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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. 200932100002
a division of Time Warner Cable, Inc.
) FRN 0018049841
Oceanic Kauai 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 Kauai Cable System
(collectively, "TWC"), willfully and repeatedly violated Section
76.1201 of the Commission's Rules ("Rules") in its Oceanic Kauai
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 Kauai cable
systems deployed SDV for customers on the islands of Oahu and Kauai 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 Kauai 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 Kauai 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 Kauai 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 Kauai 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
Kauai 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 Kauai Cable System.
38. TWC's implementation of SDV in its Oceanic Kauai 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 Kauai 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 Kauai 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 Kauai
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 14962 (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 Kauai
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 14962 (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 Kauai cable systems
deployed SDV for the islands of Oahu and Kauai. 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.
Navigation Devices Order, 13 FCC Rcd at 14789.
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 Kauai NAL, 23 FCC Rcd at 14967. 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 09-123
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Federal Communications Commission DA 09-123