FCC Permits Copy Protection to be Placed Within Retailers' Host Navigation Devices

The FCC moved on Sept. 14, 2000, to break part of the logjam it believes is delaying the sale of consumer “navigation devices” by third-party retailers. A Commission Declaratory Ruling held that allowing some cable industry security technology to be installed on host “navigation devices,” such as set-top boxes and remote control units, would not violate Commission Rules requiring the segregation of navigation device security components from other navigation device components. This ruling is expected to facilitate the digital delivery of copy-protected programming to digital converters sold directly to consumers.

The Commission’s Rules require that cable operators must segregate security and non-security components in new navigation devices sold or leased that descramble digital signals beginning Jan. 1, 2005. The Commission has said this restriction is intended to prevent cable operators from having a competitive advantage vis-a-vis third-party retailers selling only the non-security host devices, and to thereby foster creation of a competitive navigation devices market. Another provision of the rule that took effect July 1, 2000, required cable operators to make the “point of deployment” (“POD”) security modules available so that customers using navigation devices such as digital converters, or a hybrid analog/digital converter, could purchase the host box from a third party retailer.

Consumer electronics retailers argued that a copy protection licensing agreement under development by the CableLabs cable industry research group, the Dynamic Feedback Arrangement Scrambling Technique (“DFAST”), would violate the Commission’s rules because it would be located in the host set-top box, rather than in the PODs supplied by cable operators. While not ruling on whether DFAST would violate the Rule, the Commission concluded more narrowly that some measure of anti-copying encryption technology located within a host navigation device is consistent with the Commission’s navigation devices Rules.

In response to requests from retailers that the 2005 deadline be accelerated to 2002, the Commission also began a review of its navigation devices Rules by adopting a Further Notice of Proposed Rulemaking in the navigation devices proceeding. Among the topics to be examined in the Rulemaking are:

• whether navigation device interface specifications developed by CableLabs allow consumer electronics manufacturers to build equipment that provides consumers a viable alternative to the equipment provided by cable operators;
• the effect cable operators’ continued provisioning of navigation devices with both security and non-security components has had on the development of a competitive navigation devices market and whether the 2005 bar on the sale or lease of integrated navigation devices by cable operators should be accelerated;
• whether there are obstacles and barriers preventing or deterring development of a navigation devices market; and
• what other actions the Commission can take to spur development of a competitive navigation devices market.

The date for filing comments will be announced shortly.