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Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of
)
Oceanic Time Warner Cable,
)
A subsidiary of Time Warner
Cable, Inc. )
Oceanic Time Warner Cable, )
a division of Time Warner ) File Nos. EB-07-SE-351, EB-07-SE-352
Cable, Inc.
) NAL/Acct. Nos. 200832100074,
Oceanic Kauai Cable System 200932100001, 200932100002,
) 200932100003, 200932100008,
Oceanic Time Warner Cable, 200932100022, and 200932100023
)
a division of Time Warner FRN Nos. 0018049841, 0016034050
Cable, Inc. )
Oceanic Oahu Central Cable )
System
)
Cox Communications, Inc.
)
Fairfax County, Virginia
Cable System )
)
ORDER ON REVIEW
Adopted: June 15, 2009 Released: June 26, 2009
By the Commission: Commissioner McDowell approving in part, concurring in
part, and issuing a
statement.
I. introduction
1. The Enforcement Bureau ("Bureau") initiated forfeiture proceedings in
the above captioned matters against the cable operators Time Warner
Cable, Inc. ("TWC") and Cox Communications, Inc. ("Cox") relating to
their deployment of switched digital video ("SDV") technology to
deliver programming that previously was delivered in another format.
TWC and Cox have filed Petitions for Reconsideration of the Bureau's
Forfeiture Orders and Responses to the Bureau's Notices of Apparent
Liability. Upon review of the arguments presented by TWC and Cox, the
Bureau has determined that these issues merit additional review and,
accordingly, has referred these matters to the Commission en banc for
disposition. As described below, based on our review of TWC and Cox's
arguments and the facts presented, with one exception, we hereby
vacate in their entirety the Bureau's previous Notices of Apparent
Liability for Forfeiture and Forfeiture Orders relating to TWC and
Cox's implementation of SDV. We base this decision on a plain reading
of our rules, the potential consumer benefits of SDV deployment, and
other factors that limit the potential scope of consumer disruption.
We affirm, however, the Forfeiture Order against TWC relating to the
Bureau's finding that the migration of programming to an SDV platform
constitutes a "change in service" requiring 30-day advanced written
notice to the relevant local franchise authority ("LFA") pursuant to
Section 76.1603 of our rules.
II. BACKGROUND
2. The Bureau's prior decisions discuss the facts of these cases in
depth; therefore, we will provide only a brief summary here. In late
2007, based on consumer complaints, the Bureau initiated
investigations of TWC and Cox regarding their movement of certain
cable channels that previously had been viewable by subscribers using
CableCARD-equipped unidirectional digital cable products ("UDCPs"),
such as digital cable ready television sets and digital video
recorders (such as TiVo recorders), to a switched digital video
("SDV") platform. SDV permits video programming providers to free up
capacity by moving certain channels to the SDV platform and
transmitting the content only to subscribers who actually request it.
This increased capacity has been used to launch new and niche
programming services for consumers and will facilitate the deployment
of advanced broadband capabilities. It will also facilitate compliance
with the Commission's mandate that cable operators ensure that
broadcast signals are viewable by all subscribers on their systems,
given the additional broadcast carriage obligation cable systems face
in light of the digital television transition. Nevertheless, the
movement of certain channels to SDV rendered the programming
inaccessible to the relatively small percentage of subscribers using
CableCARD-equipped UDCPs unless they leased a set-top box from the
cable operator or, in the case of TiVo customers, obtained a special
tuning adapter.
3. On August 22, 2008, the Bureau issued a Notice of Apparent Liability
for Forfeiture against TWC for its apparent failure to provide the
Hawaii Department of Commerce and Consumer Affairs, Cable Television
Division with at least 30 days advanced written notice before
implementing a service change consisting of the migration of certain
channels to an SDV platform on September 24, 2007. On October 15,
2008, the Bureau issued additional Notices of Apparent Liability for
Forfeiture against TWC and Cox finding that their migration of
programming to an SDV platform in certain cable systems apparently
violated Sections 76.1201 and 76.640(b) of the Commission's rules.
Section 76.1201 prohibits a Multichannel Video Programming Distributor
("MVPD") from preventing "the connection or use of navigation devices
to or with its ... system, except in those circumstances where
electronic or physical harm would be caused by the attachment or
operation of such devices or such devices may be used to assist or are
intended or designed to assist in the unauthorized receipt of
services." Section 76.640(b) sets forth technical specifications
pursuant to which MVPDs must describe programming in the
out-of-the-band forward data channel and provide a virtual channel
table that conforms to certain standards set forth in Commission
rules.
4. In the SDV NALs, the Bureau proposed forfeitures against both
companies, and ordered TWC and Cox to submit methodologies to the
Bureau for the issuance of refunds to affected consumers. Once
approved by the Bureau, the SDV NALs required TWC and Cox to use those
methodologies to issue subscriber refunds.
