Cable is having a tough year. Comcast was punished by the FCC for its network management practices, Time Warner Cable will soon have to compete for customers with Verizon FiOS in New York City, and now Cox Communications and TWC have been fined for what the FCC considers to be anti-competitive practices.

Cox, TWC, and TWC-division Oceanic have been fined $20,000 each for deploying technology that cut access to certain channels for customers using CableCard devices such as cable-ready digital TVs and TiVo boxes.

The companies violated FCC rules by "preventing subscribers with CableCard-equipped unidirectional digital cable products from using their navigation devices to access these channels."

What does that actually mean?

Traditionally, cable companies deliver channels to a viewer all at once and they navigate them accordingly. This takes up a lot of bandwidth, however, so these cable providers last year moved to a switched digital video (SDV) system in Virginia, Missouri, and Hawaii to deliver channels one at a time.

Cable customers with set-top boxes probably didn't even notice the change, but customers who did not have set-top boxes from the cable companies and relied on one-way plug-and-play or CableCard devices were left without access to certain channels.

Plug and play allows consumers to connect to cable services without the assistance of a set-top box. The Consumer Electronics Association (CEA) and the National Cable and Telecommunications Association (NCTA) came to an agreement in 2002 over one-way "plug and play", which allows for the viewing of digital and premium programming without a set-top box. The FCC adopted this arrangement in 2003.

The following year, meanwhile, the FCC ruled that the conditional access system normally integrated into a cable set-top box, out of sight of the consumer, had to be separated into a modular card known as a CableCard. While the deadline to implement CableCards was initially set for July 1, 2006, lobbying by the cable industry pushed that deadline until July 1, 2007.

The one-way deal and CableCard decision, however, did not address two-way "plug and play" interactive services such as video on-demand. After battling for months, CEA and NCTA agreed earlier this year to adopt the Java-based "tru2way" solution powered by CableLabs, new streamlined technology licenses, and new ways for all those involved to cooperate in the development of tru2way technology at CableLabs.

A two-way system under tru2way would solve the problem for customers whose service was cut under Cox and TWC's SDV system. But the first tru2way device was only released a week ago by Comcast and Panasonic, so it might be months before all cable companies have a tru2way offering on the market.

As a result, Cox, TWC, and Oceanic must pay up--and offer refunds to those customers whose service was affected.

All three companies deny any wrongdoing. TWC notified its customers and offered them two years of set-top box service at the same price they currently pay. Cox, meanwhile, offered one year at the same price or three months of DVR.

The cable companies told the FCC that they are free to innovate and introduce new products and should not have to take into account whether the consumer electronics industry can keep up and deploy similar products and services. [Via Ars]