By Jeffrey Krauss,
Active Interacter and President of Telecommunications and Technology Policy

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Contact Jeff via e-mail at:

We all expected that the FCC's AOL-Time Warner decision would deal with cable modem open access and instant messaging, but interactive television (ITV) was the unexpected "sleeper" issue for the cable industry. Disney's contentions of discrimination (where none exist) have led to a premature and possibly irrational proposal on the part of the FCC that could impact an entire industry, not just AOL-TW.

ITV is some combination of video programming and ancillary data, that gives the viewer the opportunity to interact with the data. The data might fall into one of several categories, including: sports statistics, ordering information to allow the purchase of a product, or an electronic program guide. The viewer might want to display certain data on the screen, order tickets, or compete in a contest. The viewer might interact with data downloaded and stored in the set top-box, or with data stored at the headend. The data might be tightly synchronized to the video program, as in answer selections in a game show that must appear at a precise time, or loosely synchronized, as with players' batting averages that might be requested any time during a game. Or, as with program guides, the data might be almost totally unconnected to the current video program.

In addition to data that the viewer can interact with, ITV programs might also include "triggers." A trigger is a signal that could contain commands. For example, in order to have tight synchronization of interactive data with video, the data would typically be sent in advance and stored in the set-top box, and then a trigger would be sent to tell precisely when to display the data. It often isn't possible to guarantee synchronization when data and video are sent at the same time, because there is latency in the processing of the data in set-top boxes, and different brands of boxes might have different amounts of latency.

The ITV complaint raised by Disney is discrimination. A cable MSO that is affiliated with program producers might discriminate in favor of its affiliates, to the disadvantage of unaffiliated producers like Disney. According to Disney, this discrimination might take the form of carrying the video but refusing to carry the ancillary data or the triggers or the upstream viewer responses.

This sounds a lot like a "must-carry" dispute. For TV broadcast stations, the law is clear–a cable operator can strip out ancillary data unless it is "program related," such as closed captioning. The law was written with the analog vertical blanking interval in mind, and in the digital must-carry proceeding, the FCC is considering how to apply it to digital video. Also, there is an ongoing dispute between Gemstar and Time Warner over the stripping of program guide data, which announces future programs and is pretty clearly unrelated to the currently broadcast program. Nonetheless, this dispute was cited by Disney as one example of what might happen. But the Disney complaint goes beyond broadcast programming and applies to cable programming as well, even though cable programming is covered by contracts between the distributor and the MSO that specify whether ancillary data must be carried or not.

FCC overreaction

In a massive overreaction to this speculative problem that does not yet exist, the FCC has issued a Notice of Inquiry that proposes a slew of new regulatory approaches that would apply to the entire cable industry, not just to AOL-TW. The heart of the FCC's proposal is the section on discrimination. The FCC has proposed to regulate cable operators like common carriers, with severe non-discrimination requirements. For example, if an affiliated programmer devotes X percent if its digital program stream to interactive data and triggers, the MSO must allow unaffiliated programmers to devote that same proportion to their interactive data.

The FCC has also expressed concerned about MSO interference with upstream subscriber messages carried over a DOCSIS cable modem built into a set-top box. The FCC has proposed to regulate the operation of the cable modem and the use of the upstream DOCSIS channel, in order to ensure that cable operators will allow subscribers to send upstream interactive messages.

Finally, there is the question of pricing, and the financial terms of the contracts between programmers and MSOs. The FCC has proposed to regulate the terms and conditions to prohibit affiliated ITV programmers from receiving a better price than an unaffiliated programmer.

FCC Commissioner Harold Furchtgott-Roth dissented from the Notice of Inquiry, saying it was far too premature. He said that the FCC's proposal suggests that there are serious problems with ITV, when in fact, there is no evidence of problems.

I agree with Commissioner Furchgott-Roth. This is all a figment of Disney's imagination, not a real problem. Contracts between programmers and MSOs will be sufficient to deal with any problems that arise. If there is a real consumer demand for ITV programming, cable operators will have a strong business incentive to carry those programming services that provide the best interactive programming, regardless of their affiliation.

Author Information
Jeffrey Kraus is Active Interacter and President of Telecommunications and Technology PolicyHave a comment? Contact Jeff via e-mail at: