FCC s Martin Tells Cable TV Manufacturers To Resolve Dispute

Federal Communications Commission Chairman Kevin Martin said Tuesday it is essential that consumers be able to buy television sets that enable them to fully access interactive services in the future.

He was referring to a long-running dispute between cable operators and consumer electronics manufacturers over who will control consumers' viewing experience as new interactive services and products are developed.

Martin, speaking at the Consumer Electronics Show here, delivered a positive message to those in the consumer electronics industry who want the FCC to create new rules to resolve the dispute.

"We're trying to find a way to ensure the consumer electronics companies are able to build equipment that can attach to cable companies' systems and display not only one-way content, but two-way content without having to have set-top boxes attached," said Martin.

Two-way content refers to interactive services. The most popular now are video-on-demand and pay-per-view, but other services are in the works, such as live voting on reality TV shows, the ability to pay cable bills and uploading digital photos onto TV sets.

A majority of electronics companies have refused to sign an accord with the large cable companies that would give them access to a new technological standard that will eventually be adopted by all cable systems across the country. That standard would enable a manufacturer to design new interactive services confident that viewers could fully access them regardless of who their cable provider is or where they are in the country.

In exchange, cable companies have demanded control over aspects of the television interface, including the electronic program guides on digital TVs that are seen by both sides to the dispute as crucial to controlling the consumer experience.

Those consumer electronics firms that refuse to sign on to the cable licensing terms are not being granted access to services developed by cable such as video- on-demand and pay-per-view television.

We need to make "sure there aren't onerous terms in those agreements that effectively prohibit devices that consumers want," said Martin.

After talks between the two sides ground to a halt again last year, the FCC intervened, publishing a rule-making proposal that could see it mandating a solution to the problem.

There had been some speculation that Martin would come to the CES to announce the FCC's decision in the matter, but while he spoke at length about the issue, he didn't tip the agency's hand about what the final outcome would be.

Comcast Corp. (CMCSA, CMCSK) recently announced it had reached an agreement with TiVo Inc. (TIVO) in which the popular digital video recorder maker agreed to sign on to the cable standard.

And on Monday, Comcast and Panasonic Electronics USA, a unit of Japan's Matsushita Electric Industrial Co. Ltd. (MC), unveiled the first television that is fully compatible with the standard.

Speaking to reporters after his formal remarks, Martin welcomed the agreements, saying they were a sign of progress.

"I would encourage both industries to continue to try and develop a common standard they could agree to," said Martin. "Every time the industry takes steps on their own and sign deals that would address this issue, I think it helps, but I do think we need to have an overall standard."

While on the surface the issue may be appear to be arcane, both cable operators and consumer electronics manufacturers eagerly look to potentially lucrative interactive services they could offer in the future as important revenue streams.

With neither side willing to acquiesce, analysts say it is increasingly likely the FCC will ultimately have to resolve the dispute.

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FCC s Martin Tells Cable TV Manufacturers To Resolve Dispute