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                                   Before the

                       Federal Communications Commission

                             Washington, D.C. 20554


                                             )                               
     In the Matter of                                                        
                                             )   File Number EB-07-SE-352    
     Oceanic Time Warner Cable,                                              
                                             )   NAL/Acct. No. 200932100003  
     a division of Time Warner Cable, Inc.                                   
                                             )   FRN 0018049841              
     Oceanic Oahu Central Cable System                                       
                                             )                               


                                FORFEITURE ORDER

   Adopted: January 19, 2009 Released: January 19, 2009

   By the Chief, Enforcement Bureau:

   I. INTRODUCTION

    1. In this Forfeiture Order, we find that Oceanic Time Warner Cable, a
       division of Time Warner Cable, Inc., Oceanic Oaha Central Cable System
       (collectively, "TWC"), willfully and repeatedly violated Section
       76.1201  of the Commission's Rules ("Rules") in its Oceanic Oahu
       Central Cable System. Specifically, TWC violated Section 76.1201 by
       moving certain channels to a Switched Digital Video ("SDV") platform
       on November 6, 2007, 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 November 6, 2007, TWC violated Section
       76.640(b)(1) by failing to provide a virtual channel table which
       conforms to the standards required under Sections 76.640(b)(1)(i) and
       76.640(b)(1)(v). We conclude, pursuant to Section 503(b) of the
       Communications Act of 1934, as amended ("Act"), that TWC is liable for
       a forfeiture in the amount of twenty thousand dollars ($20,000). As
       discussed below, we further direct TWC to comply with the Bureau's
       Order to make appropriate refund of fees charged to customers affected
       by TWC's movement of linear channels to the SDV platform on November
       6, 2007.

   II. BACKGROUND

    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.
       "As 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, subject to the proviso that
       such equipment not cause harmful interference or facilitate theft of
       service, the Commission likened its actions to the Carterfone
       principle it previously adopted in the telephone environment. In
       Carterfone, the Commission allowed consumers to attach legal devices
       to the telephone network unless that equipment would damage the
       network. "As 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."

    5. The Commission recognized that its work on these issues was not
       complete and reiterated its commitment to monitoring developments
       regarding the compatibility of set-top boxes and digital televisions.
       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.

    6. Generally, the Plug and Play Order required MVPDs to support operation
       of UDCPs and 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 retail control over
       their system security.

    7. Consumers with UDCPs access MVPD programming by using a CableCARD
       leased from the cable operator. UDCPs, and certain related CE
       equipment, 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.

    8. 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). Many cable operators, however, 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 whether they are viewing the programs or not. For those
       channels, the CableCARD-equipped UDCP will work 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 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. A customer who uses a CableCARD-equipped UDCP to receive
       programming 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 that a channel be delivered 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. 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 that previously had been accessible to subscribers using
       CableCARD-equipped UDCPs, such as digital cable ready television sets
       and digital video recorders, to an SDV platform. Specifically, one
       complainant alleged that Oceanic had deployed SDV and moved a large
       number of channels to an SDV platform, including popular high
       definition ("HD") sports and entertainment channels. According to the
       complaints, Oceanic'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 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
       Commission in the Plug and Play Order  The Bureau issued a
       Supplemental LOI to TWC on August 25, 2008 to obtain additional
       information concerning the company's deployment of SDV.

   10. TWC responded to the LOI on November 30, 2007, and responded in part
       to the Supplemental LOI on September 12, 2008 and in full on September
       23, 2008. In its response, TWC admits that its Oceanic and Oahu
       Central cable systems deployed SDV for customers on the islands of
       Oahu and Oahu Central on November 6, 2007, moving 62 linear channels
       to an SDV platform. TWC reports that its Hawaii Division, which
       includes the cable systems at issue here, had 415,534 subscribers at
       the time of SDV deployment. The company does not have a precise
       estimate of the number of CableCARD-using UDCPs affected by its SDV
       deployment, but believes it to be less than 583. For CableCARD
       customers affected by its SDV deployment, TWC offered set-top boxes at
       the same price as the customers' CableCARDs for two years from the
       date of SDV deployment. TWC states that it had planned to deploy SDV
       on several other Hawaiian islands, but has deferred that action until
       it has provided 30 days notice to the relevant Local Franchising
       Authority ("LFA").

   11. On October 14, 2008, after reviewing the evidence and TWC's arguments,
       the Bureau issued a Notice of Apparent Liability for Forfeiture and
       Order, finding that TWC apparently had willfully violated Sections
       76.1201 and 76.640(b)(1) of the Rules by moving certain channels to a
       SDV platform on November 6, 2007, thereby preventing subscribers with
       CableCARD-equipped UDCPs from using their navigation devices to access
       these channels and by failing to provide a virtual channel table which
       conforms to the standards required under Sections 76.640(b)(1)(i) and
       76.640.(b)(1)(v).

   12. TWC responded to the NAL on November 14, 2008. With respect to the
       NAL's finding of apparent liability under Section 76.1201, TWC makes
       three principal arguments. First, TWC asserts that the NAL's finding
       of apparent liability violates the plain meaning of the rule.
       According to TWC, the language "prevent the connection or use" of a
       navigation device means that a cable operator can be held liable only
       where it has made it impossible for a customer to connect or use the
       device. Second, TWC asserts that the NAL's "overly expansive reading"
       of the rule violates important public policy objectives. Third, TWC
       argues that the NAL intrudes upon its First Amendment rights. TWC
       similarly asserts that the Bureau's finding that TWC apparently
       violated Section 76.640 is flawed. Finally, TWC asserts that the NAL
       findings present novel interpretations of the rules at issue and
       thereby exceed the bounds of the Bureau's delegated authority.

   III. DISCUSSION

   A. TWC Willfully and Repeatedly Violated Section 76.1201 By Requiring
   Subscribers To Obtain A Set-Top Box To View Previously Accessible Linear
   Programming

   13. 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 TWC willfully and repeatedly violated Section 76.1201 by
       moving certain linear channels to an SDV platform in its Oahu Central
       and Oceanic cable systems on November 6, 2007. In so doing, TWC
       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 TWC-supplied set-top box, thus effectively impairing the
       use of those UDCPs within each affected cable system. Additionally,
       because a TWC-leased set-top box now is required to view many TWC
       channels, even on UDCP devices, TWC's migration of channels to an SDV
       platform has prevented the use of some functions available on those
       UDCPs, such as the capacity to view picture-in-picture and record
       content.

   1. The NAL's Findings Are Not Foreclosed by the Plain Language of
   Section76.1201

   14. Notwithstanding its effect on CableCARD users, TWC contends that the
       language "prevent the connection or use of navigation devices," as
       used in Section 76.1201, makes clear that a cable operator can be held
       liable only where it has stopped or made it impossible for a customer
       to connect or use the device. According to TWC, its implementation of
       SDV does not stop a subscriber from doing so or "make[it] impossible"
       for a customer to do so. TWC asserts that the Bureau found only that
       the company's implementation of SDV "impairs," rather than prevents,
       the use of such devices and thus the Bureau's finding is insufficient
       for purposes of finding a violation of the standard set forth in the
       rule.

   15. We do not agree that a violation of Section 76.1201 occurs only where
       a cable operator "stops" or "makes it impossible" for a customer to
       connect or use a navigation device. At its core, TWC would have us
       find that unless a cable operator prevents access to each and every
       program and service that constitutes the customer's subscribed
       programming tier, no violation of Section 76.1201 has occurred. Under
       TWC's interpretation of Section 76.1201, a cable operator may prevent
       (non-cable operator-supplied) UDCPs from accessing any portion of a
       programming service (or transport stream) - such as closed captioning
       or content advisory information - or may prevent these devices from
       accessing any linear video programming-such as select channels within
       a subscriber's purchased programming tier - and nonetheless act
       consistently with the Commission's mandate to support
       CableCARD-equipped devices. As we stated in the TWC NAL and Order,
       taken to its logical conclusion, TWC'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. TWC's interpretation would eviscerate the
       rule, is inconsistent with the operative text of Section 76.1201- "use
       of navigation devices," and the Commission's goal to ensure commercial
       compatibility of such devices. Considering that the primary objective
       of Section 629 of the Act and Sections 76.1200-76.1210 of the Rules is
       to maximize the commercial availability of navigation devices, we
       decline to adopt a view of our Rule that ignores the plain text and
       the purpose of these sections.

   16. Moreover, TWC's strained interpretation of the Rule 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. TWC'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 TWC-provided set-top box conflicts with the
       Commission's rules and policies designed to promote competition and
       consumer choice of navigation devices. Our conclusion is not affected
       by the fact that customers can still attach and use navigation devices
       to receive cable services, and that customers may access switched
       digital programming by obtaining a set top box from TWC. In the Plug
       and Play Order, the Commission sought to enable unaffiliated
       manufacturers, retailers, and other vendors to compete with
       MVPD-provided equipment by facilitating the direct connection of
       digital navigation devices to MVPD systems.

   17. TWC further argues that the rule was historically intended to do no
       more than provide a right to attach commercially available equipment
       and does not include an obligation that an operator carry any service
       used by such equipment. We concur that in adopting this rule, the
       Commission agreed that the `right to attach' must be subject to the
       limitation that the equipment does not harm the MVPD network. Thus,
       the Commission adopted rules that would permit MVPDs to restrict the
       attachment or use of equipment to their systems where electronic or
       physical harm would be caused by the attachment or operation of such
       equipment. The Commission was clear however, that "[t]hese standards
       [set forth in Section 76.1203] shall be used only to prevent
       attachment of navigation devices that raise reasonable and legitimate
       concerns of electronic or physical harm or theft of service, and not
       as a means to unreasonably restrict the use of navigation devices
       obtained from a source other than the MVPD." The Commission was
       equally clear that it expected the cable industry to dedicate the
       resources necessary to ensure that commercially available
       CableCARD-enabled devices continue to interoperate properly with cable
       systems. The equipment at issue does not raise concerns of electronic
       or physical harm or theft of service.

   18. Finally, we disagree with TWC's claims that there is no record support
       for the allegation that as a result of the deployment of SDV, UDCPs
       lose certain functions, such as picture-in-picture, and that the NAL
       does not take the balanced approach to equipment compatibility that is
       required by Section 624A. 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 ensures the full compatibility of these
       devices with the cable system. The deployment of SDV and the
       requirement that a customer use a company-supplied set top box to view
       the now switched channels, negates whatever functionalities were
       available in the UDCP for those of the company-supplied set-top box.
       The Commission received numerous complaints from affected consumers.
       For instance, some cable operators have migrated linear HD programming
       to an SDV format, thus rendering useless the high definition
       capability of the navigation device. In addition, many complaints from
       consumers indicate that SDV deployment has affected their use of TiVo.
       One of TiVo's main features is the ability to watch one program while
       recording another (i.e., TiVo Series 3 was designed with two CableCARD
       slots - one single-stream CableCARD ("S-Card") to decrypt the
       programming that the TiVo is recording, and another S-card to decrypt
       the programming that the TiVo is displaying). The functionality of
       TiVo is lost with the use of the company-supplied set-top box, which
       has its own built-in functionality. 

   2. The NAL's Findings Are Fully Consistent with the Public Policy
   Underlying the Commission's Rules and Orders on "Plug and Play"

   19. TWC next argues that its manner of implementing SDV is not
       inconsistent with the Plug and Play Order. Specifically, it contends
       that the interactive or advanced two-way capabilities envisioned by
       that order are not limited to video on demand (VOD), electronic
       programming guides (EPG), and impulse pay per view (IPPV); are
       essentially without limit; and thus include SDV within its auspices.
       TWC impliedly states that it may move all of its programming to an SDV
       format because Plug and Play provided for this eventuality by
       mandating DVI/HDMI connections, which allow for connection of UDCPs
       with two-way navigation devices. According to TWC, such an action is
       also supported by Rules that permit cable operators to move any
       programming for any reason -- no law provides subscribers with an
       entitlement to receive any particular service.

   20. The Bureau previously considered, and rejected, the arguments raised
       by TWC. As we have previously found, TWC's arguments are inconsistent
       with the language and the intent of the Commission's Rules and orders.
       We do not believe that, in adopting the Plug and Play Order, the
       Commission intended to permit an MVPD move all of its programming to
       an SDV platform "without regard" for the impact such a move would have
       on its UDCP-owning customers. Such an outcome would be fundamentally
       inconsistent 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. TWC'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 TWC-provided set-top box is clearly at odds 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, we conclude that it does not permit TWC's actions here. By
       moving linear programming to an SDV platform, TWC prevents
       CableCARD-equipped UDCPs from receiving previously available channels
       and negates the usefulness of competitive commercially available
       navigation devices, in violation of the intent of Section 629 and the
       Commission's Rules. 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. 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 cable operator-provided
       set-top box. Such an outcome is fundamentally at odds with the policy
       and regulatory objectives of the Plug and Play Order.

   22. 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
       UDCP in connection with their cable systems. TWC's implementation of
       SDV in this case clearly negates the use of CableCARD-equipped UDCPs
       and fundamentally limits the commercial and competitive viability of
       those devices in cable systems where SDV has been deployed. In the
       instant case, customers who used CableCARD-equipped UDCPs are unable
       to receive dozens of linear channels after the deployment of SDV. As
       such, TWC is effectively preventing CableCARD-equipped UDCPs from
       receiving channels previously available and undermining the underlying
       policy goals of the Act and the Commission's Rules to ensure the
       commercial availability and use of navigation devices. Thus, we find
       TWC's November 6, 2007 migration of linear channels to an SDV platform
       in its Oceanic Oahu Central Cable System constitutes a willful and
       repeated violation of Section 76.1201 of the Rules.

   23. TWC again reasserts that it cannot achieve the efficiencies enabled by
       SDV without moving linear channels. According to TWC, a finding of
       liability as a consequence for such migration would undermine "vital
       public policy interests," such as additional HD programming and other
       digital content for all customers. TWC also asserts that a restriction
       on SDV would harm the Commission's own policy objectives, such as the
       digital transition, increased programming diversity, MVPD competition,
       and enhanced broadband capabilities.

