[Federal Register Volume 68, Number 232 (Wednesday, December 3, 2003)]
[Proposed Rules]
[Pages 67624-67629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30008]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 73 and 76

[MB Docket No. 02-230; FCC 03-273]


Digital Broadcast Content Protection

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Commission seeks comment on the 
mechanisms and standards by which new content protection and recording 
technologies can be approved for use with Covered Demodulator Products 
as part of an ATSC flag-based redistribution control system for digital 
broadcast content. The Further Notice of Proposed Rulemaking also seeks 
comment on: whether cable operators should be allowed to encrypt the 
digital basic tier so that they can give effect to the ATSC flag 
through their conditional access systems; and the interplay between an 
ATSC flag-based redistribution control system for digital broadcast 
content and the development of open source software applications, 
including software demodulators, for digital broadcast television. 
Potential Commission action in these areas is intended to protect 
digital broadcast television content from indiscriminate 
redistribution, thereby ensuring the continued flow of high value 
content to broadcast outlets and preserving the nation's broadcasting 
system.

DATES: Comments due January 14, 2004; reply comments are due February 
13, 2004.

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

FOR FURTHER INFORMATION CONTACT: Susan Mort, (202) 418-1043 or 
[email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Further Notice of 
Proposed Rulemaking portion of the Commission's Report and Order and 
Further Notice of Proposed Rulemaking (``Further NPRM''), FCC 03-273, 
adopted and released November 4, 2003. The full text of the 
Commission's Further NPRM 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.

Synopsis of the Further Notice of Proposed Rulemaking

    1. Although we believe that our adoption of a flag-based 
redistribution control system for digital broadcast television will 
further the digital transition and ensure the continued flow of high 
value content to broadcast outlets, further comment is needed on 
several issues. As an initial matter, we seek comment on whether cable 
operators that retransmit DTV broadcasts may encrypt the digital basic 
tier in order to convey the presence of the ATSC flag through their 
conditional access system. Section 76.630 of the Commission's rules 
generally prohibits cable operators from ``scrambl[ing] or encrypt[ing] 
signals carried on the basic service tier'' without distinguishing 
between analog and digital service. NCTA has suggested that allowing 
cable operators to encrypt the digital basic tier and ``virtually'' 
convey the presence of the flag will facilitate the offering of future 
home networking services. We seek comment on whether cable operators 
should be allowed to encrypt in this manner.
    2. In response to our Notice of Proposed Rulemaking, EFF questioned 
the impact of a flag-based regime on innovations in software 
demodulators and other DTV open source software applications. The 
Commission has actively promoted the development of

[[Page 67625]]

