Dec. 7, 2001 — The Federal Communications Commission has told St. Thomas-St. John Cable TV it must unscramble its basic cable service, rejecting the company's argument that the scrambling is a means of thwarting cable pirates and saving hundreds of thousands of dollars a year.
Caribbean Cable Corp., the name under which St. Thomas-St. John Cable TV is licensed, filed a petition for special relief asking the FCC to waive its rule against scrambling basic-service cable signals. It was a move 510 petitioners on St. Thomas and St. John, the Public Services Commission and the Attorney General's Office opposed.
The company contended that the theft of basic-tier service and costs associated with eliminating signal leakages caused by illegal connections warranted waiving the FCC rules. But in a decision a week ago the FCC's Cable Services Bureau denied the waiver.
FCC law dating from 1992 requires that cable providers refrain from scrambling basic-service signals, so as to "significantly advance compatibility by ensuring that all subscribers are able to receive basic-tier signals 'in the clear' and that basic-only subscribers with cable-ready televisions will not need set-top [unscrambling] devices." But the law also provides for waivers of the scrambling prohibition upon showing of "either a substantial problem with theft of basic-tier service or a strong need to scramble basic signals for other reasons."
The cable company stated that prior to the upgrade of its system following Hurricane Hugo in 1989, when it carried all signals on a single, unscrambled service tier, "theft was a serious problem." Before the cable company began to scramble its signal, there were 523 illegal connections and 13,754 legal subscribers, it said.
Since the upgrade, the company said, theft of service has ceased. But it contended that if it were required to unscramble its 21-channel basic-tier service, it likely would once again be "victimized by large numbers of cable pirates," resulting in annual costs of more than $200,000 plus $80,000 for equipment. That additional expense, the company argued, would prevent it from providing the lowest-cost service to its subscribers.
However, at present, basic-tier subscribers must pay a monthly fee of $3.05 for a converter box, plus a refundable deposit of $45. No such converter will be needed if the signal is unscrambled.
The PSC noted that prior to the upgrade and conversion of the cable system, unauthorized users would have had access to the company's single service tier. That service has now been separated into basic and cable-tier programming, it noted. Since the FCC requires a showing of basic-tier theft to consider a waiver, the PSC said, the company's request was inadequate because it was not based solely on theft from its basic tier.
The PSC also pointed out that the company said just 6 percent of its subscribers are on basic service today. Thus, the incentive to create unauthorized connections to an unscrambled basic-only service would be "radically different" from what existed when the system offered only a single, 33-channel tier, the PSC said.
The Attorney General's Office said the cable company has a theft-of-service rate of 2.66 percent, whereas the industry average for similar-sized systems is about 10 percent. The AG's Office also said that the company had pursued legal remedies in only seven of the 523 reported incidents of unauthorized connections, two of which involved company employees. That, it argued, did not represent the type of problem that would warrant a waiver of FCC rules.
The cable company responded that the AG's Office understated the rate of theft, which the company placed at about 4.15 percent with "probably closer to 747 instances." It also said its pursuit of remedies through the Attorney General's Office were unsuccessful.
However, the FCC noted that even with the company's figures, its theft rate was still "less than half the national average." Also, it said, since the company rebuilt its distribution system at the same time it began scrambling its signal, the leaks prior to that might have been "due to the old distribution plant."
