Audio Video News

The Federal Communications Commission was correct when it formulated rules preventing cable operators from offering integrated security and channel-surfing features in cable set-top boxes, a District of Columbia appeals court has declared. The regulations, which will take effect in 2005, are derived from a proper interpretation of provisions in the Telecommunications Act of 1996, the court found.

The rules, which require cable operators to offer separate security features for descrambling programming with set-tops purchased at retail outlets, had been challenged by the National Cable Television Association and converter box maker General Instrument. Electronics retailers will likely benefit from the FCC rules, which are intended to promote retail sales of set-top boxes. The transition to all-digital broadcasting, still several years from completion, will involve the purchase of millions of converter boxes as consumers cling to their still-operative analog television sets.

The ruling was greeted by enthusiasm by the Consumer Electronics Association. "We are pleased that the Circuit Court has unanimously upheld the FCC's sound, pro-consumer navigation devices rules,” said CEA president Gary Shapiro. Calling the regulations “pro-competitive” and “consistent with the public interest,” Shapiro said “Under these rules, all Americans will soon be able to purchase or rent converter boxes from retail outlets at competitive prices, breaking the monopoly long held by cable providers."

In a related development, TV retailers and equipment makers have begun to back away from an agreement reached with the cable industry three weeks ago intended to remove the last major obstacle to rolling out cable-compatible digital sets. Still unresolved are issues over the labeling of DTV sets to indicate whether they enable interactive applications.

The disagreement is increasing the likelihood that the FCC will step in to set rules for DTV/cable interoperability, according to agency insiders. FCC Chairman William Kennard said the FCC will have to establish interoperability standards if industry deals cannot be worked out---a step the “pro-market forces” agency has been reluctant to take. Without clear definitions, consumer confusion about what is and is not “digital” and/or “interactive” will become even worse than it is now.