[Federal Register Volume 63, Number 135 (Wednesday, July 15, 1998)]
[Rules and Regulations]
[Pages 38089-38095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18838]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[CS Docket No. 97-80; FCC 98-116]
Commercial Availability of Navigation Devices
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: These rules provide for the commercial availability of set top
boxes and other consumer equipment used to receive video signals and
other services. The intended effect of these rules is to expand
opportunities for consumers to purchase this equipment from sources
other than the service provider.
DATES: Effective upon approval by the Office of Management and Budget
(``OMB''), but no sooner than August 14, 1998, except for Sec. 76.1204,
which shall become effective July 1, 2000. When approval is received,
the Commission will publish a document announcing the effective date.
Written comments by the public on the modified information collection
requirements should be submitted on or before September 14, 1998.
ADDRESSES: A copy of any comments on the information collections
contained herein should be submitted to Judy Boley, Federal
Communications Commission, Room 234, 1919 M Street, NW, Washington, DC
20554, or via the Internet to jboley@fcc.gov.
FOR FURTHER INFORMATION CONTACT: Thomas Horan, Cable Services Bureau,
(202) 418-7200. For additional information concerning the information
collections contained herein, contact Judy Boley at 202-418-0214, or
via the Internet at jboley@fcc.gov.
PAPERWORK REDUCTION ACT: This Report and Order has been analyzed with
respect to the Paperwork Reduction Act of 1995 (the ``1995 Act'') and
found to impose new or modified information collection requirements on
the public. The Commission, as part of its continuing effort to reduce
paperwork burdens, invites the general public to take this opportunity
to comment on the information collection requirements contained in this
Report and Order, as required by the 1995 Act. Public comments are due
September 14, 1998. Comments should address: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
burden estimates; (c) ways to enhance the quality, utility, and clarity
of the information collected; and (d) ways to minimize the burden of
the collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology.
OMB Approval Number: 3060-XXXX (new collection).
Title: Commercial Availability of Navigation Devices.
Type of Review: New collection.
Respondents: Businesses or other for-profit entities.
Number of Respondents: 200.
Estimated Time Per Response: 10 minutes to 40 hours.
Frequency of Response: On occasion.
Total Annual Burden to Respondents: 3,266 hours.
Total Annual Cost to Respondents: $29,632.
Needs and Uses: The disclosure requirements set forth in this
[[Page 38090]]
proceeding will ensure that consumers can make informed decisions about
the purchase and proper installation of navigation devices. The
Sec. 76.1207 petition process will give providers of multichannel video
programming and equipment providers a forum in which to request relief
from regulations adopted under this part for a limited time, provided
that there is an appropriate showing that such a waiver is necessary to
assist the development or introduction of a new or improved
multichannel video programming or other service offered over
multichannel video programming systems, technology, or products. The
Sec. 76.1208 petition process allows interested parties to petition the
Commission to provide for a sunset of navigation devices regulations.
The semiannual reports will be used by the Commission to monitor the
progress of key industry entities of their efforts to assure the
commercial availability of navigation devices.
SUPPLEMENTARY INFORMATION:
1. The Report and Order addresses the issues raised in the Notice
of Proposed Rulemaking in CS Docket No. 97-80, 62 FR 10011 (March 5,
1997) (``NPRM''), regarding the mandate expressed in Section 629 of the
Communications Act (47 U.S.C. Sec. 549) to ensure the commercial
availability of ``navigation devices,'' the equipment used to access
video programming and other services from multichannel video
programming systems.
2. Entities Covered by Section 629. The Commission concludes that
Section 629 is jurisdictionally broad in terms of the multichannel
video programming systems to which it applies. The rules adopted will
be applied to multichannel video programming distributors (MVPDs) as
defined by 47 U.S.C. Sec. 522(13). Section 76.1200 of the rules defines
the entities to which the rules apply. 47 U.S.C. Sec. 573(c)(1)
requires exclusion of open video systems operators from the
requirements of Section 629.
3. Equipment Covered. The language of Section 629 indicates that
Congress sought to have the marketplace offer consumers a choice over a
broad range of equipment. Section 629(a) enumerates ``converter boxes,
interactive communications equipment, and other equipment used by
consumers to access multichannel video programming and other
services.'' Section 629 neither exempts nor limits any category of
equipment used to access multichannel video programming or services
offered over such systems from its coverage. Equipment used to access
video programming and other services offered over multichannel video
programming systems include televisions, VCRs, cable set-top boxes,
personal computers, program guide equipment and cable modems. Section
76.1200(c) of the rules defines the equipment to which the rules apply.