software defined radio and other software demodulators as important 
innovations in the digital age. We seek further comment on the 
interplay between a flag redistribution control system and the 
development of open source software applications, including software 
demodulators, for digital broadcast television.
    3. This Further Notice of Proposed Rulemaking also seeks comment on 
whether standards and procedures should be adopted for the approval of 
new content protection and recording technologies to be used with 
device outputs on Demodulator Products. If so, we seek comment on the 
various types of content protection technologies that should be 
considered as a part of this process, including but not limited to 
digital rights management, wireless and encryption-based technologies. 
We recognize that similar issues have been raised with respect to 
digital cable ready DTV receivers in the Second Further Notice of 
Proposed Rulemaking in the Commission's ongoing ``Plug and Play'' 
proceeding. We seek comment on whether a unified regime should be 
employed in both instances.
    4. With respect to the particular standards and procedures to be 
employed, we seek comment on whether objective criteria should be used 
to evaluate new content protection and recording technologies and, if 
so, what specific criteria should be used. For example, in our recent 
Second Report and Order and Second Further Notice of Proposed 
Rulemaking relating to digital cable compatibility, Microsoft 
Corporation and Hewlett Packard Corporation submitted a detailed 
proposal suggesting functional requirements that could be used to 
evaluate digital rights management technologies for use with digital 
cable ready products. We seek comment on this proposal in the ATSC flag 
context, as well as on other proposals submitted in this proceeding 
relying on objective criteria, and any new proposals that commenters 
may submit to the Commission.
    5. We also seek comment on the appropriate scope of redistribution 
that should be prevented. In general, we believe that a flag based 
system should prevent indiscriminate redistribution of digital 
broadcast content, however, we do not wish to foreclose use of the 
Internet to send digital broadcast content where robust security can 
adequately protect the content and the redistribution is tailored in 
nature. We see comment on the usefulness of defining a personal digital 
network environment (``PDNE'') within which consumers could freely 
redistribute digital broadcast television content. If so, we seek 
comment on the various permutations of a PDNE that were proposed in the 
BPDG Final Report and whether any modifications are needed to maintain 
consumer's home viewing expectations. We also seek comment on possible 
new formulations of a PDNE.
    6. We also seek comment on whether content owners are the 
appropriate entities to make initial approval determinations, or 
whether another entity should have decision-making authority. In 
particular, we seek comment on whether the Commission, a qualified 
third party, or an independent entity representing various industry and 
consumer interests should make approval and revocation determinations.
    7. As to the issue of how approved content protection and recording 
technologies may be revoked should their security be compromised, we 
seek comment on the appropriate standard for revocation. Specifically, 
we seek comment on whether revocation is appropriate where a content 
protection or recording technology is perceived to be insecure, or 
whether the appropriate standard is where security has been compromised 
in a significant, widespread manner. Once a content protection or 
recording technology has been revoked, we seek comment on the 
appropriate mechanism by which revocation should be effectuated. For 
example, should revoked content protection or recording technologies be 
eliminated on a going-forward basis, while preserving their 
functionality for existing devices? We also seek comment on whether 
there are technological or other means of revoking content protection 
or recording technologies while preserving the functionality of 
consumer electronics devices.
    8. Authority. This Further NPRM is issued pursuant to authority 
contained in sections 1, 2, 4(i) and (j), 303, 307, 309(j), 336, 337, 
396(k), 403, 601, 614(b) and 624a of the Communications Act of 1934, as 
amended.
    9. 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).
    10. Accessibility Information. Accessible formats of this Further 
NPRM (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].
    11. Comment Information. Pursuant to sections 1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments on or before January 14, 2004, and reply comments on or 
before February 13, 2004. 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).
    12. 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 
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, 
Natek, 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.,

[[Page 67626]]

Washington, DC 20554. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    13. 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 Further NPRM. The IRFA is set forth below. Written 
public comments are requested on the IRFA. These comments must be filed 
in accordance with the same filing deadlines for comments on the 
Further NPRM, and they should have a separate and distinct heading 
designating them as responses to the IRFA.
    14. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this Further NPRM, 
including the Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