5. TWC responded to the LFA Notice NAL contending that notice
requirements under Section 76.1603(c) did not apply to its
implementation of SDV because the movement of linear channels to an
SDV platform did not involve a change in "service" or "rates" subject
to the notice requirements under Section 76.1603. TWC and Cox
responded to the SDV NALs, disputing the Bureau's interpretation of
Section 629 of the Communications Act of 1934, as amended ("Act"), and
its interpretation of the Commission's rules and orders, and sought
reconsideration of the Bureau's refund orders. Both companies argued
that neither Section 76.1201 nor Section 76.640(b) apply to the
deployment of SDV technology, and that neither the Commission's rules
nor the Commission's Plug and Play Order, which requires cable
operators to support UDCPs and ensure the utilization of such
navigation devices, prohibit cable operators from developing and
deploying new technology and services. Both TWC and Cox stressed the
importance of the deployment of SDV and its many public interest
benefits, contending that use of this technology is pro-competitive
and pro-consumer, allowing all customers to benefit from expanded
program offerings, introduction of high-definition ("HD") programming
and faster broadband service. Further, the companies stated that the
number of customers affected by the deployment of SDV is relatively
small compared to the companies' overall subscriber base and provided
details on plans to deploy tuning adapters that would provide this
small group of customers with access to the SDV platform.
6. On January 19, 2009, the Bureau issued a Forfeiture Order against TWC
for violating Section 76.1603(c) of the Commission rules by failing to
provide timely notice to the LFA of the operator's change in service
due to the movement of certain linear channels to the SDV platform.
The Bureau also issued Forfeiture Orders against TWC and Cox for
violating Commission rules by migrating programming to an SDV platform
in certain cable systems. In response to TWC and Cox's failure to
propose a refund methodology, the Bureau established a formula and
ordered the companies to issue refunds within a specified period. The
Bureau proposed additional forfeitures against TWC and Cox for failing
to comply with the Bureau's refund orders.
7. TWC and Cox responded to the Bureau's January 19, 2009 orders.
Specifically, TWC filed a Petition for Reconsideration and Request for
Stay of the Bureau's Forfeiture Order finding TWC liable for failure
to give advanced written notice to the LFA of a change in service due
to the deployment of SDV. In addition, TWC and Cox filed Petitions for
Reconsideration and Requests for Stay of the Bureau's Forfeiture
Orders relating to the migration of programming to an SDV platform.
Both companies also requested, and the Bureau granted, a stay of the
effectiveness of the Bureau orders that TWC and Cox issue refunds to
consumers affected by the companies' SDV deployments. Finally, TWC and
Cox challenged the Bureau's proposed forfeitures for failing to comply
with the Bureau's order to submit a methodology for the issuance of
refunds to consumers affected by the SDV deployments.
III. DISCUSSION
8. We have carefully reviewed the arguments proffered by the parties and
the record developed in these proceedings. Upon review, we find that
the deployment of SDV does not violate Section 76.1201 or Section
76.640(b) of our rules. We also find, however, that Section 76.1603(c)
of our rules requires cable operators migrating existing programming
to an SDV platform to provide 30 days advance written notice to
affected LFAs and subscribers.
A. The Migration of Programming to a Switched Digital Video Platform
Does Not Violate Section 76.1201 or Section 76.640(b) of the
Commission's Rules
9. Section 76.1201 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. In adopting this rule, the Commission sought to
advance Congress' goal to assure the commercial availability of
"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, from manufacturers, retailers, and other vendors not
affiliated with any multichannel video programming distributor."
Subsequently, in the Plug and Play Order, the Commission adopted
additional rules, including Section 76.640, requiring that cable
operators support the operation of UDCPs in connection with their
cable systems.
10. The Bureau described SDV and the effect of its deployment on
CableCARD-equipped UDCPs as follows:
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.
11. We find that the plain language of Section 76.1201 is not consistent
with the Bureau's finding that the deployment of SDV by TWC and Cox
"prevented" subscribers with CableCARD-equipped UDCPs from connecting
or using their navigation devices on their systems. CableCARD-equipped
UDCP customers are still able to access unidirectional programming
services in an SDV system. Our UDCP rules were not intended to provide
access to bi-directional services or to freeze all one-way cable
programming services in perpetuity. CableCARD-equipped UDCP customers
may continue to use their UDCPs to receive unidirectional programming
services without an additional set-top box. Thus, we find that the
migration of cable programming services to an SDV platform does not
"prevent" the use of UDCP devices as that term is used in Section
76.1201. We emphasize, however, that while one-way cable programming
may be converted to a two-way platform without violating our
plug-and-play rules, these rules continue to require cable systems to
provide any one-way programming in a format compatible with UDCP
devices.
12. Similarly, with respect to the Bureau's findings regarding the
application of Section 76.640(b) to TWC and Cox's SDV deployments, we
conclude that the technical standards incorporated by reference into
that rule do not apply to two-way services like SDV. Rather, they
apply only to services that are "offered" to the unidirectional host -
not every channel or service on a network. Those technical
specifications also provide for channels that are not made available
to a host to be hidden from a user. Because two-way services like SDV
are not "offered" to UDCPs, information regarding such services need
not be included in the virtual channel table. Thus, failing to provide
virtual channel table data for channels that are not offered to or
supported by UDCPs is not a violation of Section 76.640(b).