4. Right to Attach. The rules provide subscribers the right to
attach any compatible navigation device to an MVPD system, regardless
of its source, subject to the proviso that the attached equipment not
cause harmful interference, injury to the system or compromise
legitimate access control mechanisms. The Commission's rules make clear
to subscribers that an MVPD is not the exclusive purveyor of navigation
devices for its system. In addition to being directly restrained from
attaching navigation equipment, consumers must also not be precluded
from the possibility of obtaining equipment from commercial outlets by
virtue of contractual or other restrictions on the availability of
equipment that the service provider might seek to directly impose on
suppliers of equipment. Section 76.1202 enforces the right to attach by
precluding contractual or other arrangements, other than those
involving equipment performing conditional access or security
functions, that prevent navigation devices from being made available to
subscribers from retailers, manufacturers, or other vendors that are
unaffiliated with such service provider.
5. Information on Technical Interface Specifications. The
Commission will require that MVPDs provide to the requesting party the
technical information concerning interface parameters necessary for a
navigation device to operate with the services delivered by the MVPD's
system. Section 76.1205 delineates these requirements. The Commission
will not replicate the more complete interface specification rules used
in the telephone context, but will monitor closely industry progress on
development of standards for attaching equipment, as well as MVPD
compliance with the network disclosure requirements.
6. Protection of Network Facilities. The rules will allow MVPDs to
restrict the attachment or use of equipment to their systems where
electronic or physical harm would be caused by the attachment or
operation of such equipment. MVPDs must publish, and provide to
subscribers, standards and descriptions of devices that may not be used
or attached to their systems because of the potential for harm. These
requirements are contained in Sec. 76.1203. To the extent that there is
a dispute whether an MVPD's equipment restrictions are unreasonable,
the Commission's petition procedures are available.
7. Security and Theft of Service. No Commission action in this
proceeding should be construed to authorize or justify any use,
manufacture, or importation of equipment that would violate Section 633
of the Communications Act or any other provision of law precluding the
unauthorized reception of MVPD service. Similarly, nothing in this
proceeding should be construed as diminishing an operator's ability to
seek civil damages against parties involved with navigation devices
providing unauthorized reception of services.
8. Signal Leakage. When combined with the 47 CFR 76 signal leakage
requirements, the 47 CFR 15 provisions provide sufficient safeguards
for signal leakage and interference concerns for retail navigation
devices. The part 15 provisions include limitations on signal leakage
from electronic equipment and also specify equipment authorization
procedures.
9. Rules for Equipment Providing Conditional Access. As of July 1,
2000, MVPDs covered by Section 629 who wish to distribute devices using
integrated security may do so only if they also make available security
modules separately. The device supplied by the service provider must be
designed to connect to and function with other navigation devices
through the use of a commonly used interface or through an interface
that conforms to appropriate technical standards promulgated by a
national standards organization. The rule requiring separation of
security functions does not apply to MVPDs that support navigation
devices that are portable throughout the continental United States, and
are available from retail outlets and other vendors. There is an
exception in the rules (Sec. 76.1204(d)) for situations in which where
separation is not feasible. This exception is intended, however, to be
a narrow exception to the general rules to account for unusual types of
equipment.
10. The Commission is requiring the eight multiple system operators
that are involved in the CableLabs/OpenCable project to advise the
Commission semiannually--on January 7, 1999, July 7, 1999, January 7,
2000, and July 7, 2000--as to the progress of their efforts and the
efforts of CableLabs to assure the commercial availability, to
consumers of equipment used to access multichannel video programming
and other services offered over multichannel video programming systems,
from
[[Page 38091]]
manufacturers, retailers, and other vendors not affiliated with any
multichannel video programming distributor. The reports should detail
the progress being made toward meeting the July 1, 2000 deadline. The
information should advise the Commission of the status of any standards
or certification process and any anticipated dates for approval.
11. The Commission's rules permit MVPDs to continue to provide
equipment on an integrated basis until January 1, 2005, so long as
modular security components are also made available. MVPDs may continue
to sell or lease boxes after this date provided the boxes have a
severable security component rather than integrated security. In the
year 2000, once separate security modules are available, the Commission
will assess the state of the market to determine whether that time
frame is appropriate and will review the mechanics of the phase out of
integrated boxes.
