The FCC doesn't have the authority to implement "plug and play" rules that have seen consumer electronics manufacturers build TVs containing slots for CableCARDs that can be used to decrypt cable programming without using a set-top, an appeals court ruled Tuesday.
The ruling is a victory for Dish Network (Nasdaq: DISH), which complained that the FCC didn't include satellite TV providers in negotiations it held with cable MSOs and 14 CE manufacturers in 2003. While the FCC rules were intended to create a retail market for set-tops and TVs that could decrypt cable programming, cable operators haven't seen much demand from consumers for CableCARDs.
Dish had argued that the FCC's rules shouldn't be applied to all multichannel video providers. "Applying the encoding rules to cable providers may meet consumer expectations with respect to the market for cable devices, but that is no reason to impose these rules on all MVPDs," Judge Janice Rogers Brown said in Tuesday's ruling.
It's not clear how the ruling could impact FCC rules that require cable operators to give consumers the option of installing CableCARDs in TVs and set-tops purchased in retail outlets, or the FCC's AllVid proceeding, which is focused on developing adapters that would replace CableCARDs. The FCC said that it is reviewing the decision.
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