Oral Arguments in Comcast’s CableCARD Appeal Focus on Other Waivers
Oral arguments in Comcast’s lawsuit against the FCC for denying it a waiver (CD Sept 6 p3) to deploy cheap set-top boxes combining navigation and security functions focused on why the company didn’t try to get the agency to revoke other waivers. During a Tuesday hearing at the U.S. Appeals Court for the District of Columbia, Judge Laurence Silberman asked Comcast lawyer David Murray why the cable operator didn’t oppose waivers of the July 1, 2007, set-top integration ban that were given to about 140 others. Judges Douglas Ginsburg and Thomas Griffith let Silberman ask most questions to Murray, FCC General Counsel Matthew Berry and CEA lawyer Robert Schwartz, who supported the commission.
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Silberman’s questions prompted Murray to say the Media Bureau, not commissioners, denied or granted the 170 CableCARD waiver requests from telco TV and cable companies. Comcast believes the bureau unfairly denied it a waiver because the company wouldn’t agree to transition its 10 million analog customers to digital cable by Feb. 17, 2009, or offer a la carte, said Murray. “In other words, you think they're trying to leverage you into something they can’t require?” asked Silberman. Murray said yes.
The bureau set FCC policy, which Comcast can contest in court, when it gave waivers to RCN, Verizon and other Comcast competitors, Murray said: “The chairman of the FCC has designated every one of these waiver requests to the bureau.” Comcast subscribers must pay two to four times as much as those of RCN or Verizon because they need CableCARD set-tops since Comcast didn’t win an exemption to use Motorola’s DCT 700, costing about $70, said Murray. Griffith jokingly asked whether he could “get a special deal this month.” If granted a waiver, Comcast wouldn’t have relied on non-CableCARD boxes for long because they're “going to go the way of cassette tapes and eight tracks,” said Murray. “But in the interim, they're critical” to move analog customers to digital.
Comcast agreed the commission rightly excused others from CableCARD rules, but thinks the company also should have won leeway, said Murray, answering Silberman on why it didn’t petition the commission to revoke bureau waivers to others. In one of several comic moments, Silberman asked whether Murray was saying the D.C. Circuit couldn’t issue any ruling other than one against the FCC. “We'll just have to struggle” to do that, the judge replied. On a serious note, he conceded that Murray “may be right about it not being good policy.”
It’s a stretch to say bureau actions are appealable -- as Comcast seems to doing -- since commission actions only can be appealed, said the FCC’s Berry. “That allows the tail to wag the dog,” he said. “One looks to other commission precedent, one does not look to staff precedent.” Ginsburg asked Berry how Comcast competes with other pay-TV companies. The general counsel said the company’s subscribers could switch to other systems passing their homes. Comcast hasn’t proved its claim that the company’s customers will pay more to use boxes than rivals which got CableCARD exemptions, said Berry. “We don’t know the extent to which Comcast is passing on the costs” to subscribers of more expensive set-tops, he said.
Silberman asked how the FCC was consistent in parsing out waivers, under section 629 of the Communications Act. He cited the FCC’s 2005 order that set the July 2007 CableCARD deadline but also said waivers would be considered. “So you were calculatedly ambiguous about that?” the judge asked. “I would certainly concede there is some undermining of common reliance” of CableCARD use, Berry replied.
CEA believes it’s past time for the FCC to require cable operators to deploy CableCARD boxes, said Schwartz. The CE industry has been without a CableCARD mandate since the requirement was laid out in the 1996 Telecommunications Act, he said: “We ask the court to please not deny us the benefits.” The cable industry’s last CableCARD appeal was denied by the D.C. Circuit (CD Aug 21 p1). Silberman questioned why CEA members were divided on the issue. He said Comcast’s assertions that the FCC was “disingenuous” may have gone too far. “It tends to undermine your argument,” the judge said. “I probably should have toned that down, it does reflect a degree of frustration,” replied Murray. “I apologize if we went over the line.”