FOR IMMEDIATE RELEASE:                       News Media Contact:
September 14, 2000                                Michael Perko 202-418-7200
                                             Email: mperko@fcc.gov


          FCC ADOPTS ORDER IN SET-TOP BOX PROCEEDING; 
       INITIATES REVIEW OF 1998 NAVIGATION DEVICES RULES

Washington, DC   Today the Federal Communications Commission adopted a Further Notice of
Proposed Rulemaking ("Further Notice") and Declaratory Ruling ("Order") in its navigation devices
proceeding.  

In Section 629 of the Communications Act, Congress directed the FCC to adopt rules that would allow
consumers to obtain "navigation devices," such as cable set-top boxes, remote control units and other
equipment, from commercial sources other than their cable providers.  In 1998, the Commission adopted
navigation device rules with the intent of improving consumer choice by fostering a competitive retail market
for this equipment and said that it would monitor the development of the commercial availability of navigation
devices and commence a proceeding in the year 2000 to review the effectiveness of the rules and consider any
necessary changes.  The Further Notice adopted today initiates this review.

In various proceedings before the Commission, interested parties have argued that a copy protection
licensing agreement under development by CableLabs, the Dynamic Feedback Arrangement Scrambling
Technique ("DFAST") license, violates the Commission's navigation devices rules.  Specifically, these parties
asserted that the DFAST license requires that a copy protection encryption system be located in host navigation
devices in violation of the security separation requirement of the Commission's navigation devices rules.  The
Commission's rules require that a cable operator's conditional access, or security, functions be located in a
separate point of deployment ("POD") device.  

In order to give guidance to interested parties and to prevent delay in the transition from analog-based
technology to digital-based technology, the Commission determined in today's Order that this controversy was
best resolved in the form of a narrow declaratory ruling, and concluded that some measure of anti-copying
encryption technology located within a host navigation device is consistent with the Commission's navigation
devices rules.

Summary of the Further Notice of Proposed Rulemaking:

In the Further Notice adopted today, the Commission sought comment on the following issues:
       ·  Whether the interface specifications developed by CableLabs allow consumer electronics
       manufacturers to build equipment that provides consumers a viable alternative to the equipment
       provided by their cable operator.
     
       ·  The effect operator provision of integrated equipment has had on achieving a competitive market and
       whether the 2005 date for the phase-out of integrated boxes remains appropriate. 

       ·  Obstacles or barriers preventing or deterring the development of a retail market for navigation
       devices. 

       ·  What actions, if any, should the Commission initiate to achieve the statutory objective of competition
       in the navigation devices market. 

Summary of the Declaratory Ruling:

     In today's Order, the Commission addressed the narrow issue of whether technology licenses requiring
copy protection measures to be located within commercially available equipment are consistent with the
Commission's navigation devices rules. The Order noted that the Commission's initial navigation devices Order
expressly contemplated the inclusion of copy protection measures in navigation host devices and that such
measures would not violate the security separation requirement.  Today's Order reiterated that some measure
of anti-copying encryption technology is consistent with the intent of the rules because such measures protect
a gap where digital data would otherwise be available "in the clear" and subject to unrestricted digital copying. 


     With this controversy resolved, the Commission directed industry participants to finalize negotiations
necessary to bring to fruition the goals of Section 629 and requested that industry participants submit, within
30 days of the release of the Order, a report on the status of the DFAST license, including a final version of
a completed DFAST license agreement.

     Although today's ruling clarified that the inclusion of some amount of copy protection within a host
device does not violate the navigation devices rules, the Commission did not determine whether specific copy
protection terms or technology were consistent with the rules.  The Commission also concluded that no evidence
was presented that reasonable home copying would be impeded by the inclusion of copy protection within host
devices.

     Action by the Commission September 14, 2000, by Further Notice of Proposed Rulemaking and
Declaratory Ruling (CS Docket # 97-80, FCC 00-341).  

                                  -FCC -

Cable Services Bureau contact: Thomas Horan at (202) 418-7200.
TTY: (202) 418-7172