This afternoon at the big Consumer Electronics Show in Las Vegas, FCC Chairman Kevin Martin spent an hour talking about his public policy priorities with Gary Shapiro, the head of the Consumer Electronics Association.

The only real news from the discussion was Martin's disappointing announcement that the Commission would not be granting the cable industry's request for relief from the set-top box "integration ban," which prevents cable and telco video providers from providing set-top boxes with integrated security features. (My PFF colleague Tom Lenard penned an excellent essay on this silly regulatory industrial policy if you need more background). These rules just retard sensible market innovation and drive up consumer costs.

Chairman Martin also used the opportunity to put in another plug for a la carte regulation. "It would be positive for consumers" and "a good thing" he said. He cited the FCC's second report on the matter which he commissioned and ignored the agency's earlier report which came to opposite conclusion. (Details here).

On other issues, Chairman Martin waffled back-and-forth and didn't seem to come to any definitive conclusions. For example:

> When asked about the state of the broadband marketplace and the role he thought the government should play Martin responded that he has tried to develop a regulatory framework that encourages inter-model competition by removing barriers to entry and ensuring a level playing field. The problem with the old Telecom Act regime, Martin argued, is that "different services are regulated in different ways when in reality all of these services are going to be competing" in the future. But government still has a role in addressing "market failures," he argued, including law enforcement and public safety concerns as well as access and affordability of communications services in rural areas.

> On municipal broadband, Martin said that we should aim to try to develop an environment in which private carriers are providing infrastructure, but this must be balanced against the needs of under-served areas. Communities should be able to provide service in those areas. On the other hand, he said he didn't want municipal governments building competing networks if private alternatives exist.

> On Net neutrality, he said that basic principles are now in place to protect consumers from being blocked, but carriers need to be able to structure tiers to offered advanced services. The real debate, he argued, is over what "non-discrimination" means. But it should not mean "non-charging" (his term) for specialized service especially since that could undermine infrastructure innovation.

> On unlicensed spectrum, he said that the FCC can provide some additional spectrum for such uses, but that we have to make sure it doesn't interfere with existing uses or users.

> On "broadcast flag" / "audio flag" issues, Martin said it is important that we try to provide content protection, but we must balance that against consumer fair use interests.

> On satellite mergers (EchoStar + DirecTV and XM + Sirius), he said that new developments in the video field (especially telco-provided TV) might change the calculus somewhat if EchoStar and DirecTV attempted to merge again. But he kept saying that each merger would be evaluated on the facts when brought before the Commission and refused to give much indication how things would come out.

He was also asked by Shapiro what his favorite consumer electronics gadget was and he said it was his cell phone. He spent a great deal of time talking about wireless / spectrum policy issues and stressed that the agency had been taking several important steps to free up more spectrum. He mentioned the exciting new mobile developments already occurring and cited mobile TV on cell phones as an example on a hot new wireless service that was being seen on the CES show floor this year. "The ability to watch TV on cell phones will be very popular," he predicted. The digital TV transition should facilitate even more exciting developments, he argued. And it is finally taking off thanks to Congress setting a hard deadline.