FCC Questions Switched Digital Video
On August 25, 2008, the Enforcement Bureau of the Federal Communications Commission issued a preliminary order challenging current assumptions about the cable industry's deployment of switched digital video (SDV).
This bureau-level order finds that the deployment of SDV constitutes a “change in service” requiring 30-day advance notice to local franchising authorities and customers, proposes a $7,500 forfeiture for Time Warner's failure to notify a particular local franchising authority, and includes a troubling note suggesting that the FCC is still considering whether the technology itself conforms to FCC rules for “plug and play” retail DTVs. See Oceanic Time Warner Cable, DA 08-1960.
Although this order is preliminary and will require more FCC input and possible adjudication before fines are enforceable, cable operators using SDV should take note of the order and its implications and provide advance notice of SDV deployment to local franchising authorities as well as to customers.
FCC customer service rules effectively compel cable operators to provide notice to customers and local franchising authorities “before implementing any rate or service change.” This has conventionally been understood to apply when cable systems change rates or services offered, rather than when they change the technology by which services are delivered.
SDV is a technique for optimizing bandwidth efficiency, by delivering specific digital channels only when they are selected by a customer, rather than delivering every channel to every location in the system, regardless of whether anyone in a particular node is watching. Customers with interactive digital set-top boxes continue to receive SDV channels without noticeable change. An interactive set-top box, or a tru2way retail device, can tune SDV.
In contrast, unidirectional digital cable ready devices (UDCPs), by definition, cannot send an SDV tuning signal, because they do not send signals back to the cable headend. Last year, to increase the functionality of UDCPs that use CableCARDs, the cable industry announced the development of a new external tuning adapter that will enable certain upgraded UDCPs to access switched digital cable channels without a set-top box.
The Notice of Apparent Liability (NAL) arose from the change in delivery of a set of channels from a “broadcast” method (delivery to all parts of the plant without switching) to SDV. The NAL takes the surprising position that “migration of channels that were previously accessible with a CableCARD-equipped UDCP to a switched digital platform that can only be accessed with an operator-provided set-top box constitutes a change in services for those customers that use CableCARDs without a set-top box.”
This position seems like a draconian response to a valuable technical advancement. The NAL suggests that the movement of channels to SDV delivery “can be likened to the deletion of channels, in that subscribers who accessed those channels with a CableCARD-equipped UDCP lost those channels unless they took some action.” This reflects an unusual concern for a small set of legacy devices.
Although the NAL addresses only notification requirements, if this rationale is retained as the case winds through FCC processes, it could also be misapplied to complicate the movement of channels from analog to digital, and to other technical changes which have previously been allowed (and even encouraged) by the FCC.
Finally, the NAL includes a footnote intimating that use of SDV “might further discourage consumers from the use of CableCARDs as an alternative to TWC [Time Warner Cable]-supplied set-top boxes”—a suggestion quite disconnected from the current market, from AT&T's use of switching for 100 percent of its video channels, and from the general support by the FCC for innovation in video platforms.
An order at this level is preliminary in many ways. It required no vote by the FCC; calls for a formal response from the cable operator; and cannot advance to an enforceable fine without more extensive FCC (and possibly judicial) proceedings. In the meantime, operators who deploy SDV are well advised to provide both advance notice to local franchising authorities as well as to customers.