   24. As we stated in the TWC NAL and Order, we do not dispute that the
       deployment of SDV technology may provide significant public benefits.
       It is not TWC's deployment of SDV technology that violates Section
       76.1201, but TWC's migration of existing linear programming to an SDV
       tier that we find inconsistent with Commission Rules. As we noted in
       the TWC NAL and Order, charging for channels not presently accessible
       to subscribers with CableCARD-equipped UDCPs undermines the policy and
       regulatory objectives of the Plug and Play Order. Moreover, we are not
       convinced that the only way TWC can create additional capacity using
       SDV is to move existing linear programming to an SDV platform.
       Regardless of the benefits touted, the manner in which TWC has
       migrated linear channels prevents certain UDCP customers the use and
       functionality of their navigation devices.

   3. The NAL's Reading of Section 76.1201 Does Not Conflict with the First
   Amendment

   25. TWC's arguments that the NAL runs afoul of the First Amendment are
       insubstantial. As an initial matter, TWC's contention that the NAL
       renders the Commission's Viewability Order unconstitutional lacks any
       merit. In the Viewability Order, the Commission set forth a
       comprehensive analysis of why the requirement that all cable
       subscribers be able to view the signals of all must-carry stations
       after the digital transition was consistent with the First Amendment,
       and the U.S. Court of Appeals for the District of Columbia Circuit
       recently dismissed a constitutional challenge to the Viewability
       Order. The analysis contained in the Viewability Order in no way
       depended on the use of SDV under the circumstances present here, and
       the interpretation of our Rules set forth in the NAL neither alters
       the Commission's expectation that "cable capacity will continue to
       expand in future years, thus further decreasing the relative burden on
       cable operators" nor its observation that "because digital cable
       systems offer so much more capacity, the proportion of overall
       bandwidth devoted to must-carry signals is that much smaller than was
       the case at the time of the [U.S. Supreme Court decisions upholding
       the constitutionality of must-carry regulation]."

   26. Neither is there any merit to TWC's contention that the NAL violates
       the First Amendment by "impermissibly curtail[ing] TWC's editorial
       discretion to deliver programming of its choice using the most
       efficient technology available to it." Simply put, TWC has no First
       Amendment right to undermine the development of a competitive market
       for navigation devices by preventing consumers from accessing linear
       programming in their existing programming packages with a
       CableCARD-equipped UDCP and instead requiring the consumer to obtain a
       TWC-provided set-top box. To the extent that the rules at issue here
       implicate the First Amendment at all, the requirements are content
       neutral and narrowly tailored to further the substantial federal
       interest in developing and maintaining a competitive market for
       navigation devices, an interest whose importance has been recognized
       by both Congress and the courts. Finally, while TWC complains that the
       First Amendment is implicated by the treatment of other MVPDs under
       the integration ban, the D.C. Circuit previously rejected the cable
       industry's attempt to raise the differential treatment of cable and
       DBS in another proceeding, noting the evidence set forth by the
       Commission of the distinctions in the navigation-device market for
       cable and DBS and observing that "the cable industry is `perfectly
       capable of filing a petition tomorrow with the Commission' that will
       generate a record appropriate for consideration of those issues." The
       same holds true here.

   B. TWC 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

   27. TWC contends that the TWC NAL and Order's finding that the standard
       incorporated by reference in Section 76.640(b)(1)(i) applies to all
       services, including two-way services like SDV is wrong. According to
       TWC, Section 76.640(b)(1)(i), through the incorporated standard SCTE
       40 (2003), stands for the proposition that SCTE 65 tables must be
       presented only for services that are offered to the UDCP host device.
       Since two-way services are not offered, they need not be included. TWC
       further asserts that because the text of the rule is limited to
       one-way products, it cannot reasonably be applied to two-way services.
       Issues relating to two-way services, TWC states, were not yet ripe for
       consideration during the Commission's consideration of its Plug and
       Play Order, and so were never intended to be encompassed by this rule.
       TWC also cites to the technical standard SCTE 65 to suggest that the
       standard was not intended to apply to two-way services, partly because
       hidden channels are skipped when the subscriber is channel surfing,
       and partly because the standards state that UDCPs may disregard
       virtual channel data associated with an application-type virtual
       channel. TWC argues that the virtual channel table is designed to
       present only channels that are accessible.

   28. TWC's arguments are without merit. On its face, 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, TWC 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.

   29. TWC next argues that, because Section 15.123 provides that a UDCP
       cannot be labeled as digital-ready unless it can navigate channels
       through the virtual channel table, the provision of SDV data to UDCPs
       would render them non-compliant since the devices would be unable to
       navigate to SDV programming. According to TWC, as a result, the UDCP
       would be rendered noncompliant with the Part 15 rules, could not be
       marketed as digital cable ready, and cable operators would be relieved
       of any obligation to support these devices since they are required
       only to "support unidirectional digital cable products . . ." TWC
       argues that rules are not to be interpreted in manner that would
       nullify corresponding rules. Lastly, TWC argues that there is no
       practical benefit to transmitting information for channels that cannot
       be viewed without a set-top box.

