CableCARD Exemption Seekers Note FCC Waiver to Charter
More cable operators are seeking to avoid CableCARD rules on grounds that they face financial constraints similar to those cited by Charter, given a waiver in May (CD May 7 p1). Great Plains Cable is the latest operator to ask to escape a ban on combining set-top box navigation and security features, our review of filings in FCC docket 97-80 shows. The Great Plains filing is notable for the date of its receipt by the FCC -- May 31, a month before the integration ban takes effect -- and for citing Charter’s successful waiver argument. James Cable was the first cable operator to justify its claim for an exemption by referencing the same hurdles as Charter and 2 other companies getting favorable Media Bureau action in early May orders (CD May 21 p10).
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Industry executives expect more small cable operators to emulate Great Plains as the ban’s July 1 effective date nears, or to update pending requests by citing Charter, as RCN and WideOpenWest (WOW) did this month. The Commission gave Charter a year’s reprieve, accepting its explanation that debt exceeding $20 billion and systems spread out in rural areas would make it hard to update systems in time to meet the deadline. In a Tues. filing, RCN flatly argued for a waiver because Charter got one: “To the extent that a waiver is appropriate for Charter on the grounds of financial hardship, a waiver is equally -- if not more -- justified for a much smaller, competitive company such as RCN.” The filing noted RCN’s 2004 bankruptcy; the company competes with cable operators by selling pay-TV in areas with incumbent providers.
WideOpenWest also cited its earnings in a June 1 ex parte FCC filing. Complying with the integration ban would cost WOW $20 million, narrowing already-reduced profit margins, it said: “This will further harm WOW’s position in the marketplace as a competitive [video] provider, thus compounding the financial harm.” WOW also invoked Charter. “Charter’s financial difficulties are in part ascribed by the Commission to its market conditions,” it said: “WOW’s financial condition also is impacted adversely… by its market conditions.” Cable operators say the integration ban will cost industry several hundred million dollars annually; companies hope waivers will allow them to avoid those costs by giving alternatives to CableCARDs, such as downloadable security, time to evolve.
Great Plains wants a waiver because it faces “financial hardship” similar to conditions that prompted the Bureau to issue the Charter waiver. Noting its $1.84 million loss for 2006 and a “significant debt,” Great Plains said it wants to use Motorola DCT-1000, DCT-2000 and DSR-410 boxes after the July deadline. The proposed exemption would end when Great Plains has upgraded all systems for 2-way cable or when it has access to devices that comply with the integration ban for 1-way systems as well as a Comcast TV distribution service the company uses, whichever comes 1st. About the company’s 10,000 subscribers are served by one-way systems built before the FCC unveiled its CableCARD rules, Great Plains said: “No manufacturer offers, or has announced, set- top boxes compatible with these one-way systems.”
Comcast officials lobbied for the company’s CableCARD waiver in meetings last Thurs. with aides to Comrs. Adelstein, Copps and Tate. Hours later, FCC Chmn. Martin’s office began circulating an order to deny the cable operator’s petition that the full Commission overrule a Jan. 10 Bureau denial of Comcast’s request. Agency officials are uncertain when the order will be voted on, though it was circulated in time for a vote at the June 28 meeting. It’s unclear if commissioners will vote on any items - CableCARD- related or not - at the meeting, occurring in conjunction with a broadcast localism hearing in Portland, Me. Thurs., Martin told us details of the hearing are up in the air, declining comment on whether there’s any way Comcast can convince him and colleagues it deserves a waiver.
The Commission has received 49 waiver requests, Comcast said. More than half seek FCC approval to distribute Motorola DCT-700 or similar low-cost boxes after the integration ban, said a Comcast ex parte filing. More small operators may seek waivers as the American Cable Assn. and National Cable TV Cooperative educate members on waiver- seeking technique, said Sunflower Broadband Gen. Mgr. Patrick Knorr, himself pursuing a waiver. “Many small operators still can’t believe that with a wave of the wand the cost of boxes is going to double or triple [and] it does apply to even the smallest of operators,” Knorr told us: “Navigating the waiver process is both intimidating and costly.” CEA has said CableCARDs won’t jack up customer bills and that cable operators had plenty of time to prepare for the integration ban.
It’s not too late for small cable operators to seek waivers from the Bureau, which issues exemptions on behalf of the FCC, said several cable officials. They said the Bureau may be open to waiver requests based on conditions such as Charter and the 4 other companies that got exemptions so far. “To the extent to which the Commission grants more of these waivers, that tends to lend support to later filed ones,” said attorney Howard Barr, representing a P.R. cable operator in search of a waiver. “There are lots of operators out there” who haven’t sought waivers, even at this late date, he said: “It’s sort of a head-in-the-sand approach: ‘If I don’t look up, it’s not going to hit me in the head.”