13. While we find that the plain language of Sections 76.1201 and
76.640(b) is determinative, we also find that there are significant
consumer benefits of SDV deployment that weigh against a broader
reading of our rules. As noted earlier, the increased capacity enabled
by SDV will facilitate cable operator compliance with the Commission's
"viewability" rules-which require cable operators to transmit both
analog and digital versions of broadcast channels-without displacing
substantial amounts of existing programming. SDV has also permitted
the launch of new HD channels and the introduction of diverse and
niche programming options, including foreign-language content and
other diverse programming. In addition, the additional capacity will
facilitate the deployment of advanced broadband technologies such as
DOCSIS 3.0, as well as expand broadband capabilities. Indeed, many of
cable's competitors currently rely on SDV to provide expanded
offerings to consumers. The Bureau's expansive reading of Sections
76.1201 and 76.640(b) failed to adequately account for these
significant consumer benefits.
14. We do recognize, as the Bureau found, that implementation of SDV may
have a disruptive effect on the relatively small percentage of
consumers who use CableCARD-equipped UDCPs. Again, however, that
negative impact must be considered in the context of our rules and the
consumer benefits of SDV described above. In addition, the potential
disruption may be limited because: (1) the more popular cable channels
are not prime candidates for SDV migration because cable operators
only free up capacity to the extent that subscribers do not request a
particular channel at a particular time; (2) market demand for UDCPs
is not strong and consumers with TiVo UDCP devices can use the tuning
adapter to access SDV programming; and (3) bi-directional devices that
will work with SDV content are beginning to be introduced in the
marketplace. We further note that TWC and Cox have sought to minimize
the inconvenience associated with SDV migrations by offering set-top
boxes to subscribers with UDCP devices at reduced rates for a limited
period. In addition, TWC has offered customers free tuning adapters,
which allow TiVo UDCPs to access SDV programming without a set-top
box.
15. For the above reasons, we find that TWC's and Cox's migration of
programming to an SDV platform did not violate Sections 76.1201 and
76.640(b) of the Commission's rules, and we vacate the Bureau's
previous decisions proposing and instituting forfeitures against TWC
and Cox related to their deployment of SDV.
A. Cable Operators Must Provide 30 Days Advance Written Notice to
Relevant Local Franchising Authorities Before Migrating Programming
to a Switched Digital Video Platform
16. We also have before us TWC's Petition for Reconsideration of the
Bureau's LFA Notice Forfeiture Order finding that TWC failed to
provide the requisite 30-day advance written notice required under
Section 76.1603(c) of the Commission's rules to the Hawaii LFA before
implementing a service change caused by the migration of certain
channels to its SDV platform. Section 76.1603(c) requires cable
systems to "give 30 days written notice to both subscribers and local
franchising authorities before implementing any rate or service
change." As in its Response to LFA Notice NAL, TWC challenges the
Bureau's finding that the migration of programming to an SDV platform
constitutes a service change that triggers the notice requirements of
Section 76.1603(c) of the rules. TWC argues that the Bureau erred in
its assertion that the deployment of SDV resulted in the elimination
of channels from the subscribers' perspective, contending that "the
introduction of SDV was transparent to all but a tiny portion of TWC's
subscriber base" and that "[t]his cannot reasonably be characterized
as a change in service or the `elimination' of channels `from the
subscribers' perspective.'" TWC maintains this is a situation where a
particular category of individual subscribers are required to obtain
additional equipment to access particular channels, and argues there
is no Commission support for the Bureau's application of Section
76.1603(c) to such a situation. TWC contends that the case cited by
the Bureau - where TWC discontinued carriage of the NFL Network
resulting in the deletion of a channel from its lineup - is not on
point because the change in service in that case affected "not . . . a
mere handful of customers, but . . . TWC's overall subscriber base."
17. Further, TWC claims that in a Commission decision addressing the
notice obligations of cable operators in transitioning to all-digital
systems, which would require all analog customers to obtain a set-top
box to view all former analog services, and in subsequent related
decisions granting waivers of Section 76.1204(a)(1) to cable operators
to transition their system to all-digital operations, the Commission
required operators to give notice to subscribers but "conspicuously
omitted any suggestion that notice to LFAs was required." TWC states
that it routinely shares information with LFAs, particularly with
respect to developments like SDV, and argues that the notice
requirements in Section 76.1603(c) were adopted to implement the rate
provisions under Section 623 of the Act. Given that there are no rate
change issues here, according to TWC, the LFA has no need to receive
notice.
18. TWC contends that, pursuant to 47 U.S.C. S: 544(e), LFAs do not have
authority to regulate deployment of SDV technology, and thus finds it
"unclear what could be gained by formal written notice to the LFA."
Finally, TWC asserts that the Bureau cannot bootstrap from the
consumer interest in receiving notice to impose a requirement on the
operator that LFAs receive notice. In this respect, TWC argues that if
the Commission believes there is good reason to impose on cable
operators (and other MVPDs) a requirement that LFAs be notified about
the implementation of a new technology, the proper course is to
initiate a rulemaking proceeding so all interested parties can be
heard, rather than initiating enforcement proceedings that are
inappropriate, arbitrary and capricious.
19. TWC presents no new arguments and we find no reason to reverse the
Bureau's finding that 30-day advance written notice to the relevant
LFA was required in this case. The notice requirements in Section
76.1603(c) are designed to protect subscribers. Providing advance
notice to LFAs furthers this objective by enabling LFAs to respond to
any questions or complaints from subscribers in an informed manner.
