[Federal Register Volume 68, Number 11 (Thursday, January 16, 2003)]
[Proposed Rules]
[Pages 2278-2283]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-948]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 73 and 76

[CS Docket No. 97-80; PP Docket No. 00-67; FCC 03-3]


Commercial Availability of Navigation Devices; Compatibility 
Between Cable Systems and Consumer Electronics Equipment

AGENCY: Federal Communications Commission.

ACTION: Further notice of proposed rulemaking.

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SUMMARY: This document initiates a rulemaking seeking public comment on 
a memorandum of understanding reached among members of the cable 
television and consumer electronics manufacturing industries on a cable 
compatibility standard for an integrated, unidirectional digital cable 
television receiver.

DATES: Comments due March 28, 2003; reply comments are due April 28, 
2003. Written comments on the proposed information collection(s) must 
be submitted by the public, Office of Management and Budget (OMB), and 
other interested parties on or before March 17, 2003.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554. For further filing instructions, see 
SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT: Susan Mort, 202-418-1043 or 
[email protected]. For additional information concerning the information 
collection(s) contained in this document, contact Judith B. Herman at 
202-418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
further notice of proposed rulemaking (``FNPRM''), FCC 03-3, adopted 
January 7, 2003; released January 10, 2003. The full text of the 
Commission's FNPRM, including the memorandum of understanding 
referenced herein, is available for inspection and copying during 
normal business hours in the FCC Reference Center (Room CY-A257) at its 
headquarters, 445 12th Street, SW., Washington, DC 20554, or may be 
purchased from the Commission's copy contractor, Qualex International, 
(202) 863-2893, Portals II, Room CY-B402, 445 12th St., SW, Washington, 
DC 20554, or may be reviewed via Internet at http://www.fcc.gov/mb.

Initial Paperwork Reduction Act of 1995 Analysis

    This FNPRM contains proposed information collection(s). The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and the Office of Management and 
Budget (OMB) to comment on the information collection(s) contained in 
this FNPRM, as required by the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. Public and agency comments are due at the same time 
as other comments on this FNPRM; OMB notification of action is due 
March 17, 2003. Comments should address: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
burden estimates; (c) ways to enhance the quality, utility, and clarity 
of the information collected; and (d) ways to minimize the burden of 
the collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology.
    In addition to filing comments with the Secretary, a copy of any 
comments on the information collections contained herein should be 
submitted to Judith B. Herman, Federal Communications Commission, Room 
1--C804, 445 12th Street, SW., Washington, DC 20554, or via the 
Internet to [email protected], and to Kim A. Johnson, OMB Desk Officer, 
Room 10236 NEOB, 725 17th Street, NW., Washington, DC 20503, or via the 
Internet to [email protected].
    OMB Control Number: 3060-[XXXX].
    Title: Commercial Availability of Navigation Devices and 
Compatibility Between Cable Systems and Consumer Electronics Equipment, 
FNPRM, CS Docket No. 97-80 and PP Docket No. 00-67.
    Form Number: Not applicable.
    Type of Review: New collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 554.
    Estimated Time per Response: 30 seconds.

[[Page 2279]]

    Frequency of Response: On occasion reporting requirements; Third 
party disclosure.
    Total Annual Burden: 36,667 hours.
    Total Annual Costs: None.
    Needs and Uses: The FNPRM seeks comment on two proposed information 
collections. The first is a voluntary labeling regime for 
unidirectional digital cable television receivers and related digital 
cable products. The proposed regime would prevent consumer electronics 
manufacturers from labeling or marketing products as ``digital cable 
compatible'' (or an alternative term to be established) unless they 
meet certain specified technical standards ensuring their compatibility 
with digital cable systems. Pursuant to the second information 
collection, consumer electronics manufacturers would be required to 
provide consumers with appropriate post-sale material, such as an 
owner's guide, describing the features and functionality of the 
product. We estimate that the total labeling and consumer disclosure 
burden for collections of information under the proposed rules is 
36,667 hours.

