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Waiver Winners & Losers

11:05 AM -- Cisco Systems Inc. (Nasdaq: CSCO), Motorola Inc. (NYSE: MOT), Thomson S.A. (NYSE: TMS; Euronext Paris: 18453), Pace Micro Technology , and Comcast Corp. (Nasdaq: CMCSA, CMCSK) are the obvious near-term winners of an Federal Communications Commission (FCC) Media Bureau order awarding three-year waivers to another crop of Digital Terminal Adapter (DTA) devices. (See FCC Approves DTAs From Moto, Cisco, Thomson & Pace.) With a three-year waiver in hand, the vendors get to continue selling them to Comcast and, possibly, to more MSOs, should they also want to use DTAs to help reclaim valuable analog spectrum. Comcast, meanwhile, now has the green light to activate content protection in these bare-bones, one-way boxes and, by doing so, put some of its programming partners at ease. So, who lost this round? Although not all of these folks have the same amount of skin in the game, the Consumer Electronics Association (CEA) , Click! Network (a municipal service provider in Tacoma, Wash.), and a larger group of organizations (comprised of Public Knowledge, Free Press , Media Access Project , New America Foundation, Open Technology Institute, and U.S. PIRG) all scrutinized the waiver requests submitted by Cisco, Moto, Pace, and Thomson. And they all came out on the short end of the FCC decision handed down on Monday. They, in part, argued that granting a bunch of DTA waivers would undermine adoption of tru2way and CableCARD-capable digital set-tops and TVs, and therefore, hinder the development of an open retail market for interactive digital cable set-tops and cable ready TVs. (See DTA Opposition Mounts .)

The Public Knowledge group also complained that it did not get access to the "full specifications" of the DTAs in question, arguing that they could be transformed into more advanced devices through software downloads. The vendors countered that such a suggestion was not technically feasible, and even if it was, upgrading a DTA to handle more advanced features would violate the terms of the waiver grant or cause those suppliers to seek out a new, entirely different waiver. (See Cable Circles the DTA Wagons .)

The FCC bought the vendor's explanation: "We clarify that such a modification would effectively make the Subject Boxes different devices, and this waiver only applies to the devices at issue: namely, the one-way, non-HD, non-DVR devices specified in the Waiver Requests."

The FCC also chided the DTA waiver opposition to a degree, noting that the Commission specifically sought out comments about whether the devices were more advanced than the Evolution Broadband LLC .)

The CEA, Click!, and the Public Knowledge group "filed comments that addressed only the policy implications of issues that were discussed and resolved in the Evolution Order," the FCC explained.

Although cable won this round, the fight may not be over. It's possible that the CEA could seek out a full Commission review of the matter. We've asked the CEA for a comment and will relay their reaction as soon as possible.

However, they might be getting a bit used to losing these types of regulatory skirmishes. They also opposed the original Evolution waiver request as well as a request from Cablevision Systems Corp. (NYSE: CVC), which sought out a extension so it could finish developing and deploying a new downloadable conditional access system. The FCC sided against the CEA's wishes on both counts. (See Cablevision Scores Set-Top Waiver Extension and Cablevision Waiver Catches More Heat.)

UPDATE: The CEA did indeed respond, noting that it's "disappointed with the Bureau's decision to continue policymaking through granting waivers," and claiming that consumers are the ones that come out on the losing end.

Further, it said this latest decision, as well as the earlier one involving the Evolution DTAs and a recent reversal of a ruling centered on switched digital video (SDV), "raise serious questions about the Commission's commitment to assure the development of a market for competitive retail set-top boxes." (See FCC Reverses SDV Ruling.)

The CEA, however, didn't come out and say whether it would seek out a full Commission review of the latest waiver awards, but did note that the organization does "look forward to working with the new Administration and the Congress to reverse this troubling trend."

— Jeff Baumgartner, Site Editor, Cable Digital News

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