Comcast Corp. (Nasdaq: CMCSA, CMCSK), is seeking a full Federal Communications Commission (FCC) review of a set-top waiver request that the agency's Media Bureau denied just before the ban on set-top boxes with integrated security went into effect on July 1, 2007.

In documents filed Monday afternoon, the NCTA said it's seeking a review on a request for temporary relief on the integration ban until the deployment of downloadable security or December 31, 2009, whichever is earlier.

In January, the Media Bureau denied Comcast's request for a waiver on certain low-end models from Motorola Inc. (NYSE: MOT), Scientific Atlanta , and Pace Micro Technology . The FCC has yet to act on Comcast's request for a full review on the matter. (See FCC to Comcast: 'No Waiver for You' and Comcast Appeals CableCARD Ruling.)

In its argument, cable's largest lobbying arm said the bureau "arbitrarily and irrationally denied NCTA relief" while granting temporary waivers to more than 140 others, including Verizon Communications Inc. (NYSE: VZ) and Qwest Communications International Inc. (NYSE: Q), based primarily on their commitments to go all-digital on or before February 17, 2009 -- a date that coincides with the digital transition of TV broadcasters. (See Verizon & Others Get Their Waivers and Son of 'Waiver Central' .)

"None of these petitioners, including Verizon, had bothered to take any steps over the course of the past several years to come into compliance with the integration ban," the NCTA noted.

Further, the NCTA wondered why Verizon was given relief while a waiver request from a "small, locally-run, family-owned" cable operator such as Massillon Cable TV Inc. was denied.

NCTA also stressed that the Bureau violated procedure by failing to act on its original waiver request within the 90-day deadline Congress established in 2005.

Another leg of NCTA's case for a reversal has to do with a downloadable conditional access system (DCAS), which the FCC has already deemed would satisfy the requirements for separable security.

The lobbying group reiterated that the cable industry has spent $30 million of an initial three-year, $100 million commitment toward DCAS development, likely a reference to PolyCipher LLC , a venture headed by Comcast, Time Warner Cable Inc. (NYSE: TWC), and Cox Communications Inc. .

The NCTA also stressed that the Media Bureau was repeatedly incorrect in its understanding of when a DCAS system being developed by an operator consortium called Beyond Broadband Technology LLC (BBT) would become commercially available to MSOs. BBT officials have said recently that they don't expect to start shipping set-tops and systems until early 2008. (See Small Cablers Plan Sub-$100 Set-Tops and BBT Exits Alpha .)

"The point is not to dwell on BBT's 'solution'," the NCTA said. "The point is that the Bureau premised its denial of NCTA's waiver request in significant part of the erroneous assumption that BBT's downloadable security technology is 'available today' while DCAS is not."

In its denial of the NCTA waiver request last month, the FCC Media Bureau pointed to some discrepancies in the "specified timeframe" for DCAS's deployment readiness. According to the Bureau, NCTA indicated in November 2004 that national deployment was two-and-a-half years away, then restated in August 2006 that such a rollout was more than three years away.

— Jeff Baumgartner, Site Editor, Cable Digital News

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