[Federal Register Volume 76, Number 131 (Friday, July 8, 2011)]
[Rules and Regulations]
[Pages 40263-40280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-16869]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 15 and 76

[CS Docket No. 97-80; PP Docket No. 00-67; FCC 10-181]


Implementation of Section 304 of the Telecommunications Act of 
1996: Commercial Availability of Navigation Devices; Compatibility 
Between Cable Systems and Consumer Electronics Equipment

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, we adopt new rules designed to improve the 
operation of the CableCARD regime until a successor solution becomes 
effective. The Commission has not been fully successful in implementing 
the command of Section 629 of the Communications Act to ensure the 
commercial availability of navigation devices used by consumers to 
access the services of multichannel video programming distributors 
(``MVPDs''). The rules adopted in this order are intended to bolster 
support for retail CableCARD devices so that consumers may access cable 
services without leasing a set-top box from their cable operators.

DATES: Effective August 8, 2011, except for Sec. Sec.  76.1205(b)(1), 
76.1205(b)(1)(i), 76.1205(b)(2), 76.1205(b)(5), and 76.1602(b), which 
contain information collection requirements that have not been approved 
by OMB. The Federal Communications Commission will publish a document 
in the Federal Register announcing the effective date of Sec. Sec.  
76.1205(b)(1), 76.1205(b)(1)(i), 76.1205(b)(2), 76.1205(b)(5), and 
76.1602(b).
    The incorporation by reference of certain publications listed in 
this rule is approved by the Director of the Federal Register as of 
August 8, 2011.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Brendan Murray, [email protected], of the 
Media Bureau, Policy Division, (202) 418-2120 or Alison Neplokh, 
[email protected], of the Media Bureau, (202) 418-1083.
    For additional information concerning the information collection 
requirements contained in this document, send an e-mail to [email protected] 
or contact Cathy Williams on (202) 418-2918.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's (Third 
Report and Order and Order on Reconsideration), FCC 10-181, adopted and 
released on October 14, 2010. The full text of these documents is 
available for public inspection and copying during regular business 
hours in the FCC Reference Center, Federal Communications Commission, 
445 12th Street, SW., CY-A257, Washington, DC, 20554. These documents 
will also be available via ECFS (http://www.fcc.gov/cgb/ecfs/). 
(Documents will be available electronically in ASCII, Word 97, and/or 
Adobe Acrobat.) The complete text may be purchased from the 
Commission's copy contractor, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554. To request these documents in accessible formats 
(computer diskettes, large print, audio recording, and Braille), send 
an e-mail to [email protected] or call the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

Summary of the Report and Order and Order on Reconsideration

    1. In this Third Report and Order (``Order''), we remedy 
shortcomings in our CableCARD rules in order to improve consumers' 
experience with retail navigation devices (such as set-top boxes and 
digital cable-ready television sets) and CableCARDs, the security 
devices used in conjunction with navigation devices to perform the 
conditional access functions necessary to access cable services. We 
believe these rule changes are necessary to discharge our 
responsibility under the Act to assure the development of a retail 
market for devices that can navigate cable services. We seek to remove 
the disparity in consumer experience between those who choose to buy a 
retail device and those who lease the cable provider's set-top box, as 
the

[[Page 40264]]

disparity is impeding the development of a retail market for navigation 
devices. Specifically, we adopt rules today to (1) require cable 
operators to support the reception of switched digital video services 
on retail devices to ensure that subscribers are able to access the 
services for which they pay regardless of whether they lease or 
purchase their devices; (2) prohibit price discrimination against 
retail devices to support a competitive marketplace for retail devices; 
(3) require cable operators to allow self-installation of CableCARDs 
where device manufacturers offer device-specific installation 
instructions to make the installation experience for retail devices 
comparable to the experience for leased devices; (4) require cable 
operators to provide multi-stream CableCARDs by default to ensure that 
cable operators are providing their subscribers with current CableCARD 
technology; and (5) clarify that CableCARD device certification rules 
are limited to certain technical features to make it easier for device 
manufacturers to get their products to market. We also modify our rules 
to encourage home-networking by simplifying our set-top box output 
requirements. In addition, we adopt a rule to promote the cable 
industry's transition to all-digital networks by exempting all one-way 
set-top boxes without recording functionality from the integration ban. 
Each of the rule changes adopted in this item are intended to meet the 
goals of Section 629 by further developing a retail market for 
navigation devices. Finally, we consider nine petitions for 
reconsideration of prior decisions in CS Docket No. 97-80, PP Docket 
No. 00-67, and the enforcement proceedings captioned above regarding 
changes to device certification procedures, the Commission's content 
encoding and protection rules, and access to switched digital video. 
Together, the changes we adopt today should benefit consumers who wish 
to buy navigation devices while at the same time removing unnecessary 
regulatory obligations on cable operators.
    2. Background. In the Telecommunications Act of 1996, Congress 
added Section 629 to the Communications Act. That section directs the 
Commission to adopt regulations to assure the commercial availability 
of navigation devices used by consumers to access services from 
multichannel video programming distributors (``MVPDs''). Section 629 
covers ``equipment used by consumers to access multichannel video 
programming and other services offered over multichannel video 
programming systems.'' Congress, in enacting the section, pointed to 
the vigorous retail market for customer premises equipment used with 
the public switched-telephone network and sought to create a similarly 
vigorous market for devices used with MVPD services.
    3. In 1998, the Commission adopted the First Report and Order to 
implement Section 629. The order required MVPDs to make available a 
conditional access element separate from the basic navigation or host 
device, in order to permit unaffiliated manufacturers and retailers to 
manufacture and market host devices while allowing MVPDs to retain 
control over their system security. The technical details of this 
conditional access element were to be worked out in industry 
negotiations. In 2003, the Commission adopted, with certain 
modifications, standards on which the National Cable and 
Telecommunications Association (``NCTA'') and the Consumer Electronics 
Association (``CEA'') had agreed in a Memorandum of Understanding 
(``MOU''). The MOU prescribed the technical standards for one-way (from 
cable system to customer device) CableCARD compatibility. The CableCARD 
is a security device provided by an MVPD, which can be installed in a 
retail navigation device bought by a consumer in the retail market to 
allow the consumer's television to display MVPD-encrypted video 
programming. To ensure adequate support by MVPDs for CableCARDs, the 
Commission prohibited MVPDs from integrating the security function into 
set-top boxes they lease to consumers, thus forcing MVPDs to rely on 
CableCARDs as well. This ``integration ban'' was initially set to go 
into effect on January 1, 2005, but that date was later extended to 
July 1, 2007. Although the cable industry has challenged the lawfulness 
of the integration ban on three separate occasions, in each of those 
cases the DC Circuit denied those petitions.
    4. Unfortunately, the Commission's efforts to date have not 
developed a vigorous competitive market for retail navigation devices 
that connect to subscription video services. Most cable subscribers 
continue to use the traditional set-top boxes leased from their cable 
operator; only 1 percent of the total navigation devices deployed are 
purchased at retail. Although following adoption of the CableCARD rules 
some television manufacturers sold unidirectional digital cable-ready 
products (``UDCPs''), most manufacturers have abandoned the technology. 
Indeed, since July 1, 2007, cable operators have deployed more than 
22.75 million leased devices pre-equipped with CableCARDs, compared to 
only 531,000 CableCARDs installed in retail devices connected to their 
networks. Furthermore, while 605 UDCP models have been certified or 
verified for use with CableCARDs, only 37 of those certifications have 
occurred since the integration ban took effect in July 2007. This 
evidence indicates that many retail device manufacturers abandoned 
CableCARD before any substantial benefits of the integration ban could 
be realized.
    5. Not only were very few retail devices manufactured and 
subsequently purchased in the retail market, but an additional 
complication with the installation process further depressed the retail 
market. The cable-operator leased devices come pre-equipped with a 
CableCARD, so that no subscriber premises installation of the card is 
required. But this is not the case with devices purchased at retail. 
CableCARDs for use in retail devices must be installed in the home, and 
many cable operators require professional installation by the cable 
operator. Unfortunately, the record reflects poor performance with 
regard to subscriber premise installations of CableCARDs in retail 
devices. This could be a consequence of the fact that only 1 percent of 
the total navigation devices deployed are purchased at retail and 
require an actual CableCARD installation, which may have made it 
difficult to train the cable installers properly. It could also reflect 
either indifference or reluctance by cable operators to support 
navigation devices purchased at retail in competition with their own 
set-top boxes. Regardless of the cause, these serious installation 
problems further undermine the development of a retail market.
    6. A consumer using a unidirectional device cannot take advantage 
of two-way services offered by a cable operator. The Commission 
anticipated that the parties to the MOU would negotiate another 
agreement to achieve bidirectional compatibility, using either a 
software-based or hardware-based solution. Unlike one-way devices, 
which can only receive communication from cable headends, bidirectional 
devices can send requests to the cable headend, which enables those 
devices to receive services like cable operator-provided interactive 
programming guides, cable-operator provided video-on-demand and pay-
per-view, and other interactive programming services. When the 
Commission realized in June 2007 that negotiations were not leading to 
an agreement for bidirectional

[[Page 40265]]

compatibility between consumer electronics devices and cable systems, 
it released a Third Further Notice of Proposed Rulemaking, seeking 
comment on competing proposals for bidirectional compatibility and 
other related issues. In the wake of the Two-way FNPRM, the six largest 
cable operators and numerous consumer electronics manufacturers 
negotiated an agreement for bidirectional compatibility that continues 
to rely and builds on CableCARDs by using a middleware-based solution 
called ``tru2way.''
    7. The National Broadband Plan, released in March of this year, 
recommended changes in the CableCARD rules to provide benefits to 
consumers who use retail CableCARD devices without imposing unfair 
regulatory burdens on the cable industry. The plan suggested that these 
changes could serve as an interim solution that will benefit consumers 
while the Commission considers broader changes to develop a retail 
market for navigation devices. After considering those recommendations, 
on April 21, 2010 the Commission adopted a Fourth Further Notice of 
Proposed Rulemaking (``FNPRM'') seeking comment on proposed measures to 
remedy shortcomings in the existing CableCARD system. The Commission 
proposed five measures intended to remove the disparity between the 
treatment of consumers who choose to use a retail CableCARD-equipped 
video device and those who lease a cable provider's video navigation 
box. In the FNPRM, we sought comment on proposals to (1) Ensure that 
retail devices have comparable access to video programming that is 
prescheduled by the programming provider; (2) make CableCARD pricing 
and billing more transparent; (3) streamline CableCARD installations; 
(4) require cable operators to offer multi-stream CableCARDs; and (5) 
clarify certification requirements. In the FNPRM, we also proposed a 
rule change that would allow cable operators to substitute certain 
interfaces in lieu of the IEEE-1394 interface currently required on all 
high-definition set-top boxes, and proposed to define a baseline of 
functionality that such interfaces must meet. Finally, in order to 
encourage the cable industry's transition to digital technology, the 
Commission proposed an exemption to the integration ban for all one-way 
devices that do not have digital video recording capabilities.
    8. DISCUSSION. Reforming the CableCARD System. Based on the record 
before us, we conclude that modifications to our rules are necessary to 
improve the CableCARD regime and advance the retail market for cable 
navigation devices. We are sympathetic to concerns that we are adopting 
these rules while we consider a successor regime, but we must keep in 
mind that CableCARD is a realized technology--consumer electronics 
manufacturers can build to and are building to the standard today. 
Until a successor technology is actually available, the Commission must 
strive to make the existing CableCARD standard work by adopting 
inexpensive, easily implemented changes that will significantly improve 
the user experience for retail CableCARD devices. Therefore, in this 
order we adopt rule changes that will (1) require cable operators to 
provide retail devices with access to switched-digital channels; (2) 
require cable operators to provide greater transparency in their 
CableCARD charges; (3) require cable operators to allow subscribers to 
self-install CableCARDs and require cable operators to inform their 
subscribers about this option; (4) require cable operators to provide 
multi-stream CableCARDs by default, unless a subscriber explicitly 
requests a single-stream CableCARD; and (5) clarify the testing 
requirements for CableCARD devices. Based on our examination of the 
record in this proceeding, we believe that these changes will be 
inexpensive to implement and will eliminate or reduce the disparity in 
the consumer experience between leased devices and retail devices, 
which has dampened enthusiasm for retail devices.
    9. Switched Digital Video. Switched Digital Video (``SDV'') is a 
method of delivering linear programming that requires a set-top box to 
request specific channels from the cable head-end. SDV allows cable 
providers to offer their services more efficiently, as channels occupy 
capacity on the system only if subscribers are viewing or recording 
them. Unfortunately, this can affect one-way retail CableCARD devices 
adversely because one-way devices are not capable of requesting the 
switched channels, and therefore subscribers with retail devices are 
unable to access programming provided using SDV. Certain cable 
operators that have deployed SDV offer their subscribers free ``tuning 
adapters,'' which are repurposed set-top boxes that allow TiVo and Moxi 
retail set-top boxes and certain home-theater PCs to access switched 
digital content. These cable operators have provided the tuning 
adapters voluntarily, as the Commission's rules have not required cable 
operators to provide access to switched digital channels for one-way 
retail devices.
    10. In the FNPRM, the Commission sought comment on whether this 
voluntary solution provides adequate support for retail navigation 
devices. The Commission also sought comment on TiVo's proposal to use 
an IP backchannel to request switched digital channels. There was 
vigorous disagreement between commenters on this issue--certain 
commenters strongly supported maintaining the status quo, while others 
zealously advocated a rule that would require cable operators who use 
SDV to support retail devices through the use of an IP backchannel.
    11. Commenters who support maintaining the voluntary, market-based 
tuning adapter solution argue that SDV benefits consumers and that any 
changes to the status quo could stifle deployment of SDV and its 
associated benefits. They assert that the tuning adapter solution works 
adequately, and that there is no evidence that an IP backchannel would 
work better than the tuning adapter solution. They also argue that it 
does not make sense to require the industry to develop and deploy an IP 
backchannel solution, which could be costly and discourage deployment 
of SDV, particularly with the successor AllVid requirements on the 
horizon and the current availability of the cable industry's tru2way 
solution. They argue the additional development time and resources 
necessary to implement an IP backchannel would be better allocated to 
AllVid development. Certain commenters also assert that implementing a 
signaling backchannel over the public Internet would raise security and 
privacy concerns, including potential denial-of-service attacks, 
attacks that could provide unauthorized access to proprietary networks, 
and attacks that could result in theft of service and/or subscriber 
data. Therefore, these commenters argue, the tuning adapter solution 
that has developed in the marketplace is the most pragmatic, effective 
way to ensure that retail devices can access switched channels, and the 
Commission does not need to adopt rules.
    12. While several commenters assert that the tuning adapter 
solution works adequately, others argue that consumers will not 
purchase retail CableCARD devices unless they are certain that they 
will be able to access all of the programming to which they subscribe. 
Because the Commission's rules do not require operators to provide 
access by retail CableCARD devices to switched digital video channels, 
TiVo is concerned that cable operators could withdraw their current 
willingness to