12. Affiliation. Affiliation is defined based on common ownership
or control as defined in the notes accompanying 47 CFR 76.501.
13. Subsidies. Existing equipment rate rules applicable to cable
television systems not facing effective competition address Section
629(a)'s requirement that charges to consumers for such devices and
equipment are separately stated and not subsidized by charges for any
other service. While a cable operator subject to rate regulation may
offer navigation devices necessary to receive regulated services, it
may do so only within the parameters of 47 CFR 76.923. Section 76.923
sets forth the rules for determining the rates for equipment and
installation used to receive the basic service tier and states that
cable operators subject to rate regulation are not permitted to charge
subscribers for equipment beyond actual cost. The relevant rule is
found in Sec. 76.1206.
14. Waivers. A provider of multichannel video programming and other
services offered over multichannel video programming systems, or an
equipment provider, may petition the Commission for a waiver. The
Commission may waive a regulation adopted under Section 629 if such
service or equipment provider makes an appropriate showing that such
waiver is necessary to assist the development or introduction of a new
or improved multichannel video programming or other service offered
over multichannel video programming systems, technology, or products.
The Commission will apply the procedural rules set forth in 47 CFR
76.7. The relevant rule is contained in Sec. 76.1207.
15. Sunset of Regulations. The regulations adopted under this
section shall cease to apply when, as stated in Section 629(e), the
Commission determines that (1) the market for MVPDs is fully
competitive; (2) the market for converter boxes and interactive
communications equipment used in conjunction with that service is fully
competitive; and (3) elimination of the regulations would promote
competition and the public interest. An interested party may petition
the Commission to determine that Section 629(e) has been satisfied.
This rule is found in Sec. 76.1208.
16. Digital Television Compatibility. In the context of this and
other proceedings, the issue of transmitting digital television signals
to consumers has been raised. Since the record on this issue in this
proceeding is extremely limited, and the matter may more appropriately
be addressed in another proceeding, the Commission will defer
consideration here. The Commission intends to monitor developments with
respect to the compatibility of set-top boxes and digital televisions.
17. Electronic Program Guides. An issue was raised in this
proceeding, regarding whether electronic program guide equipment and
guide services are covered by the requirements of Section 629. Based on
the plain language of Section 629, it appears clear that the equipment
used to access such electronic program guides is ``equipment used by
consumers to access . . . services offered over multichannel video
programming systems'' and hence falls within the requirements of
Section 629. While the Commission is committed to encouraging the
development of the market for the provision of electronic program guide
services as part of its broader goal of promoting consumer choice, the
record in this proceeding is limited on this issue. Therefore, the
Commission cannot adequately address at this time the extent of any
obligation of multichannel video programming systems to make such
services available pursuant to Section 629 or otherwise. The Commission
will monitor developments with respect to the availability of
electronic program guides to determine whether any action is
appropriate in the future.
Final Regulatory Flexibility Analysis
18. As required by the Regulatory Flexibility Act (RFA), an Initial
Regulatory Flexibility Analysis (``IRFA'') was incorporated into the
NPRM in this proceeding. The Commission sought written public comment
on the possible impact of the proposed policies and rules on small
entities in the NPRM, including comments on the IRFA. This Final
Regulatory Flexibility Analysis (``FRFA'') in this Report and Order
conforms to the RFA.
19. Need for Action and Objectives of the Rules. The 1996 Act added
a new Section 629 to the Communications Act of 1934, as amended, that
requires the Commission to develop rules to assure competitive
availability of navigation devices used in conjunction with
multichannel video programming distributors (``MVPD''). The Commission
is promulgating these rules in order to implement this provision of
Section 629. The statutory objective of Section 629 is assure that
navigation devices used by consumers to access a particular MVPD's
programming are available to consumers from manufactures, retailers and
other vendors not affiliated with that MVPD.
20. Summary of Significant Issues Raised by the Public Comments in
Response to the IRFA. No comments were filed specifically in response
to the IRFA. The Commission, however, considered the economic impact on
small entities through consideration of comments that pertain to issues
of concern to MVPDs. Commenters cautioned that rules enacted to
implement the requirements of Section 629 must not jeopardize the
system and signal security of MVPDs and should not mandate technical
standards that would interfere with innovation of navigation devices or
development of new technologies. In the Report and Order, the
Commission notes concern with system security and allows MVPDs to
restrict the attachment or use of navigation equipment to their systems
where electronic or physical harm would be caused by the attachment or
operation of such equipment. As for signal security, the rules allow
MVPDs to disconnect service to subscribers using a navigation device
that assists in the unauthorized reception of service. The rules
promulgated also note concern for inhibiting innovation or development
of new technologies. The Commission does not mandate particular
standards or require specific action, but seeks to recognize accepted
industry standards that have evolved or are evolving.