The rule on its face applies to "any changes" in service; it requires
advance written notice to the LFA and affected subscribers without
regard to the number or ratio of subscribers affected by the service
change.
20. Moreover, as the Bureau previously held, TWC's argument that the
deployment of SDV does not constitute a service change is contradicted
by both the facts and the company's description of the practical
effect of SDV deployment on CableCARD-equipped UDCP customers. As the
LFA Notice NAL pointedly observes, TWC's deployment of SDV "rendered
inaccessible dozens of cable channels previously available on
CableCARD-equipped UDCPs." Similarly, the LFA Notice Forfeiture Order
concludes that "[f]rom the perspective of the complainants, it is
clear that they viewed the elimination of access to dozens of
channels, including popular high-definition programming, as a `change
in service.'" Furthermore, the Bureau previously noted that TWC's own
characterization of SDV deployment expressly acknowledged that
CableCARD-equipped UDCPs receive one-way cable services and will not
receive two-way cable services such as switched digital services.
Thus, deployment of SDV was a service change that triggered the notice
rule. We disagree with TWC that notification to subscribers through an
after-the-fact annual equipment compatibility notice would suffice
here.
21. We disagree with TWC's claim that, because the Viewability Order
failed to specify the subsection of the applicable LFA notice rule in
a decision relating to the operator's obligation to provide notice in
advance of transitioning to an all digital system, the LFA notice
requirements do not apply to SDV deployments. As the Bureau properly
recognized, "[i]n that decision, the Commission advised cable
operators that such actions were subject to the notice requirements in
both the annual equipment notice rule (Section 76.1622) and Section
76.1603," noting that "although the Commission was discussing notice
to subscribers in the relevant passage, it cited to Section 76.1603 as
a whole, and did not distinguish the LFA notice language." Nor do we
find merit in TWC's argument that the absence of a condition to notify
the LFA in a waiver grant indicates that the LFA notice rule
requirement for changes in service is inapplicable here. To the
contrary, we find TWC's reading of these decisions in this manner at
odds with the most natural interpretation of the rule itself. None of
the examples cited by TWC exempted cable operators from complying with
the LFA notice requirement in Section 76.1603(c).
22. We also reject TWC's contention that Section 76.1603(c) does not apply
because it was implemented pursuant to the rate provisions of Section
623 of the Act. According to TWC, in the absence of rate regulation or
a rate change, there is no reason why the LFA should receive notice.
That interpretation is contrary to the express language of the rule,
which is not limited to rate changes. Regardless of whether a cable
system is subject to rate regulation, Section 76.1603(c) requires a
cable operator to provide "30 days written notice to both subscribers
and local franchising authorities before implementing any rate or
service change." As noted by the Bureau, TWC's preferred construction
of the rule would obviate notice to both LFAs and consumers in non
rate-regulated areas and, furthermore, would do so in an
ever-increasing number of areas across the nation. Moreover, requiring
notice to LFAs serves a broader purpose than facilitating their rate
regulation responsibilities.
23. Finally, we find no merit in TWC's argument that nothing can be gained
from requiring Section 76.1603(c) notice to LFAs in this instance
because 47 U.S.C. S: 544(e) provides that no LFA may "prohibit,
condition, or restrict a cable system's use of any type of subscriber
equipment or any transmission technology." TWC fails to demonstrate
how the notice requirement of Section 76.1603 (c) affects a
prohibition, condition, or restriction on its use of the SDV platform.
Rather, notice to LFAs enables these jurisdictions to not only respond
to customer complaints in a more informed manner, but also enables
them to consider other methods of responding that are expressly
reserved under the Act. Section 76.1603 in no way contravenes the
prohibition set forth in 47 U.S.C. S: 544(e).
24. Based on the foregoing, we affirm the Bureau's previous decision
instituting a forfeiture against TWC for failure to provide the
requisite thirty (30) day advance written notice to the Hawaii LFA
before implementing a service change caused by the migration of
certain channels to its SDV platform. The Bureau should continue to
investigate complaints from consumers and local franchising
authorities alleging that cable operators have not complied with the
applicable notice requirements. Where it determines that those
requirements have been violated, the Bureau should take appropriate
enforcement action.
IV. ordering clauses
25. ACCORDINGLY, IT IS ORDERED, that pursuant to Section 4(i) of the
Communications Act of 1934, as amended, 47 U.S.C. S:154(i), that the
Oceanic Oahu Central Forfeiture Order, Oceanic Kauai Forfeiture Order,
Oceanic Oahu Refund Methodology NAL, Oceanic Kauai Refund Methodology
NAL, Cox Fairfax County Forfeiture Order, and Cox Fairfax County
Refund Methodology NAL as cited in Footnote 1 of this Order on Review
are VACATED and the TWC Petition for Recon, TWC NAL Response, Cox
Petition for Recon and Cox NAL Response filed on February 18, 2009, as
cited in Footnote 2 of this Order on Review are GRANTED.