[[Page 40266]]

provide tuning adapters at no additional charge to the customer. 
Furthermore, a number of cable subscribers indicate that they have 
trouble obtaining tuning adapters that work. These commenters argue 
that the most effective way to provide retail CableCARD devices with 
access to switched-digital channels is through the use of an IP 
backchannel. They assert that the IP-backchannel solution would solve 
problems that consumers experience with tuning adapters because it 
would not require additional, potentially unreliable, customer-premises 
hardware. Furthermore, they argue, the tuning adapter takes up space, 
is not energy efficient, and limits the ability to use all of the 
tuners on multi-tuner devices, thereby limiting the ability of multi-
tuner devices to record more than two channels at once. TiVo also 
expresses concern that cable operators are misinforming subscribers 
that certain channels are not available on retail devices. Finally, 
TiVo and CEA assert that the IP backchannel solution would be less 
expensive than tuning adapters in the long run.
    13. We conclude that we should mandate SDV support for retail 
devices without specifying the technology that cable operators must use 
to ensure such compatibility. SDV is an innovative technology with a 
number of benefits, and we do not wish to discourage its deployment. 
The record is replete, however, with comments from consumers who have 
had negative experiences using tuning adapters to access switched 
digital channels on their retail CableCARD devices. Both of the 
proposed solutions have significant benefits and drawbacks, and the 
Commission believes that with appropriate direction, cable operators 
will find the most efficient means of effectively supporting SDV. For 
example, the Commission recognizes that the economics of deploying an 
IP backchannel solution are different between those operators who have 
already or will soon deploy SDV, and those operators who will deploy 
the next generation of SDV hardware. The Commission does not wish to 
foreclose the possibility of an IP backchannel for those operators to 
whom it will add de minimis costs as the result of being included in 
future headend equipment. Conversely, for those operators who currently 
use SDV and have significant deployments of tuning adapters, the cost 
to retrofit TiVo's IP backchannel proposal may be prohibitive. Further, 
the Commission does not presume that these are the only two means of 
supporting SDV, and expect that some operators may choose other 
options, such as in-home IP signaling, that provide additional benefits 
to consumers. We do not foreclose any of these options so long as 
appropriate documentation is available to enable UDCPs to access SDV 
channels.
    14. Subscribers must be able to use the devices they purchase at 
retail to access all of the linear channels that comprise the cable 
package they purchase. Providing retail navigation devices and leased 
navigation devices with equivalent access to linear programming at an 
equivalent service price is essential to a retail market for navigation 
devices. We also want to avoid making deployment of SDV unnecessarily 
costly. While use of IP-backchannel would not require consumers to 
purchase additional equipment, we recognize that mandating this 
approach could be costly for some cable operators. Moreover, we note 
that operators currently provide tuning adapters at no charge to 
consumers. Accordingly, pursuant to our authority under Section 629 of 
the Communications Act, we require cable operators to ensure that cable 
subscribers who use retail CableCARD navigation devices have 
satisfactory access to all linear channels, but we will not mandate a 
specific method by which cable operators must provide such access. We 
believe that this rule change will address the security concerns raised 
about the IP-backchannel proposal, as our rule will not require a cable 
operator to adopt an approach that it believes is insecure. To address 
the problems with tuning adapters identified by commenters, the 
satisfactory access standard will require cable operators to ensure 
that retail devices are able to tune at least as many switched digital 
channels as that operator's most sophisticated operator-supplied set-
top box or four simultaneous channels, whichever is greater. Further, 
the satisfactory access standard will require the ability to tune and 
maintain the desired channel as long as it is being watched or 
recorded, and to do so reliably. Furthermore, we prohibit cable 
operators from presenting their customers with misleading information 
regarding retail devices' ability to tune switched digital channels. We 
adopt these requirements pursuant to Section 629 because we conclude 
that SDV support for retail devices is necessary to assure a retail 
market for navigation devices. We will continue to monitor the 
development of SDV and the access afforded to cable customers who use, 
or wish to use, retail navigation devices. If we find that customers 
who want to use retail set-top boxes do not have satisfactory and 
equivalent access to all of the linear channels that comprise the cable 
package to which they subscribe, we will revisit our decision here.
    15. CableCARD Pricing and Billing. In the FNPRM, the Commission 
sought comment on a proposal to require cable operators to list the fee 
for their CableCARDs as a line item on subscribers' bills separate from 
their host devices. The Commission proposed this rule change as a means 
to inform customers about retail navigation device options and to 
enable them to compare the price of a retail device to the price for 
leasing a set-top box from their cable operator. The proposed rule also 
was intended to ensure that the price that subscribers pay for 
CableCARDs in retail devices is the same as the price that subscribers 
pay for CableCARDs that are affixed to leased devices. Proponents of 
the Commission's proposed rule suggest that separate billing will 
facilitate fair choice and promote competition, as a viable retail 
market depends on transparency, while opponents argue that such billing 
would be difficult and expensive to implement, with no benefit to 
subscribers. Proponents of the rule assert that Section 629 requires 
separate billing and prohibits cross-subsidization. Opponents of the 
rule point to Section 629(f), which states that ``Nothing in this 
section shall be construed as expanding'' the Commission's authority 
under the Communications Act. Those commenters assert that the proposed 
rule would be an expansion of the Commission's authority under the 
statutory rate provision, Section 623, which allows cable operators to 
aggregate their equipment costs and charge a standard average rate 
across their footprints.
    16. Public Knowledge argues that the proposed rule does not go far 
enough. Public Knowledge suggests that in addition to requiring cable 
operators to separate the monthly fee for a CableCARD from the set-top 
box on a subscriber's bill, the Commission should also require cable 
operators to provide each subscriber with the aggregate amount the 
subscriber has spent on set-top box lease fees. Additionally, Public 
Knowledge argues that cable operators should be required to notify 
subscribers about the retail options that are available to them. In a 
similar vein, Montgomery County, Maryland suggests that the Commission 
allow state legislatures to adopt legislation that would require cable 
operators to sell the devices that they lease to ensure that consumers 
have

[[Page 40267]]

more options to purchase navigation devices.
    17. Opponents of the Commission's proposed billing rule assert that 
a separate billing requirement would only serve to confuse consumers 
and lead them to believe that their cable operators have added an extra 
fee to their bills. They also assert that this rule would arbitrarily 
burden subscribers who lease separated security devices as opposed to 
those who do not because currently all subscribers pay the same lease 
fee for a set-top box regardless of whether it has separated security. 
They argue that implementation of the billing rule would be costly for 
cable operators, as their billing systems are not designed to separate 
the cost of a CableCARD from the cost of the set-top box. NCTA and 
Arris assert that the availability of this information will not affect 
the retail market because the cost of CableCARDs has no effect on the 
retail market for set-top boxes.
    18. Despite their opposition to the proposed rule as written, NCTA 
and others are not opposed to the purposes behind the rule, which are 
to treat retail and leased devices equivalently and encourage pricing 
transparency. As a compromise, NCTA has proposed that cable operators 
notify subscribers of the cost of CableCARDs on the operators' Web 
sites and yearly rate card notices. NCTA asserts that its proposal 
would serve the same purpose as the Commission's proposed rule without 
imposing expensive and confusing billing burdens on cable operators.
    19. We conclude that NCTA's compromise solution will inform 
consumers about CableCARD costs and retail options adequately without 
imposing unnecessary burdens on cable operators. Therefore, we adopt a 
requirement that cable operators prominently list the fee for their 
CableCARDs as a line item on their Web sites (readily accessible to all 
members of the public) and annual rate cards separate from their host 
devices, and provide such information orally or in writing at a 
subscriber's request. These CableCARD lease fees must be uniform across 
a cable system regardless of whether the CableCARD is used in a leased 
set-top box or a navigation device purchased at retail. We are not 
convinced that NCTA's solution will ensure that cable operators are not 
subsidizing the costs of leased set-top boxes with service fees. 
Accordingly, we also adopt a rule that requires cable operators to 
reduce the price of packages that include set-top box rentals by the 
cost of a set-top box rental for customers who use retail devices, and 
prohibits cable operators from assessing service fees on consumer-owned 
devices that are not imposed on leased devices. These price reductions 
must reflect the portion of the package price that is reasonably 
allocable to the device lease fee. In the event that an interested 
party (including a consumer, local franchise authority, or device 
manufacturer) alleges a violation of this ``reasonably allocable'' 
standard, the Commission will consider in its evaluation whether the 
allocation is consistent with one or more of the following factors: (i) 
an allocation determination approved by a local, state, or Federal 
government entity; (ii) the monthly lease fee as stated on the cable 
system rate card for the navigation device when offered by the cable 
operator separately from a bundled offer; and (iii) the actual cost of 
the navigation device amortized over a period of no more than 60 
months. These rule changes are well within our statutory authority 
under Section 629. Section 629 gives the Commission broad power to 
adopt regulations to assure the commercial availability of navigation 
devices and states that multichannel video programming distributors may 
lease their own devices, as long as ``the system operator's charges to 
consumers for such devices and equipment are separately stated and not 
subsidized by charges'' for multichannel video programming service. 
These minor rule changes will serve to ensure that cable operators are 
not subsidizing the costs of their set-top boxes via service charges 
and will serve to allow consumers to compare the costs involved in 
choosing between purchasing or leasing a navigation device. This 
prohibition on subsidies and increased transparency is vital to the 
continued development of a retail navigation device market, as it will 
allow subscribers to make informed economic decisions about whether 
they should purchase a navigation device at retail.
    20. CableCARD Installations. In the FNPRM, the Commission expressed 
concern that CableCARD installation costs and policies may differ 
unjustifiably between retail devices and leased boxes. To address this 
situation, the Commission proposed requiring cable operators to allow 
subscribers to install CableCARDs in retail devices themselves if the 
cable operator allows its subscribers to self-install leased set-top 
boxes. Furthermore, the Commission proposed a rule with regard to 
professional installations that would require technicians to arrive 
with at least the number of CableCARDs requested by the customer.
    21. Commenters who support adopting the proposed installation rule 
argue that individual users are more than capable of installing their 
own CableCARDs. According to these commenters, the installation 
consists of inserting a CableCARD and calling in to the cable operator 
to report a series of numbers that appear on an activation screen, 
which subscribers could easily do with basic instruction. 
Unfortunately, despite the apparent simplicity of installation, these 
individual subscribers comment that not all cable technicians are 
properly trained to install CableCARDs and they do not always arrive 
with functional CableCARDs; therefore it often takes several days and 
multiple installation appointments to get functional CableCARDs 
installed. According to TiVo, ``the premise of `plug and play' was that 
a subscriber should be able to buy a device from a retailer, plug it 
into her cable connection, and have it work without the cable 
operator's intervention;'' therefore, TiVo argues, until individual 
subscribers have the option to self-install their own CableCARDs, 
subscribers will not be able to purchase devices that are truly ``plug 
and play.''
    22. NCTA and CEA advocate a modification to the proposed rule that 
would require cable operators to allow self-installation of CableCARDs 
on any device for which the manufacturer provides detailed, step-by-
step installation instructions. Several major cable operators, 
including Charter and Comcast, support the self-installation option so 
long as adequate installation instructions are provided by the 
manufacturer. Likewise, manufacturers such as Panasonic support the 
provision of Web-based installation walkthroughs as one means of 
fulfilling the goal of making step-by-step instructions available to 
consumers seeking to self-install CableCARDs. The few cable operator 
proponents do, however, request a four- to six-month phase-in period 
before this rule takes effect, during which time they will develop and 
implement necessary internal procedures and training that reflect the 
new policy.
    23. Commenters including CEA/CERC and Panasonic suggest that cable 
operators should be required to permit retail outlets to sell 
CableCARDs and to assist in the installation at the point of sale. 
Commenters from the cable industry were not necessarily opposed to this 
option, but they did note that allowing retail stores to install 
CableCARDs at the point of sale would introduce certain business, 
technical, and operational hurdles, such as identifying the encryption 
technology that a cable operator uses in the specific subscriber's 
geographic location.

