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from: Technology Daily

Minorities Complain About Cost Of Cable Regulation

By David Hatch

(Thursday, October 5) Organizations representing minorities complained this week to the FCC that new regulations governing set-top boxes for cable television would trigger higher costs for consumers.

"In effect, this would amount to an FCC cable-box tax on cable customers of $2 to $3 per month, per box," the Hispanic Federation said in a letter this past Monday.

And, in a missive dated Tuesday, the National Black Chamber of Commerce predicted that consumers would pay an additional $600 million a year in equipment costs. Those figures are widely cited by the cable industry, which strongly opposes the planned restrictions.

At issue is an FCC directive that bans the integration of security features in cable boxes as of July 1, 2007. Cable systems now require set-top units containing proprietary security features, forcing customers to lease the devices from their cable providers.

Under the new arrangement, supported by electronics equipment manufacturers, set-top devices and encryption capability would be available separately. That would allow consumers to purchase boxes at retail for use with multiple programming providers.

External security cards, designed to prevent signal theft and scramble channels not being subscribed to, would be leased separately from cable operators for a small monthly fee.

The National Cable and Telecommunications Association has argued that the re-engineering will add $70 to $90 to the cost of a set-top. Earlier this year, NCTA President Kyle McSlarrow said in a letter to FCC Chairman Kevin Martin that the competitive market for "cable-ready" retail devices is "robust and developing" without the integration ban.

McSlarrow described as "laughable" the notion that consumers are demanding costlier equipment requiring an extra step to activate. The association wants the FCC to waive the integration ban until downloadable security features are available for set-top units or until Dec. 31, 2009, whichever comes first.

But the Consumer Electronics Association accuses cable companies of trying to protect their lock on the navigation device market.

"Basically, it's not in the cable industry's best interest to have a competitive device," said Julie Kearney, CEA's senior director and regulatory counsel. "They're making it as hard as possible for you to use any non-mandated cable device."

The Black Chamber of Commerce, however, argued in its letter that the FCC's "integration ban is yet another example of needless government regulation that stifles competition and taxes unnecessarily."

The group declared, "To make matters worse, consumers will be asked to bear these costs without gaining any new features or capabilities."

The Hispanic Coalition, which represents more than 90 Latino organizations, characterized the FCC's decision as "more than a bit puzzling."

FCC officials declined to comment, but the agency has acknowledged in writing that costs might rise at the outset.

"We do not take lightly the imposition of additional costs on consumers, particularly in our efforts to implement a consumer-friendly statutory directive to increase competition," the FCC wrote in 2005 in its set-top proceeding.

But the agency added that the initial cost increases would be "counterbalanced" by consumer savings likely to result from increased retail choice.