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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
File Number EB-07-SE-352
Oceanic Time Warner Cable, )
NAL/Acct. No. 200832100074
a subsidiary of Time Warner Cable, )
Inc. FRN 0018049841
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: August 22, 2008 Released: August 22, 2008
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Oceanic Time Warner Cable ("Oceanic"), a subsidiary of Time
Warner Cable, Inc. (collectively, "TWC") apparently willfully violated
Section 76.1603(c) of the Commission's Rules ("Rules"). Specifically,
Oceanic failed to provide the requisite thirty (30) day advanced
written notice to the Hawaii Department of Commerce and Consumer
Affairs, Cable Television Division, which serves as the local
franchise authority ("LFA") for the State of Hawaii, before
implementing a service change caused by the migration of certain
channels to its Switched Digital Video ("SDV") platform on September
24, 2007. We conclude, pursuant to Section 503(b) of the
Communications Act of 1934, as amended ("Act"), that Oceanic is
apparently liable for a forfeiture in the amount of seven thousand
five hundred dollars ($7,500).
2. On November 8, 2007, the Spectrum Enforcement Division of the
Enforcement Bureau ("Bureau") issued a Letter of Inquiry ("LOI") to
TWC based on complaints that the company had moved certain cable
channels, which previously had been accessible to subscribers using
CableCARD-equipped unidirectional digital cable products ("UDCPs"),
including digital cable ready sets, to an SDV platform. CableCARDs
permit the reception of secured digital cable services without the
addition of a set-top box. Specifically, one complainant alleged that
Oceanic had deployed SDV in late September 2007 and moved a large
number of channels to an SDV platform, including popular high
definition sports and entertainment channels. According to the
complaints, however, TWC's implementation of SDV necessarily required
customers using a CableCARD to obtain additional equipment, i.e., a
set top box, from the cable company to continue to receive all cable
channels available to them prior to the change to the two-way SDV
platform. The LOI sought information on a number of issues, including
whether the company had complied with Section 76.1603 of the
Commission's Rules by providing written notice to local franchising
authorities at least thirty (30) days before implementing any rate or
3. TWC responded to the LOI on November 30, 2007. In its LOI Response,
TWC does not claim that Oceanic notified the relevant LFA of its plans
to move certain channels to an SDV platform. Rather, TWC states, among
other things, that the notification provisions of Section 76.1603 do
not apply because the "provision of SDV services does not involve a
change in rates or service packages." Specifically, TWC states that
its "decision to begin transmitting certain channels using SDV
technology does not constitute a `rate or service change' for which
TWC is required to give specific advance notice to franchising
authorities pursuant to Section 76.1603(c) of the Commission's rules."
TWC contends that it offers the same service tiers to subscribers at
the same prices before and after deployment of SDV technology -
customers simply need a set top box to view any two-way services.
Moreover, according to TWC, "any customer needing a set-top box to
receive the same channels received before the activation of SDV, can
obtain such a box without an upgrade or downgrade charge" (which is
usually required when customers make changes to their service). TWC
further notes that it has taken steps to keep subscribers apprised of
its plans with respect to its SDV deployment, and notes that Oceanic
took additional steps to mitigate the impact of its movement of
channels to SDV technology by offering subscribers with CableCARDs an
opportunity to lease an interactive set-top box for two years for the
same monthly charge as a CableCARD.
4. TWC further contends that the only applicable notice requirement is
Section 76.1622 of the Commission Rules, which requires that cable
operators provide annual equipment compatibility notices to advise
consumers that "some models of TV receivers ... may not be able to
receive all of the channels offered by the cable system when connected
directly to the cable system." According to TWC, it complied with
Section 76.1622 in its June 2007 annual equipment compatibility
notice, which specifically informs subscribers that "due to device
limitations, devices using CableCARD technology only receive what is
known as `one-way' cable services, and such devices will not receive
`two-way' cable services, such as TWC's electronic program guide,
Pay-Per-View, Video-on-Demand or switched digital video services."
