FCC is cable-overready

Kennard: If parties don't agree on labeling standards by summer, U.S. will step in

F CC Chairman William Kennard, frustrated by six years of bickering among the cable industry, equipment makers and Hollywood, says "time is running out" on efforts to broker a private-sector deal. If industry agreements can't be reached, commission officials say they will move to impose their solution in late summer.

The government last week stepped closer to imposing its own solution to the cross-industry disputes that have prevented the manufacture of cable-compatible digital TV sets.

The proposal is expected to be made public this week and could lead to government labeling standards for cable-compatible DTV sets and to an FCC-selected technology for digital TV copy protection. The FCC will not favor specific solutions to either dispute but instead is asking for suggestions on the best way to go.

"It's about time," said Margita White, president of the Association for Maximum Service Television. "We've been calling for this for two years now."

Broadcasters say solving the interoperability disputes is critical to DTV implementation because the 70% of U.S. households that rely on cable won't have access to digital programming until the disagreements are resolved. In February, set makers and the cable industry settled two other interoperability disputes by agreeing to highly technical specifications for making DTV sets work with cable and to standards allowing cable subscribers to use on-screen program guides supplied by third parties.

The creation of labeling standards would settle a long-standing dispute over which sets could be listed as "cable-ready." The cable industry and manufacturers say a deal on the labeling issue is close enough that no government rule will be needed. It is now clear that all industries want to use terms that describe the sets' operational features rather than implying that some won't work with cable.

One possible solution has been to describe the 13-inch and larger sets that are expected to be outfitted with the "firewire" connections necessary for interactive communications as "two-way," while sets without the connections would be called "one-way." But marketing executives for equipment makers oppose that solution because it also would create the unfavorable impression that some sets are crippled or less than fully functional. "This would have been wrapped up a long time ago if the marketing people weren't involved," said one source familiar with the talks.

Commissioner Susan Ness also said disputes over the firewire, technically known as IEEE 1394 connector, have gone on too long. "I think it's been since 1394 that we have been addressing this issue," she quipped.

The cable industry has long opposed calling sets without firewire "cable-ready," fearing a consumer backlash when viewers realize that most small sets won't be able to take advantage of interactive digital services that cable systems plan to offer.

Solving the copy-protection standard fight appears much tougher, and industry groups are unwilling to predict whether they can reach a deal before the FCC acts.

At issue is whether the FCC should require sets to include the so-called 5C standard developed by Sony, Matsushita, Intel, Hitachi and Toshiba. The 5C standard appears to be the prevailing technology among set makers, but Zenith Corp. and Thompson Consumer Electronics have their own technology and are balking. The FCC will ask for comments on the merits of 5C and other technologies.