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Agape Church v. FCC, No. 12-1334 (D.C. Cir.)

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Released: February 14, 2013
ORAL ARGUMENT NOT YET SCHEDULED
USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 1 of 76
BRIEF FOR RESPONDENTS
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

NO. 12-1334

AGAPE CHURCH, INC., ET AL.,
PETITIONERS,
V.
FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
RESPONDENTS.

ON PETITION FOR REVIEW OF AN ORDER OF THE
FEDERAL COMMUNICATIONS COMMISSION

WILLIAM J. BAER
SEAN A. LEV
ASSISTANT ATTORNEY GENERAL
GENERAL COUNSEL


ROBERT B. NICHOLSON
PETER KARANJIA
KRISTEN C. LIMARZI
DEPUTY GENERAL COUNSEL
ATTORNEYS


JACOB M. LEWIS
UNITED STATES
ASSOCIATE GENERAL COUNSEL
DEPARTMENT OF JUSTICE

WASHINGTON, D.C. 20530
JOEL MARCUS

COUNSEL

FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740


USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 2 of 76

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES



1. Parties.
The petitioners are Agape Church, Inc., London Broadcasting
Company, Una Vez Mas, LP, and the National Association of Broadcasters.
The respondents are the Federal Communications Commission and the
United States of America. The intervenors are the National Hispanic Media
Coalition, the National Cable & Telecommunications Association, and Time
Warner Cable, Inc.
2. Rulings under review.
Carriage of Digital Television Broadcast Signals: Amendment to Part
76 of the Commission’s Rules, Fifth Report and Order, 27 FCC Rcd 6529
(2012) (JA 296).
3. Related cases.
This case has not previously been before this Court or any other court.
We are aware of no pending cases related to this one.






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TABLE OF CONTENTS


TABLE OF AUTHORITIES .......................................................................... iii
GLOSSARY ................................................................................................... vii
JURISDICTION ................................................................................................ 1
QUESTIONS PRESENTED ............................................................................. 2
STATUTES AND REGULATIONS ................................................................ 4
COUNTERSTATEMENT ................................................................................ 4
1.
Digital Broadcast And Cable Television. ......................................... 6
2.
Must-Carry. ....................................................................................... 8
3.
The Viewability Order. .................................................................... 10
4.
The Sunset Proceeding. ................................................................... 12
5.
Subsequent Proceedings. ................................................................. 19
SUMMARY OF ARGUMENT ...................................................................... 19
STANDARD OF REVIEW ............................................................................ 24
ARGUMENT .................................................................................................. 26
I.
THE COMMISSION’S READING OF THE
VIEWABILITY REQUIREMENT IS CONSISTENT
WITH THE STATUTE AND WITHIN THE AGENCY’S
INTERPRETIVE DISCRETION UNDER CHEVRON. ......................... 26

A. The Commission’s Interpretation Is Consistent With The
Statutory Language.............................................................................. 26
B. The Commission’s Interpretation Was Reasonable. ........................... 38
II. THE COMMISSION ACTED CONSISTENTLY WITH
THE APA IN ADOPTING THE SUNSET ORDER. ............................... 44
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A. The Commission Properly Revised Its Interpretation Of
Section 614(b)(7). ................................................................................ 44
B. The Commission Properly Considered The Record. .......................... 47
C. The Commission Reasonably Concluded That
Conversion Devices Are Available. .................................................... 50
D. The Commission Reasonably Considered The Burden Of
Analog Carriage. ................................................................................. 53
E. The Six-Month Transition Period Is Reasonable. ............................... 54
III. THE COMMISSION GAVE ADEQUATE NOTICE THAT
IT WOULD CONSIDER A DEVICE-BASED
VIEWABILITY APPROACH. ................................................................ 57

