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ACA Calls on the FCC to Give Relief to Small Operators as Part of Its Set-Top Box Proceeding

ACA's Proposals Aim to Salvage Failed Set-Top Policies, Produce a Retail Market, and Challenge the Motorola-Cisco/SA Set-Top Duopoly

PITTSBURGH, December 23, 2009 - The American Cable Association is calling on policymakers who are considering new set-top box regulations to recognize the public interest in ensuring the availability of affordable, high-functionality set-top boxes to small and medium-sized cable operators.  Access to such devices would not only make advanced services available to more consumers but also allow smaller distributors to accelerate their digital transition plans and use reclaimed analog channels to offer even more digital programming services and faster Internet access speeds.

"Small cable operators' customers suffered when federal regulations drove up the cost of set-top boxes that are necessary for consumers to receive the wide range of advanced services that they desire, including DVR functionality," ACA Presidentand CEO Matthew M. Polka said.

ACA, in comments filed Dec. 21 with the Federal Communications Commission, noted that current rules significantly raise the price of CableCARD-enabled devices, forcing capital-constrained small cable operators to postpone investment in such devices or ration access by limiting their availability to customers.

"Consumers of small cable operators can neither obtain affordable advanced set-top boxes from their cable operator nor purchase them directly at retail because the consumer electronics industry has not stocked retail shelves with cable boxes after the FCC required cable operators to support and deploy CableCARD boxes," Polkasaid.

Because the agency's most recent effort to create a competitive set-top market failed, the FCC must improve the situation by ensuring all waivers of the CableCARD rules remain ineffect, and consider granting additional flexibility to smaller operators while new rules are being considered," Polka said.

In addition to giving satellite TV providers (which are exempt from the CableCARD rules) a competitive edge, current policies make it broadly more expensive for small cable providers to recover analog TV channels and use the freed bandwidth to increase Internet download speeds or provide more digital programming, especially channels in high-definition format.

ACA noted that the FCC altered course by granting waivers for specific low-cost, limited-capability boxes, assisting consumers that want to watch digital tier programming on second and third sets.  ACA told the FCC that small cable operators benefited from those waivers, and will need additional flexibility to acquire and deploy higher functionality boxes because deploying those boxes in today's regulatory climate is prohibitively expensive.

In its comments, ACA brought to the FCC's attention that conditional access systems purchased from Motorola or Cicso/Scientific Atlanta and installed in cable headends are not readily interoperable with set-top boxes made by third parties. Motorola andCisco/SA have used this technology barrier to achieve and maintain an insurmountable duopoly in the set-top box market. ACA believes that interoperability would be achieved if Motorola and Cisco/SA were required to support the nonproprietary systems, such as SimulCrypt, which delivers once-encrypted digital video signals to multiple set-top boxes.

"Unfortunately,neither Motorola nor Cisco/SA supports SimulCrypt in North America. This is not the case in Europe and other international markets, where Motorola and Cisco/SA both integrate SimulCrypt into their headend products. Not coincidentally, competition thrives in these markets," Polka said.

About the AmericanCable Association

Based in Pittsburgh, the American Cable Association is atrade organization representing nearly 900 smaller and medium-sized,independent cable companies who provide broadband services for more than 7million cable subscribers primarily located in rural and smaller suburbanmarkets across America.  Through active participation in the regulatoryand legislative process in Washington, D.C., ACA's members work together toadvance the interests of their customers and ensure the future competitivenessand viability of their business.  For more information, visit http://www.americancable.org/

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