   30. We disagree. Requiring compliance with Section 76.640(b) does not
       conflict with Section 15.123 and provides a significant practical
       benefit. As we stated in the TWC NAL and Order, including the SDV
       programming in the virtual channel table would make it clear to TWC
       subscribers using CableCARD-equipped UDCPs that their cable operator
       is charging them for programming that they cannot see. We reiterate
       that if TWC 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 TWC 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 Oceanic Oahu Central Cable System.

   C. The Bureau Did Not Exceed Its Delegated Authority in Issuing the NAL

   31. TWC argues that the Bureau's expansive interpretations of the Rules
       and its decision to penalize the company present novel questions of
       policy and law; the issues, therefore, fall outside the scope of the
       Bureau's delegated authority and must be submitted to the Commission
       for en banc disposition under Section 0.311(a)(1).

   32. The Enforcement Bureau serves as the primary Commission entity
       responsible for enforcement of the Act, the Commission's rules, and
       Commission orders. The Bureau has delegated authority to issue orders
       taking appropriate action in response to complaints or investigations,
       including issues notices of apparent liability and related orders. The
       Bureau has delegated authority to decide matters unless they "present
       novel questions of law, fact or policy that cannot be resolved under
       existing precedents and guidelines." The questions presented here are
       consistent with the Commission's Plug and Play Order, the rules found
       in Section 76.1201 implementing that order, and the technical rules of
       Section 76.640(b). As such, the Bureau acted within its delegated
       authority in issuing the TWC NAL and Order. The Bureau is merely
       applying existing rules and case law to the instant facts.

   D. Forfeiture Calculation

   33. 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 TWC is liable for a forfeiture in the amount of twenty thousand
       dollars ($20,000) for its willful violation of Sections 76.1201,
       76.640(b)(1)(i), and 76.640(b)(1)(v) of the Rules.

   34. 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."

   35. 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
       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 of TWC's
       Hawaii Division cable systems - Oceanic Oahu Central Cable System.

   36. As we stated in the TWC NAL and Order, 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 conclude 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, TWC moved
       linear programming to an SDV platform in one cable system, Oceanic
       Oahu Central Cable System. Accordingly, we conclude that TWC is liable
       for a $10,000 forfeiture for its willful violation of Section 76.1201
       of the Rules.

   37. Additionally, we conclude that TWC is 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). However, we note
       that Section 1.80(b) establishes a base forfeiture of $5,000 for
       unauthorized discontinuance of service. We find that the actions of
       TWC 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 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 TWC is 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 Oceanic Oahu Central Cable System.

   38. TWC's implementation of SDV in its Oceanic Oahu Central 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 harms the Commission's policies to move navigation devices
       toward a fully competitive market. We note that TWC could have sought
       a waiver of these rules under Section 76.1207, but failed to do so.
       Accordingly, we conclude that TWC is 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.

   E. TWC Must Issue Refunds to Customers Harmed by its SDV Implementation

   39. As we noted in the TWC NAL and Order, TWC'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, TWC's movement of linear programming to an SDV platform has
       substantially diminished the value of its customers' UDCP devices.
       Moreover, CableCARD customers affected by TWC'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 TWC-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, TWC'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 Rules.

   40. In calculating the harm to TWC's customers who use UDCP equipment, we
       recognize that TWC has made offers to its CableCARD customers to
       offset the costs of obtaining a set-top box. While TWC's offer to
       provide a free set-top box to its CableCARD customers may provide
       temporary relief to its customers, it is not a permanent solution -
       the benefits promised by TWC are, at best, limited in duration. TWC's
       offer does not address the critical problem concerning the company's
       interference with its customers' use of independently obtained UDCPs,
       i.e., the loss 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.

   41. In the TWC NAL and Order, we ordered TWC, within ninety (90) days of
       the NAL and Order, to issue refunds to CableCARD customers affected by
       the November 6, 2007 implementation of SDV in its Oceanic Oahu Central
       Cable System. In addition, within thirty (30) days of the release of
       the TWC NAL and Order, we required TWC to submit to the Enforcement
       Bureau an explanation of the method the company planned 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. TWC failed to comply with the Bureau's Order
       and the Bureau is separately addressing that violation of the
       Commission's Rules.