CONCLUSION ............................................................................................... 60
ii

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 5 of 76

TABLE OF AUTHORITIES

CASES


Action for Children’s Television v. FCC, 564 F.2d
458 (D.C. Cir. 1977) .................................................................................... 57
American Library Ass’n. v. FCC, 406 F.3d 689
(D.C. Cir. 2005) ............................................................................................. 1
AT&T Corp. v. FCC, 220 F.3d 607 (D.C. Cir. 2000) ..................................... 43
AT&T Corp. v. FCC, 86 F.3d 242 (D.C. Cir. 1996) ....................................... 26
Cablevision Systems Corp. v. FCC, 597 F.3d 1306
(D.C. Cir. 2010) ........................................................................................... 49
Cablevision Systems Corp. v. FCC, 649 F.3d 695
(D.C. Cir. 2011) .............................................................................. 38, 42, 49
Chamber of Commerce v. EPA, 642 F.3d 192
(D.C. Cir. 2011) ............................................................................................. 1
*
Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984) .................. 24, 25, 26, 45
Consumer Electronics Ass’n v. FCC, 347 F.3d 291
(D.C. Cir. 2003) .................................................................................... 25, 56
C-SPAN v. FCC, 545 F.3d 1051 (D.C. Cir. 2008) ............................................ 6
FCC v. Fox Television Stations, Inc., 556 U.S. 502
(2009) .......................................................................................................... 45
Frisby v. Schultz, 487 U.S. 474 (1988) ........................................................... 41
Home Box Office, Inc. v. FCC, 567 F.2d 9
(D.C. Cir. 1977) ........................................................................................... 43
Int’l Ladies’ Garment Workers’ Union v. Donovan,
722 F.2d 795 (D.C. Cir. 1983) .................................................................... 49
*
Melcher v. FCC, 134 F.3d 1143 (D.C. Cir. 1998) .......................................... 43
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29 (1983) ........................................................................ 47
*
NCTA v. Brand X Internet Services, 545 U.S. 967
(2005) .......................................................................................................... 45
NCTA v. FCC, 567 F.3d 659 (D.C. Cir. 2009) ......................................... 24, 25
Nuvio Corp. v. FCC, 473 F.3d 302 (D.C. Cir. 2006) ............................... 49, 60
iii

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Texas Mun. Power Agency v. EPA, 89 F.3d 858
(D.C. Cir. 1996) ........................................................................................... 27
Thompson Med. Co. v. FTC, 791 F.2d 189
(D.C. Cir. 1986) ........................................................................................... 49
*
Turner Broadcasting System, Inc. v. FCC, 512 U.S.
622 (1994) .................................................................................. 9, 10, 40, 41
*
Turner Broadcasting System, Inc. v. FCC, 520 U.S.
180 (1997) ................................................................................ 37, 39, 40, 54
Village of Barrington v. STB, 636 F.3d 650
(D.C. Cir. 2011) ........................................................................................... 38
WJG Tel. Co. v. FCC, 675 F.2d 386
(D.C. Cir. 1982) ........................................................................................... 57

ADMINISTRATIVE DECISIONS


Basic Service Tier Encryption, 27 FCC Rcd 12786
(2012) ..................................................................................................... 8, 55
Carriage of Digital Television Broadcast Signals,
20 FCC Rcd 4516 (2005) ............................................................................ 53
Carriage of Digital Television Broadcast Signals,
22 FCC Rcd 21064 (2007) ..................... 8, 10, 11, 12, 37, 38, 39, 44, 47, 54
DTV Consumer Education Initiative, 23 FCC Rcd
4134 (2008) ................................................................................................. 55
Implementation of the Cable Television Consumer
Protection and Competition Act of 1992, 9 FCC
Rcd 6723 (1994) .......................................................................................... 30
Report on Cable Industry Prices, 27 FCC Rcd 9326
(Media Bur. 2012) ....................................................................................... 51
Stay Order, 27 FCC Rcd 10217 (MB 2012) ............................................ 19, 52

STATUTES AND REGULATIONS


Cable Television Consumer Protection and
Competition Act of 1992, Pub. L. No. 102-385,
106 Stat 1460 (1992) .......................................................................... 4, 9, 10
Deficit Reduction Act of 2005, Pub. L. No. 109-
171, 120 Stat. 4 (2006) .................................................................................. 6
iv