[[Page 40268]]

Therefore, they suggest that the Commission encourage industry 
negotiations to explore this option, but they oppose adoption of a rule 
that mandates retail installation. TiVo, however, supports this 
proposal as one of the few means of fulfilling the true purpose of the 
CableCARD requirement, which is to encourage a competitive market for 
retail devices that can be purchased, taken home, and installed without 
the cable operator's intervention.
    24. In addition to its other proposals, CEA seeks better 
enforcement of the CableCARD rules, including the new proposed 
installation rule. CEA suggests that empowering local franchising 
authorities to enforce the CableCARD rules would encourage cable 
operators to comply with the rules.
    25. Time Warner Cable and Verizon assert that cable operators are 
best equipped to determine whether customers should be allowed to 
install their own CableCARDs. They argue that the CableCARD 
installation process is not straightforward, that consumers may not be 
equipped to install such equipment, and that the installations are not 
overly expensive. Verizon further argues that customers have shown no 
real demand to perform self-installation. Similarly, Cox submits that 
the low number of interested consumers does not justify development of 
costly support mechanisms for those who wish to self-install, unless 
the customer support burden shifts entirely to retail device 
manufacturers. Verizon also expresses skepticism that the Commission 
has authority to adopt such a rule.
    26. We conclude that the best means of assuring the development of 
a retail market for navigation devices is to require cable operators to 
allow subscribers to self-install CableCARDs. We believe cable 
operators should have time to train staff and develop more robust 
customer support infrastructures and procedures, and provide nine 
months to comply for any operators that allow subscribers on any of 
their systems to self-install any cable modems or leased set-top boxes. 
We are not persuaded by arguments that cable operators could not 
support activation of retail CableCARD devices within this reasonable 
transition period. However, we are concerned that a cable operator that 
does not permit self-installation of any equipment that attaches to its 
network may not have the customer support infrastructures in place to 
handle self-installations and may need a longer transition period. 
Therefore, we will allow cable operators that do not have any self-
installation support in place twelve months to phase in this self-
installation requirement. We also require cable operators to inform 
their subscribers about the self-installation option when they request 
CableCARDs.
    27. With respect to professional installations, we adopt our 
proposed rule requiring technicians to arrive with at least the number 
of CableCARDs requested by the customer. We require cable operators to 
make good faith efforts to ensure that all CableCARDs delivered to 
customers or brought to professional installation appointments are in 
good working condition and compatible with their customers' devices, 
and to allow subscribers to request CableCARDs using the same methods 
that subscribers can use to request leased set-top boxes. These rules 
are intended to solve the complaints in the record that professional 
CableCARD installations often require multiple appointments. We believe 
that requiring cable technicians to have CableCARDs in good working 
condition on hand when they are requested and allowing subscribers to 
self-install CableCARDs will decrease the number of required 
appointments dramatically. To address Time Warner Cable and Verizon's 
concerns that subscribers may not be properly equipped to self-install 
a CableCARD, our self-installation rule will apply only where device 
manufacturers or vendors provide detailed, device-specific instructions 
on how to install a CableCARD and the manufacturer's or vendor's toll-
free telephone number within the packaging of the device and on the 
manufacturer's or vendor's Web site. At this time we will not adopt a 
rule requiring retail installation of CableCARDs; however, since 
devices will now contain instructions from manufacturers or vendors on 
self-installation and because such an action will decrease the burden 
on the cable providers, we encourage cable operators and consumer 
electronics retailers to reach agreement through continued private 
negotiations to achieve this type of consumer-friendly retail option.
    28. In addition to empowering cable subscribers to install 
CableCARDs, we will also make it easier for consumers to file 
complaints relating to cable customer premises equipment (including 
CableCARDs, tuning adapters, and set-top boxes) with the Commission by 
adding a specific reference to CableCARDs and other customer premises 
equipment to the process for filing complaints on our Web site. If a 
cable operator chooses to provide satisfactory access to SDV channels 
for retail devices by means of customer-premises equipment such as a 
tuning adapter, this process will encompass complaints relating to such 
equipment as well as complaints relating to CableCARDs. We will 
strictly enforce our navigation device rules in order to ensure proper 
support for CableCARD devices. We conclude that this streamlined 
complaint process makes CEA's suggestion that the Commission provide 
local franchising authorities with the authority to enforce the 
CableCARD rules unnecessary, and will allow for more consistent 
enforcement of our CableCARD rules nationwide. In addition, we will 
develop new consumer education materials specifically discussing the 
availability of cable boxes at retail as an alternative to leasing a 
cable box from the cable operator. Within the next few weeks, these 
materials will be available on our Web site and will be provided by our 
call center to those customers who lack Web access.
    29. The changes we adopt herein will improve the consumer 
experience substantially, as cable subscribers will no longer have to 
schedule multiple installation appointments for CableCARD 
installations. Furthermore, these rule changes will place only a de 
minimis burden on cable operators, because the device manufacturer's or 
vendor's self-installation instructions will include the manufacturer's 
or vendor's toll-free telephone number directing customer questions to 
the manufacturer or vendor and not to the cable operator. We disagree 
with Verizon's assertion that the Commission does not have the 
authority to adopt such a rule, as we believe that this rule falls 
squarely within our authority under Section 629. The need to schedule 
multiple installation appointments unquestionably is an impediment to 
realizing a competitive retail market for navigation devices, and the 
record is replete with comments from frustrated consumers who have had 
to schedule multiple appointments with technicians due to CableCARD 
installation problems. We believe that Congress's intent in adopting 
Section 629 was to ensure that cable operators treat retail navigation 
devices in the same manner that they treat leased navigation devices. 
Accordingly, we believe that we have clear statutory authority under 
Section 629 to adopt this self-installation rule.
    30. Multi-stream CableCARDs. A Multi-stream CableCARD is a single 
CableCARD that is capable of decrypting multiple channels, thereby 
allowing consumers to record one channel while simultaneously watching 
another channel. Original CableCARDs were only capable of decrypting a 
single

[[Page 40269]]

stream, therefore requiring devices with multiple tuners, such as most 
digital video recorders, to include two CableCARD slots. With the 
release of the Multi-stream CableCARD Interface Specification in 2005, 
device manufacturers obtained the ability to receive up to six program 
streams though a single CableCARD. Multi-stream CableCARDs, now called 
M-Cards, can also be used by older devices that had been designed for 
single-stream CableCARDs. Operators began deploying M-Cards shortly 
after the adoption of the Multi-stream CableCARD Interface 
Specification, and today retail devices often require them. In the 
FNPRM, the Commission proposed requiring cable operators to offer M-
Cards upon request, to reduce the equipment fees paid by subscribers by 
enabling them to use only one CableCARD per device rather than two or 
more.
    31. Commenters were generally supportive of the proposed rule, 
though numerous commenters suggested the Commission require the 
provisioning of M-Cards by default, rather than on request. TiVo, 
Public Knowledge, and CEA all explicitly suggested this approach. Arris 
and Tivo note that all leased set-top boxes include M-Cards, and that 
newer retail devices require M-Cards to function properly. They further 
claim that the record demonstrates that retail devices are left to use 
recycled single-stream cards that may not work, while leased set-top 
boxes are outfitted with new, functioning M-Cards. NCTA also states 
they do not object to requiring cable operators to provide an M-Card to 
any subscriber who requests one, though they assert that certain 
devices work better with single-stream CableCARDs, and therefore cable 
operators should also have the discretion to deploy them to their 
subscribers.
    32. Only Verizon and John Staurulakis, Inc. assert that the 
Commission should not require cable operators to deploy M-Cards. They 
assert that such a requirement would be costly and unnecessary because 
so few subscribers actually use CableCARDs. Verizon further states that 
the marketplace is already working to increase the availability of M-
Cards for those few subscribers. Comcast goes further, stating that M-
Cards have been widely used since 2007, and cable operators have 
sufficient supplies of multi-stream CableCARDs to meet customer demand 
for them. NCTA also suggests that the Commission adopt the multi-stream 
CableCARD rules, which would test for compatibility between UDCPs and 
M-Cards, that NCTA and the CE industry proposed in 2006.
    33. We conclude that the best step we can take in this regard to 
assure the development of a retail market for navigation devices is to 
require cable operators to provide multi-stream CableCARDs by default, 
unless a subscriber expressly requests a single-stream CableCARD. All 
new devices require multi-stream CableCARDs, and multi-stream 
CableCARDs have been standard equipment since 2007. Therefore, 
requiring cable operators to provide multi-stream CableCARDs by default 
will conform more closely to the concept of common reliance, provide 
improved customer experience, and impose little, if any, costs on the 
industry, as our examination of the record indicates that CableCARD 
manufacturers are no longer making single stream CableCARDs to sell to 
cable operators. We also adopt the multi-stream CableCARD rules that 
NCTA and the CE industry proposed in 2006, as they are necessary to 
update our rules to conform with the current state of CableCARD testing 
procedures.
    34. CableCARD Device Certification. In the FNPRM, the Commission 
proposed a rule change intended to streamline the process of CableCARD 
device certification. The proposed rule would prohibit CableLabs or 
other qualified testing facilities from refusing to certify 
Unidirectional Digital Cable Products for any reason other than a 
failure to comply with a device conformance checklist referenced in the 
Commission's rules. The Commission proposed the rule change based on 
complaints regarding the cost, complexity, and restrictiveness of 
device certification. The Commission also committed to ``consider any 
other proposed solution to streamline the CableCARD certification 
process to facilitate the introduction of retail navigation devices.''
    35. Comments regarding CableCARD device certification indicate that 
the proposed rule would simply codify the CableCARD certification 
process as it exists today. No commenter opposes the proposed rule, 
although certain commenters argue that the proposed rule would not do 
enough to protect device manufacturers. In addition, certain commenters 
argue that the proposed device certification rule is not rigorous 
enough to assure a competitive device market. Specifically, CEA and 
Public Knowledge each encourage the Commission to extend the device 
certification rule to apply to CableCARD-compatible computers and 
computer peripheral devices and to limit the terms that CableLabs may 
dictate in licensing agreements. They assert that these steps will 
allow start-up companies like SageTV to develop their devices, and that 
the proposed rule will not be effective without this extension. Indeed, 
NCTA and MPAA acknowledge that the Commission's proposed rule would 
have no effect on the SageTV certification problems that the Commission 
highlighted in the FNPRM.
    36. In a similar vein, IPCO and Nagravision encourage the 
Commission to streamline the certification process for the CableCARD 
separated security modules, as the Commission does not have a rule that 
prescribes a certification process for the CableCARD itself. They 
assert that CableLabs has delayed certification of competitive 
separated security modules, which limits the companies' ability to 
develop affordable whole-system solutions to sell to cable operators. 
They reason that, if device manufacturers can manufacture and test 
their own CableCARDs in conjunction with their retail devices, they 
will be able to develop products more rapidly.
    37. We conclude that the best step we can take in this regard to 
carry out our statutory mandate under Section 629 is to (i) modify our 
rules to reflect updated testing procedures, and (ii) adopt the 
proposed rule that prohibits CableLabs or other qualified testing 
facilities from refusing to certify UDCPs for any reason other than a 
failure to comply with the conformance checklists referenced in our 
current rules. These rule changes should encourage navigation device 
manufacturers to build competitive devices by eliminating unnecessary 
delays and costs associated with device testing, while continuing to 
recognize the importance of protecting cable networks and service. 
Based on the comments we have received about the certification process, 
we believe that these rule changes do little more than codify the 
certification process as it exists today. These changes require UDCP 
manufacturers and qualified test facilities to proceed in accordance 
with Uni-Dir-ATP-I02-040225: ``Uni-Directional Receiving Device 
Acceptance Test Plan,'' M-UDCP-PICS-I04-080225, and TP-ATP-M-UDCP-I05-
20080304. The Director of the Federal Register approves this 
incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. You may obtain a copy from Cable Television Laboratories, 
Inc., 858 Coal Creek Circle, Louisville, Colorado 80027, 
www.cablelabs.com/opencable/udcp, (303) 661-9100. You may inspect a 
copy at the Federal Communications Commission, 445 12th St., SW., 
Reference Information Center,