Synopsis of the Further Notice of Proposed Rulemaking

    1. The Commission initiated its Commercial Availability of 
Navigation Devices proceeding by notice of proposed rulemaking in CS 
Docket No. 97-80 (FCC 97-53), 62 FR 10011, March 5, 1997, and later 
issued a further notice of proposed rulemaking and declaratory ruling 
(FCC 00-341), 65 FR 58255, September 28, 2000. In its Compatibility 
Between Cable Systems and Consumer Electronics Equipment proceeding, 
the Commission adopted a notice of proposed rulemaking in PP Docket No. 
00-67 (FCC 00-137), 65 FR 24671, April 27, 2000. In connection with the 
ongoing digital television (``DTV'') transition, certain commenters in 
these proceedings have expressed the need for adoption of a standard to 
ensure the compatibility of cable television systems with DTV receivers 
and related consumer electronics equipment. To this end, the consumer 
electronics and cable industries are engaged in ongoing inter-industry 
discussions seeking to establish a so-called ``cable plug and play'' 
standard. Such a standard would allow consumers to directly attach 
their DTV receivers to cable systems and receive cable television 
services without the need for an external navigation device.
    2. On December 19, 2002, the members of this discussion group, 
headed by the Consumer Electronics Association (``CEA'') and the 
National Cable and Telecommunications Association (``NCTA''), filed 
with the Commission a memorandum of understanding (``MOU'') which 
details an agreement on a cable compatibility standard for an 
integrated, unidirectional digital cable television receiver, as well 
as other unidirectional digital cable products. NCTA and CEA assert 
that unidirectional digital cable television receivers manufactured 
pursuant to the MOU would be capable of receiving analog basic, digital 
basic and digital premium cable television programming by direct 
connection to a cable system providing digital programming. The 
receivers would have a Digital Visual Interface (``DVI'') connector 
with High-Bandwidth Digital Content Protection (``HDCP'') to connect 
with other consumer electronics devices. The MOU also calls for such 
receivers to contain a point of deployment (``POD'') interface slot 
into which a POD module provided by the cable operator would be 
inserted in order to view encrypted programming. Due to the 
unidirectional nature of this receiver specification, an external 
navigation device will still be needed to receive advanced features 
such as cable operator-enhanced electronic programming guides 
(``EPGs''), impulse pay per view (``IPPV'') or video on demand 
(``VOD''). The MOU indicates that the discussion group continues to 
work on a bidirectional receiver specification which would eliminate 
the need for an external navigation device to receive advanced 
services.
    3. The compromise reached in the MOU, as detailed in the FNPRM, 
requires, inter alia, the consumer electronics and cable television 
industries to commit to certain voluntary acts and seeks the creation 
or revision of Commission rules in the following general areas:
    (1) Requiring digital cable systems with an activated channel 
capacity of 750 MHz or greater to support operation of unidirectional 
digital cable products and to ensure that navigation devices utilized 
in connection with such systems have an IEEE 1394 interface and comply 
with specified technical standards;
    (2) Establishing a labeling regime for unidirectional digital cable 
television receivers and related digital cable products that meet 
certain technical specifications that would be voluntarily used by 
consumer electronics manufacturers. This regime would include testing 
and self-certification standards, as well as consumer information 
disclosures to purchasers of such receivers and products;
    (3) Prohibiting the use of selectable output controls by all 
multichannel video programming providers (``MVPDs''); and
    (4) Adopting encoding rules for audiovisual content applicable to 
all MVPDs.
    4. We hereby seek comment on the MOU and the proposed Commission 
rules contained therein. We also seek comment on the potential impact 
of the MOU and its proposed rules upon consumers, content providers, 
small cable operators and MVPDs other than cable operators, as well as 
the jurisdictional basis for Commission action in this area, including 
the creation of encoding rules for audiovisual content provided by 
MVPDs. As to issues not addressed by the MOU, such as the down-
resolution of programming, we seek comment on whether Commission action 
is needed and authorized. We also seek comment on any other issues 
germane to the Commission's consideration of the MOU and these proposed 
rules.
    5. Authority. This FNPRM is issued pursuant to authority contained 
in sections 1, 4(i), 4(j), 303, 403, 601, 624A and 629 of the 
Communications Act of 1934, as amended.
    6. Ex Parte Rules--Non-Restricted Proceeding. This is a non-
restricted notice and comment rulemaking proceeding. Ex parte 
presentations are permitted, except during the Sunshine Agenda period, 
provided that they are disclosed as provided in the Commission's Rules. 
See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).
    7. Accessibility Information. Accessible formats of this FNPRM 
(computer diskettes, large print, audio recording and Braille) are 
available to persons with disabilities by contacting Brian Millin, of 
the Consumer & Governmental Affairs Bureau, at (202) 418-7426, TTY 
(202) 418-7365, or at [email protected].
    8. Comment Information. Pursuant to Sec. Sec.  1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments on or before March 28, 2003, and reply comments on or 
before April 28, 2003. Comments may be filed using the Commission's 
Electronic Comment Filing System (ECFS) or by filing paper copies. See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 
(1998).
    9. Comments filed through the ECFS can be sent as an electronic 
file via the Internet to http://www.fcc.gov/e-file/ecfs.html. 
Generally, only one copy of an electronic submission must be filed. If 
multiple docket or rulemaking numbers appear in the caption of this

[[Page 2280]]

proceeding, however, commenters must transmit one electronic copy of 
the comments to each docket or rulemaking number referenced in the 
caption. In completing the transmittal screen, commenters should 
include their full name, U.S. Postal Service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit an 
electronic comment by Internet e-mail. To get filing instructions for 
e-mail comments, commenters should send an e-mail to [email protected], and 
should include the following words in the body of the message, ``get 
form .'' A sample form and directions 
will be sent in reply. Parties who choose to file by paper must file an 
original and four copies of each filing. If more than one docket or 
rulemaking number appear in the caption of this proceeding, commenters 
must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although we continue to experience delays in 
receiving U.S. Postal Service mail). The Commission's contractor, 
Vistronix, Inc., will receive hand-delivered or messenger-delivered 
paper filings for the Commission's Secretary at 236 Massachusetts 
Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this 
location are 8 a.m. to 7 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes must be disposed of 
before entering the building. Commercial overnight mail (other than 
U.S. Postal Service Express Mail and Priority Mail) must be sent to 
9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service 
first-class mail, Express Mail, and Priority Mail should be addressed 
to 445 12th Street, SW., Washington, DC 20554. All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission.
    10. Regulatory Flexibility Act. As required by the Regulatory 
Flexibility Act, the Commission has prepared an Initial Regulatory 
Flexibility Analysis (``IRFA'') of the possible significant economic 
impact on a substantial number of small entities of the proposals 
addressed in this FNPRM. Written public comments are requested on the 
IRFA. These comments must be filed in accordance with the same filing 
deadlines for comments on the FNPRM, and they should have a separate 
and distinct heading designating them as responses to the IRFA.

Initial Regulatory Flexibility Analysis

    11. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA'') the Commission has prepared this initial regulatory 
flexibility analysis (``IRFA'') of the possible significant economic 
impact on small entities by the policies and rules proposed in this 
further notice of proposed rulemaking (``FNPRM''). Written public 
comments are requested on this IRFA. Comments must be identified as 
responses to the IRFA and must be filed by the deadlines for comments 
on the FNPRM provided above in paragraph 8. The Commission will send a 
copy of the FNPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration. In addition, the FNPRM 
and IRFA (or summaries thereof) will be published in the Federal 
Register.
    12. Need for, and Objectives of, the Proposed Rules. The need for 
FCC regulation in this area derives from the lack of a so-called cable 
compatibility ``plug and play'' standard for a digital cable television 
receiver and related digital cable television consumer electronics 
equipment. The absence of such a standard has been identified as a key 
impediment to the anticipated rate and scope of the transition to 
digital television (``DTV''). Such a standard would allow consumers to 
directly attach their DTV receivers to cable systems and receive 
certain cable television services without the need for an external 
navigation device. Since more than 60 percent of television households 
subscribe to cable programming services, the availability of digital 
cable television receivers and products would encourage more consumers 
to convert to DTV, thereby furthering the transition. Private industry 
negotiations between cable operators and consumer electronics 
manufacturers have resulted in a Memorandum of Understanding (``MOU'') 
on a cable compatibility standard for an integrated, unidirectional 
digital cable television receiver, as well as for other unidirectional 
digital cable products. The MOU requires the consumer electronics and 
cable television industries to each commit to certain voluntary acts 
and seeks the creation or revision of certain relevant Commission 
rules. The objective of the proposed rules, as embodied in the MOU, 
will be to facilitate the DTV transition.
    13. Legal Basis. The authority for the action proposed in this 
rulemaking is contained in sections 1, 4(i) and (j), 303, 403, 601, 
624A and 629 of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 154(i) and (j), 303, 403, 521, 544a and 549.
    14. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply. The RFA directs the Commission to 
provide a description of and, where feasible, an estimate of the number 
of small entities that will be affected by the proposed rules. The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental entity'' under section 3 of the Small Business Act. In 
addition, the term ``small business'' has the same meaning as the term 
``small business concern'' under the Small Business Act. A small 
business concern is one which: (1) Is independently owned and operated; 
(2) is not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(``SBA'').
    15. Television Broadcasting. The proposed rules and policies could 
affect television broadcasting licensees, and potential licensees of 
television service. The Small Business Administration defines a 
television broadcasting station that has no more than $12 million in 
annual receipts as a small business. Television broadcasting consists 
of establishments primarily engaged in broadcasting images together 
with sound, including the production or transmission of visual 
programming which is broadcast to the public on a predetermined 
schedule. Included in this industry are commercial, religious, 
educational, and other television stations. Also included are 
establishments primarily engaged in television broadcasting and which 
produce programming in their own studios. Separate establishments 
primarily engaged in producing programming are classified under other 
NAICS numbers.
    16. There were 1,509 television stations operating in the nation in 
1992. That number has remained fairly constant as indicated by the 
approximately 1,686 operating television broadcasting stations in the 
nation as of September 2001. For 1992, the number of television 
stations that produced less than $10.0 million in revenue was 1,155 
establishments. Thus, the new rules could affect approximately 1,686 
television stations; approximately 77%, or 1,298 of those stations are 
considered small businesses. These estimates may overstate the number 
of small entities since the revenue figures on which they are based do 
not include or aggregate

[[Page 2281]]

revenues from non-television affiliated companies.
    17. Cable and Other Program Distribution. The SBA has developed a 
small business size standard for cable and other program distribution 
services, which includes all such companies generating $12.5 million or 
less in revenue annually. This category includes, among others, cable 
operators, direct broadcast satellite (``DBS'') services, home 
satellite dish (``HSD'') services, multipoint distribution services 
(``MDS''), multichannel multipoint distribution service (``MMDS''), 
Instructional Television Fixed Service (``ITFS''), local multipoint 
distribution service (``LMDS''), satellite master antenna television 
(``SMATV'') systems, and open video systems (``OVS''). According to the 
Census Bureau data, there are 1,311 total cable and other pay 
television service firms that operate throughout the year of which 
1,180 have less than $10 million in revenue. We address below each 
service individually to provide a more precise estimate of small 
entities.
    18. Cable Operators. The Commission has developed, with SBA's 
approval, our own definition of a small cable system operator for the 
purposes of rate regulation. Under the Commission's rules, a ``small 
cable company'' is one serving fewer than 400,000 subscribers 
nationwide. We last estimated that there were 1,439 cable operators 
that qualified as small cable companies. Since then, some of those 
companies may have grown to serve over 400,000 subscribers, and others 
may have been involved in transactions that caused them to be combined 
with other cable operators. Consequently, we estimate that there are 
fewer than 1,439 small entity cable system operators that may be 
affected by the decisions and rules proposed in this Further Notice.
    19. The Communications Act, as amended, also contains a size 
standard for a small cable system operator, which is ``a cable operator 
that, directly or through an affiliate, serves in the aggregate fewer 
than 1% of all subscribers in the United States and is not affiliated 
with any entity or entities whose gross annual revenues in the 
aggregate exceed $250,000,000.'' The Commission has determined that 
there are 68,500,000 subscribers in the United States. Therefore, an 
operator serving fewer than 685,000 subscribers shall be deemed a small 
operator if its annual revenues, when combined with the total annual 
revenues of all of its affiliates, do not exceed $250 million in the 
aggregate. Based on available data, we find that the number of cable 
operators serving 685,000 subscribers or less totals approximately 
1,450. Although it seems certain that some of these cable system 
operators are affiliated with entities whose gross annual revenues 
exceed $250,000,000, we are unable at this time to estimate with 
greater precision the number of cable system operators that would 
qualify as small cable operators under the definition in the 
Communications Act.
    20. Direct Broadcast Satellite (``DBS'') Service. Because DBS 
provides subscription services, DBS falls within the SBA-recognized 
definition of cable and other program distribution services. This 
definition provides that a small entity is one with $12.5 million or 
less in annual receipts. There are four licensees of DBS services under 
part 100 of the Commission's rules. Three of those licensees are 
currently operational. Two of the licensees that are operational have 
annual revenues that may be in excess of the threshold for a small 
business. The Commission, however, does not collect annual revenue data 
for DBS and, therefore, is unable to ascertain the number of small DBS 
licensees that could be impacted by these proposed rules. DBS service 
requires a great investment of capital for operation, and we 
acknowledge, despite the absence of specific data on this point, that 
there are entrants in this field that may not yet have generated $12.5 
million in annual receipts, and therefore may be categorized as a small 
business, if independently owned and operated.
    21. Home Satellite Dish (``HSD'') Service. Because HSD provides 
subscription services, HSD falls within the SBA-recognized definition 
of cable and other program distribution services. This definition 
provides that a small entity is one with $12.5 million or less in 
annual receipts. The market for HSD service is difficult to quantify. 
Indeed, the service itself bears little resemblance to other MVPDs. HSD 
owners have access to more than 265 channels of programming placed on 
C-band satellites by programmers for receipt and distribution by MVPDs, 
of which 115 channels are scrambled and approximately 150 are 
unscrambled. HSD owners can watch unscrambled channels without paying a 
subscription fee. To receive scrambled channels, however, an HSD owner 
must purchase an integrated receiver-decoder from an equipment dealer 
and pay a subscription fee to an HSD programming package. Thus, HSD 
users include: (1) Viewers who subscribe to a packaged programming 
service, which affords them access to most of the same programming 
provided to subscribers of other MVPDs; (2) viewers who receive only 
non-subscription programming; and (3) viewers who receive satellite 
programming services illegally without subscribing. Because scrambled 
packages of programming are most specifically intended for retail 
consumers, these are the services most relevant to this discussion.
    22. Multipoint Distribution Service (``MDS''), Multichannel 
Multipoint Distribution Service (``MMDS'') Instructional Television 
Fixed Service (``ITFS'') and Local Multipoint Distribution Service 
(``LMDS''). MMDS systems, often referred to as ``wireless cable,'' 
transmit video programming to subscribers using the microwave 
frequencies of the MDS and ITFS. LMDS is a fixed broadband point-to-
multipoint microwave service that provides for two-way video 
telecommunications.
    23. In connection with the 1996 MDS auction, the Commission defined 
small businesses as entities that had annual average gross revenues of 
less than $40 million in the previous three calendar years. This 
definition of a small entity in the context of MDS auctions has been 
approved by the SBA. The MDS auctions resulted in 67 successful bidders 
obtaining licensing opportunities for 493 Basic Trading Areas 
(``BTAs''). Of the 67 auction winners, 61 met the definition of a small 
business. MDS also includes licensees of stations authorized prior to 
the auction. As noted, the SBA has developed a definition of small 
entities for pay television services, which includes all such companies 
generating $12.5 million or less in annual receipts. This definition 
includes multipoint distribution services, and thus applies to MDS 
licensees and wireless cable operators that did not participate in the 
MDS auction. Information available to us indicates that there are 
approximately 850 of these licensees and operators that do not generate 
revenue in excess of $12.5 million annually. Therefore, for purposes of 
the IRFA, we find there are approximately 850 small MDS providers as 
defined by the SBA and the Commission's auction rules.
    24. The SBA definition of small entities for cable and other 
program distribution services, which includes such companies generating 
$12.5 million in annual receipts, seems reasonably applicable to ITFS. 
There are presently 2,032 ITFS licensees. All but 100 of these licenses 
are held by educational institutions. Educational institutions are 
included in the definition of a small business. However, we do not 
collect annual revenue data for ITFS licensees, and are not able to 
ascertain how many of the 100 non-educational licensees would be

