FCC encoding rules negated by appeals court

Dish prevails after noting it hadn't participated in 2002 negotiation process

A federal appellate court has struck down a series of decade-old FCC-encoding guidelines designed to pave the way for “plug and play” televisions that do not require set-top boxes for cable and satellite service.

In its decision the D.C. Circuit Court of Appeals sided with satellite provider Dish Network, which argued that it never took part in the 2002 negotiations between the cable industry and electronics firms. Those talks resulted in an agreement that in turn led to FCC guidelines that spelled out what distributors could encode in their programming and also banned “selectable output control,” in which program feeds can be remotely shut off on a case-by-case basis.

The FCC claimed that it had authority to impose the rules under the Telecommunications Act of 1996, which includes a provision designed to create a separate market for TV navigation technology from the set-top boxes provided by the cable business.

“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” multichannel TV providers, the appellate court said in its ruling, which was released Tuesday.

The appellate judges doubted that the FCC’s “rigid imposition” of the encoding rules was essential, as the FCC has since provided a waiver, at the request of the MPAA, on selectable output control. Studios sought the waiver, saying it was needed to provide high-definition movies to consumers in shorter release windows while protecting the works from being pirated.