[[Page 40270]]

Room CY-A257, Washington, DC 20554, (202) 418-0270 or at the National 
Archives and Records Administration (NARA). For information of the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    38. Comments reflect that while the certification process is 
costly, CableLabs's device testing is conducted in a professional 
manner and is important to ensure that CableCARD devices work properly. 
CEA claims generally, however, that certain CableCARD licensing terms 
may go beyond what is allowed under Sections 76.1201 and 76.1204 of our 
rules. They assert that these licensing terms limit innovation. To the 
extent that any interested party has concerns that an aspect of the 
CableCard licensing regime violates Sections 76.1201 through 76.1204 of 
the Commission's rules, that party may allege a specific violation of 
the Commission's rules pursuant to Section 76.7 of our rules.
    39. We decline to adopt IPCO and Nagravision's proposal to extend 
certification rules to the CableCARD security modules by dictating the 
specific testing procedures that CableLabs must use to certify 
CableCARD security modules. CableCARDs are an important part of 
protecting signal theft and protecting cable networks. Section 629(b) 
prohibits the Commission from adopting regulations that would 
jeopardize the security of cable systems or interfere with a cable 
operator's right to prevent theft of service. Therefore, we believe 
that it would be prudent to defer to CableLabs's policies on certifying 
whether the CableCARDs themselves, which are the lynchpins of the 
conditional access scheme, are robust enough to protect cable systems 
and prevent theft of service.
    40. Interface Requirements. The Commission's rules require cable 
operators to include an IEEE 1394 interface on all high-definition set-
top boxes that they acquire for distribution to customers. IEEE 1394, 
also known as Firewire, is an external serial data connection that 
allows for audio and video data transfers. The Commission adopted a 
requirement from the MOU to provide an IEEE 1394 interface on all high-
definition set-top boxes as a means of enabling a market for devices 
which interact with the operator-supplied set-top box. In the FNPRM, 
the Commission proposed to give cable operators greater flexibility in 
deciding which type of interface to include on the set-top boxes that 
they lease. Set-top box manufacturers and cable operators suggested 
that alternative interfaces could perform the same functions and have 
wider consumer adoption than the IEEE 1394 interface. The Commission 
also proposed to clarify that operators must enable bi-directional 
communication over these interfaces. The proposed clarification would 
require the interfaces to be able to receive remote-control commands 
from a connected device and deliver video in any industry-standard 
format to ensure that video made available over these interfaces can be 
received and displayed by devices manufactured by unaffiliated 
manufacturers (i.e., manufacturers not owned by or under license of the 
leased set-top box vendor or cable operator) and sold at retail. The 
record generally supported replacing the IEEE 1394 interface 
requirement with a rule that would instead require cable operators to 
include an IP-based connection on all high-definition set-top boxes 
that they acquire for distribution to customers. The commenters also 
agreed that the Commission does not need to define the physical 
interface (e.g., IEEE 1394, Ethernet, Wi-Fi, or MoCA) used to transfer 
the IP data. With respect to functionality, commenters disagreed on 
whether the Commission should set a baseline for functionality of that 
interface.
    41. Certain commenters suggested that the Commission should adopt 
baseline standards to define a ``functional'' IP connection on a set-
top box. Various industry associations have developed suites of 
standards that include functionality we might rely on. For example, 
Panasonic suggested that the Commission require that the IP connection 
pass through ``OpenCable Host Thin Chassis Device'' remote commands. 
OpenCable, branded for consumers as tru2way, was developed by 
CableLabs, is a set of standards defining a common interface for 
supporting interactive cable services. As the full implementation, 
branded for consumers as tru2way, has seen limited adoption in retail 
devices, the Host Thin Chassis Device standard was developed to provide 
reduced costs while simultaneously enabling two-way communication with 
CableCARDs. Among the component parts of the Host Thin Chassis Device 
standard are specifications for passing remote control commands entered 
with the TV remote control through to the set-top box.
    42. CEA and the Digital Living Network Alliance (``DLNA'') each 
suggest that the Commission require that devices follow the DLNA 
guidelines. DLNA standards have been or are being developed to enable 
widespread network-based connectivity for a wide variety of devices, 
from handheld viewers to media servers. This focus on broad 
interoperability has resulted in standards which permit the addition or 
subtraction of various functional components, including remote control 
commands and content formats. Three consumers suggested that the 
Commission require that the interfaces pass through closed captioning 
data. The 1394 Trade Association and Texas Instruments commented that 
each leased set-top box should be required to play back any video that 
is sent to it over an IEEE 1394 interface.
    43. Comcast, Verizon, and NCTA each argue that defining 
``functional'' would put a large burden on cable operators. They assert 
that standards organizations are still working to define standards for 
functionality over IP-based connections, and that cable operators could 
not comply with a functionality requirement in the near future. They 
assure the Commission that the market will determine the specific type 
of functionality that consumers desire, and therefore urge the 
Commission not to lock operators into a certain defined set of 
functions, lest the Commission make the same mistakes it made with 
regard to the IEEE 1394 interface requirement.
    44. We conclude that the best step we can take in this regard to 
fulfill our statutory mandate under Section 629 is to modify our 
interface rule to require cable operators to include an IP-based 
interface on all two-way high-definition set-top boxes that they 
acquire for distribution to customers without specifying a physical 
interface. IP has overwhelming marketplace support and serves the same 
purpose that our IEEE 1394 connection requirement was intended to 
serve. We agree with commenters that the method of physical transport 
(e.g., Ethernet, Wi-Fi, MoCA, or IP implemented over IEEE 1394) is not 
relevant in this situation, as we predict based on our examination of 
the record in this proceeding that consumers will use network adapters 
to choose the physical transport method that they prefer for networking 
their devices, in furtherance of the goals of Section 629.
    45. Contrary to Comcast, Verizon and NCTA's assertions, we believe 
that it is important to define a baseline of functionality to ensure 
that consumers who network their devices and device manufacturers can 
rely on networked devices' ability to communicate with leased set-top 
boxes. However, as with the physical interface itself, we find that it 
is appropriate, at this time, to refrain from specifying the exact 
manner in

[[Page 40271]]

which this baseline of functionality is to be implemented. Accordingly, 
we modify our rules to require that the IP-based connection deliver the 
video in a recordable format (e.g., MPEG-2, MPEG-4, h.264), and pass 
through closed captioning data in a standard format. We also believe 
more advanced functionalities are necessary to provide a foundation for 
a retail market of navigation devices that are connected to leased set-
top boxes with limited capabilities. Those functionalities include 
service discovery, video transport, and remote control command pass-
through standards for home networking. While these functionalities may 
exist in some form today, there is considerable work ongoing in 
industry standard bodies to provide those functionalities in a manner 
designed for IP-based and home network solutions. We, therefore, do not 
mandate that these additional functionalities be supported by cable 
operators immediately. We do, however, wish to ensure that consumers 
benefit from these additional functionalities in a timely manner, and 
require operators to provide these additional functionalities by 
December 1, 2012, but do not mandate a particular means by which these 
functionalities are to be provided.
    46. Promoting Cable's Digital Transition. The integration ban, 
which went into effect in 2007, is designed to support the market for 
retail navigation devices by creating an incentive for cable operators 
to fully support CableCARDs, drive costs down through economies of 
scale, and encourage cable operators to strive to improve and maintain 
the CableCARD system. In the FNPRM, the Commission proposed to allow 
operators to place into service new one-way navigation devices 
(including devices capable of processing a high-definition signal) that 
perform both conditional access and other functions in a single 
integrated device provided that the devices do not perform recording 
functions. The integration ban raises the cost of set-top boxes for 
cable operators, which discourages operators from transitioning their 
systems to all-digital. Transitioning to an all-digital cable system 
allows operators to make more efficient use of spectrum capacity, 
allowing the operators to dedicate more of their spectrum to broadband 
and other services. The impetus for this proposed rule change was to 
remove economic barriers that discourage cable operators from 
transitioning their systems to all-digital.
    47. The rule proposed in the FNPRM would still require operators to 
offer CableCARDs to any subscribers who request them and to commonly 
rely on CableCARDs for any digital video recorder and bidirectional 
devices that they offer for lease or sale. In limiting the proposed 
rule's applicability to devices with less functionality, the Commission 
attempted to balance the goal of easing the financial burdens 
associated with transitioning to digital cable systems with the 
benefits that stem from common reliance. The Commission also sought 
comment on whether the potential effect on the retail market supports 
limiting any relief to smaller cable systems with activated capacity of 
552 MHz or less. Some commenters additionally suggested that the 
integration ban should be eliminated entirely.
    48. Exempting Limited Capability High Definition Set-Top Boxes. 
NCTA, ACA, Comcast, and Time Warner support the proposed rule and 
suggest that it will not impact the limited retail market for 
navigation devices that currently exists. Motorola adds that HD 
capability is commonplace rather than advanced and, therefore, the 
proposed rule would have no effect on the retail market for navigation 
devices, as the competitive devices available at retail have advanced 
functionality such as Internet connectivity and recording capability. 
Finally, proponents of the rule change assert that it will allow cable 
operators to deploy less expensive set-top boxes which will ease 
consumers' financial burden when cable operators transition to digital 
systems. BBT suggests that, for the sake of regulatory certainty, the 
Commission should not take a piecemeal approach in applying the 
integration ban suggesting that the Commission either abandon the 
integration ban altogether or not at all.
    49. Public Knowledge and CEA argue that the proposed rule would 
undermine the goals of common reliance. They assert that the proposed 
rule would limit cable operators' incentives to support CableCARDs, and 
that the current state of CableCARD support suggests that cable 
operators need more, not fewer, incentives to support CableCARDs. They 
assert also that the Commission still does not have reliable data 
regarding the cost of relying on CableCARDs or the economic effect 
CableCARD exemptions have on the retail market. CEA and Public 
Knowledge argue that, without such data, the Commission cannot 
accurately balance the public interest benefits of the integration ban 
against the benefit of an exemption.
    50. Based on our examination of the record, we will adopt the 
limited exemption to the integration ban proposed in the FNPRM. As the 
Commission explained in 2005, common reliance ensures that cable 
operators have incentives to make their services as accessible as 
possible to CableCARD devices. We find that even if cable operators are 
allowed to deploy integrated one-way devices they will still have 
incentives to ensure that CableCARD devices are able to receive their 
services because all two-way, digital video recorder (``DVR'') and 
Internet-connected devices deployed by cable operators will still be 
subject to the integration ban. Furthermore, as NCTA highlights, cable 
operators have deployed more than 40 times as many CableCARDs in their 
own separated security devices than in devices purchased at retail, and 
we believe that the former devices will remain in service for years to 
come. We conclude that this decision will not undermine the goal of 
common reliance, as we believe that the majority of operator-leased 
devices will continue to commonly rely on CableCARDs, and therefore 
cable operators will continue to have adequate incentives to support 
CableCARDs in retail devices. Allowing operators to deploy one-way 
devices with integrated security will help lower the costs of set-top 
box rentals to subscribers and allow operators to dedicate more of 
their spectrum to broadband without undermining the effectiveness of 
the integration ban. In this vein, while we recognize that the 
inclusion of an IP-based home-networking connection would provide 
additional functionality, we believe that the costs to consumers of 
imposing the interface requirement would outweigh the potential 
benefits. For these reasons, we exempt one-way set-top boxes from the 
Commission's integration ban and, correspondingly, our interface 
requirements.
    51. Limiting the Proposed Exemption to Small Systems. We decline to 
put any limitation on the size or capacity of the systems to which the 
modified rule applies. While no commenter supports adopting an 
exemption limited to small cable operators as its preferred course of 
action, Public Knowledge, which encourages the Commission not to adopt 
any exemption to the integration ban, alternatively suggests that the 
Commission limit the rule's applicability to small cable systems. 
Public Knowledge reasons that such a limitation would mitigate the 
detrimental effects that such a rule would have on common reliance and 
the development of a retail market for navigation devices. Cable 
operators oppose such a limitation and assert that limiting the relief 
would be akin to not