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DTV Delay Act, Pub. L. No. 111-4, 123 Stat. 112
(2009) ............................................................................................................ 6
5 U.S.C. § 553(b)(3) ........................................................................................ 57
5 U.S.C. § 706(2)(A) ....................................................................................... 25
5 U.S.C. § 706(2)(E) ....................................................................................... 25
47 U.S.C. § 325 ................................................................................................. 9
47 U.S.C. § 338(d)........................................................................................... 44
47 U.S.C. § 534(a) .................................................................................... 2, 4, 9
47 U.S.C. § 534(b)(1)(B) ........................................................................... 9, 53
47 U.S.C. § 534(b)(4)(A) ................................................................... 37, 38, 41
47 U.S.C. § 534(b)(5) ...................................................................................... 53
47 U.S.C. § 534(b)(7) ................................................. 2, 4, 9, 22, 26, 29, 32, 33
47 U.S.C. § 535 ................................................................................................. 4
47 U.S.C. § 535(a) ............................................................................................. 9
47 U.S.C. § 543(b)(3)(A) ................................................................................ 29
47 C.F.R. § 76.1601 ................................................................................. 18, 56
47 C.F.R. § 76.1603(b) ............................................................................. 18, 56
47 C.F.R. § 76.56(d)(3) (2010) ....................................................................... 11
47 C.F.R. § 76.56(d)(5) (2010) ....................................................................... 58

OTHERS


H.R. Rep. No. 102-628 (1992) ................................................................. 29, 36
S. Rep. No. 102-92 (1991) ........................................................... 29, 34, 35, 36
Simon Haykin, Communications Systems (4th Ed.
2001) ............................................................................................................ 31
Walter Ciciora et al., Modern Cable Television
Technology (2nd Ed. 2003) ........................................................................... 7
*
Webster’s Third New International Dictionary
(1993) .......................................................................................................... 26


v

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* Cases and other authorities principally relied upon are marked with
asterisks.



vi

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GLOSSARY

DTA
Digital Transport Adapter. A small, low-cost set-
top box that enables a customer to view digital
signals without having to obtain a more expensive,
full-featured digital set-top box.



vii

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 10 of 76
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

NO. 12-1334

AGAPE CHURCH, INC., ET AL.,
PETITIONERS,
V.
FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
RESPONDENTS.

ON PETITION FOR REVIEW OF AN ORDER OF THE
FEDERAL COMMUNICATIONS COMMISSION

BRIEF FOR RESPONDENTS

JURISDICTION

The Court has jurisdiction under 28 U.S.C. § 2342(1) over final orders
of the Federal Communications Commission. The petition for review was
timely filed. We do not challenge the associational standing of petitioner the
National Association of Broadcasters (NAB). Although petitioners’ opening
brief fails to specifically identify any member of NAB that would have
standing to challenge the Commission’s order, see Chamber of Commerce v.
EPA, 642 F.3d 192, 200 (D.C. Cir. 2011); American Library Ass’n. v. FCC,
406 F.3d 689, 696-697 (D.C. Cir. 2005), we understand that NAB’s members

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 11 of 76
include must-carry stations that would have individual standing to challenge
the order on review.

QUESTIONS PRESENTED

Section 614 of the Communications Act requires cable television
systems to carry the signals of local broadcast stations, 47 U.S.C. § 534(a),
and specifies that the signals of these “must-carry” stations “shall be viewable
… on all television receivers of a subscriber” for which the cable company
provides a connection, 47 U.S.C. § 534(b)(7). In implementing these
statutory requirements, the Commission has taken account of technological
changes over the years – including, in particular, changes in transmission
formats from analog to digital – and has modified its understanding of
Section 614’s “viewability” mandate accordingly.
In 2007, when nearly half of all television viewers could receive only
analog signals, the FCC adopted a “viewability” rule requiring most cable
television systems to carry the signals of must-carry stations in analog format,
so those stations could be viewed by system subscribers with analog
television sets without using a device that converts the signals from digital to
analog format. By its terms, however, the viewability rule was scheduled to
expire three years after its June 2009 effective date, unless extended by the
Commission.
2