21. Description and Estimate of the Number of Small Entities to
Which the 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 might be affected by the rules here adopted. The
[[Page 38092]]
RFA defines the term ``small entity'' as having the same meaning as the
terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' In addition, the term ``small business''
has the same meaning as the term ``small business concern'' under the
Small Business Act. Under the Small Business Act, a small business
concern is one which: (a) is independently owned and operated; (b) is
not dominant in its field of operation; and (c) satisfies any
additional criteria established by the SBA. The rules adopted in this
Report and Order will affect cable systems, multipoint multichannel
distribution systems, direct broadcast satellites, home satellite dish
manufacturers, satellite master antenna television, local multipoint
distribution systems, small manufacturers, electronic equipment
manufacturers, computer manufacturers, and small retailers.
22. Small Multichannel Video Programming Distributors (``MVPD''):
The SBA has developed a definition of small entities for cable and
other pay television services, which includes all such companies
generating $11 million or less in annual receipts. This definition
includes cable system operators, closed circuit television services,
direct broadcast satellite services, multipoint distribution systems,
satellite master antenna systems and subscription television services.
According to the Bureau of the Census, there are approximately 1,758
total cable and other pay television services and 1,423 had less than
$11 million in revenue. Below each service is addressed to provide a
more precise estimate of small entities.
23. Cable Systems: The Commission has developed, with SBA's
approval, our own definition of a small cable system operator for the
purposes of rate regulation. Under the Commission's rules, a ``small
cable company'' is one serving no more than 400,000 subscribers
nationwide. Based on recent information, the Commission estimates that
there were 1439 cable operators that qualified as small cable companies
at the end of 1995. Since then, some of those companies may have grown
to serve over 400,000 subscribers, and others may have been involved in
transactions that caused them to be combined with other cable
operators. Consequently, the Commission estimates that there are fewer
than 1439 small entity cable system operators that may be affected by
the decisions and rules we are adopting. The Commission concludes that
only a small percentage of these entities currently provide qualifying
``telecommunications services'' as required by the Communications Act
and, therefore, estimate that the number of such entities are
significantly fewer than noted.
24. The Communications Act also contains a definition of a small
cable system operator, which is ``a cable operator that, directly or
through an affiliate, serves in the aggregate fewer than 1% of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' The Commission has determined that there are 61,700,000
cable subscribers in the United States. Therefore, the Commission found
that an operator serving fewer than 617,000 subscribers shall be deemed
a small operator, if its annual revenues, when combined with the total
annual revenues of all of its affiliates, do not exceed $250 million in
the aggregate. Based on available data, the Commission finds that the
number of cable operators serving 617,000 subscribers or less totals
1450. Although it seems certain that some of these cable system
operators are affiliated with entities whose gross annual revenues
exceed $250,000,000, the Commission is unable at this time to estimate
with greater precision the number of cable system operators that would
qualify as small cable operators under the definition in the
Communications Act.
25. Multipoint Multichannel Distribution Systems (``MMDS''): The
Commission refined its definition of ``small entity'' for the auction
of MMDS as an entity that together with its affiliates has average
gross annual revenues that are not more than $40 million for the
preceding three calendar years. This definition of a small entity in
the context of MMDS auctions has been approved by the SBA.
26. The Commission completed its MMDS auction in March 1996 for
authorizations in 493 basic trading areas (``BTAs''). Of 67 winning
bidders, 61 qualified as small entities. Five bidders indicated that
they were minority-owned and four winners indicated that they were
women-owned businesses. MMDS is an especially competitive service, with
approximately 1573 previously authorized and proposed MMDS facilities.
Information available to us indicates that no MMDS facility generates
revenue in excess of $11 million annually. The Commission concludes
that, for purposes of this FRFA, there are approximately 1634 small
MMDS providers as defined by the SBA and the Commission's auction
rules.
27. ITFS: There are presently 2032 ITFS licensees. All but 100 of
these licenses are held by educational institutions. Educational
institutions are included in the definition of a small business.
However, the Commission does not collect annual revenue data for ITFS
licensees and is not able to ascertain how many of the 100 non-
educational licensees would be categorized as small under the SBA
definition. No commenters address these non-educational licensees.
Accordingly, the Commission concludes that at least 1932 licensees are
small businesses.
28. Direct Broadcast Satellite (``DBS''): Because DBS provides
subscription services, DBS falls within the SBA definition of cable and
other pay television services (SIC 4841). As of December 1996, there
were eight DBS licensees. However, the Commission does not collect
annual revenue data for DBS and, therefore, is unable to ascertain the
number of small DBS licensees that could be affected by these proposed
rules. Although DBS service requires a great investment of capital for
operation, in the NPRM, the Commission acknowledged that there are
several new entrants in this field that may not yet have generated $11
million in annual receipts, and therefore may be categorized as a small
business, if independently owned and operated. Since the publication of
the NPRM, however, more information has become available. In light of
the 1997 gross revenue figures for the various DBS operators, the
Commission concludes that no DBS operator qualifies as a small entity.
29. Home Satellite Dish (``HSD''): The market for HSD service is
difficult to quantify. Indeed, the service itself bears little
resemblance to other MVPDs. HSD owners have access to more than 500
channels of programming placed on C-band satellites by programmers for
receipt and distribution by MVPDs, of which 350 channels are scrambled
and approximately 150 are unscrambled. HSD owners can watch unscrambled
channels without paying a subscription fee. To receive scrambled
channels, however, an HSD owner must purchase an integrated receiver-
decoder from an equipment dealer and pay a subscription fee to an HSD
programming packager. Thus, HSD users include: (1) Viewers who
subscribe to a packaged programming service, which affords them access
to most of the same programming provided to subscribers of other MVPDs;
(2) viewers who receive only nonsubscription programming; and (3)
viewers who receive satellite
[[Page 38093]]
programming services illegally without subscribing.
30. According to the most recently available information, there are
approximately 20 to 25 program packagers nationwide offering packages
of scrambled programming to retail consumers. These program packagers
provide subscriptions to approximately 2,184,470 subscribers
nationwide. This is an average of about 77,163 subscribers per program
packager. This is substantially smaller than the 400,000 subscribers
used in the Commission's definition of a small multiple system operator
(``MSO'').
31. Satellite Master Antenna Television (``SMATVs''): Industry
sources estimate that approximately 5200 SMATV operators were providing
service as of December 1995. Other estimates indicate that SMATV
operators serve approximately 1.162 million residential subscribers as
of June 30, 1997. The ten largest SMATV operators together pass 848,450
units. Assuming that these SMATV operators serve 50% of the units
passed, the ten largest SMATV operators serve approximately 40% of the
total number of SMATV subscribers. Because these operators are not rate
regulated, they are not required to file financial data with the
Commission. Furthermore, the Commission is not aware of any privately
published financial information regarding these operators. Based on the
estimated number of operators and the estimated number of units served
by the largest ten SMATVs, the Commission concludes that a substantial
number of SMATV operators qualify as small entities.
32. Local Multipoint Distribution System (``LMDS''): Unlike the
above pay television services, LMDS technology and spectrum allocation
will allow licensees to provide wireless telephony, data, and/or video
services. A LMDS provider is not limited in the number of potential
applications that will be available for this service. Therefore, the
definition of a small LMDS entity may be applicable to both cable and
other pay television (SIC 4841) and/or radiotelephone communications
companies (SIC 4812). The SBA approved definition for cable and other
pay services that qualify as a small business is defined above. A small
radiotelephone entity is one with 1500 employees or fewer. However, for
the purposes of this Report and Order on navigation devices, the
Commission includes only an estimate of LMDS video service providers.
33. An auction for licenses to operate LMDS systems was recently
completed by the Commission. The vast majority of the LMDS license
auction winners were small businesses under the SBA's definition of
cable and pay television (SIC 4841). The Commission adopted a small
business definition for entities bidding for LMDS licenses as an entity
that, together with affiliates and controlling principles, has average
gross revenues not exceeding $40 million for each of the three
preceding years. The Commission has not yet received approval by the
SBA for this definition.
34. There is only one company, CellularVision, that is currently
providing LMDS video services. In the IRFA, the Commission assumed that
CellularVision was a small business under both the SBA definition and
our auction rules. No commenters addressed the tentative conclusions
reached in the NPRM. Accordingly, the Commission affirms the tentative
conclusion that a majority of the potential LMDS licensees will be
small entities, as that term is defined by the SBA.