[[Page 40272]]

offering relief at all. They argue that economies of scale are 
necessary to encourage manufacturers to develop inexpensive devices 
with integrated security. They argue that small system operators will 
not be able to achieve the economies of scale that are necessary to 
make this relief effective. They also assert that limiting the relief 
to small systems could unfairly harm subscribers who happen to live in 
areas with large systems because consumers would benefit if large 
systems were to transition to all-digital as well. For the same reasons 
that these commenters present, we agree that a small-system limitation 
would undermine the benefits of the rule change.
    52. Ending the Integration Ban. We disagree with the arguments of 
NCTA and cable operators that the Commission should abandon the 
integration ban altogether. They assert that the integration ban is an 
expensive, discriminatory requirement with no consumer benefit. Cable 
operators reason that ending the integration ban would decrease the 
costs of transitioning to all-digital systems and would lead to 
increased availability of broadband. Finally, they argue that 
terminating the integration ban would reduce set-top box costs for all 
subscribers. In addition to the arguments summarized above, opponents 
of ending the integration ban assert that it would discourage cable 
operators from negotiating in good faith in developing a successor 
technology to CableCARD, as cable operators would have no economic 
incentive to work to develop such a technology in a timely fashion. We 
agree. The integration ban continues to serve several important 
purposes--better support for CableCARD devices, economies of scale for 
CableCARDs, and economic incentives to develop better solutions. Ending 
the integration ban before a successor standard is developed would 
undermine the market for retail navigation devices.
    53. Two-Way Negotiation Reporting. As the Commission discussed in 
the FNPRM, in 2005 the Commission adopted a requirement that NCTA and 
CEA file reports every 60 days regarding the status of negotiations on 
a bidirectional CableCARD standard. As noted above, the six largest 
cable operators and numerous consumer electronics manufacturers 
negotiated an agreement for bidirectional compatibility that continues 
to rely on and builds on the standards for CableCARDs by using a 
middleware-based solution called ``tru2way.'' As the cable industry and 
the consumer electronics industry have concluded their negotiations on 
a bidirectional CableCARD standard, we do not believe it is necessary 
for those parties to continue to file status reports regarding those 
negotiations, and we therefore eliminate that requirement. As we will 
still require cable operators to commonly rely on CableCARDs in certain 
set-top boxes, we will retain the requirement that Comcast Corporation, 
Time Warner Cable, Cox Communications, Charter Communications, and 
Cablevision file quarterly reports detailing CableCARD deployment and 
support.
    54. Petitions for Reconsideration. The Commission also has before 
it eight petitions for reconsideration in this docket. NCTA, DIRECTV, 
Genesis Microchip, Inc., MPAA, Broadcast Music, Inc. and the American 
Society of Composers, Authors and Publishers (``BMI and ASCAP''), and 
the National Music Publishers' Association et al. (``NMPA'') separately 
filed petitions for reconsideration of the Plug and Play Order, while 
NCTA and MPAA also petitioned for reconsideration of the Commission's 
Sua Sponte Reconsideration Order. As noted below, many of these 
petitioners seek reconsideration of the Commission's encoding rules. 
Our encoding rules prescribe whether and how MVPDs may mark different 
forms of content (e.g., broadcast, non-premium subscription, pay 
television, video-on-demand, etc.) to limit the number of times the 
content may be copied. In addition to the petitions for reconsideration 
of orders adopted in the plug-and-play dockets, the Commission has 
before it a petition for reconsideration filed by TiVo, Inc., which is 
mooted by the rule changes adopted in this order.
    55. NCTA. Our device certification rules allow device manufacturers 
to self-certify CableCARD devices once they have received CableLabs 
certification for any certified CableCARD device. NCTA urges the 
Commission to reconsider the rule that a manufacturer's certified first 
``product'' eliminates the need for its first television set to be 
tested if the manufacturer has already received certification for a 
set-top box. NCTA asserts that digital televisions (``DTVs'') are more 
complex than DVR devices or other products, and that a manufacturer's 
first television should be tested in order to ensure that consumers' 
televisions are able to receive digital cable programming. We agree. As 
NCTA explains in its petition for reconsideration, ``unless the first 
tested UDCP is a DTV, there will be no real test that the UDCP actually 
and clearly displays encrypted programming, [emergency alert system] 
messages, [Program and System Information Protocol] information, and 
closed captions so there is no assured compliance with all of the 
relevant standards in the agreed-upon Joint Test Suite.'' We conclude 
that making such testing a part of our rules is necessary to ensure 
that new devices are built to comply with the Commission's rules. 
Accordingly, we grant NCTA's petition for reconsideration with respect 
to this issue, and modify our rules to clarify that a manufacturer may 
not self-certify its first DTV.
    56. Next, NCTA asserts that the Commission's rules permit too much 
flexibility in defining a qualified testing facility, and would allow 
unqualified organizations to test plug and play products because our 
rules do not require test facilities to be impartial or have 
appropriate testing equipment. NCTA urges us to define ``qualified 
testing facility'' more precisely. CEA disagrees, asserting that NCTA 
bases its assertions on unfounded security concerns. We agree with 
NCTA's assertions that it is important for our rules to require that 
qualified testing facilities are impartial organizations whose 
employees have a detailed understanding of the Joint Test Suite for 
CableCARD products. We do not believe that NCTA's security concerns are 
unfounded, nor do we believe that NCTA's suggested rule change will 
hinder independent testing facilities from becoming ``qualified testing 
facilities.'' Therefore, we adopt NCTA's recommendation by modifying 
our rules to specifically require testing facilities to be impartial 
and have appropriate testing equipment. To the extent that there are 
disagreements regarding whether specific testing facilities meet the 
standards set forth in our modified rule, we will consider such 
disagreements on a case-by-case basis.
    57. In its final critique of the Plug and Play Order, NCTA takes 
issue with the language of certain Commission rules. NCTA asserts that 
the Commission's rules should unequivocally state that digital cable 
ready products must ``pass'' applicable tests, rather than the current 
requirement which merely requires that the devices be subject to 
testing. NCTA also requests that we amend our rules to clarify that a 
cable operator may carry more than 12 hours of programming metadata 
(Program and System Information Protocol or ``PSIP'' data) if it so 
chooses, and shall only be required to carry PSIP data that conforms to 
the standards adopted by the Advanced Television Systems Committee for 
transmission of that data. As these requests will clarify the 
Commission's intent in the Plug and

[[Page 40273]]

Play Order, we adopt them without exception.
    58. NCTA's petition for reconsideration of the Sua Sponte 
Reconsideration Order requests that the Commission clarify that 
programming that is not retransmitted ``substantially simultaneously'' 
to the time it is broadcast is not considered ``Unencrypted Broadcast 
Television'' under our encoding rules. Currently, our rules define 
``Unencrypted Broadcast Television'' as the retransmission of any 
service, program, or schedule or group of programs that is made by a 
terrestrial television broadcast station in the clear (i.e., without 
any encryption). NCTA asserts that it is likely that this definition is 
broader than the Commission intended. NCTA states, as an example, that 
the omission of the term ``substantially simultaneously'' prevents it 
from placing copy protections on VOD content that was originally 
delivered over the air because it is a retransmission of a program that 
was initially made by a terrestrial television broadcast station. With 
our encoding rules, we intend to reflect consumer expectations that 
they may freely copy unencrypted broadcast programming as it airs. We 
also intend to reflect that consumers do not have the expectation that 
they may freely copy all content simply because it was available over 
the air at one point during the history of television broadcasting. 
Therefore, we agree with NCTA's assertion that we should add the phrase 
``substantially simultaneously'' back into the definition of 
``Unencrypted Broadcast Television,'' for the reason that NCTA 
provides.
    59. DIRECTV. DIRECTV urges the Commission to close what it calls 
the ``broadband loophole'' in the encoding rules. According to DIRECTV, 
cable operators and telcos will be able to subvert the Commission's 
encoding rules by delivering their video offerings over the Internet, 
which are specifically exempt from our encoding rules. We understand 
DIRECTV's concern, but there is no evidence that any MVPD is using 
Internet-based delivery to subvert our encoding rules. If DIRECTV has 
evidence that this concern is more than hypothetical and is harming 
consumers, we urge the company to file a petition for declaratory 
ruling or a petition for rulemaking. Therefore, we deny this portion of 
DIRECTV's petition for reconsideration.
    60. DIRECTV next argues that the Commission should define minimum 
standards that include an IEEE 1394 interface. DIRECTV is concerned 
that television manufacturers could build sets with IEEE 1394 
connections that support a cable-only version of IEEE 1394, and prevent 
consumers from connecting satellite boxes to their television sets. 
Given the rule change that we adopted in Section III.B above to remove 
the IEEE 1394 output requirement, and the limited consumer adoption of 
IEEE 1394 outputs on television sets, we dismiss DIRECTV's petition for 
reconsideration as moot on this point.
    61. DIRECTV also takes issue with the Commission's decision to 
provide CableLabs with the authority to approve and reject content 
protection technologies for set-top box outputs and to license DFAST 
technology, which is the content protection scheme used between 
CableCARDs and UDCPs. DIRECTV's objections are based on a concern that 
CableLabs could use its licensing power for anti-competitive purposes 
against DIRECTV's services and devices by preventing DIRECTV devices 
from using DFAST or rejecting DIRECTV's preferred content protection 
technologies. The intervening years since the adoption of the Plug and 
Play Order have demonstrated that these concerns are without merit. 
Indeed, as of June 30, 2003, 20.4 million households in the U.S. 
subscribed to DBS service; as of June 2010, that number increased to 
over 33 million, and DIRECTV has not established that CableLabs has 
rejected any content protection technology to DIRECTV's detriment. 
Furthermore, we have invited DIRECTV and others to cooperate with the 
Commission as we seek to develop a successor technology to CableCARD 
that would apply to all MVPDs. Accordingly, we deny DIRECTV's petition 
for reconsideration.
    62. Genesis Microchip. Genesis Microchip takes issue with the 
Commission's requirement that a DVI or HDMI interface be included on a 
digital cable ready device. Genesis Microchip asserts that DVI and HDMI 
were not developed by standards development organizations such as IEEE 
and ANSI, and are not available on a non-discriminatory basis. Genesis 
Microchip also asserts that the Commission's requirement violates the 
Administrative Procedure Act. Opponents to Genesis Microchip's petition 
for reconsideration point out correctly that the Commission addressed 
Genesis Microchip's arguments in the Plug and Play Order, stating that 
``the technology underlying these specifications is widely available in 
the marketplace today'' and that ``the adopter agreements for these 
technologies are freely offered on non-discriminatory terms.'' 
Furthermore, HDMI is a ubiquitous output, available on an estimated one 
billion devices, and we are convinced that Genesis Microchip's 
objections are not supported by marketplace reality. Therefore, we deny 
Genesis Microchip's petition for reconsideration.
    63. MPAA. MPAA seeks reconsideration of four points in the Plug and 
Play Order. First, MPAA asserts that the Commission should mandate that 
all digital cable ready devices be built with the capability to 
recognize and honor video programming that is encoded with a request to 
remotely disable selected audio/video outputs, also known as 
``selectable output control.'' MPAA believes that selectable output 
control functionality is essential to protect content and facilitate 
future business models that take advantage of selectable output control 
functionality. We do not believe that such a mandate is necessary. In 
May 2010, the Commission's Media Bureau released an order granting in 
part MPAA's request for waiver of the prohibition on the use of 
selectable output control for certain high-value films in order to 
support a new business model of delivering early-release films over 
MVPD systems to consumers. As MPAA argued in support of that waiver, 
``the use of SOC would have no impact whatsoever on the ability of 
existing [consumer electronics equipment] to work in exactly the same 
fashion that such devices work today.'' While it is possible that 
consumer electronics manufacturers may want to build devices with SOC 
in order to be compatible with future business models like the early-
release film model, as they are free to do under our rules, we do not 
believe that it is necessary to require such functionality to protect 
high-value content or ensure the success of such future business 
models. Therefore, we do not believe that it is necessary to mandate 
that such functionality be built into consumer electronics devices, and 
we deny MPAA's petition for reconsideration with respect to this issue.
    64. Second, MPAA would like Subscription VOD designated as a 
defined business model. Subscription VOD is a video-on-demand service 
that requires customers to subscribe to a service to gain access to the 
on-demand programming. In the Plug and Play Order, the Commission 
classified Subscription VOD as an Undefined Business Model, in order to 
``allow [* * *] SVOD to more fully develop as a program offering in the 
marketplace.'' MPAA asserts that because the Commission did not 
explicitly adopt a rule that allows cable operators to prohibit their 
subscribers from copying Subscription VOD, the Commission will

