AT&T-Comcast Merger Provides Congress With Opportunity To Accelerate DTV Transition, Testifies Consumer Electronics Manufacturer

Calls For Senate Antitrust Subcommittee Action To Ensure Competitive Retail Market For Set-Top BoxesSays Subcommittee Approach To Cable Merger Could Either Hinder Or Ensure Retail Cable Product Competition

29-Apr-02

Testifying in a congressional hearing focusing on the proposed AT&T-Comcast merger, Mitsubishi Consumer Electronics Vice President of Marketing Bob Perry called on the Senate Judiciary Subcommittee on Antitrust to insist on a commitment that an AT&T-Comcast merger be used to deconstruct rather than reinforce the current monopoly structure, particularly as it pertains to the marketplace for digital cable equipment and the digital television (DTV) transition.""The fox does not simply rule the henhouse; it is owner and sole tenant,"" Perry said of the current cable set-top box market. ""[AT&T-Comcast's] combined intentions and single checkbook will determine whether this product market remains closed to viable competition, or finally becomes the open and competitive market that Chairman Leahy envisioned in 1992, and that the Congress demanded in 1996.""In 1996 Congress adopted Section 629 of the Telecommunications Act in order to create a competitive retail market for cable set-top boxes and other ""navigation devices."" The Federal Communications Commission (FCC) delegated responsibility for devising specifications for retail manufacturers to CableLabs, a cable industry consortium. Some progress has been made, but no implementation timetable or enforcement mechanism exists to ensure a national ""plug and play"" cable standard. The Consumer Electronics Association (CEA), which represents every major manufacturer of DTV products, has consistently said that the longer this issue languishes, the more proprietary boxes enter the market, effectively foreclosing a truly competitive landscape.In his testimony, Perry outlined the steps necessary to eliminate the competitive obstacles facing consumer electronics manufacturers and seventy percent of American households, because of the absence of any retail DTV product that connects directly to any cable system. According to Perry's outline, AT&T-Comcast executives must first pledge that by a specified date AT&T-Comcast devices will follow the same rules and specifications set for competitors, and that these will not discriminate against competitive features. Second, they must make a commitment that the merged company would investigate CableLabs' extensive and time-consuming certification practices for competitive products and work expeditiously toward self-certification, as in other standards areas. Finally, they must reject selectable output control by which high-definition outputs, home network connections, and recordable interfaces can be shut off by technical means, thus depriving consumers not only of the promise of high-definition television, but also of the fair use practices and home recording rights enjoyed by Americans for more than twenty years.CEA today echoed Perry's sentiments and reaffirmed that cable compatibility can only be accomplished with a national standard for digital cable transmission, an agreement from the cable industry to provide electronic program guide (EPG) information and standards for impulse pay-per-view, as well as an assurance of fair cable licensing. Without this, the real harm is that cable consumers will still be deprived of the benefits of a competitive marketplace: more choice, lower prices, and superior products.