Initial Regulatory Flexibility Analysis

    15. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA'') the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (``IRFA'') of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rules proposed in the Further Notice of Proposed 
Rulemaking portion of this item. 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 Further Notice of 
Proposed Rulemaking portion of this item provided in paragraph 69 of 
the item. The Commission will send a copy of this entire Report and 
Order and Further Notice of Proposed Rulemaking (``Report and Order and 
Further NPRM''), including this IRFA, to the Chief Counsel for Advocacy 
of the Small Business Administration (``SBA''). In addition, the 
Further Notice of Proposed Rulemaking portion of this item and the IRFA 
(or summaries thereof) will be published in the Federal Register.
    16. Need for, and Objectives of, the Proposed Rules. Content 
providers have suggested that they should have the ability to make 
determinations about which new content protection and recording 
technologies may be used in connection with demodulator products under 
an ATSC flag-based redistribution control system. Commenters have 
indicated that content providers should not be the sole arbiters of 
such decisions. However, the record currently before the Commission is 
insufficient on this matter. In order to ensure the connectivity and 
interoperability of Demodulator Products and peripheral devices, we are 
initiating the Further NPRM to seek comment on the process and criteria 
by which new content protection and recording technologies can be 
evaluated and approved for use in this context. The Further NPRM also 
seeks comment on whether cable operators should be allowed to encrypt 
the digital basic tier in order to be able to give effect to the ATSC 
flag through cable operators' conditional access system. The Further 
NPRM also seeks comment on the interplay between an ATSC flag system 
and open source software for DTV applications, such as software defined 
radio.
    17. Legal Basis. The authority for this proposed rulemaking is 
contained in sections 1, 2, 4(i) and (j), 303, 307, 309(j), 336, 337, 
396(k), 403, 601, 614(b) and 624a of the Communications Act of 1934, 47 
U.S.C 151, 152, 154(i) and (j), 303, 307, 309(j), 336, 337, 396(k), 
403, 521, 534(b) and 544a.
    18. 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 encompassing the terms 
``small business,'' ``small organization,'' and ``small governmental 
entity.'' 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'').
    19. Television Broadcasting. The Small Business Administration 
defines a television broadcasting station that has no more than $12 
million in annual receipts as a small business. Business concerns 
included in this industry are those ``primarily engaged in broadcasting 
images together with sound.'' According to Commission staff review of 
the BIA Publications, Inc. Master Access Television Analyzer Database 
as of May 16, 2003, about 814 of the 1,220 commercial television 
stations in the United States have revenues of $12 million or less. We 
note, however, that, in assessing whether a business concern qualifies 
as small under the above definition, business (control) affiliations 
must be included. Our estimate, therefore, likely overstates the number 
of small entities that might be affected by our action, because the 
revenue figure on which it is based does not include aggregate revenues 
from affiliated companies. There are also 2,127 low power television 
stations (LPTV). Given the nature of this service, we will presume that 
all LPTV licensees qualify as small entities under the SBA definition.
    20. In addition, an element of the definition of ``small business'' 
is that the entity not be dominant in its field of operation. We are 
unable at this time to define or quantify the criteria that would 
establish whether a specific television station is dominant in its 
field of operation. Accordingly, the estimate of small businesses to 
which rules may apply do not exclude any television station from the 
definition of a small business on this basis and are therefore over-
inclusive to that extent. Also as noted, an additional element of the 
definition of ``small business'' is that the entity must be 
independently owned and operated. We note that it is difficult at times 
to assess these criteria in the context of media entities and our 
estimates of small businesses to which they apply may be over-inclusive 
to this extent.
    21. 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.
    22. 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,

[[Page 67627]]

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 NPRM.
    23. 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.
    24. 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.
    25. 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.
    26. 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.
    27. 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.
    28. 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 
categorized as small under the SBA definition. Thus, we tentatively 
conclude that at least 1,932 licensees are small businesses.
    29. 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.
    30. In sum, there are approximately a total of 2,000 MDS/MMDS/LMDS

[[Page 67628]]

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.
    31. 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.
    32. 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, D.C. 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.
    33. 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.
    34. 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.
    35. 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 consumer electronics manufacturers to seek approval for 
content protection technologies and recording methods to be used in 
conjunction with demodulator products. These requirements will have an 
impact on consumer electronics manufacturers, including small entities. 
We seek comment on the possible burden these requirements would place 
on small entities. Also, we seek comment on whether a special approach 
toward any possible compliance burdens on small entities might be 
appropriate. The proposed rules would also allow cable operators to 
encrypt the digital basic tier, however, we do not believe that this 
voluntary provision would have an impact on small entities.
    36. 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.
    37. As indicated above, the Further NPRM seeks comment on whether 
the

[[Page 67629]]

Commission should adopt rules establishing an approval mechanism for 
new content protection and recording technologies to be used with 
demodulator products. Consumer electronics manufacturers may be 
required to seek such approval prior to implementing content protection 
and recording technologies in demodulator products. We welcome comment 
on modifications of this proposal to lessen any potential impact on 
small entities, while still remaining consistent with our policy goals. 
The Further NPRM also seeks comment on whether cable operators should 
be allowed to encrypt the digital basic tier in order to be able to 
give effect to the ATSC flag through cable operators' conditional 
access system. While we do not believe that this rule change would have 
a potential impact on small entities because it would be voluntary in 
nature, we seek comment on whether a special approach toward any 
possible compliance burdens on small entities might be appropriate.
    38. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposals. None.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-30008 Filed 12-2-03; 8:45 am]
BILLING CODE 6712-01-P