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In the order on review, Carriage of Digital Television Broadcast
Signals, 27 FCC Rcd 6529 (2012) (Sunset Order) (JA 296), the FCC
determined that technological and marketplace changes during the previous
five years justified allowing the rule to expire as planned. The Commission
allowed cable systems to provide must-carry signals exclusively in digital
format, but only so long as the cable company makes available to customers
free of charge or at a nominal fee a device that converts the signals to analog
format.
The questions presented are:
1)
Whether the Commission reasonably concluded that a cable
operator may discharge its statutory obligation to make the
signals of must-carry broadcast stations “viewable” under 47
U.S.C. § 534(b)(7) by making available to its subscribers free
of charge or at low cost a device that converts those signals
into a viewable format;
2)
Whether the Sunset Order was a reasonable exercise of the
Commission’s discretion;
3)
Whether the Commission provided adequate notice that it
was considering the approval of signal conversion devices to
satisfy the viewability requirement.
3

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STATUTES AND REGULATIONS

Pertinent materials are attached.

COUNTERSTATEMENT

In legislation enacted in 1992, Congress required cable television
systems to carry the signals of local commercial broadcast television stations.
47 U.S.C. § 534(a); see the Cable Television Consumer Protection and
Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992) (1992
Cable Act) (adding new Sections 614 to the Communications Act). In
Section 614(b)(7) of the Communications Act, 47 U.S.C. § 534(b)(7),
Congress further required that the signals of such “must-carry” stations be
“viewable via cable on all television receivers of a subscriber.” Ibid. This
1
case concerns the Commission’s interpretation of Section 614(b)(7).
Whether a station is viewable by a given subscriber to a cable system
depends on the technology employed by both the system and the subscriber.
Two technological developments are particularly relevant here. First, starting
in June 2009, television broadcasters switched technology from analog, the
traditional form of transmission, to digital, a new technology that allows more
content, such as a high definition picture or multiple channels, to be
transmitted in the same system capacity or “bandwidth.” Separately, over the

1 Congress created a similar regime for noncommercial stations. 47 U.S.C.
§ 535.
4

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past several years, cable systems also have been switching from analog to
digital signal carriage. Although the broadcast digital transition is complete,
the cable transition is still in progress. As a result, some cable systems
supply programming exclusively in digital format, but many cable systems
are “hybrid” systems that transmit a combination of analog and digital
signals. At the same time, some customers have newer television sets that
can process digital or analog signals, while others have legacy analog-only
sets. Because of the mixture of technologies on both the transmitting and
receiving ends (i.e., the cable system and the viewer’s television set), any
given cable customer may or may not need a device that converts signals
from digital to analog format to watch cable programming.
In 2007, the Commission adopted a “viewability” rule that required
hybrid cable systems to provide the signals of must-carry stations in analog
format. That rule enabled all subscribers to hybrid systems to view must-
carry stations without using a converter box to turn digital signals into analog
signals, even if they had an analog television set. Cable systems that
transmitted only in digital format were not subject to that requirement even
though their customers who used analog televisions required a converter box.
The Commission set the viewability rule to expire three years from its June
2009 effective date.
5

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In the order on review, the Commission allowed the viewability rule to
expire as planned; hybrid cable systems no longer are required to supply an
analog signal for must-carry stations. Those stations must still be viewable
by cable subscribers as required by Section 614(b)(7), but a cable system may
now fulfill that requirement by making available to subscribers who need it a
device that converts digital signals to analog signals. The Commission
specified that the device must be provided either free of charge or for a
nominal charge.
1. Digital Broadcast And Cable Television.
On June 12, 2009, by congressional directive, all full-power broadcast
television stations in the country switched their signal transmitting format
from analog to digital. See Pub. L. No. 109-171 § 3002, 120 Stat. 4, 21
(2006) (establishing February 2009 switch date and specifying that only full-
power, as opposed to low-power, stations must transition); Pub. L. No. 111-4,
123 Stat. 112 (2009) (extending date to June 2009). That switch rendered
analog television sets incapable of displaying broadcast television pictures
unless the digital signal is converted into an analog format. See C-SPAN v.
FCC, 545 F.3d 1051, 1053 (D.C. Cir. 2008). A viewer thus may watch over-
the-air television either by purchasing a television set equipped with a digital
6