[[Page 2282]]

categorized as small under the SBA definition. Thus, we tentatively 
conclude that at least 1,932 licensees are small businesses.
    25. Additionally, the auction of the 1,030 LMDS licenses began on 
February 18, 1998, and closed on March 25, 1998. The Commission defined 
``small entity'' for LMDS licenses as an entity that has average gross 
revenues of less than $40 million in the three previous calendar years. 
An additional classification for ``very small business'' was added and 
is defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding calendar 
years. These regulations defining ``small entity'' in the context of 
LMDS auctions have been approved by the SBA. There were 93 winning 
bidders that qualified as small entities in the LMDS auctions. A total 
of 93 small and very small business bidders won approximately 277 A 
Block licenses and 387 B Block licenses. On March 27, 1999, the 
Commission re-auctioned 161 licenses; there were 40 winning bidders. 
Based on this information, we conclude that the number of small LMDS 
licenses will include the 93 winning bidders in the first auction and 
the 40 winning bidders in the re-auction, for a total of 133 small 
entity LMDS providers as defined by the SBA and the Commission's 
auction rules.
    26. In sum, there are approximately a total of 2,000 MDS/MMDS/LMDS 
stations currently licensed. Of the approximate total of 2,000 
stations, we estimate that there are 1,595 MDS/MMDS/LMDS providers that 
are small businesses as deemed by the SBA and the Commission's auction 
rules.
    27. Satellite Master Antenna Television (``SMATV'') Systems. The 
SBA definition of small entities for cable and other program 
distribution services includes SMATV services and, thus, small entities 
are defined as all such companies generating $12.5 million or less in 
annual receipts. Industry sources estimate that approximately 5,200 
SMATV operators were providing service as of December 1995. Other 
estimates indicate that SMATV operators serve approximately 1.5 million 
residential subscribers as of July 2001. The best available estimates 
indicate that the largest SMATV operators serve between 15,000 and 
55,000 subscribers each. Most SMATV operators serve approximately 
3,000-4,000 customers. Because these operators are not rate regulated, 
they are not required to file financial data with the Commission. 
Furthermore, we are not aware of any privately published financial 
information regarding these operators. Based on the estimated number of 
operators and the estimated number of units served by the largest ten 
SMATVs, we believe that a substantial number of SMATV operators qualify 
as small entities
    28. Open Video Systems (``OVS''). Because OVS operators provide 
subscription services, OVS falls within the SBA-recognized definition 
of cable and other program distribution services. This definition 
provides that a small entity is one with $12.5 million or less in 
annual receipts. The Commission has certified 25 OVS operators with 
some now providing service. Affiliates of Residential Communications 
Network, Inc. (``RCN'') received approval to operate OVS systems in New 
York City, Boston, Washington, DC and other areas. RCN has sufficient 
revenues to assure us that they do not qualify as small business 
entities. Little financial information is available for the other 
entities authorized to provide OVS that are not yet operational. Given 
that other entities have been authorized to provide OVS service but 
have not yet begun to generate revenues, we conclude that at least some 
of the OVS operators qualify as small entities.
    29. Electronics Equipment Manufacturers. Rules adopted in this 
proceeding could apply to manufacturers of DTV receiving equipment and 
other types of consumer electronics equipment. The SBA has developed 
definitions of small entity for manufacturers of audio and video 
equipment as well as radio and television broadcasting and wireless 
communications equipment. These categories both include all such 
companies employing 750 or fewer employees. The Commission has not 
developed a definition of small entities applicable to manufacturers of 
electronic equipment used by consumers, as compared to industrial use 
by television licensees and related businesses. Therefore, we will 
utilize the SBA definitions applicable to manufacturers of audio and 
visual equipment and radio and television broadcasting and wireless 
communications equipment, since these are the two closest NAICS Codes 
applicable to the consumer electronics equipment manufacturing 
industry. However, these NAICS categories are broad and specific 
figures are not available as to how many of these establishments 
manufacture consumer equipment. According to the SBA's regulations, an 
audio and visual equipment manufacturer must have 750 or fewer 
employees in order to qualify as a small business concern. Census 
Bureau data indicates that there are 554 U.S. establishments that 
manufacture audio and visual equipment, and that 542 of these 
establishments have fewer than 500 employees and would be classified as 
small entities. The remaining 12 establishments have 500 or more 
employees; however, we are unable to determine how many of those have 
fewer than 750 employees and therefore, also qualify as small entities 
under the SBA definition. Under the SBA's regulations, a radio and 
television broadcasting and wireless communications equipment 
manufacturer must also have 750 or fewer employees in order to qualify 
as a small business concern. Census Bureau data indicates that there 
are 1,215 U.S. establishments that manufacture radio and television 
broadcasting and wireless communications equipment, and that 1,150 of 
these establishments have fewer than 500 employees and would be 
classified as small entities. The remaining 65 establishments have 500 
or more employees; however, we are unable to determine how many of 
those have fewer than 750 employees and therefore, also qualify as 
small entities under the SBA definition. We therefore conclude that 
there are no more than 542 small manufacturers of audio and visual 
electronics equipment and no more than 1,150 small manufacturers of 
radio and television broadcasting and wireless communications equipment 
for consumer/household use.
    30. Computer Manufacturers. The Commission has not developed a 
definition of small entities applicable to computer manufacturers. 
Therefore, we will utilize the SBA definition of electronic computers 
manufacturing. According to SBA regulations, a computer manufacturer 
must have 1,000 or fewer employees in order to qualify as a small 
entity. Census Bureau data indicates that there are 563 firms that 
manufacture electronic computers and of those, 544 have fewer than 
1,000 employees and qualify as small entities. The remaining 19 firms 
have 1,000 or more employees. We conclude that there are approximately 
544 small computer manufacturers.
    31. Description of Projected Reporting, Recordkeeping and other 
Compliance Requirements. At this time, we do not expect that the 
proposed rules would impose any additional reporting or recordkeeping 
requirements. However, compliance with the rules, if they are adopted, 
may require the manufacture of digital cable television receivers and 
other digital cable television consumer electronics equipment. Consumer 
electronics manufacturers may be required to