26. IT IS FURTHER ORDERED, that pursuant to Section 4(i) of the
Communications Act of 1934, as amended, 47 U.S.C. S:154(i), that the
LFA Notice Forfeiture Order as cited in Footnote 1 of this Order on
Review is AFFIRMED and the TWC Petition for Recon of LFA Notice
Forfeiture Order and TWC Stay Request of LFA Notice Forfeiture Order
filed on February 18, 2009, as cited in Footnote 2 of the Order on
Review are DENIED.
27. IT IS FURTHER ORDERED that a copy of this Order on Review shall be
sent Certified Mail, Return Receipt Requested, to Matthew A. Brill,
Latham & Watkins LLP, 555 11th Street, N.W., Suite 1000, Washington,
DC 20004 and Arthur H. Harding, Fleischman & Harding LLP, 1255 23rd
Street, N.W., Eighth Floor, Washington, DC 20037, counsel for Time
Warner Cable, Inc., and Kathleen Q. Abernathy, Wilkinson Barker
Knauer, LLP, 2300 N Street, N.W., Suite 700, Washington, DC 20037,
counsel for Cox Communications, Inc.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
STATEMENT OF
COMMISSIONER ROBERT M. MCDOWELL
APPROVING IN PART AND CONCURRING IN PART
Re: In the Matter of Oceanic Time Warner Cable, a subsidiary of Time
Warner Cable, Inc.; Oceanic Time Warner Cable, a division of Time Warner
Cable, Inc., Oceanic Kauai Cable System; Oceanic Time Warner Cable, a
division of Time Warner Cable, Inc., Oceanic Oahu Central Cable System;
Cox Communications, Inc., Fairfax County, Virginia Cable System; File Nos.
EB-07-SE-351, EB-07-SE-352; NAL/Acct. Nos. 200832100074, 200932100001,
200932100002, 200932100003, 200932100008, 200932100022, and 200932100023;
Order on Review
The Commission through this Order appropriately determines that the
migration of programming to a switched digital video ("SDV") platform does
not violate Sections 76.1201 or 76.640(b) of our rules. Deployment of SDV
technology to deliver video programming is consistent with the plain
language of the regulations. It also can serve the public interest by
allowing cable operators to comply with the Commission's "viewability"
rules and deliver more programming options, including HD channels and
niche programming, without displacing significant numbers of existing
channels.
I only concur, however, with respect to the determination that the SDV
deployment requires notification to local franchising authorities and
customers. Whether the SDV deployment here - because of its effect on the
channels accessible to certain subscribers who purchased unidirectional
digital cable devices on their own in the retail market - constitutes a
"change in service" requiring notice under Section 76.1603(c) is not
without some doubt. Nevertheless, the broader ramifications of our
decision here for the industry's deployment of SDV technology, which has
largely been on hold since the enforcement proceedings became public,
justify resolution of these issues now.
See Oceanic Time Warner Cable, a subsidiary of Time Warner Cable, Inc.,
Forfeiture Order, 24 FCC Rcd 960 (Enf. Bur. 2009) ("LFA Notice Forfeiture
Order"); Oceanic Time Warner Cable, a division of Time Warner Cable, Inc.,
Oceanic Oahu Central Cable System, Forfeiture Order, 24 FCC Rcd 994 (Enf.
Bur. 2009)("Oceanic Oahu Central Forfeiture Order"); Oceanic Time Warner
Cable, a division of Time Warner Cable, Inc., Oceanic Kauai Cable System,
Forfeiture Order, 24 FCC Rcd 1030 (Enf. Bur. 2009) ("Oceanic Kauai
Forfeiture Order"); Oceanic Time Warner Cable, a division of Time Warner
Cable, Inc., Oceanic Oahu Central Cable System, Notice of Apparent
Liability for Forfeiture, 24 FCC Rcd 964 (Enf. Bur. 2009) ("Oceanic Oahu
Refund Methodology NAL"); Oceanic Time Warner Cable, a division of Time
Warner Cable, Inc., Oceanic Kauai Cable System, Notice of Apparent
Liability for Forfeiture, 24 FCC Rcd 955 (Enf. Bur. 2009) ("Oceanic Kauai
Refund Methodology NAL"); Cox Communications, Inc., Fairfax County,
Virginia Cable System, Forfeiture Order, 24 FCC Rcd 1013 (Enf. Bur. 2009)
("Cox Fairfax County Forfeiture Order"); Cox Communications, Inc., Fairfax
County, Virginia Cable System, Notice of Apparent Liability for
Forfeiture, 24 FCC Rcd 970 (Enf. Bur. 2009) ("Cox Fairfax County Refund
Methodology NAL").
See Petition for Reconsideration of Time Warner Cable, Inc., (filed Feb.
18, 2009) ("TWC Petition for Recon of LFA Notice Forfeiture Order"); Time
Warner Cable Inc. Request for Stay Pending Resolution of Petition for
Reconsideration ("TWC Stay Request of LFA Notice Forfeiture Order");
Petition for Reconsideration of Time Warner Cable Inc. (filed Feb. 18,
2009) ("TWC Petition for Recon"); Time Warner Cable Inc. Request for Stay
Pending Resolution of Petition for Reconsideration (filed Feb. 18, 2009)
("TWC Stay Request"); Response to Notices of Apparent Liability and
Request for Cancellation of Proposed Forfeitures, filed by Time Warner
Cable Inc., on behalf its Oceanic Time Warner Cable division (filed Feb.