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 16 of 76
tuner or by acquiring a digital-to-analog converter for use with an analog
television set.
Cable television is in a similar process of converting to digital format.
Unlike broadcast television, however, there is no statutory deadline, so cable
is transitioning on a schedule driven by market factors. Thus, some cable
systems are now all-digital, but many systems still carry a mixture of both
digital and analog programming formats. See Sunset Order ¶2 (JA 298).
Digital video signals are far more bandwidth-efficient – an analog channel
requires 6 megahertz of bandwidth for a single broadcast station, whereas the
same bandwidth can carry 15 or more standard definition or approximately
two high definition channels. See Walter Ciciora et al., Modern Cable
Television Technology 75 (2nd Ed. 2003).
Digital cable signals are not viewable on analog televisions unless they
are converted to analog format. The conversion can occur in either of two
places: (1) at the cable system’s “head-end” (where the system receives
video programming signals), which requires the cable system to carry the
bandwidth-intensive analog signal; or (2) at the customer’s premises, through
the use of a set-top converter box. Carriage of Digital Television Broadcast
Signals, 22 FCC Rcd 21064, 21071 ¶18 (2007) (Viewability Order).
7

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Thus, a cable customer who receives service from an all-digital cable
system, but desires to watch it on an analog television set, must have a device
that converts the digital signal to analog format (a function built into most
digital cable set-top boxes).2 For the digital cable subscriber with an analog
TV, a set-top box is therefore required. Subscribers to all-digital systems
who own digital television sets do not necessarily need converter boxes.
Most digital televisions can process digital cable signals, so a digital set
owner typically needs no special equipment to watch broadcast stations via
cable. A set-top box is necessary, however, to receive on-demand
3
programming, pay-per-view, and other such services.
2. Must-Carry.
Section 614(a) of the Communications Act provides that “[e]ach cable
operator shall carry … the signals of local commercial television stations.”
47 U.S.C. § 534(a). The Act imposes a similar requirement for non-
commercial stations. 47 U.S.C. § 535(a). Cable systems with more than 12

2 The cable converter is not the same as the device that converts over-the-
air broadcast signals from digital to analog, so the two cannot be used
interchangeably.
3 The Commission recently authorized digital-only cable operators to
encrypt all of their programming. See Basic Service Tier Encryption, 27 FCC
Rcd 12786 (2012). If a digital cable operator chooses to encrypt the basic
tier, which includes must-carry stations, all of its subscribers must have a set-
top box to decode the signals. That authorization does not apply to hybrid
systems.
8

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channels (which includes almost every system in operation today), must carry
these stations on “up to one-third of the aggregate number of usable activated
4
channels of such system.” 47 U.S.C. § 534(b)(1)(B). “Signals carried in
fulfillment” of the must-carry requirements “shall be provided to every
subscriber of a cable system,” and “[s]uch signals shall be viewable via cable
on all television receivers of a subscriber” that are connected to the system
through connections supplied by the cable operator. 47 U.S.C. § 534(b)(7).
Congress enacted the must-carry requirement in order to counteract a
“competitive imbalance” in market power between cable systems and
broadcast stations. Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622,
633 (1994) (Turner I). By 1992, 60 percent of television households
subscribed to cable, which therefore controlled most viewers’ access to
television programming, including broadcast stations. 1992 Cable Act
§ 2(a)(3). Thus, “[b]y refusing carriage of broadcasters’ signals, cable
operators, as a practical matter, can reduce the number of households that
have access to the broadcasters’ programming, and thereby capture
advertising dollars that would otherwise go to broadcast stations.” Turner I,

4 Not all broadcast stations rely on must-carry to obtain cable carriage.
Some stations are carried under “retransmission consent,” under which the
cable system and the station bargain over the terms of carriage, such as
payment to the station. See 47 U.S.C. § 325.
9

