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Federal Communications Commission
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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

Report No. CS 98-11 CABLE SERVICES ACTION June 11, 1998

(CS DOCKET 97-80)

The Commission has adopted rules providing for the commercial availability of set top boxes and other consumer equipment used to receive video signals and other services. In the Telecommunications Act of 1996, Congress directed the Commission to create rules that would allow consumers to obtain "navigation devices" -- meaning the set top boxes, remote control units and other equipment -- from commercial sources other than the service provider. This order will benefit consumers and further the Commission's goal of providing competition in the telecommunications marketplace by creating a major market for consumers to own equipment used to access video programming and other services in their homes.

Multichannel video programming distributors must separate out security functions from non-security functions by July 1, 2000. An exception is made for navigation devices that operate throughout the continental United States and are commercially available from unaffiliated sources, which includes direct broadcast satellite ("DBS") providers. The selection of this date is premised on the representations of the various interests involved that they will agree on relevant specifications, interfaces, and standards in a timely fashion, thus permitting the manufacture and sale of navigation devices by unaffiliated sources. For the time being, multichannel video programming distributors may continue to offer devices that have security and non-security functions integrated. The Commission believes that 2005 provides a sufficient period of time for a reasonable transition and therefore it is establishing a prohibition on the sale or lease of new integrated boxes as of January 1, 2005. In the year 2000, once separate security modules are available, the Commission will assess the state of the market to determine whether that timeframe is appropriate.

Section 629 of the Communications Act, as amended by the Telecommunications Act of 1996 instructs the Commission to "adopt regulations 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." Additionally, Section 629 states that Commission rules "shall not prescribe regulations . . . which would jeopardize security of . . . services offered over multichannel video programming systems, or impede the legal rights of a provider of such services to prevent theft of service."

Summary of key elements of the order:

  • Section 629 is broad in terms of the multichannel video programming distributors ("MVPDs") involved. The MVPDs covered include cable television, multichannel broadcast television, direct broadcast satellite ("DBS"), multichannel multipoint distribution service ("MMDS"), and satellite master antenna television ("SMATV"). The Commission determined that open video system operators are not covered as a consequence of the specific open video system provisions of the Communications Act which exclude open video system operators from certain regulations applicable to cable operators.

  • Section 629 covers not just equipment used to receive video programming, but also equipment used to access "other services offered over multichannel video programming systems." Such equipment includes televisions, VCRs, cable set-top boxes, personal computers, program guide equipment, and cable modems. The focus of Section 629, however, is on cable television set-top boxes and cable modems, devices that have historically been available only on a lease basis from the service provider.

  • Subscribers have the right to attach any compatible navigation device to a multichannel video programming system. We conclude that the core requirement, to make possible the commercial availability of equipment to MVPD subscribers, is similar to the Carterfone principle adopted by the Commission in the telephone environment. The Carterfone "right to attach" principle is that devices that do not adversely affect the network may be attached to the network. The order also notes that commercial availability is furthered only if consumers are aware of the availability of equipment from alternative sources.

  • Service providers are prohibited from taking actions that would prevent navigation devices that do not perform conditional access functions from being made available from retailers, manufacturers, or other unaffiliated vendors.

  • Cable operators and other MVPDs can take the necessary steps to guarantee the security of their systems and their programming. The order follows the provisions in the Communications Act that prohibit the manufacture, sale and distribution of equipment designed to allow for the unauthorized reception of service.

  • Service providers must provide, upon request, technical information concerning interface parameters that are needed to permit navigation devices to operate with multichannel video programming systems.

  • Existing equipment rate rules applicable to cable systems not facing effective competition fulfill the statute's requirement prohibiting subsidies.

  • The order adopts rules implementing the statute's waiver and sunset provisions.

The Commission believes that the steps taken in this Report and Order, if implemented promptly and in good faith, will result in a broad expansion of the market for navigation devices so that they become commercially available through retail outlets. This will create incentive for innovation, choice and better prices. The Commission will monitor developments with respect to the availability of information to consumers, retailers, and manufacturers necessary to the functioning of a commercial retail market for navigation equipment, as well as developments relating to standard means of attaching and using equipment with the networks of service providers. The Commission also will monitor developments with respect to the compatibility of set-top boxes and digital televisions, and the availability of program guides. The Commission also is requiring the filing of reports at six month intervals to ensure that the CableLabs OpenCable process, a private effort by several cable companies, is progressing towards the requirement of separation of security by July 1, 2000.

Action by the Commission June 11, 1998, by Report and Order (FCC 98-116). Chairman Kennard, Commissioners Ness, Furchtgott-Roth and Tristani with Commissioner Powell dissenting and Commissioners Ness and Powell issuing statements.

-FCC -

News Media contact: Morgan Broman at (202) 418-2358.
Cable Services Bureau contact: Deborah Klein at (202) 418-7200. TTY: (202) 418-7172