Verizon & Others Get Their Waivers
Verizon Communications Inc. (NYSE: VZ) was among a heap of service providers to obtain special waivers from the Federal Communications Commission (FCC) Media Bureau late Friday, just ahead of the government-mandated ban on set-tops with integrated security that went into effect Sunday, July 1, 2007.
The primary condition for most service providers receiving this waiver are for those that either are currently all-digital or expect to go all-digital by Feb. 17, 2009 -- also the date broadcasters are required to cutover their transmissions from analog to digital. This "Omnibus waiver," the agency held, will facilitate the digital TV transition, expand service offerings, enable expanded service offerings, and promote the efficient use of spectrum.
Obtaining the waiver was key to providers such as Verizon, which uses hybrid QAM/IP set-tops from Motorola Inc. (NYSE: MOT), and appeared not to have a Plan B ready to go on July 1 in the absence of a waiver. (See 'QIP' Quip? )
Under this order, Qwest Communications International Inc. (NYSE: Q) also gained a waiver to continue using integrated set-tops that support its VDSL-based video delivery system, which is deployed only in pockets of Phoenix, Ariz., and Highlands Ranch, Colo. The waiver also applies to Qwest's still-limited video deployments on fiber-to-the-home (FTTH) networks.
Some of the more than 100 service providers covered in the order include Liberty Cablevision of Puerto Rico Ltd., CenturyLink Inc. (NYSE: CTL), Puerto Rico Cable Acquisition Corp. (d/b/a Choice Cable TV), and Cablevision of Marion County. In January, the Media Bureau granted similar waivers to BendBroadband , General Communication Inc. (GCI) (Nasdaq: GNCMA), and OneSource Communications, based on a condition that they transition to all-digital environments.
Among other things, the ban on integrated set-tops, an aim of the Telecommunications Act of 1996, looks to open up a competitive retail environment for set-top devices. In the cable industry, the set-top landscape remains dominated by Motorola, Scientific Atlanta , and, to a lesser degree, Pace Micro Technology . Starting Sunday, the mandated separation of security will be handled primarily by boxes outfitted with slots that accommodate the CableCARD, a removable module that contains the keys of the operator's conditional access system. The cable industry is also working on downloadable conditional access systems that are expected to be less expensive and more elegant than the hardware-centric CableCARD approach. (See Countdown to 'Seven-Oh-Seven'.)
"By these orders we are once again taking action to further Congress's goal of creating a competitive market for the set-top boxes that are used for watching cable television," said FCC Chairman Kevin Martin, in a statement released Friday. In 1996, "Congress and the Commission envisioned consumers being able to walk into their local retail store and buy televisions and set-top boxes from any manufacturer that would work on any cable system. This is a goal that I share and believe we are a big step closer to with today's rulings."
While Verizon and several other operators obtained relief under the all-digital blanket order, the FCC also acted on several other requests, with some results not falling in favor of the cable industry.
NCTA request denied
In a blow to the cable industry, the Bureau denied a blanket waiver request from the National Cable & Telecommunications Association (NCTA) for all cable operators. The Bureau argued that the NCTA's arguments "are not adequately novel or changed from assertions that it has made to support previous extension requests to justify further relief."
Some get deferral
In another order issued Friday, the Media Bureau also denied requests from nearly a dozen other small- and mid-sized MSOs for waivers on entry-level boxes, claiming the devices are not "necessary" for the launch of new or improved cable services.
But, to give this group some relief, the FCC deferred enforcement until September 1, 2007. MSOs receiving this temporary reprieve include Armstrong Utilities; Cable & Communications and Mid-Rivers Telephone Cooperative; Atlantic Broadband; Bresnan Communications; Suddenlink Communications; Knology Inc. (Nasdaq: KNOL); NPG Cable; Orange Broadband Operating and Carolina Broadband; and Sunflower Broadband , an operator based in Lawrence, Kan.
FCC denies Massillon request
The FCC also denied a waiver request from Massillon Cable TV, which sought to use about 3,255 boxes with integrated security it already had in inventory as of June 1, including the Motorola DCT700 (2,580 units) and DCT3416 (580 units), and the Pace Tahoe HD-DVR (96 units) -- together valued at $473,544.
Because Massillon said it had already launched its all-digital network in March, a waiver would not be necessary for the development or introduction of new and improved services, the FCC said in its order.
Massillon has the option of amending its request by filing for a deferral that could allow it to continue using integrated boxes until it can obtain CableCARD-based devices.
Comcast still waiting
As of Friday, the agency had yet to act on an appeal from Comcast Corp. (Nasdaq: CMCSA, CMCSK) that seeks the ability to continue deploying and purchasing some entry-level all-digital set-tops with integrated security. After having that request denied in January, Comcast has since sought full FCC review on the matter. (See Comcast Appeals CableCARD Ruling.)
— Jeff Baumgartner, Site Editor, Cable Digital News