[[Page 40274]]

stifle the development of the service. Starz Encore Group originally 
opposed this petition, arguing that the Commission's flexible rules 
would encourage SVOD to flourish, but later withdrew its opposition 
based on its new position that the ``Undefined Business Model'' public 
notification process is ``difficult and cumbersome * * * for cable 
operators to navigate.'' We conclude that MPAA's concerns were 
unfounded, and that the procedures agreed upon in the MOU are 
sufficient to meet the needs of content owners, MVPDs, and their 
subscribers. As contemplated in the Plug and Play Order, Subscription 
VOD services have thrived in the marketplace, as Starz On-Demand, HBO 
On-Demand, Cinemax On-Demand, and Showtime On-Demand are all popular 
services available to consumers. Subject to the review process for 
Undefined Business Models set forth in Section 76.1906 of our rules, 
content providers and MVPDs are free to negotiate the terms for how 
such business models are encoded. To the extent that any interested 
party has specific problems with the current state of the encoding of 
any SVOD service, our rules set forth procedures for filing complaints 
regarding how such content is encoded. Accordingly, we deny MPAA's 
petition for reconsideration with respect to this issue.
    65. Third, MPAA seeks simplified procedures for announcing and 
challenging the launch of an Undefined Business Model for content 
encoding purposes. When an entity launches a new video programming 
service that is not defined in our encoding rules, that entity must 
announce its launch publicly, describe the service, and explain how it 
will be encoded for recording purposes. Interested parties may then 
challenge the encoding terms for up to two years after the announcement 
of the service. MPAA's challenge stems from a concern that Undefined 
Business Model announcements will lead to regulatory uncertainty 
because numerous MVPDs will be required to make announcements regarding 
these new business models, and that the window for accepting such 
challenges is too long. We disagree. This rule has been in effect for 
over six years, and the Commission has not received a single challenge 
regarding the encoding rules for an undefined business model. 
Accordingly, we conclude that MPAA's speculative challenge is 
unfounded.
    66. Fourth, MPAA seeks clarification that Section 76.1908(a), which 
allows MVPDs to maintain undistributed copies of audio-visual content 
that is encoded in any way the MVPD chooses, does not nullify 
contractual obligations between MVPDs and content providers. MPAA is 
correct in its assertion that the Commission did not intend that MVPDs 
be allowed to use Section 76.1908(a) of the Commission's rules to make 
copies of ``Copy Never'' content on a PVR in a consumer's home. 
Therefore, we clarify that Section 76.1908(a) does not permit MVPDs to 
make copies of content that would violate agreements between content 
owners and MVPDs.
    67. Finally, MPAA seeks review of the Commission's Sua Sponte 
Reconsideration Order on the same grounds that NCTA does. For the same 
reasons provided in our consideration of NCTA's petition above in 
paragraph 57, MPAA's petition is granted with respect to this issue.
    68. BMI and ASCAP. BMI and ASCAP have filed a petition for 
reconsideration seeking a declaration that performance rights 
organizations are allowed to decrypt content that has been encrypted, 
when used solely for the purpose of monitoring and tracking 
transmissions of audiovisual works for royalty purposes. We do not 
believe that a rule change is necessary for such a narrow exception of 
our rules, and we agree with the Home Recording Rights Coalition that 
the Commission does not have the authority to grant a waiver of the 
Digital Millennium Copyright Act's prohibition on circumventing content 
encryption. Accordingly, we deny BMI and ASCAP's petition for 
reconsideration.
    69. NMPA. The National Music Publishers Association seeks 
reconsideration of the Commission's decision not to require output 
controls on digital audio outputs. NMPA asserts that unprotected 
digital audio outputs will contribute to illegal copying, and that the 
Commission's decision not to require content protections on digital 
audio outputs violates copyright concerns. We continue to believe that 
our existing treatment of audio outputs is necessary to protect legacy 
devices that do not have protected digital connections. Moreover, NMPA 
provides no evidence that illegal copying of the audio channel of cable 
television programming is anything more than a speculative problem. 
Accordingly, we deny NMPA's petition for reconsideration.
    70. TiVo. On July 27, 2009, TiVo filed a petition for 
reconsideration of the Commission's decision that our then existing 
rules did not require cable operators to provide UDCPs with access to 
switched digital channels. Due to the rule change that we adopt in 
Section III.A.1 above, which requires cable operators to provide UDCPs 
with access to switched digital channels, we dismiss TiVo's petition as 
moot.
    71. Conclusion. The steps we take in this order represent 
inexpensive reforms that will remove the disparity in the subscriber 
experience for those customers who choose to purchase a retail 
navigation device as opposed to leasing the cable provider's set-top 
box. These steps will help to develop a retail market for navigation 
devices during the interim period before a successor solution is 
developed and implemented for all MVPDs. While we are optimistic about 
the prospects of a successor technology, we must also be pragmatic 
about harnessing realized solutions. Therefore, until a successor 
technology is actually available, the Commission must strive to make 
the existing CableCARD standard work effectively.
    72. Procedural Matters. Paperwork Reduction Act Analysis. This 
Order adopts new or revised information collection requirements subject 
to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. The 
requirements will be submitted to the Office of Management and Budget 
(OMB) for review under section 3507 of the PRA. The Commission will 
publish a separate notice in the Federal Register inviting comment on 
the new or revised information collection requirement(s) adopted in 
this document. The requirement(s) will not go into effect until OMB has 
approved it and the Commission has published a notice announcing the 
effective date of the information collection requirement(s). In 
addition, we note that pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we 
previously sought specific comment on how the Commission might 
``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.'' We find that the modified 
information collection requirements must apply fully to small entities 
(as well as to others) to ensure compliance with our CableCARD rules, 
as described in the Order.
    73. Final Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act, the Commission has prepared a Final 
Regulatory Flexibility Analysis (``FRFA'') relating to this Report and 
Order. The FRFA is set forth in Appendix A.
    74. Congressional Review Act. The Commission will send a copy of 
this Third Report and Order in a report to be sent to Congress and the 
Government Accountability Office pursuant to the Congressional Review 
Act, see 5 U.S.C. 801(a)(1)(A).

[[Page 40275]]

    75. Additional Information. For additional information on this 
proceeding, contact Steven Broeckaert, [email protected], or 
Brendan Murray, [email protected], of the Media Bureau, Policy 
Division, (202) 418-2120.
    76. For additional information concerning the information 
collection(s) contained in this document, contact Cathy Williams at 
(202) 418-2918, or via the Internet at [email protected].

Final Regulatory Flexibility Analysis

    77. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Fourth Further Notice of Proposed Rule Making 
(FNPRM). The Commission sought written public comment on the proposals 
in the FNPRM, including comment on the IRFA. No commenting parties 
specifically addressed the IRFA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.
    78. Need for, and Objectives of, the Rules. The need for FCC 
regulation in this area derives from deficiencies in our rules that 
prevent consumer electronics manufacturers from developing video 
navigation devices (such as televisions and set-top boxes) that can be 
connected directly to cable systems and access cable services without 
the need for a cable-operator provided navigation device. The 
objectives of the rules we adopt are to support a competitive market 
for navigation devices by increasing customer service and by improving 
audio-visual output functionality on cable-operator-leased devices.
    79. Specifically, we adopt rules that (i) require cable operators 
to provide customer and technical support for retail devices to access 
switched digital channels; (ii) require that equivalent prices be 
charged for CableCARDs for use in cable-operator-provided set-top boxes 
and in retail devices, and that require the pricing information and 
billing of the CableCARD to be more transparent; (iii) simplify the 
CableCARD installation process; (iv) require cable operators to provide 
their subscribers with CableCARDs that can tune multiple streams of 
programming; and (v) streamline the CableCARD device certification 
process by modifying our rules to reflect updated testing procedures, 
and prohibiting a qualified testing facility from refusing to certify 
UDCPs for any reason other than a failure to comply with the 
conformance checklists referenced in our current rules.
    80. 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.
    81. 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'').
    82. Cable Television Distribution Services. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined as follows: 
``This industry comprises establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using wired telecommunications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies.'' The SBA has developed a small business size standard 
for this category, which is: all such firms having 1,500 or fewer 
employees. To gauge small business prevalence for these cable services 
we must, however, use current census data that are based on the 
previous category of Cable and Other Program Distribution and its 
associated size standard; that size standard was: all such firms having 
$13.5 million or less in annual receipts. According to Census Bureau 
data for 2002, there were a total of 1,191 firms in this previous 
category that operated for the entire year. Of this total, 1,087 firms 
had annual receipts of under $10 million, and 43 firms had receipts of 
$10 million or more but less than $25 million. Thus, the majority of 
these firms can be considered small.
    83. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide. Industry data 
indicate that, of 1,076 cable operators nationwide, all but eleven are 
small under this size standard. In addition, under the Commission's 
rules, a ``small system'' is a cable system serving 15,000 or fewer 
subscribers. Industry data indicate that, of 6,635 systems nationwide, 
5,802 systems have under 10,000 subscribers, and an additional 302 
systems have 10,000-19,999 subscribers. Thus, under this second size 
standard, most cable systems are small.
    84. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent 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 an operator serving 
fewer than 677,000 subscribers shall be deemed a small operator, if its 
annual revenues, when combined with the total annual revenues of all 
its affiliates, do not exceed $250 million in the aggregate. Industry 
data indicate that, of 1,076 cable operators nationwide, all but ten 
are small under this size standard. We note that the Commission neither 
requests nor collects information on whether cable system operators are 
affiliated with entities whose gross annual revenues exceed $250 
million, and therefore we are unable to estimate more accurately the 
number of cable system operators that would qualify as small under this 
size standard. Radio and Television Broadcasting and Wireless 
Communications Equipment Manufacturing. The Census Bureau defines this 
category as follows: ``This industry comprises establishments primarily 
engaged in manufacturing radio and television broadcast and wireless 
communications equipment. Examples of products made by these 
establishments are: transmitting and receiving antennas, cable 
television equipment, GPS equipment, pagers, cellular phones, mobile 
communications equipment, and radio and television studio and 
broadcasting equipment.'' The SBA has developed a small business size 
standard for Radio and Television Broadcasting and Wireless 
Communications Equipment Manufacturing, which is: all such firms having 
750 or fewer employees. According to Census Bureau data for 2002, there 
were a total of 1,041