   42. Thus, we order TWC, within ninety (90) days of this Forfeiture Order,
       to issue refunds to CableCARD customers affected by the November 6,
       2007 implementation of SDV in its Oceanic Oahu Central Cable System.
       Specifically, TWC must provide refunds as follows:

    a. For former CableCARD customers that began to lease any set-top boxes
       from TWC following notice of a possible SDV deployment, TWC must
       refund the difference in cost (if any) between the charges for the TWC
       set-top boxes and the CableCARD previously leased by such customers;
       and

    b. For CableCARD customers that kept their CableCARDs even after notice
       of the SDV deployment, TWC must refund the customers' subscriber fees
       based on the diminished value of their service following the movement
       of linear programming to an SDV platform by $0.10 per month, per
       channel moved and reduce their rates on a going-forward basis
       accordingly.

   IV. ordering clauses

   43. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
       Act, Section 1.80 of the Rules, and the authority delegated by
       Sections 0.111 and 0.311 of the Commission's Rules, Oceanic Time
       Warner Cable, a division of Time Warner Cable, Inc., Oceanic Oahu
       Central Cable System IS LIABLE 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.

   44. 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, Time Warner Cable, Inc. must take the steps
       set forth in paragraph 42 of this Forfeiture Order.

   45. Payment of the forfeiture must be made by check or similar instrument,
       payable to the order of the Federal Communications Commission within
       thirty (30) days of the release of this Order. 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. TWC will also send electronic
       notification on the date said payment is made to JoAnn.Lucanik@fcc.gov
       and Kevin.Pittman@fcc.gov.

   46. 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 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: 76.1201.

   Navigation devices refer 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). UDCPs refer to devices that
   have the ability to receive encrypted digital cable programming, but do
   not have any upstream, or bidirectional, capabilities. For example, such
   devices cannot support two-way services such as Electronic Programming
   Guides (EPGs), Voice on Demand (VOD), Pay Per View (PPV), and other
   interactive capabilities. See Implementation of Section 304 of the
   Telecommunications Act of 1996, Commercial Availability of Navigation
   Devices, Compatibility Between Cable Systems and Consumer Electronics
   Equipment, Third Further Notice of Proposed Rulemaking, 22 FCC Rcd 12024,
   12025-26 (2007) ("Third Further Notice of Proposed Rulemaking"). See also
   47 C.F.R. S: 15.123(a).

   47 U.S.C. S: 503(b). This Forfeiture 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).

   TWC's notice to its customers, as well as technical papers submitted by
   the company to the Bureau, support our characterization of TWC's actions
   as "moving" or "migrating" linear programming to a SDV platform.

   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).

   Id.

   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, para. 2 (1998) ("Navigation Devices Order").

   47 C.F.R. S: 76.1201.

   See Navigation Devices Order, 13 FCC Rcd at 14478 (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 Id. at 14780, para. 11.

   Id. at 14786.

   Id. The Commission recognized 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 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 n.9.

   See December 2002 Memorandum of Understanding Among Cable MSOs and
   Consumer Electronics Manufacturers. Id. at note 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]."

   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
   provider").

   Third Further Notice of Proposed Rulemaking, 22 FCC Rcd at 12025 P:P:3-4.

   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"). According to the August 21, 2007
   notice that TWC sent to its Hawaii subscribers, Oceanic planned to move
   certain channels to a two-way switched digital platform on September 24,
   2007. TWC ultimately delayed its deployment of SDV until November 6, 2007.
   See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew
   A. Brill, Latham & Watkins LLP, counsel for TWC, dated September 12, 2008
   ("Initial Supplemental LOI Response") at Exhibit A.

   Id. at 1. In addition to the Flatt Complaint, the Commission has received
   several other complaints from TWC customers about Oceanic's SDV
   deployment. We provided relevant excerpts and identifying information for
   those complaints in Attachment A to the Oceanic Time Warner Cable, a
   subsidiary of Time Warner Cable, Inc., Notice of Apparent Liability for
   Forfeiture and Order, 23 FCC Rcd 14981 (Enf. Bur. 2008) ("TWC NAL and
   Order"). Unlike the Flatt Complaint, these complaints were not filed in a
   public Commission docket, so we will treat the complainants' names as
   confidential for privacy reasons.

   The LOI stated we were investigating 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 Arthur
   H. Harding, Fleischman and Harding LLP and Matthew A. Brill, Latham &
   Watkins LLP, counsel for TWC, (Aug. 25, 2008) ("Supplemental LOI"). The
   Supplemental LOI noted that the investigation now included possible
   violations by TWC of Sections 76.1201 and 76.1202 of the Rules. 47 C.F.R.
   S:S: 76.1201, 76.1202. Id., at note 3.

   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").

   See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew
   A. Brill, Latham & Watkins LLP, Counsel for Time Warner Cable, to Marlene
   H. Dortch, Secretary, Federal Communications Commission (Sept. 12, 2008)
   ("Initial Supplemental LOI Response").

