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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ********************************* ******************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) Media General Cable of ) CSR-5343-Z Fairfax County, Inc. ) ) Petition for Special Relief ) MEMORANDUM OPINION AND ORDER Adopted: June 23, 1999 Released: June 25, 1999 By the Chief, Cable Services Bureau: INTRODUCTION 1. Media General Cable of Fairfax County, Inc. ("Media General") has filed a petition for special relief, pursuant to Section 76.7 of the Commission's rules, seeking a waiver of Section 76.605(a)(6)(ii) of the rules. The rule, which goes into effect on December 30, l999, requires measurement of the amplitude characteristic at the subscriber terminal. Media General contends that application of the rule will require it to prematurely replace a significant number of set-top converters, at a great cost to the cable operator and its subscribers. BACKGROUND 2. The Commission adopted a number of technical requirements for cable television systems in 1992, including the following standard: The amplitude characteristic shall be within a range of +/- 2 decibels from 0.75 MHz to 5.0 MHz above the lower boundary frequency of the cable television channel, referenced to the average of the highest and lowest amplitudes within these frequency boundaries. In Cable Television Technical and Operational Requirements, Review of the Technical and Operational Requirements of Part 76, Cable Television ("Report and Order"), the Commission established the requirement that this standard be measured after the cable television signal passes through the converter box provided by the cable operator. The rule was established to provide a picture quality standard which includes measurements taken from the converter box. On reconsideration, the Commission modified the rule "... to permit cable operators to measure this standard prior to a signal passing through a converter box for no more than a seven- year period beginning December 30, l992...." The seven-year period allowed cable operators to replace existing converter boxes in a cost efficient manner. Accordingly, as of December 30, l999, the standard will be measured at a subscriber's terminal, which will include measurements which take into account the converter box. ARGUMENTS 3. Media General states that of its nearly 423,000 converter boxes currently in use, approximately 72,000 units will fail to meet the specifications established in the revised rule. Media General began a program in 1996 in anticipation of the revised rule, and with "increasing awareness" of the durability of the Zenith boxes, to retrofit its equipment to bring the them into compliance. However, this program was curtailed recently when Zenith determined that it was no longer to be a supplier of cable converter boxes. Media General states that because of the surprising durability of the Zenith boxes and their continued reliability past their expected lives, it would not need to replace the boxes in the foreseeable future absent the revised rule. In addition, Media General states that absent the rule, it has no foreseeable plans for technological change which would require replacement of the boxes. Without relief, Media General states that it will be forced to replace set-top boxes that are still performing adequately, at a cost of $9.2 million for the equipment alone. 4. Media General explains further that its system has adequate bandwidth to provide subscribers with both analog and digital video signals, so that even when its system converts to digital, the cable operator will not have to retire the Zenith boxes now in use with its subscribers' analog television receivers. In addition, Media General contends that if it is required to spend in excess of nine million dollars in order to comply with the rule, there are currently no analog set-top boxes that can be upgraded to handle digital signals as subscribers demand the new technology. Accordingly, the cable operator surmises that many of the boxes that would have to be installed before the end of the year will have to be replaced as digital programming becomes available. Media General also states it will have to raise its monthly subscription fees seventy-seven cents for all of its 240,000 subscribers to account for the set-top boxes that will have to be replaced prior to the end of 1999. Media General concludes that the cost impact of the revised rule will damage its ability to compete in the competitive Northern Virginia market and potentially erode its market share of subscribers. 5. Accordingly, Media General requests that the Commission afford special relief from the equipment sunset requirements of the revised rule, on the condition that Media General agrees to maintain its policy of replacing the aforementioned Zenith set-top boxes either in the event of a malfunction or upon a subscriber's request. ANALYSIS AND DISCUSSION 6. The Report and Order adopted an amplitude characteristic (also known as frequency response) standard, which maintains the relative order of the different components in the television waveform, contributing to a higher quality picture. The Order on Reconsideration recognized the potential costs for coming into compliance with the standard by December 30, l992, and modified Section 76.605(a)(6) to permit cable operators to come into compliance no later than December 30, l999. In doing so, the Commission stated: The current recovery period for a converter according to the Internal Revenue Service depreciation standards is seven years, and thus even converters put into use today would be depreciated by the end of the period. This seven year phase-in period will allow cable systems to replace converters in a cost-efficient manner. (footnote omitted) The Order on Reconsideration also noted that the legislative history of the Cable Television Consumer Protection and Competition Act of l992 (the "Act") stated: In considering new standards, the Commission shall require cable operators to comply with the standards it establishes within a reasonable period of time. The Commission should, however, consider permitting reasonable phase-in periods so that operators and ultimately consumers may not unreasonably be required to pay for replacing equipment in place prior to the end of its useful life. (emphasis added) 7. The Order on Reconsideration makes it clear that the Commission considered the seven-year Internal Revenue Service depreciation standard so that cable operators could replace fully depreciated converter boxes in a cost efficient manner which would benefit both operators and subscribers. It is also clear from the legislative history that cable operators, and ultimately subscribers, were not intended to bear the costs of replacing equipment prior to the end of its useful life. In the instant matter, it appears that the converter boxes in question have outperformed the Commission's expectations. It also appears that because of the durability of the Zenith boxes, and the configuration of Media General's system, the cable operator would not be required to replace the converter boxes for analog use absent the rule. 8. Based on the facts and circumstances presented by Media General, we do not believe that any reasonable purpose would be served by requiring the retirement or costly retrofiting of existing equipment. To rule otherwise would contradict the intent of the legislative history of the l992 Cable Act and the Commission's interpretation of Section 76.605 in its Order on Reconsideration. In granting Media General's request for waiver, we do impose the condition that Media General must maintain its current policy of replacing the converter boxes in question either in the event of a malfunction or upon a subscriber's request. In addition, when Media General replaces any of the boxes in question for any reason, we will require that the replacement converter boxes comply with Section 76.605 of the rules. Accordingly, we believe that the picture quality standards set out in the rule will be minimally effected by allowing Media General to continue to use the converter boxes in question. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED, pursuant to Sections 76.7 and 76.605 of the Commission's rules, 47 C.F.R. Sections 76.7 and 76.605, that the request for waiver (CSR-5343-Z) filed on behalf of Media General Cable of Fairfax, Inc., IS GRANTED, to the extent indicated above. 10. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules, 47. C.F.R. Section 0.321. FEDERAL COMMUNICATIONS COMMISSION Deborah A. Lathen Chief, Cable Services Bureau