FCC Releases Details on Navigation Device Rules
The FCC last week announced its "reconsideration" of its prior ruling on the commercial availability of cable "navigation devices" (i.e., set-top boxes). As you will recall, the FCC last summer adopted new regulations requiring cable operators and equipment suppliers to separate the security and non-security functions of set-top converters/decoders so as to foster a competitive market for these devices. See Memo of June 29, 1998. Cable operators were required to start offering set-top equipment with segregated security modules by July 1, 2000, and were required to phase out the use of integrated equipment by Jan.1, 2005.
The Reconsideration Order clarifies that the separation requirements will not apply to equipment used only to access analog programming. The FCC recognized that the recent trend towards digital devices meant that efforts spent adapting existing analog equipment would detract from, rather than enhance, the development of a competitive commercial marketplace for cable equipment. Hybrid analog/digital units apparently will be subjected to the separation requirements.
Under the Reconsideration Order, cable operators are prohibited from offering integrated digital devices after the Jan. 1, 2005, deadline. There is some ambiguity as to whether operators can continue offering integrated devices inventoried before that date. That ambiguity may be resolved when the text of the Reconsideration Order is released in the next few weeks. To complicate matters, the FCC suggested that it will review the marketplace after the initial year 2000 roll-out of separate security modules to assess whether the final implementation deadline should be accelerated from 2005 to 2003.
The FCC's Reconsideration Order expressly rejects NCTA's argument that the governing statute only requires cable operators to offer a segregated option and that the Commission had overstepped its authority in entirely prohibiting the offering of integrated devices after Jan. 1, 2005. Commissioner Powell alone dissented from this portion of the decision. He agreed with NCTA that the FCC had gone beyond its statutory mandate and now risked stifling innovative equipment options. NCTA already has announced that it will appeal this aspect of the ruling.
The FCC confirmed that the standards now being developed through the Open Cable process appear sufficiently specific to guide equipment manufacturers. The FCC declined to impose portability/interoperability standards, but suggested it would revisit the issue as the standards process developed. Finally, the FCC confirmed that the separation requirements for navigation devices would apply only to cable operators and not to DBS and OVS providers.