   See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew
   A. Brill, Latham & Watkins LLP, Counsel for Time Warner Cable, to Marlene
   H. Dortch, Secretary, Federal Communications Commission (Sept. 23, 2008)
   ("Final Supplemental LOI Response").

   Initial Supplemental LOI Response, Exhibit A.

   Id.

   TWC reported 583 UDCP CableCARD subscribers at the time of deployment for
   its entire Hawaii Division, which includes not only the Oceanic and Oahu
   Central cable system, but also several other systems. Although some
   subscribers may have more than one UDCP, this number probably overstates
   the number of affected devices. Id.

   Id.

   In its most recent offer, TWC limited the period for affected CableCARD
   customers to receive a free set-top box to six months. Id.

   Oceanic Time Warner Cable, a subsidiary of Time Warner Cable, Inc., Notice
   of Apparent Liability for Forfeiture and Order, 23 FCC Rcd 14981 (Enf.
   Bur. Oct. 15, 2008) ("TWC NAL and Order").

   Time Warner Cable Inc. Response to Notices of Apparent Liability and
   Request for Cancellation of Proposed Forfeitures, File No. EB-07-SE-352
   (filed Nov. 14, 2008) (TWC NAL Response). Together with its NAL Response,
   TWC also filed Time Warner Cable Inc. Request for Stay Pending Resolution
   of Petition for Reconsideration and Request for Cancellation of Proposed
   Forfeitures, EB-07-SE-352 (filed Nov. 14, 2008) and Petition for
   Reconsideration of Time Warner Cable Inc., EB-07-SE-352 (filed Nov. 14,
   2008). TWC's Request for Stay and Petition for Reconsideration will be
   addressed in subsequent orders.

   TWC NAL Response at 15-20.

   Id. at 20-28.

   Id. at 32-37.

   Id. at 37-42.

   Id. at 43.

   47 C.F.R. S: 76.1201.

   See 47 U.S.C. S: 312(f)(1) & (2) (defining a "willful" violation as the
   "conscious and deliberate commission or omission of such act, irrespective
   of any intent to violate any provision of this Act or any rule or
   regulation of the Commission," and defining "repeated" as "the commission
   or omission of such act more than once."). The definition of willful and
   the definition of repeated apply to violations for which forfeitures are
   assessed under Section 503(b) of the Act. See Southern California
   Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387 (1991),
   recon. denied 7 FCC Rcd 3454 (1992).

   As noted earlier, TWC states that its Oceanic and Oahu Central cable
   systems deployed SDV for the islands of Oahu and Oahu Central. Initial
   Supplemental LOI Response, Exhibit A.

   We are aware that other TWC cable systems have implemented SDV and will
   address the legality of those actions in future proceedings.

   As enacted, 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).

   TWC NAL Response at 15.

   Id.

   Id.

   See Thomas Jefferson University v. Shalala, 512 U.S. 504 (1994) (agency's
   interpretation of its own rule must be given controlling weight unless
   clearly erroneous).

   TWC Response at 15-16.

   See Navigation Devices Order, 13 FCC Rcd at 14789.

   47 S: C.F.R. 76.1203.

   Id. (emphasis added).

   But see 2005 Deferral Order, 20 FCC Rcd at 6814.

   TWC Response at 17-20.

   47 U.S.C. S: 544a(c)(1)(B).

   TWC Response at 21.

   Id. at 22.

   Id. at 23-25.

   See Oceanic Oahu Central NAL, 23 FCC Rcd at 14987. TWC also argues that
   "curtailing TWC's ability to deliver its programming of choice based on
   its selection of the most efficient technology available would likely run
   afoul of the First Amendment." See Oct. 14 Supplemental LOI Response at 5
   (citation omitted). We reject this argument. The requirements at issue are
   content neutral and are narrowly tailored to further the substantial
   federal interest of maximizing commercial availability of navigation
   devices to the consumer. See Turner Broadcasting System, Inc. v. FCC, 512
   U.S. 622, 662 (1994).

   See 47 U.S.C. S: 549; 47 C.F.R. S: 76.1201.

   "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 bidirectional, 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.").

   TWC's LOI Response cites an ex parte letter it filed in the Plug and Play
   docket in 2006. In that letter, TWC states that it informed staff from the
   Commission's Media Bureau "that SDV would impact some subscribers using
   [UDCPs], but noted that these subscribers would continue to receive nearly
   all the same channels as subscribers using digital set top boxes. Contrary
   to the suggestions of the Consumer Electronics Association in its March
   23, 2006 ex parte, the use of SDV by TWC in no way contravenes our support
   of UDCPs." Letter from Steven N. Teplitz, Time Warner Cable, Inc. to
   Marlene Dortch, Secretary, Federal Communications Commission dated May 11,
   2006 (filed in CS Docket 97-80) ("TWC Ex Parte Letter") (emphasis added).
   As the facts of this case demonstrate, TWC's removal of more than 60
   channels, including popular HD channels, is inconsistent with the
   company's ex parte letter more than a year beforehand.