[[Page 40276]]

establishments in this category that operated for the entire year. Of 
this total, 1,010 had employment of under 500, and an additional 13 had 
employment of 500 to 999. Thus, under this size standard, the majority 
of firms can be considered small.
    85. Other Communications Equipment Manufacturing. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in manufacturing communications 
equipment (except telephone apparatus, and radio and television 
broadcast, and wireless communications equipment).'' The SBA has 
developed a small business size standard for Other Communications 
Equipment Manufacturing, which is: all such firms having 750 or fewer 
employees. According to Census Bureau data for 2002, there were a total 
of 503 establishments in this category that operated for the entire 
year. Of this total, 493 had employment of under 500, and an additional 
7 had employment of 500 to 999. Thus, under this size standard, the 
majority of firms can be considered small.
    86. Electronics Equipment Manufacturers. The SBA has developed a 
small business size standard for manufacturers of audio and video 
equipment, which is: all such firms having 750 or fewer employees. 
Census Bureau data indicates that there are 571 U.S. establishments 
that manufacture audio and visual equipment, and that 560 of these 
establishments have fewer than 500 employees and would be classified as 
small entities. The remaining 11 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 560 small manufacturers of audio and visual electronics equipment 
for consumer/household use.
    87. 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 485 firms that 
manufacture electronic computers and of those, 476 have fewer than 
1,000 employees and qualify as small entities. The remaining 9 firms 
have 1,000 or more employees. We conclude that there are approximately 
476 small computer manufacturers.
    88. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements. The rules adopted in the Order will impose 
additional reporting, recordkeeping, and compliance requirements on 
cable operators. The Order adopts a rule that requires cable operators 
to charge equivalent and transparent prices for CableCARDs. This rule 
change will require certain cable operators to change their billing 
practices by reporting CableCARD prices on their Web sites, annual rate 
cards, or monthly bills. The Order also adopts a rule that will require 
device manufacturers to include CableCARD installation instructions 
with their devices.
    89. 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.
    90. Four of the final rules did not require the Commission to 
consider alternatives. Based on our review of the record and analysis, 
a consideration of alternatives is unnecessary because adoption of 
these rules leads to far greater consumer and industry benefits that 
outweigh any de minimis burden that may be placed on small entities. 
The switched digital support rule places a minor burden on cable 
operators. This burden is offset because the rule will greatly benefit 
consumers by ensuring that subscribers are able to access all of the 
programming for which they pay. This rule ensures consumers will 
benefit regardless of whether they use retail or leased devices.
    91. The installation rule decreases the burden on cable operators 
with respect to customer service calls. It requires cable technicians 
to arrive with the number of CableCARDs that a consumer requests, and 
allow for self-installation of CableCARDs. The effect will be to reduce 
the difficulties that consumers face when seeking to install a 
CableCARD in a retail device and to reduce the number of service calls 
that cable operators and subscribers need to schedule.
    92. The rule regarding Multi-stream CableCARDs places a minimal 
burden on cable operators by requiring cable operators to provide 
subscribers with Multi-stream CableCARDs. However, the record indicates 
that Multi-stream CableCARDS have been the standard since 2007 and 
CableCARD manufacturers are no longer making single stream CableCARDs 
to sell to cable operators. Therefore, we believe the burden will be 
minimal and will be greatly outweighed by the benefits to consumers. 
This rule will reduce the cost that consumers face to use the picture-
in-picture and ``watch one, record one'' functions of their video 
navigation devices, since fewer CableCARDs will be necessary.
    93. The rule that streamlines the CableCARD device certification 
process will place no burden on qualified testing facilities. To the 
contrary, it will benefit consumer electronics manufacturers by 
reducing the cost of the certification process and limiting the 
influence that testing facilities have in the development of new 
consumer electronics equipment.
    94. The Commission did consider alternatives to the pricing and 
billing rule. As proposed, the rule change would have required cable 
operators to separate and report the cost of a CableCARD on every 
monthly bill. As suggested in comments received in the proceeding, the 
Commission instead adopted a rule that will instead require cable 
operators to separate and report the cost on the annual rate card or on 
the operator's Web site. This new rule places a smaller burden on cable 
operators than the proposed rule. It will also greatly benefit 
consumers, resulting in fewer customer service calls, an increase in 
transparency of pricing, and provide consumers with pricing information 
prior to purchase, rather than after.
    95. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposals. None.

List of Subjects

47 CFR Part 15

    Communications equipment, Computer technology, Labeling, Radio, 
Reporting and recordkeeping requirements, Security measures, Telephone, 
Wiretapping and electronic surveillance, Incorporation by reference.

47 CFR Part 76

    Administrative practice and procedure, Cable television, Equal 
employment opportunity, Political

[[Page 40277]]

candidates, Reporting and recordkeeping requirements.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR parts 15 and 76 as follows:

PART 15--RADIO FREQUENCY DEVICES

0
1. The authority citation for part 15 is revised to read as follows:

    Authority:  47 U.S.C. 154, 302a, 303, 304, 307, 336, 544a, and 
549.

0
2. Amend Sec.  15.38 by revising paragraphs (a), (b) introductory text, 
and (c) to read as follows:


Sec.  15.38  Incorporation by reference.

    (a) The materials listed in this section are incorporated by 
reference in this part. These incorporations by reference were approved 
by the Director of the Federal Register in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51. These materials are incorporated as they 
exist on the date of the approval, and notice of any change in these 
materials will be published in the Federal Register. The materials are 
available for purchase at the corresponding addresses as noted, and all 
are available for inspection at the Federal Communications Commission, 
445 12th St., SW., Reference Information Center, Room CY-A257, 
Washington, DC 20554, (202) 418-0270, and at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call (202) 741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (b) The following materials are available for purchase from at 
least one of the following addresses: Global Engineering Documents, 15 
Inverness Way East, Englewood, CO 80112, (800) 854-7179, or at http://global.ihs.com; or American National Standards Institute, 25 West 43rd 
Street, 4th Floor, New York, NY 10036, (212) 642-4900,or at http://webstore.ansi.org/ansidocstore/default.asp.; or Society of Cable 
Telecommunications Engineers, 140 Philips Road, Exton, PA 19341-1318, 
(800) 542-5040, or at http://www.scte.org/standards/index.cfm.
* * * * *
    (c) The following materials are freely available from at least one 
of the following addresses: Cable Television Laboratories, Inc., 858 
Coal Creek Circle, Louisville, Colorado, 80027, http://www.cablelabs.com/opencable/udcp, (303) 661-9100; or at Consumer 
Electronics Association, 1919 S. Eads St., Arlington; VA 22202, http://www.ce.org/public_policy, (703) 907-7634.
    (1) Uni-Dir-PICS-I01-030903: ``Uni-Directional Receiving Device: 
Conformance Checklist: PICS Proforma,'' September 3, 2003, IBR approved 
for Sec.  15.123(c).
    (2) Uni-Dir-ATP-I02-040225: ``Uni-Directional Receiving Device, 
Acceptance Test Plan,'' February 25, 2004, IBR approved for Sec.  
15.123(c).
    (3) M-UDCP-PICS-I04-080225, ``Uni-Directional Cable Product 
Supporting M-Card: Multiple Profiles; Conformance Checklist: PICS,'' 
February 25, 2008, IBR approved for Sec.  15.123(c).
    (4) TP-ATP-M-UDCP-I05-20080304, ``Uni-Directional Digital Cable 
Products Supporting M-Card; M-UDCP Device Acceptance Test Plan,'' March 
4, 2008, IBR approved for Sec.  15.123(c).

0
3. Revise Sec.  15.123(c) to read as follows:


Sec.  15.123  Labeling of digital cable ready products.

* * * * *
    (c) Before a manufacturer's or importer's first unidirectional 
digital cable product may be labeled or marketed as digital cable ready 
or with other terminology as described in paragraph (b) of this 
section, the manufacturer or importer shall verify the device as 
follows:
    (1) The manufacturer or importer shall have a sample of its first 
model of a unidirectional digital cable product tested to show 
compliance with the procedures set forth in Uni-Dir-PICS-I01-030903: 
Uni-Directional Receiving Device: Conformance Checklist: PICS Proforma 
(incorporated by reference, see Sec.  15.38) at a qualified test 
facility. If the model fails to comply, the manufacturer or importer 
shall have any modifications to the product to correct failures of the 
procedures in Uni-Dir-PICS-I01-030903: ``Uni-Directional Receiving 
Device: Conformance Checklist: PICS Proforma,'' September 3, 2003 
(incorporated by reference, see Sec.  15.38) retested at a qualified 
test facility and the product must comply with Uni-Dir-PICS-I01-030903: 
``Uni-Directional Receiving Device: Conformance Checklist: PICS 
Proforma,'' September 3, 2003 (incorporated by reference, see Sec.  
15.38) in accordance with the test procedures set forth in Uni-Dir-ATP-
I02-040225: ``Uni-Directional Receiving Device, Acceptance Test Plan,'' 
February 25, 2004 (incorporated by reference, see Sec.  15.38) or with 
M-UDCP-PICS-I04-080225, ``Uni-Directional Cable Product Supporting M-
Card: Multiple Profiles; Conformance Checklist: PICS,'' February 25, 
2008 (incorporated by reference, see Sec.  15.38) in accordance with 
the test procedures set forth in TP-ATP-M-UDCP-I05-20080304, ``Uni-
Directional Digital Cable Products Supporting M-Card; M-UDCP Device 
Acceptance Test Plan,'' March 4, 2008 (incorporated by reference, see 
Sec.  15.38) before the product or any related model may be labeled or 
marketed. If the manufacturer or importer's first unidirectional 
digital cable product is not a television, then that manufacturer or 
importer's first model of a unidirectional digital cable product which 
is a television shall be tested pursuant to this subsection as though 
it were the first unidirectional digital cable product. A qualified 
test facility may only require compliance with the procedures set forth 
in Uni-Dir-PICS-I01-030903: Uni-Directional Receiving Device: 
Conformance Checklist: PICS Proforma, September 3, 2003 (incorporated 
by reference, see Sec.  15.38). Compliance testing beyond those 
procedures shall be at the discretion of the manufacturer or importer.
    (2) A qualified test facility is a testing laboratory representing 
cable television system operators serving a majority of the cable 
television subscribers in the United States or an appropriately 
qualified independent laboratory with adequate equipment and competent 
personnel knowledgeable with respect to Uni-Dir-PICS-I01-030903: ``Uni-
Directional Receiving Device: Conformance Checklist: PICS Proforma,'' 
September 03, 2003 (incorporated by reference, see Sec.  15.38); Uni-
Dir-ATP-I02-040225: ``Uni-Directional Receiving Device, Acceptance Test 
Plan,'' February 25, 2004 (incorporated by reference, see Sec.  15.38); 
M-UDCP-PICS-I04-080225, ``Uni-Directional Cable Product Supporting M-
Card: Multiple Profiles; Conformance Checklist: PICS,'' February 25, 
2008 (incorporated by reference, see Sec.  15.38); and TP-ATP-M-UDCP-
I05-20080304, ``Uni-Directional Digital Cable Products Supporting M-
Card; M-UDCP Device Acceptance Test Plan,'' March 4, 2008 (incorporated 
by reference, see Sec.  15.38). For any independent testing laboratory 
to be qualified hereunder such laboratory must ensure that all its 
decisions are impartial and have a documented structure which 
safeguards impartiality of the operations of the testing laboratory. In 
addition, any independent

[[Page 40278]]