A. Oceanic Apparently Violated Section 76.1603(c) By Failing To Provide
Proper Notice to the Hawaii LFA
5. Based on the record before us, we find that Oceanic apparently
willfully violated Section 76.1603(c) by failing to provide the Hawaii
Department of Commerce and Consumer Affairs, Cable Television
Division, thirty (30) days advance notice prior to its movement of
certain channels to a SDV platform on September 24, 2007.
6. We disagree with TWC's assertion that its subsequent movement of
linear channels to an SDV platform did not involve a change in rates
or service subject to Section 76.1603's notice requirements.
7. Section 76.1603(c) of the Rules provides, in relevant part, as
[C]able systems shall give 30 days written notice to both subscribers and
local franchising authorities before implementing any rate or service
change. Such notice shall state the precise amount of any rate change and
briefly explain in readily understandable fashion the cause of the rate
change (e.g., inflation, change in external costs or the addition/deletion
of channels). When the change involves the addition or deletion of
channels, each channel added or deleted must be separately identified.
We find that migration of channels that were previously accessible with a
CableCARD-equipped UDCP to a switched digital platform that can only be
accessed with an operator-provided set-top box constitutes a change in
services for those customers that use CableCARDs without a set-top box.
Indeed, TWC's own notice to subscribers concedes this point by contrasting
"what is known as `one-way' services" (provided using CableCARD
technology) with "`two-way' cable services" (which CableCARD technology
cannot provide). Based upon TWC's own characterization, therefore, the
migration to a switched digital platform can be likened to the deletion of
channels, in that subscribers who accessed those channels with a
CableCARD-equipped UDCP lost those channels unless they took some action.
Thus, Oceanic's actions triggered the obligation to provide advance
written notice to both customers and the appropriate LFA.
8. Oceanic's movement of programming to a SDV platform rendered
inaccessible dozens of cable channels previously accessible on
CableCARD-equipped UDCPs. Its offer to exchange each CableCARD for a
digital cable box at no extra charge, and to discount the digital box
in exchange for the CableCARD for a minimum of two years, does not
negate the fact that CableCARD customers have experienced a service
change. From the customer's perspective, on September 23, 2007, a
CableCARD-equipped UDCP without a set-top box received certain
channels; on September 24, 2007, that same device received forty fewer
channels. As the Commission stated in another case involving TWC, "it
is the subscribers' perspective - not that of the cable operator -
that is relevant in determining whether a change in programming
services has occurred." We doubt that Oceanic's customers would view
the loss of more than forty (40) channels -- including popular high
definition programming -- as merely an "equipment compatibility"
issue. Indeed, according to a channel listing from two months after
Oceanic's migration of channels to an SDV platform, 135 of 248 Oceanic
Time Warner's linear channels were unavailable to CableCARD users,
including popular news and entertainment programming.
9. TWC's interpretation of the Rules would have us find that cable
operators apparently have no obligation to inform either their
customers or LFAs about the movement of channels to a platform
inaccessible to those customers without additional equipment. If we
followed TWC's construction of the Rules to its logical conclusion,
cable operators could, with nothing more than an annual equipment
compatibility notice, move all their channels to such platforms
without further notice to customers and local governing bodies, and
thereby render CableCARDs entirely useless. Regardless of the
consequences, cable operators would violate no FCC rule if they
abruptly moved channels to an SDV platform with no notice to anyone.
Such an interpretation defies both precedent and common sense.
10. As the Commission reiterated in its recent decision addressing the
responsibilities of cable operators regarding the transition to
digital broadcast television, cable operators must comply with certain
notice requirements when they make changes in programming service,
particularly ones that will affect the channels viewable by
subscribers. In that decision, the Commission reminded operators that
they must provide written notice to subscribers about transitions to
all-digital systems, containing any information they need or actions
they will have to take to continue receiving service. As the
Commission has stated, previously, "it is crucial that local
franchising authorities receive timely notice of a cable operator's
change to programming services."
11. Therefore, for the reasons stated above, we find that Oceanic
apparently violated Section 76.1603(c) by failing to provide at least
thirty (30) days notice to the Hawaii LFA before moving certain linear
channels to its SDV platform.
B. Forfeiture Calculation
12. Under Section 503(b)(1)(B) of the Act, any person who is determined by
the Commission to have willfully or repeatedly failed to comply with
any provision of the Act or any rule, regulation, or order issued by
the Commission shall be liable to the United States for a forfeiture
penalty. To impose such a forfeiture penalty, the Commission must
issue a notice of apparent liability and the person against whom such
notice has been issued must have an opportunity to show, in writing,
why no such forfeiture penalty should be imposed. The Commission will
then issue a forfeiture if it finds by a preponderance of the evidence
that the person has violated the Act or a Commission rule. As
discussed below, we conclude that Oceanic is apparently liable for a
forfeiture in the amount of seven thousand five hundred dollars
($7,500) for its willful violation of Section 76.1603(c) of the Rules.
13. Under Section 503(b)(2)(A) and Section 1.80(b)(1) of the Commission's
Rules, we may assess a cable television operator a forfeiture of up to
$32,000 for each violation or each day of a continuing violation, up
to a statutory maximum forfeiture of $325,000 for any single
continuing violation. In exercising such authority, we are required to
take into account "the nature, circumstances, extent, and gravity of
the violation and, with respect to the violator, the degree of
culpability, any history of prior offenses, ability to pay, and such
other matters as justice may require."
14. The Commission's Forfeiture Policy Statement and Section 1.80 of the
Rules do not establish a specific base forfeiture for violation of
Section 76.1603's notice requirements. Based on the totality of
circumstances here and the Commission's past precedent, we find that
$7,500 is an appropriate base forfeiture for the failure to notify the
Hawaii LFA of Oceanic's change in service. Accordingly, we conclude
that Oceanic is apparently liable for a $7,500 forfeiture for its
willful violation of Section 76.1603(c) of the Rules.
IV. ordering clauses
15. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, Oceanic Time Warner Cable, a
subsidiary of Time Warner Cable, Inc. is NOTIFIED of its APPARENT
LIABILITY FOR A FORFEITURE in the amount of seven thousand five
hundred dollars ($7,500) for willful violation of Section 76.1603(c)
of the Rules.
16. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,
within thirty days of the release date of this Notice of Apparent
Liability for Forfeiture, Oceanic SHALL PAY the full amount of the
proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
17. Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The
payment must include the NAL/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by
credit card, an FCC Form 159 (Remittance Advice) must be submitted.
When completing the FCC Form 159, enter the NAL/Account number in
block number 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). Requests for full payment under
an installment plan should be sent to: Chief Financial Officer --
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554. Please contact the Financial Operations Group Help Desk
at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures. Oceanic will also send electronic
notification on the date said payment is made to
18. The response, if any, must be mailed to the Office of the Secretary,
Federal Communications Commission, 445 12th Street, S.W., Washington,
D.C. 20554, ATTN: Enforcement Bureau - Spectrum Enforcement Division,
and must include the NAL/Acct. No. referenced in the caption. The
response should also be e-mailed to JoAnn Lucanik, Deputy Chief,
Spectrum Enforcement Division, Enforcement Bureau, FCC, at
19. The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits:
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices; or (3) some other reliable and objective
documentation that accurately reflects the petitioner's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
20. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture shall be sent by first class mail and certified mail
return receipt requested to counsel for Time Warner, Inc.: Arthur H.
Harding, Esq., Fleischman and Harding LLP, 1255 23rd Street, N.W.,
Eighth Floor, Washington, D.C. 20037 and Matthew A. Brill, Esq.,
Latham & Watkins LLP, 555 Eleventh Street, N.W., Suite 1000,
Washington, D.C. 20004-1304.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
47 C.F.R. S: 76.1603(c).
47 U.S.C. S: 503(b).
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, Federal Communications Commission to Mark
Lawrence-Apfelbaum, Esq., Executive Vice President and General Counsel,
Time Warner Cable, Inc. (Nov. 8, 2007) ("LOI").
See Letter from Robert A. Flatt to Kevin J. Martin, Chairman, Federal
Communications Commission dated Nov. 7, 2007 (available as a comment in CS
Docket No. 97-08) ("Flatt Complaint").
Id. at 1. See also Letter from Richard C. Brooks, Jr. to Kevin J. Martin,
Chairman Federal Communications Commission dated Aug. 27, 2008 (available
as a comment in CS Docket No. 97-08) ("Brooks Complaint").
See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew
A. Brill, Latham & Watkins LLP, Counsel for Time Warner Cable, to Kathryn
S. Berthot, Chief, Spectrum Enforcement Division, Enforcement Bureau,
Federal Communications Commission (Nov. 30, 2007) ("LOI Response").
Id. at 8.
Id. at 9.
Id. at 10.
Id. at 6. For instance, TWC points out that it provided announcements of
its plans for deployment of SDV to potentially affected CableCARD
customers in a number of its Divisions. For certain customers in its
Hawaii Division, Oceanic provided 30 day-advanced notice, dated August 20,
2007, about the planned deployment of SDV scheduled for September 24,
Id. at 4.
47 C.F.R. S: 76.1622(b)(1).
LOI Response at 8 (emphasis added), and Attachment 4.
The Cable Television Division of the Hawaii Department of Commerce and
Consumer Affairs regulates franchised wireline cable operators within the
State of Hawaii. See http://hawaii.gov/dcca/areas/catv/ (visited Aug. 21,
The record indicates that Oceanic implemented SDV in certain cable systems
in its Hawaii Division on September 24, 2007 and on November 6, 2007. Our
ruling here pertains only to the implementation of SDV on September 24,
47 C.F.R. S: 76.1603(c).
LOI Response at 8, and Attachment 4.
Oceanic's August 20, 2007 notice to CableCARD customers stated that
customers could exchange their CableCARDS for a digital cable box(es) at
no extra charge and could schedule a free visit by contacting the Customer
Care Center. The notice further stated that discounting the digital
box(es) in exchange for the CableCARD(s) would continue for a minimum of
two years. See LOI Response, Attachment 1.
Time Warner Cable, a Division of Time Warner Entertainment Company, L.P.,
Order on Reconsideration, 21 FCC Rcd 9016, 9020 P: 15 (Media Bur. 2006)
("Time Warner Order on Reconsideration"), consent decree adopted, Order,
21 FCC Rcd 11229 (Media Bur. 2006). We note that the Consent Decree
adopted in that case contained an admission by TWC that "its
discontinuation of its carriage of the NFL Network without notification of
its subscribers violated Section 76.1603." Id. at 11229 P: 2; see also id.
at 11233 P: 14. The Consent Decree, however, also states that it "does not
constitute an adjudication on the merits or a factual or legal finding or
determination regarding compliance or noncompliance with the requirements
of the Act or the Rules and the Commission's orders." Id.
We understand that many television sets equipped to utilize CableCARDs can
display high-definition television programming. Thus, the unavailability
of HD channels to CableCARD users has particular significance.
Flatt Complaint, Attachment 1 ("Digital Channel Lineup-Kona"). That
channel listing also indicated that at least two broadcast stations,
including the local NBC affiliate, were unavailable to CableCARD users.
TWC has stated that this listing was an error and has been corrected. LOI
Response at 10. The current channel lineup listed on Oceanic's website now
indicates that more than 100 linear programming channels (excluding
pay-per-view, on-demand, and audio channels) remain unavailable to such
See Carriage of Digital Television Broadcast Signals: Amendment to Part 76
of the Commission's Rules, Third Report and Order and Third Further Notice
of Proposed Rulemaking, 22 FCC Rcd 21064 at P: 38 & n. 121 (2007).
Although this decision came after Oceanic's September 24, 2007 movement of
channels to its SDV platform, the Commission was merely reminding cable
operators of existing law, not changing its interpretation of the Rules.
Id. at P: 38.
Time Warner Order on Reconsideration, 21 FCC Rcd at 9027 P: 30.
To the extent that Section 76.1622 of our Rules applies in this context,
we would not find TWC to be in violation of the requirement that cable
operators at least annually provide subscribers the relevant equipment
compatibility notices. Also, though we do not address here whether
Oceanic's movement of channels to a SDV platform is consistent with the
Commission's "plug and play" policies, we note that this movement might
further discourage consumers from the use of CableCARDs as an alternative
to TWC-supplied set top boxes. See Implementation of Section 304 of the
Telecommunications Act of 1996: Commercial Availability of Navigation
Devices, Report and Order, 13 FCC Rcd 14775, 14786-7, P:P: 28-32 (1998)
("Manufacturers will have substantial incentive to develop and distribute
new products in response to consumer demands for equipment and features,
provided that the MVPD system for which the equipment is designed is
accessible."). See also 47 C.F.R. S:S: 76.1201, 1202, 1204(c). We will
consider those concerns and complaints separately. See e.g., Flatt
Complaint at 1-2; Brooks Complaint at 2-3.
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1).
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
47 U.S.C. S: 503(b)(2)(A), 47 C.F.R. S: 1.80(b)(1). The Commission has
repeatedly amended Section 1.80(b)(1) of the Rules to increase the maximum
forfeiture amounts, in accordance with the inflation adjustment
requirements contained in the Debt Collection Improvement Act of 1996, 28
U.S.C. S: 2461. Most recently, the Commission raised the maximum
forfeitures applicable to cable operators, broadcast licensees, and
applicants for such authority from $32,500 to $37,500 for a single
violation, and from $325,000 to $375,000 for continuing violation. See
Inflation Adjustment of Maximum Forfeiture Penalties, 73 Fed. Reg. 44663,
44664 (July 31, 2008). The new forfeiture limits take effect September 2,
2008 and do not apply to this case.
47 U.S.C. S: 503(b)(2)(E). See also 47 C.F.R. S: 1.80(b)(4), Note to
paragraph (b)(4): Section II. Adjustment Criteria for Section 503
See The Commission's Forfeiture Policy Statement and Amendment of Section
1.80 of the Rules to Incorporate the Forfeiture Guidelines, Report and
Order, 12 FCC Rcd 17087, 17115 (1997) ("Forfeiture Policy Statement"),
recon. denied, 15 FCC Rcd 303 (1999).
The Bureau has substantial discretion, however, in proposing forfeitures.
See, e.g., InPhonic, Inc., Order of Forfeiture and Further Notice of
Apparent Liability, 22 FCC Rcd 8689, 8699 (2007); Globcom, Inc. d/b/a
Globcom Global Commun., Order of Forfeiture, 21 FCC Rcd 4710, 4723-24
(2006). We may apply the base forfeiture amounts described in the
Forfeiture Policy Statement and the Commission's rules, or we may depart
from them altogether as the circumstances demand. See 47 C.F.R.
S:1.80(b)(4) ("The Commission and its staff may use these guidelines in
particular cases [, and] retain the discretion to issue a higher or lower
forfeiture than provided in the guidelines, to issue no forfeiture at all,
or to apply alternative or additional sanctions as permitted by the
statute.") (emphasis added).
See, e.g., Northland Cable Television, Inc., Memorandum Opinion and Order
and Notice of Apparent Liability for Forfeiture, 23 FCC Rcd 7865 (Media
Bur. 2008) (proposing $20,000 forfeiture for apparent violations of
Section 76.1603 and other rules); Northland Cable Television, Inc.,
Memorandum Opinion and Order and Notice of Apparent Liability for
Forfeiture, 23 FCC Rcd 7872 (Media Bur. 2008) (same).
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Federal Communications Commission DA 08-1960
Federal Communications Commission DA 08-1960