The U.S. Court of Appeals for the D.C. Circuit rejected Comcast's challenge of the Federal Communications Commission's decision not to grant it a waiver of its rule requiring the unbundling of security and surfing functions of its set-top boxes.
Comcast had argued that it qualified for a waiver; that it needed a waiver to help deliver new digital services and migrate customers to digital; and that the FCC's decision to deny the waiver was arbitrary and capricious given that the commission granted similar waivers to others.
The FCC said Comcast didn't need the waiver, adding that it was already offering digital services in all of its markets and was likely to do so absent a waiver.
The court found the FCC's explanation "quite reasonable." It said, "With or without a waiver, Comcast has a strong incentive to make as many services available as possible, and to continue introducing new high-value (and high-cost) features."
As for Comcast's argument that the waiver was inequitably applied since some companies were granted waivers for the exact same set-tops, the court agreed that "an agency’s unexplained departure from precedent must be overturned as arbitrary and capricious," but did not agree that this had been the case with the FCC.
The court pointed out that the other waivers were granted not by the commission, but by its Media Bureau, and they had not been appealed to the full commission. The court said unappealed staff decisions are not precedential.
Comcast pointed out that it did not appeal those because it agreed with them, but the court said that was immaterial and that without an appeal, it has no idea how the commission would have rules.
“While we are disappointed in this decision, we will continue to actively deploy digital services to our consumers," Comcast government-affairs executive Sena Fitzmaurice said. "Our only interest has been to facilitate and accelerate the digital transition for our customers in the most cost-effective fashion. We’ve announced plans to help even more consumers to go digital faster and economically, and we will continue to bring innovative services to consumers.”
The court did suggest one course of action to Comcast if it wanted to force the full FCC into the picture.
"If Comcast believes it will be at a competitive disadvantage against video providers that have received waivers," the court said, "then it may petition the commission to revoke the waivers that have been granted by the Media Bureau. At that time, the FCC must either revoke the other waivers or offer a reasoned explanation for why it rejected Comcast’s waiver but granted the others."
Fitzmaurice had no comment on whether Comcast would take that step.
"Today's ruling by the D.C. Circuit brings the vision of a copmetitive market for TV set-top boxes closer to reality," said FCC spokesman Clyde Ensslin. "Ten years ago, Congress and the FCC envisioned consumers being able to walk into their local retail store and buy TVs and set-tops from any manufacturer that would work on any cable system. This will create greater choice for consumers."