35. Small Manufacturers: The SBA has developed definitions of small
entity for manufacturers of household audio and video equipment (SIC
3651) and for radio and television broadcasting and communications
equipment (SIC 3663). In each case, the definition includes all such
companies employing 750 or fewer employees.
36. Electronic Equipment Manufacturers: The Commission has not
developed a definition of small entities applicable to manufacturers of
electronic equipment, and therefore, will use the SBA definition of
manufacturers of Radio and Television Broadcasting and Communications
Equipment. According to the SBA's regulations, a TV equipment
manufacturer must have 750 or fewer employees in order to qualify as a
small business concern. Census Bureau data indicates that there are 858
U.S. firms that manufacture radio and television broadcasting and
communications equipment, and that 778 of these firms have fewer than
750 employees and would be classified as small entities. The Census
Bureau category is very broad, and specific figures are not available
as to how many of these firms are exclusive manufacturers of television
equipment or how many are independently owned and operated. The
Commission concludes that there are approximately 778 small
manufacturers of radio and television equipment.
37. Electronic Household/Consumer Equipment: The Commission has not
developed a definition of small entities applicable to manufacturers of
electronic equipment used by consumers, as compared to industrial use
by television licensees and related businesses, and therefore will
utilize the SBA definition applicable to manufacturers of Household
Audio and Visual Equipment. According to the SBA's regulations, a
household audio and visual equipment manufacturer must have 750 or
fewer employees in order to qualify as a small business concern. Census
Bureau data indicates that there are 410 U.S. firms that manufacture
radio and television broadcasting and communications equipment, and
that 386 of these firms have fewer than 500 employees and would be
classified as small entities. The remaining 24 firms have 500 or more
employees; however, the Commission is unable to determine how many of
those have fewer than 750 employees and therefore, also qualify as
small entities under the SBA definition. Furthermore, the Census Bureau
category is very broad, and specific figures are not available as to
how many of these firms are exclusive manufacturers of television
equipment for consumers or how many are independently owned and
operated. The Commission concludes that there are approximately 386
small manufacturers of television equipment for consumer/household use.
38. Computer Manufacturers: The Commission has not developed a
definition of small entities applicable to computer manufacturers, and
therefore will use the SBA definition of Electronic Computers.
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 716 firms that manufacture computers and
of those, 659 have fewer than 500 employees and qualify as small
entities. The remaining 57 firms have 500 or more employees; however,
the Commission is unable to determine how many of those have fewer than
1,000 employees and therefore also qualify as small entities under the
SBA definition. The Commission concludes that there are approximately
659 small computer manufacturers.
39. Small Retailers: The Commission has not developed a definition
of small entities applicable to navigation retail devices, and
therefore will utilize the SBA definition. The 1992 Bureau of the
Census data indicates: there were 9,663 U.S. firms classified as Radio,
TV & electronic stores (SIC 5731), and that 9,385 of these firms had
$4.999 million or less in annual receipts and 9,473 of these firms had
$7.499 million or less in annual receipts. Consequently, the Commission
concludes that there are approximately 9,663 small entities that
[[Page 38094]]
produce and distribute radio, television, and electronic equipment that
may be affected by the decisions in the Report and Order.
40. Description of Reporting, Recordkeeping and Other Compliance
Requirements. This analysis examines the costs and administrative
burdens associated with our rules and requirements. The rules adopted
require MVPDs to make available, upon request, technical information
concerning interface parameters. The Commission believes, however, that
this requirement would not necessitate any additional professional,
engineering, or customer service skills beyond those already utilized
in the ordinary course of business by MVPDs.
41. Steps Taken to Minimize Significant Economic Impact On Small
Entities and Significant Alternatives Considered. The Commission
believes that the rules, implemented to assure commercial availability
of navigation devices, will have the positive result of opening up to
small retailers the market to sell or lease navigation devices to MVPD
subscribers. Section 629 includes provisions which may lessen
compliance impact on small entities affected by the rules adopted in
this Report and Order. Section 629(c) specifies that the Commission
shall waive the regulations developed to implement Section 629 when
necessary for an MVPD to develop new or improved services offered over
its system. Second, Section 629(e) requires the Commission to sunset
the rules adopted in the Report and Order once a determination is made
that (1) the market for MVPDs is fully competitive; (2) the market for
convertor boxes and interactive communications equipment used in
conjunction with that service is fully competitive; and (3) elimination
of the regulations would promote competition and the public interest.
