Friday, May 22, 2009

Set Top Box Follies: More

I posted earlier on the predictable objections of Cox to LUS' request for a waiver of FCC regulations that have been waved for everyone else for a long time. I complained that LUS wasn't being treated fairly and suggested that LUS' competition and the innovative services it has already offered are just what the FCC has been saying it wanted to accomplish through its regulation.

I've snagged Jim Baller's reply to Cox and the Consumer Electronics Association's objections to LUS' waiver request. (And I am still trying to track down the initial petition and Cox's written objections, just for the record...if any of you see a copy floating past or know how to burrow at the FCC better than I please drop a line.) —see post script.

Baller does a great job of laying out his points clearly and tightly—it's easy to see why he has such a good reputation. Here's an argument extracted from his reply to comments in the case (all emphases mine):
In January 2009, LUS launched a multichannel video programming service over this system, designed from the ground up to operate on LUS’s advanced FTTH network. The LUS video service – offered in direct competition to Cox Communications’ cable service in Lafayette – includes a full lineup of basic, expanded basic, and premium programming in digital form through LUS’s IPTV system...

Cox seeks to thwart or delay this competition by urging the Commission to deny LUS a waiver....
Baller reviews the history in which all the market segments have been granted repeated time extensions and finally unlimited waviers.
By its present petition, LUS requests a waiver similar to those which the Commission has already issued for similarly-situated IPTV system operators. While the Commission’s prior orders included various complex considerations relating to the DTV transition and other matters (addressed in LUS’s petition and below in response to Cox’s comments), the issue in this case is simple and straightforward: LUS would sincerely like to comply with Section 1204(a), but having performed a diligent search, it has been unable to find commercially available navigation devices that would enable it to do so. In other cases in which this has been true, the Commission has granted the MVPDs in question waivers from its rules. LUS merely asks for similar treatment, until such time as commercially available devices are readily available...
Baller points out that LUS' request can be granted based on different sources of regulatory authority and that in one —
Under Section 629(c), the Commission “shall” issue a waiver from the integration ban “upon an appropriate showing by a provider of multichannel video programming and other services offered over multichannel video programming systems … that such waiver is necessary to assist the development or introduction of a new or improved multichannel video programming or other service offered over multichannel video programming systems, technology, or products....”

Under Section 629(c), “waivers of [the integration ban] are granted when doing so ‘is necessary to assist the development or introduction of a new or improved’ service, such as, for example, a nascent MVPD offering from a new competitor.”

Congress could not have intended that the FCC derail state-of-the-art projects like Lafayette’s by imposing standards that are technologically impossible to meet. For that simple reason alone, a waiver under the Commission’s general waiver authority is appropriate.
I'm enough of a policy nerd to actually enjoy reading such a nicely crafted piece and if you have any such unsavory tendencies I recommend you click through and read the entire thing. If you do you'll find a few nice hooks left in the text for LUS to pull tight if circumstance warrants. For instance when Cox requests that it be granted a similar waver if the FCC grants one to LUS, Baller replies:
Cox claims that it is already complying with the integration ban. If that is true, then it presumably does not need a waiver, and there is no factual basis for the Commission to grant one.
Of course Cox is not really complying with the law now and there is substantial reason to believe that an FCC dominated by Democrats will be tempted to recognize that and act forcefully on it....leaving Cox to worry that its latest promise to bring its technologies up to date so that its navigation technology will actually be separable from its legitimate security issues won't work again this time if the issue is opened up before the commission. In the unlikely event that LUS is denied its waiver the tables would be turned and LUS would be in the best possible position to turn the tables and assert that a level playing field required that the FCC force Cox in full and complete compliance immediately. In that case making the open claim that it doesn't need a waiver opens up the possibility that LUS — or other competitors — will call its bluff. There's a little of the old "make my day" threat lying just under the surface. I can feel the chest-thumping silverback lying just under the surface of the measured writing and I have to admit that I like it.

A final caveat: Cox apparently argues that only fully digital systems qualify for a waiver. While my inner policy nerd is happy, the geek side evoked by Cox's silly claim that LUS' service isn't all digital wants to point out that LUS is actually providing a fully digital service to every household that buys its service—but that some people choose to have the digital signal transformed (digitally! :-)) into an analog format for use with older equipment. Technically that is exactly what happens. That little twist, on my account, is a nifty bit of digital innovation...and the tongue isn't pressing too hard against the cheek when I say it. LUS's system is all-digital already and they've creatively found a way to comply with the integration ban for those tiers of service that are sold for use without any set top box or with a DVR, like a TiVo, that the consumer is allowed to buy and freely use as their own navigation tool separate from LUS'...they've already gone the extra mile. I'd also lean harder on LUS' actual innovations, like the 100 megs of internal bandwidth and, especially the internet via the IP set top box that couldn't be practically accomplished without the box for which the FCC is being urged to deny a waver. But, I suppose the policy nerd that insists on sticking to the central point and dismissing silly claims about digital as the distractions that Cox clearly hopes they will be is right. Don't muddy the waters or help your opponent do so. But....the FCC might find the truth of Lafayette's all-digital network compelling policy arguments if they take Cox's bit of misdirection seriously and the details of innovations that would be harmed by the denial of a waver could only strengthen that part of the argument.

PS—As we came into New Orleans but before I found the signal I could use to post this I got a set of useful links requested of Jim Baller: the original petition, both Cox and the CEA's objections, and LUS' response. The obsessive among you might want to peruse them too. As will I if I ever get a reliable signal.
  • http://tinyurl.com/q8qxue (LUS Petition)
  • http://tinyurl.com/pyra9x (Cox Opposition)
  • http://tinyurl.com/pp32yg (CEA Comment)
  • http://tinyurl.com/ot9ohh (LUS Reply)

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