CEA, Public Knowledge, AllVid Clash with Verizon, NCTA, Broadcasters, Cable Operators Over TiVo CableCARD

Creating new CableCARD and encoding rules that would apply only to cable operators would “hamstring” their ability to compete in the current video marketplace, said NCTA in comments responding to a TiVo petition (http://bit.ly/12VRaS) asking the FCC to reinstate the portions of the rules knocked down by the EchoStar decision (http://bit.ly/10nMM3E). CEA, Public Knowledge and the All-Vid Tech Company Alliance voiced support for the petition, while Verizon, cable providers and broadcasters opposed TiVo’s proposal, along with NCTA. “In such a dynamic and vibrant marketplace, there is no place for decade-old plug-and-play regulations premised on an entirely different competitive landscape” said NCTA.

Because the U.S. Court of Appeals for the D.C. Circuit’s EchoStar decision was based on the rationale that the FCC did not have the authority to apply encoding rules governing copy protection to DBS providers, TiVo’s petition proposed reinstating the lost encoding rules and technical standards for cable providers only. However, NCTA and a joint filing from Disney, 21st Century Fox, CBS, Viacom and Time Warner said singling out cable would be anti-competitive. “TiVo’s proposal would have the effect of creating greater inconsistency” in the market, said the joint filing, which also said 40 percent of the current multichannel video progam distribution market “would not be covered by cable-specific rules."

Applying new CableCARD rules only to cable would likely also drive content away from cable providers, NCTA said. If the vacated rules were now imposed only on cable operators, they would have to seek commission approval for new business models that were not expressly authorized by the rules, said NCTA. “Conditioning a cable operator’s ability to innovate on first obtaining Commission approval, when competitors face no similar obligation, is untenable,” said NCTA. If the commission did pass new cable-only CableCARD rules, they should have a three- to five-year sunset clause, said NCTA.

Several of the commenters disagreed about whether the EchoStar decision left any room for new CableCARD rules to be established. “The EchoStar court only struck down one of several CableCARD orders, and only after finding that the provisions in the order in question was not severable,” said Public Knowledge. “A series of narrow findings like this provides no basis for a fundamental shift with regard to cable operators’ support requirements for CableCARD.” The D.C. Circuit decision “that vacated these provisions did not question the Commission’s authority to enact them,” said CEA. However, Verizon argued that the EchoStar decision “invalidated all of the Commission’s legal justifications” for adopting the encoding rules.

Verizon and NCTA said instead of singling out cable providers, the commission should enact new CableCARD rules that apply to all MVPDs. Although NCTA conceded the EchoStar court issued a “clear and unequivocal rejection” of the old CableCARD rules for DBS, it said circumstances in the DBS market have greatly changed since the rules struck down in EchoStar were issued. DBS providers now generally lease set-top equipment to their customers instead of selling it, and Verizon said this “marketplace development” eliminates the “distinction between cable operators and DBS providers in the record that was before the EchoStar court.”

CEA and the AllVid Tech Company Alliance said there are important technical reasons to reinstate the CableCARD encoding rules and technical standards. Because the encoding rules govern the use of “triggers” in content that can control a set-top box’s ability to record or play content, the loss of the encoding rules is “manifestly unfair” to manufacturers and consumers, said AllVid. Without the “level playing field” maintained by the encoding rules, the triggers could be used by content owners as “pawns in license struggles between distributors and content owners, who can threaten to hobble leased devices,” said CEA. The association also said since CableCARD rules have already been extensively debated for many years, the commission has enough of a record on them that it could re-issue the rules stripped away by EchoStar and apply them only to cable operators without issuing an NPRM. “The existing record, and any comments on TiVo’s petition, should support the prompt reinstatement of these rules,” said CEA. “If the Commission feels obliged to issue a formal Notice of Proposed Rulemaking, it should do so expeditiously so as to avoid any further uncertainty.”

The American Cable Association didn’t weigh in on the proposed resurrection of the CableCARD rules, but said if a new rulemaking is initiated, the FCC should consider creating an exception from the integration ban for small cable operators. Such an exception would affect “at most approximately 13 percent of the marketplace,” an amount “too small to impact the manufacturing decisions of TiVo or other third party set-top box manufacturers,” said ACA.