The rules also consider situations and offer relief where the
commercial availability of navigation devices performing conditional
access functions could adversely impact an MVPD. An MVPD is not subject
to the rules requiring the commercial availability of navigation
devices if: (1) it is not reasonably feasible to separate conditional
access functions from other functions; or (2) it is not reasonably
feasible to prevent the unauthorized reception of service by
subscribers using navigation devices obtained from other sources.
42. In the NPRM, the Commission asked for comment as to other means
for achieving a competitive market for navigation devices. Commenters
suggest means which would lead to more governmental involvement in the
equipment design process and the retail marketplace. For instance, some
commenters advocate that the Commission require MVPDs to license
proprietary design specifications to manufacturers of navigation
devices. The Commission has determined that allowing for technical
innovation and flexible design standards would be the best means of
meeting Section 629's statutory mandate of maximizing consumer choice
in consumer electronics equipment. The Commission noted the ongoing
activities of several industry organizations to develop open equipment
standards. Accordingly, the Commission has adopted a regulatory regime
to implement Section 629's requirements that causes minimum intrusion
into the commercial marketplace.
43. It is ordered that, pursuant to authority found in Sections
4(i), 303(r), and 629 of the Communications Act of 1934, as amended, 47
U.S.C. Secs. 154(i), 303(r), and 549, the Commission's rules are hereby
amended as set forth below.
44. It is further ordered that the rules as amended shall become
effective upon approval by OMB, but no sooner than August 14, 1998,
except for Sec. 76.1204, which shall become effective July 1, 2000.
45. It is further ordered that Tele-Communications, Inc., Time
Warner Cable, Jones Intercable, U S WEST Media Group, Marcus Cable,
Advance/Newhouse Communications, Cox Communications, and Comcast
Corporation Shall file reports on January 7, 1999, July 7, 1999,
January 7, 2000, and July 7, 2000 detailing the progress of their
efforts and the efforts of CableLabs to assure the commercial
availability, to consumers of equipment used to access multichannel
video programming and other services offered over multichannel video
programming systems, from manufacturers, retailers, and other vendors
not affiliated with any multichannel video programming distributor.
46. It is further ordered that the Commission's Office of Public
Affairs, Reference Operations Division, shall send a copy of this
Report and Order, including the Final Regulatory Flexibility Analysis,
to the Chief Counsel for Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 76
Cable television.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
Part 76 of title 47 of the Code of Federal Regulations is amended
as follows:
PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
1. The authority citation for part 76 is revised to read as
follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a,
307, 308, 309, 312, 315, 317, 325, 503, 521, 522, 531, 532, 533,
534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556,
558, 560, 561, 571, 572, 573.
2. Subpart P is added to read as follows:
Subpart P--Competitive Availability of Navigation Devices
Sec. 76.1200 Definitions.
As used in this subpart:
(a) Multichannel video programming system. A distribution system
that makes available for purchase, by customers or subscribers,
multiple channels of video programming other than an open video system
as defined by Sec. 76.1500(a). Such systems include, but are not
limited to, cable television systems, multichannel multipoint
distribution systems, direct broadcast satellite systems, other systems
for providing direct-to-home multichannel video programming via
satellite, and satellite master antenna systems.
(b) Multichannel video programming distributor. A person such as,
but not limited to, a cable operator, a multichannel multipoint
distribution service, a direct broadcast satellite service, or a
television receive-only satellite program distributor, who owns or
operates a multichannel video programming system.
(c) Navigation devices. Devices such as converter boxes,
interactive communications equipment, and other equipment used by
consumers to access multichannel video programming and other services
offered over multichannel video programming systems.
(d) Affiliate. A person or entity that (directly or indirectly)
owns or controls, is owned or controlled by, or is under common
ownership or control with, another person, as defined in the notes
accompanying Sec. 76.501.
(e) Conditional access. The mechanisms that provide for selective
access and denial of specific services and make use of signal security
that can prevent a signal from being received except by authorized
users.
[[Page 38095]]
Sec. 76.1201 Rights of subscribers to use or attach navigation
devices.
No multichannel video programming distributor shall prevent the
connection or use of navigation devices to or with its multichannel
video programming system, except in those circumstances where
electronic or physical harm would be caused by the attachment or
operation of such devices or such devices may be used to assist or are
intended or designed to assist in the unauthorized receipt of service.
Sec. 76.1202 Availability of navigation devices.
No multichannel video programming distributor shall by contract,
agreement, patent right, intellectual property right or otherwise
prevent navigation devices that do not perform conditional access or
security functions from being made available to subscribers from
retailers, manufacturers, or other vendors that are unaffiliated with
such owner or operator, subject to Sec. 76.1209.
Sec. 76.1203 Incidence of harm.
A multichannel video programming distributor may restrict the
attachment or use of navigation devices with its system in those
circumstances where electronic or physical harm would be caused by the
attachment or operation of such devices or such devices that assist or
are intended or designed to assist in the unauthorized receipt of
service. Such restrictions may be accomplished by publishing and
providing to subscribers standards and descriptions of devices that may
not be used with or attached to its system. Such standards shall
foreclose the attachment or use only of such devices as raise
reasonable and legitimate concerns of electronic or physical harm or
theft of service. In any situation where theft of service or harm
occurs or is likely to occur, service may be discontinued.
Sec. 76.1204 Availability of equipment performing conditional access
or security functions.
(a)(1) A multichannel video programming distributor that utilizes
navigation devices to perform conditional access functions shall make
available equipment that incorporates only the conditional access
functions of such devices. Commencing on January 1, 2005, no
multichannel video programming distributor subject to this section
shall place in service new navigation devices for sale, lease, or use
that perform both conditional access and other functions in a single
integrated device.
(2) The foregoing requirement shall not apply to a multichannel
video programming distributor that supports the active use by
subscribers of navigation devices that: (i) operate throughout the
continental United States, and (ii) 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.
(b) Conditional access function equipment made available pursuant
to paragraph (a)(1) of this section shall be designed to connect to and
function with other navigation devices available through the use of a
commonly used interface or an interface that conforms to appropriate
technical standards promulgated by a national standards organization.
(c) No multichannel video programming distributor shall by
contract, agreement, patent, intellectual property right or otherwise
preclude the addition of features or functions to the equipment made
available pursuant to this section that are not designed, intended or
function to defeat the conditional access controls of such devices or
to provide unauthorized access to service.
(d) Notwithstanding the foregoing, navigation devices need not be
made available pursuant to this section where:
(1) It is not reasonably feasible to prevent such devices from
being used for the unauthorized reception of service; or
(2) It is not reasonably feasible to separate conditional access
from other functions without jeopardizing security.
(e) The requirements of this section shall become applicable on
July 1, 2000.
Sec. 76.1205 Availability of interface information.
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.
Sec. 76.1206 Equipment sale or lease charge subsidy prohibition.
Multichannel video programming distributors offering navigation
devices subject to the provisions of Sec. 76.923 for sale or lease
directly to subscribers, shall adhere to the standards reflected
therein relating to rates for equipment and installation and shall
separately state the charges to consumers for such services and
equipment.
Sec. 76.1207 Waivers.
The Commission may waive a regulation adopted under this subpart
for a limited time, upon an appropriate showing by a provider of
multichannel video programming and other services offered over
multichannel video programming systems, or an equipment provider that
such a waiver is necessary to assist the development or introduction of
a new or improved multichannel video programming or other service
offered over multichannel video programming systems, technology, or
products. Such waiver requests should be made pursuant to Sec. 76.7.
Such a waiver shall be effective for all service providers and products
in the category in which the waiver is granted.
Sec. 76.1208 Sunset of regulations.
The regulations adopted under this subpart shall cease to apply
when the Commission determines that (1) the market for multichannel
video distributors is fully competitive; (2) the market for converter
boxes, and interactive communications equipment, used in conjunction
with that service is fully competitive; and (3) elimination of the
regulations would promote competition and the public interest. Any
interested party may petition the Commission for such a determination.
Sec. 76.1209 Theft of service.
Nothing in this subpart shall be construed to authorize or justify
any use, manufacture, or importation of equipment that would violate 47
U.S.C. 553 or any other provision of law intended to preclude the
unauthorized reception of multichannel video programming service.
Sec. 76.1210 Effect on other rules.
Nothing in this subpart affects Sec. 64.702(d) of the Commission's
regulations or other Commission regulations governing interconnection
and competitive provision of customer premises equipment used in
connection with basic common carrier communications services.
[FR Doc. 98-18838 Filed 7-14-98; 8:45 am]
BILLING CODE 6712-01-P
