D.C. Court Rejects Comcast Set-Top Appeal

Judge Calls FCC’s Denial Of Waiver Petition ‘Quite Reasonable’

By Todd Spangler -- Multichannel News, 5/16/2008 4:59:00 PM

A federal appeals court Friday rejected Comcast’s request for a review of the Federal Communications Commission’s denial of its waiver petition to the so-called integrated set-top ban.

Comcast had requested a waiver for three low-cost, limited-function set-top boxes, including Motorola’s DCT700, which the FCC denied last year.

Judge Laurence Silberman of the U.S. Court of Appeals for the D.C. Circuit, in his May 16 decision, affirmed the FCC’s rationale for denying the operator’s original waiver request, pointing out that such set-tops still “contain electronic programming guides, video-on-demand, pay-per-view and interactive television capabilities.”

Furthermore, the FCC’s explanation of why a waiver for Comcast was not “necessary to assist the development or introduction” of new or improved video services as specified by the Telecommunications Act was “quite reasonable,” Silberman wrote.

The judge said that “with or without a waiver, Comcast has a strong incentive to make as many services available as possible, and to continue introducing new high-value (and high-cost) features.”

Silberman noted that the FCC does not have a binding commitment to grant waivers to all low-cost set-tops. “Rather, the commission said only that it would ‘consider’ such waiver requests based on its ‘inclin[ation] to believe that provision of such devices… will not endanger the development of [a] competitive marketplace.”

Comcast also had contended in its suit, filed in November, that the commission’s application of the waiver policy has been inconsistent, because it has granted waivers to other video providers for, in some cases, the very same set-top models.

After the FCC’s Media Bureau rejected the Comcast waiver request, the cable operator appealed the decision to all five commissioners, who turned down its request.

Silberman wrote that “the allegedly inconsistent waivers were all granted by the FCC’s Media Bureau and were not appealed to the commission” and that the agency “is not bound by the actions of its staff if the agency has not endorsed those actions.”

In arguments before the court, Comcast said it had no incentive to appeal the waivers previously granted by the Media Bureau because it agreed with the actions. “But this is irrelevant,” Silberman wrote. “Without an appeal… we simply do not know how the commission would have ruled on the earlier waiver requests.”

In a statement, Comcast senior director of corporate communications and government affairs Sena Fitzmaurice said: “While we are disappointed in this decision, we will continue to actively deploy digital services to our consumers.”

“Our only interest has been to facilitate and accelerate the digital transition for our customers in the most cost-effective fashion. We’ve announced plans to help even more consumers to go digital faster and economically and we will continue to bring innovative services to consumers,” Fitzmaurice said.

FCC spokesman Clyde Ensslin, in a statement, said: "Today's court decision brings the vision of a competitive market for set-top boxes closer to reality. Ten years ago, Congress and the FCC envisioned consumers being able to walk into their local retail store and buy a television or a set-top box from any manufacturer that would work on any cable system. This ruling is going to lead to greater choice for consumers." 

The FCC required most cable operators to use only CableCard-based set-tops as of July 1, 2007, after the agency had twice previously delayed the enforcement of the integrated set-top ban. 

The purpose of the agency’s rule is to ensure “common reliance” on CableCard technology, on the theory that it will encourage growth in the market for third-party cable-ready consumer electronics devices.

Through mid-March, the top 10 cable operators had deployed 4.18 million set-top boxes with CableCards, while they had supplied just 347,000 standalone CableCards to subscribers for use with TiVos and other third-party devices.