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The Media Bureau of The Federal Communications Commission has denied a set-top waiver request from Comcast Corp., while conditionally granting or granting requests from two other cable operators.

The actions disclosed Wednesday come in front of a forthcoming FCC-mandated ban on digital set-tops with integrated security set to begin July 1, 2007.

Most operators have until then to flush their existing inventories of integrated set-tops, and move forward with digital set-tops with separable security, handled in most instances by the removable CableCARD, which houses the operator's conditional access system and fits into special slots on certain models of set-tops and digital televisions. In a filing made last month, the National Cable & Telecommunications Association (NCTA) disclosed that more than 216,000 CableCARDs had been deployed by U.S. operators that serve about 90 percent of the country as of Nov. 10, 2006.

The FCC said it will allow Comcast to amend its original request. Comcast filed its request in May 2006, seeking a waiver for certain "all-digital" set-top models, including the Motorola DCT700, Scientific Atlanta Explorer 940 and the Pace Micro Technology "Chicago" DC501p.

Comcast, in response to the denial, said it will seek full Commission review immediately.

"We are very disappointed in this regrettable FCC Media Bureau decision," said Comcast Executive Vice President David L. Cohen, in a prepared statement, noting that the rejection will mean "millions of American consumers" won't be able to get digital TV easily and affordably, and access to services like VOD, the family tier, and electronic program guides will be denied to customers.

"This amounts to an FCC tax of hundreds of millions of dollars on consumers with no countervailing benefits," Cohen added.

"It is incomprehensible that the FCC would deny these waiver requests at a time when Congress and the Administration have made the digital transition a national priority and are trying to manage the costs to consumers," NCTA VP of Communications Brian Dietz said, in a prepared release, noting that the denial will cost cable customers another $2 to $3 per month. "We urge the Chairman and the Commission to move in another direction on this issue and grant cable's requests to relieve consumers of this potential burden," Dietz added.

Some operators have complained vehemently that the CableCARD model doubles or sometimes triples the cost of set-tops compared to those with integrated security. RCN Corp., which filed a waiver request of its own in November 2006, divulged at the time that its cost for the DCT700 was $84 per unit, while a similar, replacement CableCARD-based model from Motorola, the DCH-100, would cost about $232 each.

While denying Comcast's original request, the FCC was more even-handed with two other requests, conditionally granting one filed by BendBroadband of Bend, Ore., and granting another filed by Cablevision Systems Corp.

In addition to RCN, several other video service operators, including Charter Communications and Verizon have filed waiver requests. An FCC spokesperson said those requests remain pending and that the agency is reviewing them on a case-by-case basis.

In granting Cablevision's request, the FCC noted that the MSO has relied on a removable SmartCard (from NDS Group) in its digital set-tops since 2001. Although the approach "does not comply with our rules," the Bureau added that "there is good cause to temporarily grandfather Cablevision's use of its separated security solution until July 1, 2009."

On the rules sticking point, the FCC noted an argument from the Consumer Electronics Association holding that the SmartCard approach is not a physically separate CA system because a major element of the conditional access hardware remains in the navigation device, rather than the card.

BendBroadband originally filed its request in Oct. 2006, asking for a waiver on limited capability boxes to aid in its digital transition. In its conditional okay, the Bureau said the waiver was justified if Bend accomplished its migration to an all-digital environment by 2008. Bend must also hit certain milestones during the migration period.

The FCC Media Bureau also sided with the plight of other smaller cable operators, noting that their compliance with the July 1, 2007 deadline will be difficult for them "because manufacturers prioritize orders from the largest providers."  Because of that, the FCC said it would defer enforcement of the deadline if small operators can demonstrate that they have placed orders for boxes that do comply, but won't be fulfilled in time for the ban date.

In another significant action, the FCC clarified that a downloadable conditional access system (DCAS) would comply with its rules, hence giving DCAS the green light as a more elegant and less expensive option.

One high-level DCAS project is being headed up by PolyCipher, a non-profit backed by Comcast, Time Warner Cable and Cox Communications.

The system being developed by PolyCipher is not expected to be ready for full-scale deployment by the July 1, 2007 deadline.

More recently, Beyond Broadband Technology LLC (BBT) - a joint venture founded by WinDBreak Cable, Buford Media Group LLC, and Tele-Media Broadband - announced it had developed a low-cost (sub $100) "open standard" set-top platform with downloadable security capabilities.

BBT, which signed on R.L. Drake as its initial manufacturing partner, said tests of a prototype are slated for Q1 2007, with production following in Q3 2007.

In comments issued yesterday, the FCC Media Bureau acknowledged that BBT's approach falls within its rules for a downloadable conditional access solution.