   See Navigation Devices Order, 13 FCC Rcd at 14786.

   According to the TWC notice announcing the deployment that ultimately took
   place on November 6, 2007, more than 40 channels would be moved to the SDV
   platform and no longer available without the use of a TWC-supplied set-top
   box: Digital Cable Service: (CSPAN-3, CSPAN-2, CNBC World, Bloomberg TV,
   The Weather Channel, AZN TV, Imaginasian, The Outdoor Channel, Country
   Music TV, VH1 Classic, BET On Jazz, Ovation), Sports Pak: (Fuel, NBA TV,
   The Tennis Channel, Fox College Sports-Atlantic, Fox College
   Sports-Central, Fox College Sports-Pacific, College Sports TV), Encore
   Service: (Fuse), Spanish Pak: (Galavision, Fox Sports World Espanol, CNN
   Espanol, Discovery en Espanol, CNN Espanol, ESPN Deportes), Premium:
   (Chinese Channel), HD Entertainment Pak: (HD Golf/HD Versus, HD Versus &
   Golf, HD Fsn, HD National Geographic, HD Net, HD Net Movies, iNDemand HD,
   ESPN HD, ESPN2HD, HD Universal), Jewelry Channel, Pentagon Channel, KOAM,
   Ocean Network, and Inspirational TV. See also TWC Initial Supplemental LOI
   Response, Exhibit A (stating that 62 channels ultimately were moved to SDV
   platform).

   TWC Response at 28-32.

   Id. at 30.

   Id. at 31-32.

   We note TWC's claim that bi-directional navigation devices "are now
   becoming available at retail." TWC Response at 26. The development of
   bi-directional navigation devices without limitations on the ability to
   integrate broadband capability into competitive navigation devices and the
   ability to integrate web-based or IP content with cable-providing
   programming will further Congress and the Commission's shared policy goal
   of expeditious commercial availability of bi-directional navigation
   devices.

   See Carriage of Digital Television Broadcast Signals, Third Report and
   Order, 22 FCC Rcd 21064 (2007) ("Viewability Order").

   See Viewability Order at P:P: 41-63.

   See C-SPAN, Inc. v. FCC, 545 F.3d 1051 (D.C. Cir. 2008).

   Viewability Order at P: 60.

   TWC Response at 33.

   See 47 U.S.C. S: 549; Comcast Corp. v. FCC, 536 F.3d 763 (D.C. Cir. 2008);
   Charter Communications, Inc. v. FCC, 460 F.3d 31 (D.C. Cir. 2006).

   Charter, 460 F.3d at 43 (quoting FCC counsel). Similarly, although TWC
   complains about a waiver given by the Media Bureau to Verizon, TWC never
   sought Commission review of that waiver, and this is not the appropriate
   proceeding for challenging its merits.

   TWC Response at 37.

   Id. at 37-38.

   Id.

   TWC Response at 38-40.

   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...").

   TWC Response at 41-42.

   TWC Response at 41.

   Id. at 42.

   TWC NAL and Order, XXX at para. 27.

   47 C.F.R. S: 76.1207.

   TWC Response at 43.

   47 C.F.R. S: 0.111.

   47 C.F.R. S: 0.111(17).

   47 C.F.R. S: 0.311(a)(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,
   7591 (2002).

   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 TWC's apparent violations of Section 76.1201 to
   have begun on the date its cable system moved previously available linear
   programming to an SDV platform. TWC's apparent violations continue 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.")
   (emphasis added).

   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). SDV is installed at separate
   hubs throughout the cable system, but generally the operator will
   implement the technology on a system-wide basis.

   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 TWC'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
   rules adopted under Section 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:
   76.1207.

   For instance, one complainant stated that after talking to a customer
   service representative who stated that the CableCARDs would allow access
   to HD programming on a HD-Tivo DVR, the consumer spent $300 for the
   HD-Tivo DVR and $300 for a Tivo Service subscription package. Three weeks
   later, when the technician came to install the CableCARDs, the customer
   could not receive the HD package because TWC no longer "offered the cable
   cards with HD." See Complaint No. 07-R522759 at Attachment A.

   TWC NAL and Order at 39.

   $0.10 is our best estimate of the relevant license fee per channel. We
   note that TWC did not provide an explanation of the method the company
   planned to use to determine the appropriate amount of refunds as required
   by the TWC NAL and Order. The Bureau will reconsider the appropriate
   license fee per channel should TWC submit a petition for reconsideration
   that includes evidence that the license fees of the affected channels are
   lower than $0.10 per month.

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   Federal Communications Commission DA 09-120

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   Federal Communications Commission DA 09-120