testing laboratory qualified hereunder must not supply or design 
products of the type it tests, nor provide any other products or 
services that could compromise confidentiality, objectivity or 
impartiality of the testing laboratory's testing process and decisions.
    (3) Subsequent to the testing of its initial unidirectional digital 
cable product model, a manufacturer or importer is not required to have 
other models of unidirectional digital cable products tested at a 
qualified test facility for compliance with the procedures of Uni-Dir-
PICS-I01-030903: ``Uni-Directional Receiving Device: Conformance 
Checklist: PICS Proforma,'' September 03, 2003 (incorporated by 
reference, see Sec.  15.38) unless the first model tested was not a 
television, in which event the first television shall be tested as 
provided in Sec.  15.123(c)(1). The manufacturer or importer shall 
ensure that all subsequent models of unidirectional digital cable 
products comply with the procedures in the Uni-Dir-PICS-I01-030903: 
``Uni-Directional Receiving Device: Conformance Checklist: PICS 
Proforma,'' September 03, 2003 (incorporated by reference, see Sec.  
15.38) and all other applicable rules and standards. The manufacturer 
or importer shall maintain records indicating such compliance in 
accordance with the verification procedure requirements in part 2, 
subpart J of this chapter. The manufacturer or importer shall further 
submit documentation verifying compliance with the procedures in the 
Uni-Dir-PICS-I01-030903: ``Uni-Directional Receiving Device: 
Conformance Checklist: PICS Proforma,'' September 03, 2003 
(incorporated by reference, see Sec.  15.38) to the qualified test 
facility.
    (4) Unidirectional digital cable product models must be tested for 
compliance with Uni-Dir-PICS-I01-030903: ``Uni-Directional Receiving 
Device: Conformance Checklist: PICS Proforma,'' September 3, 2003 
(incorporated by reference, see Sec.  15.38) in accordance with Uni-
Dir-ATP-I02-040225: ``Uni-Directional Receiving Device Acceptance Test 
Plan,'' February 25, 2004, (incorporated by reference, see Sec.  15.38) 
or an equivalent test procedure that produces identical pass/fail test 
results. In the event of any dispute over the applicable results under 
an equivalent test procedure, the results under Uni-Dir-ATP-I02-040225: 
``Uni-Directional Receiving Device Acceptance Test Plan,'' February 25, 
2004 (incorporated by reference, see Sec.  15.38) shall govern.
    (5) This paragraph applies to unidirectional digital cable product 
models which utilize Point-of-Deployment modules (PODs) in multi-stream 
mode (M-UDCPs).
    (i) The manufacturer or importer shall have a sample of its first 
model of a M-UDCP tested at a qualified test facility to show 
compliance with M-UDCP-PICS-I04-080225, ``Uni-Directional Cable Product 
Supporting M-Card: Multiple Profiles; Conformance Checklist: PICS,'' 
February 25, 2008 (incorporated by reference, see Sec.  15.38) as 
specified in the procedures set forth in TP-ATP-M-UDCP-I05-20080304, 
``Uni-Directional Digital Cable Products Supporting M-Card; M-UDCP 
Device Acceptance Test Plan,'' March 4, 2008 (both references 
incorporated by reference, see Sec.  15.38). If the model fails to 
comply, the manufacturer or importer shall have retested, at a 
qualified test facility, a product that complies with Uni-Dir-PICS-I01-
030903: ``Uni-Directional Receiving Device: Conformance Checklist: PICS 
Proforma,'' September 03, 2003 (incorporated by reference, see Sec.  
15.38) in accordance with Uni-Dir-ATP-I02-040225: ``Uni-Directional 
Receiving Device Acceptance Test Plan,'' February 25, 2004, 
(incorporated by reference, see Sec.  15.38) or an equivalent test 
procedure that produces identical pass/fail test results before any 
product or related model may be labeled or marketed. If the 
manufacturer or importer's first M-UDCP is not a television, then that 
manufacturer or importer's first model of a M-UDCP which is a 
television shall be tested pursuant to this subsection as though it 
were the first M-UDCP.
    (ii) A qualified test facility is a testing laboratory representing 
cable television system operators serving a majority of the cable 
television subscribers in the United States or an appropriately 
qualified independent laboratory with adequate equipment and competent 
personnel knowledgeable with Uni-Dir-PICS-I01-030903: ``Uni-Directional 
Receiving Device: Conformance Checklist: PICS Proforma,'' September 03, 
2003 (incorporated by reference, see Sec.  15.38); Uni-Dir-ATP-I02-
040225: ``Uni-Directional Receiving Device, Acceptance Test Plan,'' 
February 25, 2004 (incorporated by reference, see Sec.  15.38); M-UDCP-
PICS-I04-080225, ``Uni-Directional Cable Product Supporting M-Card: 
Multiple Profiles; Conformance Checklist: PICS,'' February 25, 2008 
(incorporated by reference, see Sec.  15.38); and TP-ATP-M-UDCP-I05-
20080304, ``Uni-Directional Digital Cable Products Supporting M-Card; 
M-UDCP Device Acceptance Test Plan,'' March 4, 2008 (incorporated by 
reference, see Sec.  15.38). For any independent testing laboratory to 
be qualified hereunder such laboratory must ensure that all its 
decisions are impartial and have a documented structure which 
safeguards impartiality of the operations of the testing laboratory. In 
addition, any independent testing laboratory qualified hereunder must 
not supply or design products of the type it tests, nor provide any 
other products or services that could compromise confidentiality, 
objectivity or impartiality of the testing laboratory's testing process 
and decisions.
    (iii) Subsequent to the successful testing of its initial M-UDCP, a 
manufacturer or importer is not required to have other M-UDCP models 
tested at a qualified test facility for compliance with M-UDCP-PICS-
I04-080225, ``Uni-Directional Cable Product Supporting M-Card: Multiple 
Profiles; Conformance Checklist: PICS,'' February 25, 2008 
(incorporated by reference, see Sec.  15.38) unless the first model 
tested was not a television, in which event the first television shall 
be tested as provided in Sec.  15.123(c)(5)(i). The manufacturer or 
importer shall ensure that all subsequent models of M-UDCPs comply with 
M-UDCP-PICS-I04-080225, ``Uni-Directional Cable Product Supporting M-
Card: Multiple Profiles; Conformance Checklist: PICS,'' February 25, 
2008 (incorporated by reference, see Sec.  15.38) and all other 
applicable rules and standards. The manufacturer or importer shall 
maintain records indicating such compliance in accordance with the 
verification procedure requirements in part 2, subpart J of this 
chapter. For each M-UDCP model, the manufacturer or importer shall 
further submit documentation verifying compliance with M-UDCP-PICS-I04-
080225, ``Uni-Directional Cable Product Supporting M-Card: Multiple 
Profiles; Conformance Checklist: PICS,'' February 25, 2008 
(incorporated by reference, see Sec.  15.38) to the qualified test 
facility.
    (iv) M-UDCPs must be in compliance with M-UDCP-PICS-I04-080225, 
``Uni-Directional Cable Product Supporting M-Card: Multiple Profiles; 
Conformance Checklist: PICS,'' February 25, 2008 (incorporated by 
reference, see Sec.  15.38) in accordance with the procedures set forth 
in TP-ATP-M-UDCP-I05-20080304, ``Uni-Directional Digital Cable Products 
Supporting M-Card; M-UDCP Device Acceptance Test Plan,'' March 4, 2008 
(incorporated by reference, see Sec.  15.38) or an equivalent test 
procedure that produces identical pass/fail test results. In the event 
of any dispute over the applicable results under an equivalent test 
procedure, the

[[Page 40279]]

results under TP-ATP-M-UDCP-I05-20080304, ``Uni-Directional Digital 
Cable Products Supporting M-Card; M-UDCP Device Acceptance Test Plan,'' 
March 4, 2008 (incorporated by reference, see Sec.  15.38) shall 
govern.
* * * * *

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

0
4. The authority citation for part 76 continues to read as follows:

    Authority:  47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 
303a, 307, 308, 309, 312, 315, 317, 325, 339, 340, 341, 503, 521, 
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 
552, 554, 556, 558, 560, 561, 571, 572, 573.

0
5. Revise Sec.  76.640(b)(4)(ii) and (iii) to read as follows:


Sec.  76.640  Support for unidirectional digital cable products on 
digital cable systems.

* * * * *
    (b)* * *
    (4) * * *
    (ii) Effective July 1, 2011, include both: (A) a DVI or HDMI 
interface and (B) a connection capable of delivering recordable high 
definition video and closed captioning data in an industry standard 
format on all high definition set-top boxes, except unidirectional set-
top boxes without recording functionality, acquired by a cable operator 
for distribution to customers.
    (iii) Effective December 1, 2012, ensure that the cable-operator-
provided high definition set-top boxes, except unidirectional set-top 
boxes without recording functionality, shall comply with an open 
industry standard that provides for audiovisual communications 
including service discovery, video transport, and remote control 
command pass-through standards for home networking.

0
6. Revise Sec.  76.1204(a)(2) to read as follows:


Sec.  76.1204  Availability of equipment performing conditional access 
or security functions.

    (a) * * *
    (2) The foregoing requirement shall not apply:
    (i) With respect to unidirectional navigation devices without 
recording functionality; or
    (ii) To a multichannel video programming distributor that supports 
the active use by subscribers of navigation devices that:
    (A) Operate throughout the continental United States, and
    (B) Are available from retail outlets and other vendors throughout 
the United States that are not affiliated with the owner or operator of 
the multichannel video programming system.
* * * * *

0
7. Revise Sec.  76.1205 to read as follows:


Sec.  76.1205  CableCARD support.

    (a) Technical information concerning interface parameters that are 
needed to permit navigation devices to operate with multichannel video 
programming systems shall be provided by the system operator upon 
request in a timely manner.
    (b) A multichannel video programming provider that is subject to 
the requirements of Sec.  76.1204(a)(1) must:
    (1) Provide the means to allow subscribers to self-install the 
CableCARD in a CableCARD-reliant device purchased at retail and inform 
a subscriber of this option when the subscriber requests a CableCARD. 
This requirement shall be effective August 1, 2011, if the MVPD allows 
its subscribers to self-install any cable modems or operator-leased 
set-top boxes and November 1, 2011 if the MVPD does not allow its 
subscribers to self-install any cable modems or operator-leased set-top 
boxes;
    (i) This requirement shall not apply to cases in which neither the 
manufacturer nor the vendor of the CableCARD-reliant device furnishes 
to purchasers appropriate instructions for self-installation of a 
CableCARD, and a manned toll-free telephone number to answer consumer 
questions regarding CableCARD installation but only for so long as such 
instructions are not furnished and the call center is not offered;
    (ii) [Reserved].
    (2) Effective August 1, 2011, provide multi-stream CableCARDs to 
subscribers, unless the subscriber requests a single-stream CableCARD;
    (3) With respect to professional installations, ensure that the 
technician arrives with no fewer than the number of CableCARDS 
requested by the customer and ensure that all CableCARDs delivered to 
customers are in good working condition and compatible with the 
customer's device;
    (4) Effective August 1, 2011, provide, through the use of a 
commonly used interface and published specifications for communication, 
CableCARD-reliant, firmware-upgradable navigation devices the ability 
to tune simultaneously as many switched-digital channels as the 
greatest number of streams supported by any set-top box provided by the 
cable operator, or four simultaneous channels, whichever is greater;
    (5) Separately disclose to consumers in a conspicuous manner with 
written information provided to customers in accordance with Sec.  
76.1602, with written or oral information at consumer request, and on 
Web sites or billing inserts;
    (i) Any assessed fees for the rental of single and additional 
CableCARDs and the rental of operator-supplied navigation devices; and,
    (ii) If such provider includes equipment in the price of a bundled 
offer of one or more services, the fees reasonably allocable to:
    (A) The rental of single and additional CableCARDs; and
    (B) The rental of operator-supplied navigation devices.
    (1) CableCARD rental fees shall be priced uniformly throughout a 
cable system by such provider without regard to the intended use in 
operator-supplied or consumer-owned equipment. No service fee shall be 
imposed on a subscriber for support of a subscriber-provided device 
that is not assessed on subscriber use of an operator-provided device.
    (2) For any bundled offer combining service and an operator-
supplied navigation device into a single fee, including any bundled 
offer providing a discount for the purchase of multiple services, such 
provider shall make such offer available without discrimination to any 
customer that owns a navigation device, and, to the extent the customer 
uses such navigation device in lieu of the operator-supplied equipment 
included in that bundled offer, shall further offer such customer a 
discount from such offer equal to an amount not less than the monthly 
rental fee reasonably allocable to the lease of the operator-supplied 
navigation device included with that offer. For purposes of this 
section, in determining what is ``reasonably allocable,'' the 
Commission will consider in its evaluation whether the allocation is 
consistent with one or more of the following factors:
    (i) An allocation determination approved by a local, state, or 
Federal government entity;
    (ii) The monthly lease fee as stated on the cable system rate card 
for the navigation device when offered by the cable operator separately 
from a bundled offer; and
    (iii) The actual cost of the navigation device amortized over a 
period of no more than 60 months.
    (c) A cable operator shall not provide misleading information 
regarding the ability of navigation devices to access switched digital 
channels.

0
8. Amend 76.1602 by adding paragraphs (b)(7) and (8) read as follows:

[[Page 40280]]

Sec.  76.1602  Customer service--general information.

* * * * *
    (b) * * *
    (7) Effective May 1, 2011, any assessed fees for rental of 
navigation devices and single and additional CableCARDs; and,
    (8) Effective May 1, 2011, if such provider includes equipment in 
the price of a bundled offer of one or more services, the fees 
reasonably allocable to:
    (i) The rental of single and additional CableCARDs; and
    (ii) The rental of operator-supplied navigation devices.
* * * * *

0
9. Revise Sec.  76.1902(s) to read as follows:


Sec.  76.1902  Definitions.

* * * * *
    (s) Unencrypted broadcast television means any service, program, or 
schedule or group of programs, that is a substantially simultaneous 
retransmission of a broadcast transmission (i.e., an over-the-air 
transmission for reception by the general public using radio 
frequencies allocated for that purpose) that is made by a terrestrial 
television broadcast station located within the country or territory in 
which the entity retransmitting such broadcast transmission also is 
located, where such broadcast transmission is not subject to a 
commercially-adopted access control method (e.g., is broadcast in the 
clear to members of the public receiving such broadcasts), regardless 
of whether such entity subjects such retransmission to an access 
control method.
* * * * *

0
10. Revise Sec.  76.1908(a) to read as follows:


Sec.  76.1908  Certain practices not prohibited.

* * * * *
    (a) Encoding, storing or managing commercial audiovisual content 
within its distribution system or within a covered product under the 
control of a covered entity's commercially adopted access control 
method, provided that the outcome for the consumer from the application 
of the encoding rules set out in Sec.  76.1904(a) and (b) is unchanged 
thereby when such commercial audiovisual content is released to 
consumer control and provided that all other laws, regulations, or 
licenses applicable to such encoding, storage, or management shall be 
unaffected by this section, or
* * * * *
[FR Doc. 2011-16869 Filed 7-7-11; 8:45 am]
BILLING CODE 6712-01-P