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CONTACT: Amy Smorodin
October 23, 2007
(202) 289-8928
FCC Should Not Interfere in Cable Application Market
Federally Controlled Application Standards Could Impede Innovation

WASHINGTON D.C. - The Federal Communications Commission should refrain from regulating technical standards in the cable industry, explains Adam Thierer in "Unplugging Plug-and-Play Regulation," a Progress on Point released today by The Progress & Freedom Foundation. The author warns that leaving standards creation in control of the government, as opposed to private negotiation, would do little to benefit consumers. Instead, FCC-controlled standards could hinder the cable applications and platform market by restricting future development and innovation to inferior technology.

In his paper, Thierer, PFF Senior Fellow and Director of the Center for Digital Media Freedom, addresses two competing proposals currently before the FCC concerning ways the FCC can facilitate development of two-way cable services, such as pay-per-view and video-on-demand. One proposal from the consumer electronics industry requests that the FCC impose "common carrier" type regulations on cable facilities in order to ensure third party service providers are able to have input into interoperability standards for their products. However, the author warns, "regulation of this market could impose significant costs on industry and consumers alike by locking in sub-optimal technical standards and expanding the FCC's authority to micro-manage the industry in the future."

Thierer explains that FCC regulation can only be warranted if there is an identified market failure in the cable applications market. With no reported exclusions of third-party services and applications, pre-emptive regulation is not justified. Consumer demand and other entertainment platforms, such as FIOS and programming available via the Internet, provide competition in the market which will discourage attempts to block application providers. The FCC should also not deny cable companies the right to develop services and applications for their networks in favor of third-party innovation.

Thierer concludes that if the FCC wants to promote development of features and services for cable, they should refrain from imposing open access type regulations. Instead, he explains, "the better approach is to encourage ongoing marketplace experimentation, private negotiations, and greater facilities-based competition."

"Unplugging Plug-and-Play Regulation," is available on the PFF website.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation