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Federal Communications Commission
Washington, D.C. 20554
In the Matter of File Number EB-07-SE-351
Cox Communications, Inc. NAL/Acct. No. 200932100001
Fairfax County, Virginia Cable System FRN 0016034050
NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER
Adopted: October 15, 2008 Released: October 15, 2008
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture and Order ("NAL
and Order"), we find that Cox Communications, Inc. ("Cox") apparently
willfully violated Sections 76.1201 and 76.640(b)(1) of the
Commission's Rules ("Rules"). Specifically, Cox apparently violated
Section 76.1201 by moving certain channels to a Switched Digital Video
("SDV") platform on October 16, 2007, in its Fairfax County, Virginia
cable system, thereby preventing subscribers with CableCARD-equipped
unidirectional digital cable products ("UDCPs") from using their
navigation devices to access these channels. Further, in its
deployment of SDV on October 16, 2007, Cox apparently violated Section
76.640(b)(1) by failing to provide a virtual channel table conforming
to the standards required under Section 76.640(b)(1)(i) and (v). We
conclude, pursuant to Section 503(b) of the Communications Act of
1934, as amended ("Act"), that Cox is apparently liable for a
forfeiture in the amount of twenty thousand dollars ($20,000). We also
require Cox to make appropriate refund of fees charged to customers
affected by Cox's movement of linear channels to the SDV platform on
October 16, 2007.
2. Congress and the Commission have long recognized the importance of
allowing consumers the freedom to purchase their own navigation
devices from sources other than their cable operator, satellite
provider, or other multichannel video programming distributor
("MVPD"). Thus, Congress adopted Section 629 of the Act, which
requires the Commission to ensure the commercial availability of
navigation devices. By separating the security and navigation
functions of equipment used to receive MVPD programming, Congress
hoped to spur competition and expand consumer choice. As the House
Report accompanying Section 629 noted, "competition in the
manufacturing and distribution of consumer devices has always led to
innovation, lower prices and higher quality. Clearly, consumers will
benefit from having more choices among telecommunications subscription
services available through various distribution sources." At the same
time, Congress recognized that MVPDs have "a valid interest, which the
Commission should continue to protect, in system or signal security
and in preventing theft of service."
3. In its order proposing rules implementing Section 629, the Commission
stated that its overarching goal was to assure competition in the
availability of set-top boxes and other customer premises equipment.
The Commission explained that "[a]s navigation devices are the means
to deliver analog and digital communications, competition in the
navigation equipment market is central toward encouraging innovation
in equipment and services, and toward bringing more choice to a
broader range of consumers at better prices."
4. Thus, in adopting Section 76.1201 of the Commission's Rules, which
allows subscribers to acquire, attach, and use any compatible
navigation device with an MVPD's system, as long as that equipment
does not cause harmful interference or facilitate theft of service,
the Commission likened its actions to its Carterfone decision in the
telephone environment. In Carterfone, the Commission allowed consumers
to attach legal devices to the telephone network unless that equipment
would harm the network. The Commission stated that "[a]s a result of
Carterfone and other Commission actions, ownership of telephones moved
from the network operator to the consumer. As a result, the choice of
features and functions incorporated into a telephone has increased
substantially, while the cost of equipment has decreased." The
Commission emphasized that "[f]ollowing the Carterfone principle
adopted in the telephone context would allow subscribers the option of
owning their own navigation devices and would facilitate the
commercial availability of equipment." The Commission stated that
"[t]he steps taken in this Report and Order, if implemented promptly
and in good faith, should result in an evolution of the market for
navigation devices so that they become generally and competitively
available." The Commission recognized that its work on these issues
was not complete, however, and reiterated its commitment to monitoring
developments regarding the compatibility of set-top boxes and digital
5. Five years later, in the Plug and Play Order, the Commission took
further steps to facilitate the direct connection of digital
navigation devices (including commercially available UDCPs) to MVPD
systems. Specifically, the Commission considered standards agreed upon
by the cable and consumer electronics ("CE") industries and adopted a
cable compatibility standard for integrated, unidirectional digital
cable television receivers, as well as other UDCPs, to ensure the
compatibility and commercial availability of UDCPs with cable
television systems. Generally, the Plug and Play Order required MVPDs
to support operation of UDCPs and to ensure the utilization of such
navigation devices in connection with their cable systems. In
addition, the Commission required MVPDs to make available a security
element separate from the basic navigation device. Under this
framework, the Commission sought to enable unaffiliated manufacturers,
retailers, and other vendors to commercially market UDCPs while
allowing MVPDs to retain control over their system security.
6. Consumers with UDCPs access MVPD programming by using a CableCARD
leased from the cable operator. UDCPs employ a standard interface that
permits them to negotiate with the CableCARD. The CableCARD
descrambles the MVPD's encoded digital signal and allows the
subscriber to view the programming. Thus, commercially available UDCPs
can be compatible with cable systems nationwide, while cable operators
maintain their ability to secure programming content from unauthorized
viewing. In theory, this arrangement allows consumers access to all of
a cable operator's linear programming without the need of a separate
set-top box leased from their cable operator, while protecting the
cable operator from theft of its programming services.
7. But recent events have demonstrated the limits of this theory.
Traditionally, cable systems have used broadcast-type technologies
that deliver all programs to all subscribers whether the subscribers
view the programs or not. The programs not viewed nonetheless occupy
system bandwidth, which prevents the use of that bandwidth for any
other purpose. Because of ever-increasing constraints on bandwidth,
many cable operators have begun to test and deploy SDV technology in
their cable systems. In an SDV system, a subset of programming is
delivered in the traditional way to all subscribers regardless of
whether they are viewing the programs. For those channels, the
CableCARD-equipped UDCP works as described above, allowing the
subscriber to view the channels delivered in the traditional broadcast
manner. The remaining channels are switched through the use of SDV
network equipment located at a "hub" (where signals are converted and
placed onto the "last mile" coaxial portion of the network). These
switched channels do not occupy bandwidth, and are not available to
subscribers until a subscriber tunes to that channel by sending a
request, using a remote control or program guide, upstream through the
use of a set-top box to the hub. At the hub, the SDV equipment
directly receives and processes set-top channel change requests for
switched content and responds to that set-top with the frequency and
program number where that content can be found. Once the hub receives
the request, it immediately begins to transmit the channel.
8. A customer who uses a CableCARD-equipped UDCP to receive programming,
however, must have additional equipment with the necessary upstream
signaling capability to obtain the switched (i.e., bi-directional)
channels. The UDCP cannot perform the bi-directional functions
necessary to request delivery of a channel via SDV. Nor can the
CableCARD, which is designed only to provide the separate security
element, provide the necessary interface needed to send the signal to
the SDV server. Thus, in essence, in an SDV system, all subscribers
must have a cable-operator supplied set-top box to view channels
placed on the SDV platform.
9. As noted above, the Plug and Play Order not only adopted standards to
allow commercially available navigation devices to work with MVPD
systems, but also adopted technical rules to ensure that cable
subscribers would be able to view digital cable services while still
enjoying full functionality of their UDCPs. The Commission did so
pursuant to Section 624A of the Act, which requires the agency to
ensure that cable subscribers enjoy the full benefit of available
cable programming as well as the features and functions of their
televisions. To that end, the Commission adopted Section 76.640(b) of
the Rules, which obligates cable operators to support UDCPs through
compliance with certain Program System Information Protocol ("PSIP")
standards put forth by the Advanced Television Systems Committee
("ATSC"). The standards referenced in Section 76.640 were proposed as
part of the 2002 MOU reached between cable operators and consumer
electronics manufacturers to ensure compatibility between consumer
electronics devices and cable systems.
10. The deployment of SDV technology has implications for cable operators'
compliance with certain subparts of Section 76.640(b). First, Section
76.640(b)(1)(i) provides, in relevant part:
(b) No later than July 1, 2004 cable operators shall support
unidirectional digital cable products, as defined in S:15.123 of this
chapter, through the provision of Point of Deployment modules (PODs) and
services, as follows:
(1) Digital cable systems with an activated channel capacity of 750 MHz or
greater shall comply with the following technical standards and
(i) SCTE 40 2003 (formerly DVS 313): "Digital Cable Network Interface
Standard" ...,provided however that with respect to Table B.11, the Phase
Noise requirement shall be -86 dB/Hz, and also provided that the "transit
delay for most distant customer" requirement in Table B.3 is not
SCTE 40 2003, Section 5.5 states that "[w]hen one or more scrambled
services are offered on the cable system, System and Service Information
for all services (both scrambled and in-the-clear) shall be carried in an
out-of-band Forward Data Channel, as defined in section 3.3.3 above, using
the formats described in SCTE DVS/234 (rev.2)."
11. In essence, Section 76.640(b)(1)(i) requires cable operators to send
UDCPs a one-way stream of data that is separate from the video
programming (the "out of band Forward Data Channel"). That data stream
includes channel lineups and other programming information otherwise
known as "service information tables." This requirement applies to all
services, both scrambled and in the clear.
12. Second, Section 76.640(b)(1)(v) further provides, in relevant part:
(v) When service information tables are transmitted out-of-band for
(A) The data shall, at minimum, describe services carried within the
transport stream carrying the PSIP data itself;
(B) A virtual channel table shall be provided via the extended channel
interface from the POD module. Tables to be included shall conform to
ANSI/SCTE 65 2002 ... "Service Information Delivered Out-of-Band for
Digital Cable Television"....
13. Together, Section 76.640(b)(1)(i) and Section 76.640(b)(1)(v) require
a cable operator to provide information to UDCPs allowing them to find
and display a scrambled programming service on a particular channel.
Section 76.640(b)(1)(i) is the basic requirement regarding service
information tables, and Section 76.640(b)(1)(v) provides the more
detailed specifications for how cable operators should format and
transmit a particular service information table -- the "virtual
channel table." That table acts as a legend for the UDCP. When a cable
operator transmits its digital cable services, those services are not
necessarily transmitted on the channels listed on a subscriber's
programming guide. The virtual channel table enables a UDCP to display
the programming services on the channels on which the subscriber
expects to see them. As noted above, virtual channel table information
is sent on a data channel separate from the video programming
(""out-of-band") via a communication path agreed upon by cable
operators and CE manufacturers (the "extended channel interface").
14. Because of the bi-directional nature of SDV technology, however, UDCPs
cannot view programming provided on such a platform. If a cable
operator transmits a virtual channel table that includes SDV
programming to a UDCP, the UDCP will indicate that SDV programming
should appear on certain channels but will be unable to display it. To
avoid such a scenario, some cable operators may have unilaterally
excluded SDV programming from the virtual channel tables transmitted
to customers with CableCARD-equipped UDCPs.
15. On November 8, 2007, the Spectrum Enforcement Division of the
Enforcement Bureau ("Bureau") issued a Letter of Inquiry ("LOI") to
Cox based on complaints that the company had moved certain cable
channels that previously were accessible to subscribers using
CableCARD-equipped UDCPs, such as digital cable ready television sets
and digital video recorders, to an SDV platform. Specifically, the
Enforcement Bureau received a notice that Cox had sent to its Fairfax
County, Virginia CableCARD subscribers informing them that effective
October 16, 2007, Cox would implement new technology that was not
compatible with one-way digital cable ready devices requiring a
CableCARD. According to the notice, customers that used
CableCARD-equipped UDCPs to receive programming now would need a Cox
digital set-top box to continue to receive all cable channels
available to them prior to the change to the SDV platform. The LOI
sought information on a number of issues, and asked the company to
explain how its implementation of SDV was consistent with Section 629
of the Act, Commission Rules implementing that statute, the 2002 MOU,
and in particular, the policies and Rules established by the
Commission in the Plug and Play Order. The Bureau issued a
Supplemental LOI to Cox on September 5, 2008 and a Second Supplemental
LOI on October 3, 2008 to obtain additional information concerning the
company's deployment of SDV.
16. Cox responded to the LOI on December 17, 2007, and responded to the
Supplemental LOI on September 19, 2008 and the Second Supplemental LOI
on October 10, 2008. In its LOI Response, Cox admits that its Fairfax
County, Virginia cable system deployed SDV on October 16, 2007, which
resulted in the movement of the Latino tier and 14 linear channels to
an SDV platform. Cox states that the deployment of SDV to its Fairfax
County customers affected a small number of its customers using
CableCARDs in one-way devices and that to mitigate the potential
impact on these customers, Cox offered to transition them at little or
no incremental cost to bi-directional equipment to ensure that they
could continue accessing the switched channels, even though they had
purchased a one-way CableCARD device. Specifically, at the time of its
SDV deployment, Cox offered CableCARD-equipped UDCP subscribers a
standard digital receiver for the same price as a CableCARD for the
first year or a free Digital Video Recorder ("DVR") for three months.
Both those offers have since expired.
17. With respect to the technical requirements described above, Cox admits
that it does not provide its subscribers using CableCARD-equipped
UDCPs with a virtual channel table that includes programming on its
SDV platform. Rather, "Cox's Fairfax, Virginia subscribers who utilize
a Cox provided CableCARD with their UDCPs receive a `virtual channel
table' covering all of the scrambled programming services viewable on
their one-way devices." Cox explains that it "does not populate that
channel table for two-way services that are not viewable with UDCP
devices." Cox asserts that its actions are consistent with Section
76.640 of the Commission's Rules because -- according to Cox -- those
provisions only apply to unidirectional digital cable services. Cox
further argues that populating the virtual channel table for two-way
services would confuse consumers with UDCPs, as those devices are
incapable of viewing two-way services.
A. Cox Apparently Willfully Violated Section 76.1201 By Requiring
Subscribers To Obtain A Set-Top Box To View Previously Accessible Linear
18. Section 76.1201 of the Rules prohibits an MVPD from "prevent[ing] the
connection or use of navigation devices to or with its system" unless
such devices would cause electronic or physical harm or allow the
unauthorized receipt of service. Based on the record before us, we
find that Cox apparently willfully violated Section 76.1201 by moving
certain linear channels to an SDV platform in its Fairfax County,
Virginia cable system on October 16, 2007. In so doing, Cox prevented
subscribers with UDCPs, such as "digital cable ready" televisions and
TiVo recorders, from viewing the switched linear channels that were
already part of their subscription package without the use of a
Cox-supplied set-top box, thus impairing the use of those UDCPs within
the affected cable system. Additionally, because customers now must
have a Cox-leased set-top box to view many of their channels, even on
UDCP devices, Cox's migration of channels to an SDV platform has
prevented the use of some functions available on those UDCPs, such as
the abilities to view picture-in-picture and to record one channel
while viewing another channel.
19. Notwithstanding its effect on CableCARD-using UDCP owners, Cox
contends that its movement of existing linear channels to an SDV
platform is fully consistent with the Act and the Commission's rules
and policies, including the Plug and Play Order and the 2002 MOU
between the cable operators and the CE industry. Cox states that in
the Plug and Play Order, the Commission "explicitly acknowledged that
the `MOU reflects a compromise agreement among the parties on a
specification that will permit the manufacturer of unidirectional
digital cable television receivers,' and that `[d]ue to the
unidirectional nature of this receiver specification, an external
navigation device would still be needed to receive advanced features
such as cable operator-enhanced electronic programming guides
("EPGs"), impulse pay per view ("IPPV") or video on demand ("VOD").'"
According to Cox, its deployment of SDV is precisely the kind of
advanced bi-directional technology that the Commission's rules permit.
Moreover, Cox argues that the Commission has stated that Section 629
and its associated rules include no obligation for cable operators to
carry any service that is used by unidirectional equipment and that
the Commission did not intend "to force cable operators to develop and
deploy products and services in tandem with consumer electronics
manufacturers. Cable operators are free to innovate and introduce new
products and services without regard to whether consumer electronics
manufacturers are positioned to deploy substantially similar products
and services." As such, Cox contends that its development and
deployment is consistent with the Commission's policies and rules and
with Congressional intent that in implementing Section 629, the
Commission should "avoid actions which could have the effect of
freezing or chilling the development of new technologies and
20. We reject Cox's arguments as inconsistent with the language and the
intent of the Commission's rules and orders. Taken to its logical
conclusion, Cox's reasoning would permit an MVPD to move all of its
programming to an SDV platform without regard for the impact its
actions would have on customers using or wishing to use
CableCARD-equipped UDCPs. Such an outcome would be fundamentally at
odds with the Commission's goal of protecting cable subscribers'
ability to view signals through the use of commercially available
navigation devices offered in a competitive market. Cox's movement of
linear channels that were previously accessible with a
CableCARD-equipped UDCP to a switched digital platform that can only
be accessed with a Cox-provided set-top box conflicts with the
Commission's rules and policies designed to promote competition and
consumer choice of navigation devices.
21. While we recognize that the Plug and Play Order does not prohibit
cable operators from developing and deploying new technology and
services, it does not permit Cox's actions here. In recognizing that
cable operators are free to innovate and introduce new products and
services, the Commission cautioned that such development and
deployment of new products and services should not interfere with the
functioning of consumer electronics equipment or the introduction of
such equipment into the commercial market for navigation devices.
Indeed, the Commission has continually emphasized that its navigation
device rules are an important tool for promoting competition and
bringing more choices to consumers. Yet the manner in which Cox has
opted to administer its SDV programming effectively negates the
concerted efforts and advances made thus far to achieve a competitive
pro-consumer environment for such equipment.
22. Specifically, by moving linear programming to an SDV platform, Cox has
prevented CableCARD-equipped UDCPs from receiving previously available
channels and impaired the usefulness of competitive commercially
available navigation devices, in violation of the Commission's Rules
and the intent of Section 629. The Commission recognized that devices
made pursuant to the standard adopted in the Plug and Play Order
lacked upstream or bi-directional capabilities and therefore could not
receive certain programming or services, but that recognition did not
extend to services that consumers traditionally experienced as one-way
services or programming that was part of the package for which they
were already paying. At no point did the Commission authorize MVPDs to
modify their transmission of linear programming such that UDCP devices
could no longer receive such programming without a set-top box. Cox
states that "to the extent any Cox customer is unable to view any
programming carried on the SDV platform, it only will be by the
customer's choice." But it is Cox that has chosen to place its
customers in a dilemma -- either continue to receive the now-SDV
programming by leasing a set-top box at additional cost and the
expense of many of their UDCP's features, or keep using the CableCARD
but lose the ability to view certain programming for which Cox
continues to bill them. Such an outcome is fundamentally at odds with
the policy and regulatory objectives of the Plug and Play Order.
23. Section 76.1201 was adopted to achieve the statutory requirement of
alternative sources of navigation devices and to ensure the commercial
availability of navigation devices. The Plug and Play Order sought to
provide further assurance of the commercial availability of navigation
devices by requiring that cable operators support the operation of
UDCPs in connection with their cable systems. Cox's movement of linear
programming to an SDV platform clearly impairs the use of
CableCARD-equipped UDCPs and fundamentally limits the commercial and
competitive viability of those devices. After Cox's movement of linear
programming to an SDV platform, customers who use CableCARD-equipped
UDCPs can no longer receive that programming without leasing a set-top
box from the company. Those customers who choose to lease a set-top
box not only must bear the additional cost, but also lose many
features of their UDCPs, such as picture-in-picture viewing and the
ability to record one channel while watching another. Accordingly, Cox
is preventing its customers from using their UDCPs and undermining the
policy goal of Congress and the Commission to ensure the commercial
availability and use of navigation devices. Thus, we find Cox's
October 16, 2007 migration of linear channels to an SDV platform in
its Fairfax County, Virginia cable system apparently constitutes a
willful violation of Section 76.1201 of the Rules.
24. Cox also stresses the importance of the development and deployment of
SDV. Cox claims it is pro-competitive, pro-consumer, vital to the
digital television transition (especially for carriage of broadcast
signals in both analog and digital format as required by the
Commission), and critical for expanding the number of HD programming
and increasing broadband transmission speeds. Finally, Cox claims that
only a de minimus number of its customers were potentially affected by
the implementation of SDV and that the company took steps to minimize
any potential inconvenience for these few customers in its promotional
offer to provide bi-directional receivers at little or no cost.
25. The deployment of SDV technology may provide public benefits. It is
not Cox's deployment of SDV technology that violates Section 76.1201,
but Cox's migration of existing linear programming to an SDV tier that
we find inconsistent with the Commission's Rules. For example,
charging for channels not presently accessible to subscribers with
CableCARD-equipped UDCPs undermines the policy and regulatory
objectives of the Plug and Play Order. Cox's movement of linear
programming to an SDV platform is particularly troubling because no
bi-directional navigation devices are commercially available at this
time. We understand that a major impediment to the availability of
such devices is the cable industry's insistence on licensing
conditions that go beyond the protection of the network from physical
or electronic harm or theft of service. For example, limitations on
the ability to integrate broadband capability into competitive
navigation devices and the ability to integrate web-based or IP
content with cable-provided programming are not related to Congress'
recognition that MVPDs have "a valid interest, which the Commission
should continue to protect, in system or signal security and in
preventing theft of service." We consider such restrictions to be
contrary to Congress and the Commission's shared policy goal of
expeditious commercial availability of bi-directional navigation
B. Cox Apparently Willfully Violated Section 76.640(b) by Failing to
Comply with the Commission's Technical Rules Regarding the Provision of a
Virtual Channel Table for SDV Programming
26. Cox readily admits that it does not populate the virtual channel table
with its two-way services. In its defense, Cox claims that Section
76.640 only applies to unidirectional digital cable services; on its
face, however, Section 76.640 applies only to unidirectional products.
Section 76.640(b)(1) makes no distinction between unidirectional and
bi-directional services. Indeed, by its own terms, the standard
incorporated by reference in Section 76.640(b)(1)(i) applies to all
services - there is no exception for bi-directional services.
Therefore, Cox is required to describe programming on an SDV platform
in the out-of-band forward data channel and populate the virtual
channel table with all of its programming services. As Cox did not
provide a complete virtual channel table, Cox violated Section
76.640(b)(1)(i) and 76.640(b)(1)(v) of the Commission's Rules.
27. Pointing to the inability of UDCPs to view two-way services, Cox
claims that populating the virtual channel table for two-way services
would confuse consumers with UDCPs. We disagree. It is the absence of
SDV programming from the virtual channel table that is confusing
because it creates the false impression that the subscriber is
receiving all of the programming to which he or she is entitled.
Including the SDV programming in the virtual channel table would make
it clear to Cox subscribers using CableCARD-equipped UDCPs that their
cable operator is charging them for programming that they cannot see.
28. In any event, Commission regulatees may not pick and choose with which
of the Commission's Rules they wish to comply. If Cox believed it had
a legitimate reason to exclude two-way programming from the virtual
channel table provided to customers with CableCARD-equipped UDCPs, the
company should have sought a waiver of the relevant rules.
Accordingly, based on the record before us, we find that Cox
apparently willfully violated Section 76.640(b) by failing to provide
a virtual channel table as required by Section 76.640(1)(b)(i) and
76.640(b)(1)(v) in its Fairfax, Virginia cable system.
C. Forfeiture Calculation
29. 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. We conclude
that Cox is apparently liable for a forfeiture in the amount of
$20,000 for its willful violation of Sections 76.1201,
76.640(b)(1)(i), and 76.640(b)(1)(v) of the Rules.
30. 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."
31. The Commission's Forfeiture Policy Statement and Section 1.80 of the
Rules do not establish a specific base forfeiture for violation of
Section 76.1201. In a similar case, the Commission proposed
forfeitures for each cable system involved in the violation. Thus, we
propose to establish a base forfeiture amount for each cable system in
which linear programming has been moved to an SDV platform, thereby
impairing customers' use of navigation devices such as UDCPs to view
such programming. As noted above, this case involves one Cox cable
system - Fairfax County, Virginia.
32. Cox argues that Section 629 of the Act cannot be interpreted as
precluding cable operators from deploying a two-way video platform as
long as some customers own devices that are, by definition, one-way.
If such were the case, Cox contends, a small percentage of consumers
could effectively prevent the implementation of technical upgrades
that would benefit the vast majority of consumers. Cox contends that
the number of subscribers that rely on CableCARD-equipped UDCPs in its
Fairfax County cable system is small (i.e., less than 0.4% of its
customers had purchased one-way devices), and that on balance, the
implementation of SDV provides an overall benefit to the entire
33. While the number of subscribers that were prevented from using their
CableCARD-equipped UDCPs to access certain programming may be a
relatively small percentage of all cable subscribers, we consider the
consumer harm resulting from actions here, which frustrate the
Commission's broader goal of achieving a competitive navigation device
market, to be significant. Moreover, it is impossible to determine the
injury actions like those at issue here may have inflicted on the
market for one-way devices such as UDCPs. The movement of linear
programming to an SDV platform, without having in place standards to
ensure bi-directional compatibility of cable television systems and
consumer electronics equipment without unnecessary licensing
conditions, significantly harms the Commission's policies to move
navigation devices toward a fully competitive market. Consumers have
little incentive to purchase a UDCP and lease a CableCARD when their
cable provider already has moved more than a dozen channels to a
platform inaccessible to such equipment.
34. One analogous violation for which the Commission has already
established a base forfeiture is violation of the cable broadcast
signal carriage rule, which has a base forfeiture of $7,500. Given the
number of channels involved and the effect of actions like those here
on the Commission's policy objectives, however, we find that a more
significant penalty is appropriate. We conclude that $10,000 per cable
system in which linear programming is moved to an SDV platform is an
appropriate base forfeiture for violation of Section 76.1201. In this
case, Cox moved linear programming to an SDV platform in one cable
system, Fairfax County, Virginia. Accordingly, we conclude that Cox is
apparently liable for a $10,000 forfeiture for its willful violation
of Section 76.1201 of the Rules.
35. Additionally, we conclude that Cox is apparently liable for a
forfeiture in the amount of $5,000 for its willful violation of
Section 76.640(b)(1)(i) of the Rules and $5,000 for its willful
violation of Section 76.640(b)(1)(v) of the Rules. The Commission's
Forfeiture Policy Statement and Section 1.80 of the Rules do not
establish a specific base forfeiture for violation of Section
76.640(b). We note, however, that Section 1.80(b) establishes a base
forfeiture of $5,000 for unauthorized discontinuance of service. We
find that the actions of Cox effectively discontinue a portion of the
services for each of its CableCARD subscribers who choose to view
content via a UDCP. We also conclude that the amount of the proposed
forfeiture for each violation is commensurate with the harm imposed
upon cable subscribers. Because the violation of Section 76.640(b)(1)
coincides with the migration of linear channels to an SDV platform, we
will also apply this base forfeiture amount of $5,000 for each
technical violation of Section 76.640(b)(1) on a per cable system
basis. Accordingly, we conclude that Cox is apparently liable for a
forfeiture in the amount of $10,000 for its willful violation of
Sections 76.640(b)(1)(i) and 76.640(b)(1)(v) in its Fairfax County,
Virginia cable system.
36. Cox's implementation of SDV in its Fairfax County, Virginia cable
system, in which previously available linear programming was moved to
an SDV platform, resulted in the removal of channel information and
the loss of access to those switched channels for its subscribers
using CableCARD-equipped UDCPs. Moreover, such implementation of SDV,
without having in place standards to ensure bi-directional
compatibility of cable television systems and CE equipment,
effectively significantly harms the Commission's policies to move
navigation devices toward a fully competitive market. We note that Cox
could have sought a waiver of these rules under Section 76.1207, but
failed to do so. Accordingly, we conclude that Cox is apparently
liable for a total forfeiture amount of twenty thousand ($20,000) for
its willful violation of Sections 76.1201 ($10,000), 76.640(b)(1)(i)
($5,000), and 76.640(b)(1)(v) ($5,000) of the Commission's Rules.
D. Cox Must Issue Refunds To Customers Harmed by Its SDV Implementation
37. Cox's implementation of SDV has harmed its customers who opted to
purchase and use television receiving equipment that does not require
a cable operator-supplied set-top device to receive cable service.
Many consumers purchased expensive UDCPs, such as "cable ready"
televisions and digital video recorders like TiVos, based on the
reasonable assumption that no set-top box would be necessary to
receive linear programming. In effect, Cox's movement of linear
programming to an SDV platform has substantially diminished the value
of its customers' UDCP devices. Moreover, CableCARD customers affected
by Cox's SDV deployment now must pay higher prices to lease set-top
boxes than they would have paid for CableCARDs. Those CableCARD
customers who chose not to obtain the Cox-supplied set-top boxes after
the implementation of SDV nevertheless have paid the same monthly rate
for their cable service even though they can view significantly fewer
channels. Most importantly, however, Cox's movement of linear
programming to an SDV platform set back the shared goal of Congress
and the Commission of a competitive market for commercially available
navigation devices, as required by Section 629 and the Commission's
38. In calculating the harm to Cox's customers who use UDCP equipment, we
recognize that Cox has made offers to its CableCARD customers to
offset the costs of obtaining a set-top box. Cox states that to
mitigate the impact of its SDV deployment, it offered to transition
subscribers with UDCPs to bi-directional equipment at no initial cost.
Specifically, Cox's notice to its customers states:
If you're interested in a DVR receiver from Cox, for a limited time we're
offering [a] DVR free for the first three months. A DVR will allow you to
record your favorite shows and watch them on your schedule and also give
you access to Cox On DEMAND and all the other great services offered with
digital cable. Or, if you would prefer a standard digital receiver we are
pleased to offer you one for the same price as a CableCARD for the first
year ($1.99 a month).
While Cox's offer to provide a free set-top box to its CableCARD customers
may have provided temporary relief to some its customers; it was not a
permanent solution -- the benefits promised by Cox expired months ago.
Cox's offer did not address the critical problem concerning the company's
interference with its customers' use of independently obtained UDCPs,
i.e., the of service to the extent customers can view fewer channels than
they did before the movement of linear programming to an SDV platform, nor
does it address the loss of functionality of the device in question.
39. Thus, we order Cox, within ninety (90) days of this NAL and Order, to
issue refunds to CableCARD customers affected by the October 16, 2007
implementation of SDV in its Fairfax County, Virginia cable system.
Specifically, Cox must provide refunds as follows:
a. For former CableCARD customers that began to lease any set-top boxes
from Cox following notice of a possible SDV deployment, Cox must
refund the difference in cost (if any) between the charges for the Cox
set-top boxes and the CableCARDs previously leased by such customers;
b. For CableCARD customers that kept their CableCARDs even after notice
of the SDV deployment, Cox must refund the customers' subscriber fees
based on the diminished value of their service following the movement
of linear programming to an SDV platform and reduce their rates on a
going-forward basis accordingly.
40. In addition, we require Cox to submit to the Enforcement Bureau an
explanation of the method the company plans to use to determine the
appropriate amount of refunds, the number of customers receiving
refunds, the total value of such refunds, and the planned timing of
such refunds. Cox must submit this information to the Enforcement
Bureau for review and approval within thirty (30) days of the release
of this decision and must proceed with its proposed refund plan within
sixty (60) days of such submission, provided the Enforcement Bureau
approves Cox's proposed refund plan within thirty (30) days of Cox's
IV. ordering clauses
41. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, and the authority delegated by
Sections 0.111 and 0.311 of the Commissions Rules, Cox Communications,
Inc. is NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the
amount of twenty thousand dollars ($20,000) for willful violation of
Sections 76.1201, 76.640(b)(1)(i) and 76.640(b)(1)(v) of the Rules.
42. 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 and Order, Cox SHALL PAY the full amount of
the proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
43. IT IS FURTHER ORDERED that, pursuant to sections 1, 4(i), 4(j), 601,
and 629 of the Communications Act of 1934, as amended 47 U.S.C. S:151,
154(i), 154(j), 521, 549, Cox must take the steps set forth in
paragraphs 39 and 40 of this NAL and Order.
44. 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. Cox will also send electronic
notification on the date said payment is made to JoAnn.Lucanik@fcc.gov
45. 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
JoAnn.Lucanik@fcc.gov and Kevin Pittman, Esq., Spectrum Enforcement
Division, FCC, at Kevin.Pittman@fcc.gov.
46. 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
47. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture and Order shall be sent by first class mail and
certified mail return receipt requested to counsel for Cox
Communications, Inc., Gary Lutzker, Esquire, Dow Lohnes PLLC, 1200 New
Hampshire Avenue, NW, Suite 800, Washington, DC 20036-6802.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
Representative Customer Complaints Received by FCC
Concerning Cox Communications, Inc.'s Implementation of SDV
in its Fairfax County, Virginia Cable System
Date Received Complaint Number Consumer Complaint
On October 16, 2007, Cox
Communications in Fairfax Virginia
began using Switched Digital Video
to encode all new channels that
they have added to their service.
As a CableCARD customer, I am
paying for channels that I cannot
view. Starting next month the MLB
Extra Innings package will begin
for a new season and will be moved
to Switched Digital Video, thus
also being unavailable to me. When
I signed up for Cox's High
03/22/2008 08-C00009190-1 Definition service, I purchased a
$700 TiVo Series 3 and prepaid $300
for three years of TiVo service. I
did this with the understanding
that Cox would provide CableCARDs
that would give me access to all of
their channels, with the exception
of pay-per-view events. Their
switch to Switched Digital Video
leaves CableCARD customers like
myself out in the cold, with no
means of getting access to these
channels. It was my understanding
that the Integration Ban forbade
I recently purchased a TiVo HD and
had Cox install a Multi-stream
CableCARD in it. Currently, there
are over 15 channels that do not
come in due to decisions made by
Cox to not support CableCARDs and
third party products such as my
TiVo HD. When Cox recently added
several new channels in my area
(northern Virginia) they did so
using SDV technology. This is like
a two-way service which Cox doesn't
02/16/2008 08-C00002771-1 support with CableCARDs. Cox
doesn't say or admit anywhere that
you can't get a bunch of channels
because they use SDV, only PPV and
VOD. By not being able to receive
these channels with a TiVo and
CableCARD, Cox is violating an FCC
mandate for cable companies to
support such devices. They render
competing device useless and the
more channels added in this manner,
the more Cox is guaranteeing
reliance on their own equipment.
Currently because of high
definition SDV Cox is providing in
my area, my TiVo HD unit will not
receive various HD channels with
12/07/2007 07-W13582835 the Cox CableCARDs I am paying for,
they will only work if I lease a
Cox HD receiver. This seems highly
unfair to those who like the
alternatives of having to lease
only Cox HD hardware solutions.
I am filing this complaint against
Cox Communications on the grounds
that the company is in violation of
the Telecommunications Act of 1996.
Specifically, Cox is limiting the
number of digital channels I
receive because I use a CableCARD.
The spirit of this Act was to give
consumers a choice when deciding
which type of device to use to view
cable channels. Now, Cox
Communications is advising
consumers that the only way one can
get the full digital cable lineup
is to use a Cox cable box. If one
chose to use a CableCARD, one would
still pay for the digital lineup
but not receive 75 of those
channels in digital format. To be
clear, for over two years I have
subscribed to digital cable, with a
Cox CableCARD, and have analog. I
contacted a Cox technician about
the issue and was informed I would
be required to use a cable box in
order to regain the digital
channels I had lost. I then
contacted a manager in the Herndon,
Virginia office, who informed me of
the same. As a resolution, I would
like to see Cox provide the full
digital lineup to consumers who
have made the choice to use
10/31/2007 Letter CableCARDs. This request would
exclude any channels that require
two-way communications such as On
Demand, Digital PPV, interactive,
etc., that CableCARDs currently do
not support. Second, if Cox is
allowed to exclude digital channels
to consumers, then the consumer
should have a prorated billing
statement that directly correlates
as a percent of the digital video
channels the consumer is losing.
For example, if 100 digital video
channels cost $100 dollars and 75
of those channels are not
obtainable in digital format for
consumers who choose to use
CableCARDs, then Cox should only
charge $25 dollars a month not
$100. I will caveat this resolution
because it may give Cox the ability
to discriminate [against] popular
digital channels such as CNN and
CSPAN for use with the Cox cable
box-only approach and leave the Cox
CableCARD user with the less
popular channels. Lastly, the same
percentage based billing logic, as
stated above, should be
retroactively applied and cost
reimbursed, to all current Cox
cable card subscribers who have had
their service switched from digital
to analog. This retroactive refund
should be automatically applied.
On September 10, 2007 my cable
company, Cox Communications, begins
rolling out its switched digital
service. Because I'm a CableCARD
user, I will no longer be able to
access 54 previously accessible
channels. This will surely increase
over time to include every channel.
If I want to access these channels,
Cox says I'll have to lease one of
their digital receivers. Which, of
course, is more expensive. And I
don't have a choice. Competitor's
set-top boxes and DVRs (TiVo's for
example) are incompatible with
switched digital. I thought the FCC
required cable providers to support
the CableCARD standard and to
correct incompatibilities between
their networks and certified
CableCARD devices. By making their
network less compatible with
08/23/2007 07-W13311936 CableCARD, Cox is forcing me to
give up my CableCARD for one of
their set-top boxes. The FCC should
not allow cable companies to hobble
or render competitive set-top boxes
unusable by deploying new switching
technology that won't work with
other boxes. I want the FCC to stop
Cox from deploying its switched
digital technology until such time
as (1) they can provide me with a
CableCARD that is compatible with
switched digital, or (2)
competitive set-top boxes and DVRs
compatible with switched digital
are brought to market by the
Consumer Electronics industry. I
demand a choice in the marketplace.
In the event the FCC allows Cox to
reduce my current cable service, I
want my cable bill prorated. I
shouldn't have to pay the same
money for fewer channels.
47 C.F.R. S:S: 76.1201, 76.640(b)(1).
The term "navigation devices" refers to "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." 47 C.F.R. S: 76.1200(c). The
UDCPs at issue in this proceeding include certain "digital cable ready"
televisions and TiVo digital video recorders.
47 U.S.C. S: 503(b). This NAL and Order is issued through the coordinated
effort of the Commission's Enforcement Bureau and Media Bureau. See 47
C.F.R. S:S: 0.61(f)(5), 0.111(15).
47 U.S.C. S: 549. Section 629 was adopted as part of the
Telecommunications Act of 1996. Pub. L. No. 104-104, 110 Stat. 56 (1996).
H.R. Rep. No. 104-204, at 112 (1995).
Implementation of Section 304 of the Telecommunications Act of 1996,
Commercial Availability of Devices, Notice of Proposed Rulemaking, 12 FCC
Rcd 5639, 5641 (1997).
See Implementation of Section 304 of the Telecommunications Act of 1996,
Commercial Availability of Navigation Devices, Report and Order, 13 FCC
Rcd 14775, 14776, P: 2 (1998) ("Navigation Devices Order").
47 C.F.R. S: 76.1201.
See Navigation Devices Order, 13 FCC Rcd at 14778 (citing Use of the
Carterfone Device in Message Toll Service, Decision, 13 FCC 2d 420, 424-25
(1968), recon. denied, 14 FCC 2d 571(1968)).
Navigation Devices Order, 13 FCC Rcd at 14780, P: 11.
Id. at 14786.
Id. at 14780, P: 11. The Commission acknowledged that "the parallel to the
telephone has limitations" and specifically stated that the rules it
adopted in implementing Section 629 of the Act sought to accommodate the
differences from the telephone model. Id. at 14780, P: 12.
Id. at 14781.
Implementation of Section 304 of the Telecommunications Act of 1996,
Commercial Availability of Navigation Devices, Compatibility Between Cable
Systems and Consumer Electronics Equipment, Second Report and Order and
Second Further Notice of Proposed Rulemaking, 18 FCC Rcd 20885 (2003)
("Plug and Play Order"). "The term `plug and play' refers to a device's
ability to plug into a cable system and receive digital cable programming
without a cable-operator provided set-top box." Third Further Notice of
Proposed Rulemaking, 22 FCC Rcd at 12025, n.9.
See December 2002 Memorandum of Understanding Among Cable MSOs and
Consumer Electronics Manufacturers. Plug and Play Order, 18 FCC Rcd at
20887, n.3 (citing Letter from Carl E. Vogel, President and CEO, Charter
Communications, et al., to Michael K. Powell, Chairman, FCC (Dec. 19,
2002) ("2002 MOU")). The MOU "reflects a compromise agreement among the
parties [cable and consumer electronics industries] on a specification
that will permit the manufacture of unidirectional cable television
receivers that include [the same] ... navigation functionality [that
currently exists for set-top boxes]." Plug and Play Order, 18 FCC Rcd at
20890, P: 7.
In most cases, the MVPDs have employed CableCARDs as their
separate-security solution to enable non-integrated conditional access.
But see Cablevision Systems Corporation's Request for Waiver of Section
76.1204(a)(1) of the Commission's Rules, Memorandum Opinion and Order, 22
FCC Rcd 220, 221-222 (2007). The Commission granted Cablevision a waiver
of the ban on cable operator deployment of set-top boxes with integrated
security to allow Cablevision to use a Smart-Card-based separate-security
solution, which is CableCARD-compatible with the use of an adaptor.
The term "linear programming" is generally understood to refer to video
programming that is prescheduled by the programming provider. Cf. 47
U.S.C. S: 522(12) (defining "interactive on-demand services" to exclude
"services providing video programming prescheduled by the programming
Third Further Notice of Proposed Rulemaking, 22 FCC Rcd at 12025 P:P: 3-4.
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, 21095, P: 60 (2007)
("Viewability Order") ("Cable operators continue to develop ways to use
their available capacity more efficiently. For example, cable operators,
in order to keep pace with their competitors, are beginning to deploy
`switched digital'-capability in their networks. In a switched digital
environment, a channel is transmitted via coaxial cable to a subscriber's
premises only when the subscriber tunes to that channel.").
In November 2007, "... CableLabs, NCTA, TiVo, Motorola,
Scientific-Atlanta, Big Band Networks, and C-COR announced the
availability of a technical solution for UDCPs, being adopted by TiVo,
that can enable certain devices using unidirectional CableCARDs to access
switched digital services previously unavailable to them." See Letter from
Gary S. Lutzker, Esq., Dow Lohnes PLLC, Counsel for Cox Communications,
Inc. to Marlene H. Dortch, Secretary, Federal Communications Commission
(Dec. 17, 2007) ("LOI Response") at Exhibit 4, n.11 (internal citations
omitted). According to the November 26, 2007 press releases provided by
Cox, the external adapter was to have been available in "the second
quarter of 2008." Cox has not informed the Bureau whether the device is
now available, whether the company has offered it to its customers, how
the device would be priced, or how it would differ in appearance from a
traditional set-top box.
See Plug and Play Order, 18 FCC Rcd at 20892.
47 U.S.C. S: 544a.
See SCTE 40 2003, Section 5.5, page 16.
47 C.F.R. S: 76.640(b).
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, Federal Communications Commission to James A. Hatcher,
Esq., Senior Vice President, Legal and Regulatory Affairs, Cox
Communications, Inc. (Nov. 8, 2007) ("LOI").
Id. at Exhibit A. The Commission has received several complaints from Cox
customers about SDV deployment in Cox's Fairfax County cable system. We
have provided relevant excerpts and identifying information for those
complaints in Attachment A. Because these complaints were not filed in a
public Commission docket, we will treat the complainants' names as
confidential for privacy reasons.
The LOI described an investigation into possible violations of Section 629
of the Act, 47 U.S.C. S: 549, and Sections 76.640, 76.980(f), 76.984,
76.1204, 76.1206, and 76.1603 of the Commission's rules, 47 C.F.R. S:S:
76.640, 76.980(f), 76.984, 76.1204, 76.1206, and 76.1603.
See Plug and Play Order, 18 FCC Rcd at 20885 n.3.
Id. at 20885.
See Letter from JoAnn Lucanik, Deputy Chief, Spectrum Enforcement
Division, Enforcement Bureau, Federal Communications Commission to Gary S.
Lutzker, Esq., Dow Lohnes PLLC, Counsel for Cox Communications, Inc.,
(Sept. 5, 2008) ("Supplemental LOI"). The Supplemental LOI noted that the
investigation now included possible violations by Cox of Sections 76.1201
and 76.1202 of the Rules. 47 C.F.R. S:S: 76.1201, 76.1202. Supplemental
LOI at n. 3.
See Letter from JoAnn Lucanik, Deputy Chief, Spectrum Enforcement
Division, Enforcement Bureau, Federal Communications Commission to Gary S.
Lutzker, Esq., Dow Lohnes PLLC, Counsel for Cox Communications, Inc.,
(Oct. 3, 2008) ("Second Supplemental LOI"). This LOI sought information
relating to possible violations of Section 76.640 of the Commission's
See LOI Response. The response was timely filed based on the Bureau's
approval of Cox's request for an extension of time to respond.
See Letter from Gary S. Lutzker, Esq., Dow Lohnes PLLC, Counsel for Cox
Communications, Inc. to Marlene H. Dortch, Secretary, Federal
Communications Commission (Sept. 19, 2008) ("Supplemental LOI Response").
See Letter from J. Christopher Redding, Esq., Dow Lohnes PLLC, Counsel for
Cox Communications, Inc. to Marlene H. Dortch, Secretary, Federal
Communications Commission at 3 (Oct. 10, 2008) ("Second Supplemental LOI
See LOI Response at 9, 11, and Exhibit 3. Cox states that it provided
advanced notice of its switched digital implementation to its customers in
the August 2007 billing inserts, which commenced on July 27, 2007 and
continued through August 27, 2007, and also mailed a second notice to its
CableCARD customers on September 14, 2007. In addition, Cox states that it
provided advanced written notice to the Fairfax County local franchise
authority ("LFA") on September 14, 2007. According to these notices, in
addition to pay-per-view channels, the Paquete Latino Tier and 14 networks
would no longer be available to Cox's CableCARD-equipped UDCP customers
without a Cox digital set-top box. Also, the notice stated that new
channels added to the Cox Digital Cable and HD channel lineup will not be
available to customers with CableCARD-equipped UDCPs without the use of a
Cox set-top box.
Cox reports that its Fairfax County, Virginia cable system served 241,128
subscribers as of November 9, 2007; and that it had issued 2002 CableCARDs
in the Fairfax County system as of October 31, 2007. See Supplemental LOI
Response at 2.
LOI Response at 4.
Id. at Exhibit 3.
Second Supplemental LOI Response at 3.
47 C.F.R. S: 76.1201.
Section 312(f)(1) of the Act defines "willful" as "the conscious and
deliberate commission or omission of [any] act, irrespective of any intent
to violate" the law. 47 U.S.C. S: 312(f)(1). The legislative history of
Section 312(f)(1) clarifies that this definition of willful applies to
both Sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765, 97th Cong.
2d Sess. 51 (1982), and the Commission has so interpreted the term in the
context of Section 503(b). See Southern California Broadcasting Co.,
Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388 (1991), recon. denied,
7 FCC Rcd 3454 (1992).
Cox confirms that it deployed SDV technology on October 16, 2007 in its
Fairfax County Virginia system. See Supplemental LOI Response at 1.
Although Cox states that it has not deployed SDV technology in any of its
other cable systems, it expects to deploy SDV technology in Orange County,
California and Phoenix, Arizona within the coming months. Id. at n.1.
Section 624A of the Act expressly mandates that the Commission "minimize
interference with or nullification of the special functions of
subscriber's television receivers or video cassette recorders," and thus
ensure the full compatibility of these devices with the cable system. 47
U.S.C. S: 544a(c)(1)(B).
LOI Response at 2, 6-8.
Id. at 7.
LOI Response at 7, quoting Plug and Play Order, 18 FCC Rcd at 20890.
LOI Response at 8, citing Gemstar International Group, Ltd., Memorandum
Opinion and Order, 16 FCC Rcd 21531, 21542 (2001) ("Gemstar").
LOI Response at 8, citing Implementation of Section 304 of the
Telecommunications Act of 1996, Commercial Availability of Navigation
Devices, Second Report and Order, 20 FCC Rcd 6794, 6809 (2005) ("2005
LOI Response at 15, citing H.R. Rep. No. 104-458, at 181 (1995), reprinted
in 1996 U.S.C.C.A.N. 10, 94.
2005 Deferral Order, 20 FCC Rcd at 6809-10.
"Due to the unidirectional nature of this receiver specification, an
external navigation device would still be needed to receive advanced
features such as cable operator-enhanced electronic programming guides
(`EPGs'), impulse pay per view (`IPPV') or video on demand (`VOD')." Plug
and Play Order, 18 FCC Rcd at 20890, P:7. See also Third Further Notice of
Proposed Rulemaking, 22 FCC Rcd at 12025-26, P: 4 ("Devices made pursuant
to this standard have the ability to receive encrypted digital cable
programming, but do not have any upstream, or bi-directional, capabilities
(i.e., consumer electronics manufacturers can only make unidirectional
devices under the technical standard adopted in the Plug and Play Order).
For example, such devices cannot support two-way services such as EPGs,
VOD, PPV, and other ITV [Interactive Television] capabilities.").
LOI Response at 4 n.11.
See Navigation Devices Order, 13 FCC Rcd at 14786.
According to the Cox notice announcing the deployment of SDV that took
place on October 16, 2007, pay-per view channels, the Paquete Latino Tier
and the following channels would be moved to the SDV platform and no
longer available without the use of a Cox-supplied set-top box: CMT Pure
Country, NASA, Jewelry TV, Cable Market Place II, American Life TV,
Ovation, CSPAN 3, BET Jazz, SBTN, Bridges TV, ART, Zee TV, TV Asia and The
Filipino Channel. In addition, new channels added to the Cox Digital Cable
and HD channel lineup would no longer be available after October 16, 2007
to customers with CableCARD-equipped UDCP devices. LOI Response, Exhibit
3. See also Attachment A (quoting complaints received after Cox's SDV
deployment that cite the addition of HD channels exclusively to the SDV
Our conclusion is consistent with the Commission's decision in Gemstar
(see supra note 52), which involved Time Warner Cable's removal of
Gemstar's Electronic Programming Guide from the vertical blanking interval
of local broadcast television stations carried on Time Warner's cable
systems. Among other arguments, Gemstar claimed that Time Warner had
violated Section 629 of the Act and Section 76.1202 of the Rules, 47
C.F.R. S: 76.1202, which prohibits MVPDs from taking actions that prevent
navigation devices that do not perform security functions from being made
available to subscribers from sources unaffiliated with the MVPD. 16 FCC
Rcd at 21541. The Commission rejected Gemstar's allegation, holding that
Section 629 and Section 76.1202 applied to equipment, rather than
third-party services. Id. at 21542. As an initial matter, this case
involves Cox's apparent violation of Section 76.1201, not 76.1202. This
NAL and Order does not address whether Cox's actions may have violated the
latter rule. Moreover, in this case, we do not find that the Act or
Commission Rules require Cox to carry a third-party service that can be
used by CableCARD-equipped UDCPs. Rather, we find that Cox apparently
violated Section 76.1201 by altering its mode of transmission of its
existing linear programming in a manner that reduced the value and utility
of such devices.
LOI Response at 2-3, 5, 8, 14-15.
Id. at 4, 15
See supra note 6.
Second Supplemental LOI Response at 3.
See 47 C.F.R. S: 76.640 ("Support for unidirectional digital cable
products on digital cable systems.").
Id. at S: 76.640(b)(1)(i) (incorporating by reference SCTE 40 2003,
Section 5.5, which states that "[w]hen one or more scrambled services are
offered on the cable system, System and Service Information for all
services (both scrambled and in-the-clear) shall be carried in an
out-of-band Forward Data Channel...").
Second Supplemental LOI Response at 3.
47 C.F.R. S: 76.1207.
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 took effect September 2,
2008, apply to violations occurring after that date, and, accordingly, 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
Forfeitures. We consider Cox's apparent violation of Section 76.1201 of
the Commission's Rules to have begun on the date its cable system moved
previously available linear programming to an SDV platform. Cox's apparent
violation continues each day that such programming remains unavailable to
customers using CableCARD-equipped UDCPs.
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 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.")
See, e.g., Cablevision Systems Corporation, Forfeiture Order, 15 FCC Rcd
24298 (2000) ("Cablevision Forfeiture Order")(imposing forfeitures against
Cablevision on a cable system basis).
LOI Response at 4.
Id. at 4-5. Cox states that its determination that the entire customer
base would benefit from SDV led it to pursue the switched digital
solution. Further, for the small number of customers using
CableCARD-equipped UDCPs, Cox states it took steps to ensure these
customers were not harmed by offering to transition this small group of
customers at little or no incremental cost to bi-directional equipment.
While the number of customers using CableCARD-equipped UDCPs may be a
relatively small percentage of the overall number of MVPD customers
nationwide, see Third Further Notice of Proposed Rulemaking, 22 FCC Rcd at
12025, the absolute number is significant - more than 374,000 among the
ten largest incumbent cable operator as of September 22, 2008. See Letter
from Neal Goldberg, General Counsel, National Cable & Telecommunications
Association, to Marlene Dortch, Secretary, FCC dated September 22, 2008
(filed in CS Docket No. 97-80) (compiling ten cable system reports on
In addition, complaints received by the Commission and comments filed in
CS Docket No. 97-80 suggest that consumers have been extremely frustrated
by a multitude of cable operator-related problems with CableCARDs,
including availability, pricing, and service quality issues. See also
Letter from Julie M. Kearney, Senior Director and Regulatory Counsel,
Consumer Electronics Association to Marlene Dortch, Secretary, Federal
Communications Commission dated March 23, 2006 (filed in CS Docket 97-80)
(listing difficulties of manufacturers in producing UDCPs due to alleged
cable operator actions).
47 C.F.R. S: 1.80(b)(4)(Note). See also Cablevision Forfeiture Order, 15
FCC Rcd at 24298 .
47 C.F.R. S: 1.80(b)(4)(Note). Violation of the broadcast signal carriage
rule is also analogous to Cox's failure to provide the SDV programming
information in its virtual channel table. In contrast with violations of
Section 76.1201, however, violations of Section 76.640(b)(1) do not affect
the viewability of actual programming. Therefore, it is appropriate to
impose a somewhat lesser penalty for such technical violations.
Under Section 629(c) of the Act, 47 U.S.C. S: 549(c) and Section 76.1207
of the Commission's Rules, 47 C.F.R. S: 76.1207, the Commission may waive
a rules adopted under Section subsection 629(a) of the Act 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 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. See 47 U.S.C. S: 549(c), 47 C.F.R. S:
For instance, according to one complainant, the consumer "purchased a $700
TiVo Series 3 and prepaid $300 for three years of TiVo service. I did this
with the understanding that Cox would provide CableCARDs that would give
me access to all of their channels, with the exception of pay-per-view
events. Their switch to Switched Digital Video leaves CableCARD customers
like myself out in the cold, with no means of getting access to these
channels." See Complaint No. 08-C00009190-1 at Attachment A.
LOI Response, Exhibit 3. By its own terms, this offer was both temporary
and limited to existing residential CableCARD subscribers.
Federal Communications Commission DA 08-2299
Federal Communications Commission DA 08-2299