[[Page 2283]]

establish a voluntary labeling regime for unidirectional digital cable 
television receivers and related digital cable products that meet 
certain technical specifications. This regime would include testing and 
self-certification standards, as well as consumer information 
disclosures to purchasers of such receivers and products. Compliance 
may also require multichannel video programming distributors to encode 
certain commercial audiovisual content to prevent or limit its copying 
and prohibit the use of selectable output controls. Cable operators 
with systems of 750 MHz or greater activated channel capacity may be 
required to support operation of unidirectional digital cable products 
on digital cable systems and to ensure that navigation devices utilized 
in connection with such systems have an IEEE 1394 interface and comply 
with specified technical standards. While these requirements could have 
an impact on consumer electronics manufacturers and multichannel video 
programming distributors, it remains unclear weather there would be a 
differential impact on small entities. We seek comment on whether the 
burden of these requirements would fall on large and small entities 
differently.
    32. Steps Taken to Minimize Significant Impact on Small Entities, 
and Significant Alternatives Considered. The RFA requires an agency to 
describe any significant alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): (1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (3) the use 
of performance, rather than design, standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for small entities.
    33. As indicated above, the FNPRM seeks comment on whether the 
Commission should adopt or revise rules relating to the creation of a 
cable ``plug and play'' standard for digital cable television receivers 
and other digital cable television consumer electronics equipment in 
order to facilitate the DTV transition. This regime may require may 
require the manufacture of digital cable television receivers and other 
digital cable television consumer electronics equipment. Consumer 
electronics manufacturers may be required to establish a labeling 
regime for unidirectional digital cable television receivers and 
related digital cable products that meet certain technical 
specifications. This regime would include testing and self-
certification standards, as well as consumer information disclosures to 
purchasers of such receivers and products. Compliance may also require 
multichannel video programming distributors to encode certain 
commercial audiovisual content to prevent or limit its copying and 
prohibit the use of selectable output controls. Cable operators with 
systems of 750 MHz or greater activated channel capacity may be 
required to support operation of unidirectional digital cable products 
on digital cable systems and to ensure that navigation devices utilized 
in connection with such systems have an IEEE 1394 interface and comply 
with specified technical standards. However, we welcome comment on 
modifications of the proposals if based on evidence of potential 
differential impact on smaller entities. In addition, the Regulatory 
Flexibility Act requires agencies to seek comment on possible small 
entity-related alternatives, as noted above. We therefore seek comment 
on alternatives to the proposed rules that would assist small entities 
while maintaining the compromise reached in the Memorandum of 
Understanding.
    34. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposals. None.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-948 Filed 1-15-03; 8:45 am]
BILLING CODE 6712-01-P