Latta Integration Ban Bill’s Path Uncertain, Observers Say

A House bill that would remove the integration ban requiring cable operators to use CableCARDs instead of built-in security in set-top boxes doesn’t have a clear path to passage but has generated a lot of industry interest, a Republican lobbyist who represents cable interests and a consumer electronics official told us Friday. Both NCTA and ACA have issued statements in support of the bill, while CEA, TiVo and Public Knowledge denounced it as anti-consumer. The League of Rural Voters, National Puerto Rican Coalition and National Congress of Black Women support the bill, said a spokeswoman for House Communications Subcommittee Vice Chairman Bob Latta, R-Ohio, who introduced the bill. “I think there’s going to be a big push to get this done somehow, some way,” said the lobbyist.

House Communications Subcommittee ranking member Anna Eshoo, D-Calif., has voiced opposition to the bill in its draft form. She sent a July 31 letter to House Commerce members, a spokesman told us. Eshoo’s letter slammed that draft as “a broadly written bill which would undermine the important goals of [Telecommunications Act of 1996] Section 629 and prevent consumer innovative retail alternatives to set-top boxes leased by cable operators.” The draft failed to promote innovation, competition and consumer choice, she said. Her spokesman declined to say whether Eshoo opposes the bill as introduced.

Latta developed the bill following meetings with stakeholders and contacted co-sponsor Rep. Gene Green, D-Texas, to work with him after drafting the language, the spokeswoman for Latta told us. Latta “was interested in reducing regulations in a smart but meaningful way to free up innovation and give consumers more choices and better experiences,” she said. Next steps are uncertain as to whether the bill would stand alone or be part of a broader legislative package, she said.

Passing the bill would make it very difficult for TiVo -- which uses CableCARDs -- to do business, said a cable attorney with a relationship to the debate. Since the integration ban compels cable companies to make their set-top boxes accessible to the same technology TiVo uses, set-top boxes developed after its repeal wouldn’t automatically be compatible with TiVo’s technology. The cable attorney also pointed out that the current environment in Congress makes it hard for any legislation to pass.

The integration ban isn’t the only FCC rule that requires companies to use CableCARDs, said TiVo General Counsel Matt Zinn. Some of the rules affected by the EchoStar U.S. Court of Appeals for the D.C. Circuit decision that stripped away parts of the FCC’s CableCARD rules also require companies to use CableCARDs. TiVo has asked the commission to reinstate them. “This makes TiVo’s petition for rulemaking all the more important,” Zinn told us. TiVo blamed the proposed law on cable companies. “We're disappointed that the cable industry has chosen this route rather than work with consumer electronics companies, such as TiVo, to forge an industry developed technology to replace CableCARD,” said the company in a news release.

Even if the bill doesn’t become a law, the discussion it kicks up around the integration ban could lead to change, said a CE official. The discussion of the bill will “highlight the costs” associated with separated security and the “questionable benefits,” the official said. The bill’s focus on the integration ban will likely lead to more consideration of how the video industry has changed since the rule was adopted by the FCC in 1998, said the official.

The bill text of HR-3196 is two pages and is direct in changing the Communications Act of 1934 to repeal the integration ban. It’s not yet posted online, but a spokeswoman for Latta provided us a copy. The bill provides new language into the law: “INTEGRATED DEVICES -- Nothing in this section or any other provision of this Act authorizes the Commission to adopt any rule or policy that prohibits a multichannel video programming distributor from placing into service navigation devices for sale, lease, or use that perform both conditional access and other functions in a single integrated device,” said the text. “Any such rule or policy adopted by the Commission prior to the date of enactment of this subsection shall cease to be effective on such date of enactment, and the Commission shall remove any such rule or policy from the rules of the Commission.” The bill made clear that nothing in it should be “construed to affect the authority” of the FCC under Section 629 of the Communications Act.

Getting rid of the integration ban will “scare” consumers away from CableCARD devices, said Public Knowledge Senior Staff Attorney John Bergmayer. “All this does is weaken the current system -- it doesn’t do much to bring out a successor to CableCARDs,” he said. “Unfortunately, the Latta and Green bill does not accomplish movement toward modernizing regulations to the benefit of consumers,” said CEA. “To the contrary, it reinforces the cable industry’s lock on consumer choice."

Cable associations support the proposal to get rid of the ban. The ban has been “especially harmful to small cable operators, who were forced to rely on expensive CableCARD-enabled boxes that were disproportionately more costly than for larger cable operators,” said the American Cable Association. NCTA said the bill recognizes “significant harms imposed by the integration ban, which since 2007 has forced consumers with leased set top boxes to bear over $1 billion in unnecessary costs.”