18, 2009) ("TWC NAL Response"); Petition for Reconsideration of Forfeiture
Order, filed by Cox Communications, Inc. ("Cox Petition for Recon") (filed
Feb. 18, 2009); Request for Stay, filed by Cox Communications, Inc.
(filed Feb. 18, 2009) ("Cox Stay Request"); and Statement in Response to
Notice of Apparent Liability, filed by Cox Communications, Inc. (filed
Feb. 18, 2009) ("Cox NAL Response").
47 C.F.R. S: 1.106(a)(1).
This Order on Review relates only to the Bureau's SDV investigation, which
is separate from the digital migration investigation initiated by the
Bureau on October 30, 2008 regarding cable operators' migrations of analog
programming to digital tiers. See generally Amy Schatz and Vishesh Kumar,
FCC Opens Investigation into Cable-TV Pricing, Wall St. J., Nov. 5, 2008,
at B3.
47 C.F.R. S: 76.1603. That rule requires cable operators to provide at
least 30 days advance written notice to customers before making any
"changes in rates, programming services or channel positions." Id. at
S:76.1603(b). Cable operators must give LFAs and customers at least 30
days advance written notice "before implementing any rate or service
change." Id. at S:76.1603(c).
Carriage of Digital Television Broadcast Signals: Amendment to Part 76 of
the Commission's Rules, Third Report and Order and Third Further Notice of
Proposed Rulemaking, 22 FCC Rcd 21064, 21069-70 P:P: 15-16 (2007)
("Viewability Order").
See Oceanic Time Warner Cable, a subsidiary of Time Warner Cable, Inc.,
Notice of Apparent Liability for Forfeiture, 23 FCC Rcd 12804 (Enf. Bur.
2008) ("LFA Notice NAL") (subsequent history omitted).
See Oceanic Time Warner Cable, a division of Time Warner Cable, Inc.,
Oceanic Oahu Central Cable System, Notice of Apparent Liability for
Forfeiture, 23 FCC Rcd 14981 (Enf. Bur. 2008) (subsequent history
omitted); Oceanic Time Warner Cable, a division of Time Warner Cable,
Inc., Oceanic Kauai Cable System, Notice of Apparent Liability for
Forfeiture, 23 FCC Rcd 14962 (Enf. Bur. 2008) (subsequent history
omitted); Cox Communications, Inc., Fairfax County, Virginia Cable System,
Notice of Apparent Liability for Forfeiture, 23 FCC Rcd 14944 (Enf. Bur.
2008) (subsequent history omitted). We refer to these NALs collectively as
the "SDV NALs."
47 C.F.R. S: 76.1201.
47 C.F.R. S: 76.640(b).
See Time Warner Cable, Inc. Response to NAL and Request for Cancellation
of Forfeiture, (filed Sept. 22, 2008) ("Response to LFA Notice NAL").
See TWC Response to NAL and Request for Cancellation of Forfeiture (filed
Nov. 14, 2008) ("TWC SDV NAL Response"); Cox Statement in Response to
Notice of Apparent Liability and Order (filed Nov. 14, 2008) ("Cox SDV NAL
Response").
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).
Petition for Reconsideration of Time Warner Cable, Inc. (filed Nov. 14,
2008) ("TWC SDV Petition"); Petition for Reconsideration of Cox
Communications, Inc. (filed Nov. 14, 2008) ("Cox SDV Petition").
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." 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, n.9 (2007).
See, e.g., TWC SDV NAL Response at 3-4, 13, 20; Cox SDV NAL Response at
10-11.
See, e.g., TWC SDV NAL Response at 7-8; Cox SDV NAL Response at 2-4. TWC
also noted the importance of SDV in allowing it to broadcast signals in
both analog and digital format, thus minimizing the impact of the digital
transition on many customers. TWC SDV NAL Response at 2, 7-8.
TWC SDV NAL Response at 9 (noting that the group of such customers in its
Hawaii Division numbers 0.0004 percent of the overall subscriber base);
Cox SDV NAL Response at 3 (noting that the percentage of subscribers using
UDCPs with CableCARDs was 0.6% of its Fairfax County subscriber base).
TWC SDV NAL Response at 11; Cox SDV NAL Response at 15.
See Oceanic Time Warner Cable, a subsidiary of Time Warner Cable, Inc.,
Forfeiture Order, 24 FCC Rcd 960 (Enf. Bur. 2009) ("LFA Notice Forfeiture
Order").
See Oceanic Oahu Central Forfeiture Order, 24 FCC Rcd 994; Oceanic Kauai
Forfeiture Order, 24 FCC Rcd 1030; Cox Fairfax County Forfeiture Order, 24
FCC Rcd 1013.
See Oceanic Oahu Central Forfeiture Order, 24 FCC Rcd at 1011; Oceanic
Kauai Forfeiture Order, 24 FCC Rcd at 1047; Cox Fairfax County Forfeiture
Order, 24 FCC Rcd at 1027-28.
See Oceanic Oahu Refund Methodology NAL, 24 FCC Rcd 964; Oceanic Kauai
Refund Methodology NAL, 24 FCC Rcd 955; Cox Fairfax County Refund
Methodology NAL, 24 FCC Rcd 970.
