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Boucher blasts FCC, CableLabs on secret licensing pacts

Sun, 03/24/2002 - 7:00pm
Brigitte Greenberg

Copyright 2002 Warren Publishing, Inc.

Communications Daily…03/25/2002

From LexisNexis

Rep. Boucher (D-Va.), member of House Telecom Subcommittee, called on the Federal Communications Commission to make public the latest license agreement that CableLabs requires manufacturers to sign before they can bring to market navigation devices that connect to cable systems.

Boucher, in a letter to FCC Chair Michael Powell dated March 21, said issue was key to spurring DTV transition and to determining what was "fair use" for consumers and what content was copyright-protected material. Boucher said CableLabs had imposed the requirement that only companies willing to sign a nondisclosure agreement could review terms of the license to manufacture products in question.

He already had asked the FCC to publish CableLabs' POD-Host Interface License Agreement (PHILA), but the Commission declined, saying that as general matter, content protections were allowed in those devices.

In a previous response to Boucher, the FCC said it hadn't received any complaints that the PHILA license violated FCC rules. But the lawmaker said one condition of the nondisclosure agreement was that the person or entity signing it could not publicly disclose or discuss its contents, including any disclosure that would accompany a petition to the FCC.

"The industry is being told its only remedy is to complain publicly while still keeping the offered terms secret," Boucher wrote. "Given this effective gag order, it should come as no surprise that the Commission has not received any petitions."

CableLabs spokesman Michael Schwartz said the nondisclosure agreement was required to protect manufacturers' proprietary business interests and confidentiality in their negotiations with CableLabs. He declined to comment on other issues in dispute.

Behind Boucher on this issue was the Consumer Electronics Association, which had questioned provisions of PHILA that allowed cable MSOs and Hollywood content producers to determine among themselves what they would and wouldn't allow consumers to record in their homes.

CEA VP of Technology Policy Michael Petricone, basing his comments on initial the PHILA agreement that had been made public, said only two things were needed in the agreement: conditional access provisions and safeguards to ensure that the devices wouldn't harm a network.

"Instead, there are a lot of other things in there that have huge consumer and public-policy implications and have thus far prevented any competitive manufacturers — manufacturers who sell things in stores — from signing the agreement," Petricone said.

Specifically, he said PHILA had no restrictions on the ability of cable MSOs and content owners to limit noncommercial home recording, and gave them carte blanche to make consumers pay for any and perhaps every piece of content they wanted to view.

"We believe that there are certain types of content, for example content originating as free, over-the-air broadcasts, that consumers should be able to copy," he said. "Cable is saying … just trust us on this, and we believe that in an agreement like this, that some kind of consumer safeguards should be built in." Making issue more complicated, he said, is that latest versions of PHILA agreement are being kept "secret."

However, cable sources said MSOs had no intention of alienating their customers by making them pay for everything.

On the contrary, cable wants to work with Hollywood content producers so they can deliver the best content product to their subscribers, cable sources said. If cable doesn't give Hollywood those assurances, MSOs won't be able to obtain that content and will lose out to satellite providers that can and will provide those content protections, sources said.

The dispute between CE and cable erupted as they appeared to be making unprecedented strides in bridging their differences. NCTA Pres. Robert Sachs last week told NAB meeting that cable MSOs would add their ad resources to those of broadcast and CE industries to promote DTV transition. NCTA declined to comment.

Boucher, in his letter, reminded Powell that in 1996 Telecom Act Congress mandated that the FCC ensure competitive availability of navigation devices in market. Boucher said the Commission essentially had delegated that responsibility to cable industry's R&D consortium and that Congress needed to know whether its directive was being carried out appropriately.

"It is indefensible that a license to implement a public trust, mandated by an act of Congress, be kept 'secret.' There is absolutely no public policy justification for this secrecy," Boucher wrote. An FCC spokesman said the Commission was reviewing the letter and would respond to Boucher, but couldn't make public comment on the issue at this time.

Boucher said FCC not only should make the PHILA license public, but also should put it out for public comment. He said that would "drive parties to take clear positions on public policy issues concerning home viewing and recording and fair treatment of competitive entrants."

Three set-top manufacturers have signed the PHILA agreement: Pace Micro Technology, Motorola and Scientific-Atlanta. Petricone described those three as "captive, in-house" manufacturers already producing boxes for cable companies. However, a cable industry source who laughed at that criticism, asked who else would be clamoring to build boxes but those who already were making them.

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