See TWC Petition for Recon of LFA Notice Forfeiture Order; TWC Stay
Request of LFA Notice Forfeiture Order.
See TWC Petition for Recon; TWC Stay Request; Cox Petition for Recon; Cox
Stay Request.
See Oceanic Time Warner Cable, a division of Time Warner Cable, Inc. et
al., Order, DA 09-752 (Enf. Bur. rel. April 14, 2009).
TWC Stay Request at 1-2; Cox Stay Request at 1.
See TWC NAL Response at 2; Cox NAL Response at 2.
47 C.F.R. S: 76.1201.
47 U.S.C. S: 549(a); see also Navigation Devices Order, 13 FCC Rcd at
14777-78.
See Plug and Play Order, 18 FCC Rcd at 20891.
Oceanic Oahu Central Forfeiture Order, 24 FCC Rcd at 997; Oceanic Kauai
Forfeiture Order, 24 FCC Rcd at 1033; Cox Fairfax County Forfeiture Order,
24 FCC Rcd at 1016.
Indeed, the Commission requires that cable system operators inform
consumers, at the time they subscribe and annually thereafter, "that some
models of TV receivers and videocassette recorders may not be able to
receive all of the channels offered by the cable system when connected
directly to the cable system," and further, that "the use of a cable
system terminal device such as a set-top channel converter" could be
needed to resolve an incompatibility. 47 C.F.R. S: 76.1622(a)(1).
ANSI/SCTE 40(2003); see TWC Petition for Recon at 17.
Sec. 76.640(b) and the standards incorporated by reference therein
address technical transmission requirements for UDCP devices. Our
conclusions herein are limited to that issue alone and do not reflect a
view on other issues pending before the Commission (e.g., the definition
of a "digital cable system").
TWC Petition for Recon at 2-3; Cox Petition for Recon at 6.
See TWC Petition for Recon at 2-3 (citing Viewability Order, 22 FCC Rcd
21064). Individual Commissioners have recognized the benefits that SDV
technology may provide to consumers and encouraged the development of new
technologies that would bring about expansion and improvements in
services. See Separate Statement of Commissioner Jonathan S. Adelstein,
Approving in Part, Dissenting in Part, id. at 21128 ("We encourage cable
operators to upgrade their systems and deploy solutions, such as switched
digital, QAM or IPTV, to increase system capacity for more channels,
enhanced services and faster broadband speeds. Such technological
innovations promote efficient network management and the greater diversity
of programming."); Separate Statement of Commissioner Deborah Taylor Tate,
id. at 21130 ("Developments in new compression technology, such as
switched digital, allow cable operators to conserve valuable spectrum
while providing quality video service."); Separate Statement of
Commissioner Robert M. McDowell, id. at 21131 ("The standard we reaffirm
today will permit cable operators to take advantage of technological
innovations, such as switched digital and advanced compression
technologies, to continue providing service to consumers with greater
efficiency.").
For instance, as a result of bandwidth capacity reclaimed by the
implementation of SDV, Cox recently added 24 new HD channels and 27 new SD
channels to its Fairfax, Virginia lineup. See Cox Petition for Recon at 6.
In the year since it introduced SDV in the Hawaii divisions at issue here,
TWC has added nine HD linear channels, including one broadcast HD channel.
In addition TWC states in other divisions across the country it has now
launched ESPN2 HD, the Food Channel HD, and HGTV HD. See TWC SDV NAL
Response at 18-19. In its Austin, Texas cable system, TWC added Canal24,
DocuTVE, Toon Disney Spanish, Cartoon Spanish, Boomerang Spanish, ESPN
Deportes, TVE International, La Familia, Infinito, and Deutsche Welle to
its cable lineup. See Time Warner Cable LOI Response at 12 (filed
November 30, 2007).
See, e.g., TWC Petition for Recon at 2-3; Cox Petition for Recon at 4,
6-7.
AT&T's U-Verse platform, for instance, uses SDV to provide a range of
programming and other digital services. See Alan Breznick, Cable
Technologists Fear Bell IPTV, Web Video, Peer-to-Peer, COMMUNICATIONS
DAILY, Jan. 17, 2006, at 6 (stating that "telco IPTV is switched digital
by nature").
See, e.g., TWC Petition for Recon at 2-3; Cox Petition for Recon at 6-7.
See supra note 17.
Todd Spangler, Set-Tops Break Free, MULTICHANNEL NEWS, April 27, 2009 at
8 ("[C]onsumers have been able to buy TiVo DVRs and plug in cable
company-supplied CableCards to get their standard cable lineup. But to
date, CableCard-based retail devices have proven to be very unpopular in
the market.").
Bi-directional navigation devices that will work with SDV content are
beginning to be introduced in the marketplace. See Jeff Baumgartner,
"Denver, Chicago First to Get Tru2Way TVs, Light Reading's Cable Digital
News, Oct. 15, 2008 available at
http://www.lightreading.com/document.asp?doc_id=166014&site=cdn. In
addition, TWC states that it has already begun rolling out tru2way
technology at headends throughout its digital base. See Letter from
Matthew A. Brill, Esq., Counsel for Time Warner Cable, Inc., to Kris
Monteith, Chief, Enforcement Bureau, Federal Communications Commission,
dated March 6, 2009 at 2 ("Brill Letter").
See Brill Letter at 1-2; TWC Petition for Recon at 9; Cox Petition for
Recon at 6.
Brill Letter at 1.
Because we vacate our previous orders for the reasons stated above, we
need not reach the parties' other arguments.
TWC Petition for Recon of LFA Notice Forfeiture Order.
47 C.F.R. S:76.1603(c).
TWC Petition for Recon of LFA Notice Forfeiture Order at 6; see also
Response to LFA Notice NAL at 5.
TWC Petition for Recon of LFA Notice Forfeiture Order at 7; see also
Response to LFA Notice NAL at 7. TWC argues that the "deployment of SDV
had no effect on the number or placement of channels that TWC delivered to
its subscribers or on any other aspect of the service TWC provides." TWC
Petition for Recon of LFA Notice Forfeiture Order at 6. Rather, TWC
contends "the same channels continue to be part of the same service tiers,
available on the same channel numbers and at the same prices, both before
and after the introduction of SDV." Id.; see also Response to LFA Notice
NAL at 5.
TWC Petition for Recon of LFA Notice Forfeiture Order at 7-8; see also
Response to LFA Notice NAL at 6.
Time Warner Cable, a Division of Time Warner Entertainment Company, L.P.,
Order on Reconsideration, 21 FCC Rcd 9016 (Media Bur.) ("Time Warner
Reconsideration Order"), consent decree adopted, Order, 21 FCC Rcd 11229
(Media Bur. 2006).
TWC Petition for Recon of LFA Notice Forfeiture Order at 7; see also
Response to LFA Notice NAL at 6.
Viewability Order, 22 FCC Rcd 21064.
See, e.g., Mediacom Communications Corp. and Bresnan Communications, LLC,
Implementation of Section 304 of the Telecommunications Act of 1996,
Commercial Availability of Navigation Devices, Memorandum Opinion and
Order, 23 FCC Rec 6506 P: 1 (Media Bur. 2008); Millennium Telcom LLC d/b/a
OneSource Communications, Request for Waiver of Section 76.1204(a)(1) of
the Commission's Rules, Memorandum Opinion and Order, 22 FCC Rcd 8567 P:
18 (Media Bur. 2007); TWC Petition for Recon of LFA Notice Forfeiture
Order at 8 (citing Bend Cable Communications LLC d/b/a BendBroadband
Request for Waiver of Section 76.1204(a)(1) of the Commission's Rules;
Implementation of Section 304 of the Telecommunications Act of 1996
Commercial Availability of Navigation Devices, Memorandum Opinion and
Order, 22 FCC Rcd 209 P: 21 (Media Bur. 2007); see also Response to LFA
Notice NAL at 10.
TWC Petition for Recon of LFA Notice Forfeiture Order at 8-9; see also
Response to LFA Notice NAL at 10.
TWC Petition for Recon of LFA Notice Forfeiture Order at 9-10; see also
Response to LFA Notice NAL at 9.
TWC Petition for Recon of LFA Notice Forfeiture Order at 10; see also
Response to LFA Notice NAL at 9.
TWC Petition for Recon of LFA Notice Forfeiture Order at 11; see also
Response to LFA Notice NAL at 10-11.
See Time Warner Reconsideration Order, 21 FCC Rcd at 9020 ("[W]e also
reject the company's interpretation of section 76.1603(b) on the merits.
Because section 76.1603(b) is aimed at protecting subscribers, it is the
subscribers' perspective -- not that of the cable operator -- that is
relevant to determining whether a change in programming services has
occurred."). Although the Media Bureau was discussing Section 76.1603(b)
in this decision, the same reasoning applies to Section 76.1603(c).
In any event, TWC deprived more than 350 of its Hawaii customers of access
to dozens of channels by switching to the SDV platform without providing
notice to the affected LFA. See Time Warner Cable Supplemental LOI
Response, dated September 12, 2008, at Exhibit A. That is not a trivial
number of adversely affected customers.
LFA Notice NAL, 23 FCC Rcd at 12806.
LFA Notice Forfeiture Order, 24 FCC Rcd at 961. We note that defining a
change in service solely from the perspective of a cable operator would
permit such entities to deliver all programming services via a
transmission technology that is incompatible with subscriber equipment
without providing the 30-day notice to subscribers required by Section
76.1603(b).
LFA Notice NAL, 23 FCC Rcd at 12806.
LFA Notice Forfeiture Order 24 FCC Rcd at 961, n.13.
47 C.F.R. S:76.1603(c) (emphasis added).
In the instant cases, both TWC and Cox provided appropriate 30-day advance
written notice to their customers about the changes in service due to the
deployment of SDV.
See, e.g., 47 U.S.C. S: 552 (d)(1) ("Nothing in this title shall be
construed to prevent any State or any franchising authority from enacting
or enforcing any consumer protection law, to the extent not specifically
preempted by this title.")
Because we affirm the Bureau's LFA Notice Forfeiture Order, we deny the
TWC Stay Request of LFA Notice Forfeiture Order.
Federal Communications Commission FCC 09-52
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Federal Communications Commission FCC 09-52