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512 U.S. at 633-634. In the absence of mandatory carriage, “the economic
viability of free local broadcast television and its ability to originate quality
local programming will be seriously jeopardized.” Id. at 634. See 1992
Cable Act §§ 2(a)(13)-(16).
3. The Viewability Order.
In 2007, the Commission issued the Viewability Order to implement
Section 614(b)(7) in light of the then-upcoming digital broadcast transition.
The agency recognized that immediately after the DTV transition there would
“continue to be a large number of cable subscribers with legacy, analog-only
television sets” – 40 percent of all television households – that were
incapable of processing digital signals. Viewability Order ¶1. It also
understood that the cable industry’s own transition to digital would take
“some period of time” beyond the broadcast transition. Id. ¶20.
The Commission accordingly gave cable systems two choices: (1)
convert operations entirely to digital format, which would require that all
subscribers have the necessary equipment to view the signal – either a digital
TV capable of displaying the digital cable signal or a set-top box that will
allow an analog TV to display a digital cable signal; or (2) establish a hybrid
system with mandatory carriage of must-carry stations in an analog format
that could be decoded by analog television sets without additional equipment.
10

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Viewability Order ¶¶18, 20; see 47 C.F.R. § 76.56(d)(3) (2010). Under that
rule, a hybrid system was required to convert digital broadcast signals to
analog format at the head-end and supply analog signals to its customers. An
all-digital system, by contrast, could choose to carry only the digital version
of the broadcast signal, which would be converted to analog format by the
set-top cable box.
The Commission’s approach rested on what it deemed a
“straightforward reading” of section 614(b)(7). The statute directs that the
signals of must-carry stations “shall be viewable,” and the Commission
interpreted that language to mean that “the operators of either all-digital or
mixed digital-analog systems will be responsible … for ensuring that
mandatory carriage stations are actually viewable by all subscribers.”
Viewability Order ¶23.
Although the Commission described its decision to require the
provision of an analog signal as being rooted in the “plain meaning” of the
statute, Viewability Order ¶22, it specified that the viewability rule would by
its own terms expire in three years unless the agency affirmatively extended
the rule. Id. ¶16. “A three-year sunset ensures that both analog and digital
cable subscribers will continue to be able to view the signals of must-carry
stations,” the Commission explained, “and provides the Commission with the
11

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opportunity after the transition [from analog to digital broadcasting] to review
these rules in light of the potential cost and service disruption to consumers,
and the state of technology and the marketplace.” Ibid.
4. The Sunset

Proceeding.

a. Approximately four months before the viewability rule was set to
lapse, the Commission began the promised rulemaking proceeding. Carriage
of Digital Television Broadcast Signals, 27 FCC Rcd 1713 (2012) (Sunset
Notice) (JA 69). The agency did not directly propose either to extend the rule
or to let it expire, but sought information necessary to make that decision.
Such information, the Commission explained, would “provid[e] an
opportunity … to determine whether extending the current rule is necessary
to fulfill th[e] statutory [viewability] mandate, given the current state of
technology and the marketplace.” Id. ¶5 (JA 71). The Commission asked
interested parties to provide “specific information” on topics such as “how
the sunset of the viewability requirement would impact the financial
resources of must carry stations,” “the range of costs per digital [converter]
box, and the range of rental fees” for boxes, and “any marketplace or other
changes” since 2007. Id. ¶¶10, 13, 16 (JA 74, 75, 77).
The Commission noted that in the Viewability Order it had considered
and rejected “possible alternatives,” such as “a rule that would allow [cable
12

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systems] to carry must-carry signals in digital so long as they made [signal
conversion] equipment available for lease or sale to subscribers.” Sunset
Notice ¶14 & n.48 (JA 76). Reviving that alternative as a means to achieve
compliance with the viewability mandate, the agency called for comment on
“proposals that would achieve the results necessary to assure the viewability
of must carry signals through an approach different than that of [the] existing
rule,” including solutions “that will satisfy the statute in a less burdensome
manner.” Id. ¶16 (JA 77).
b. In the Sunset Order, the Commission decided to allow the
viewability rule to expire as originally planned, after a six-month transition
period. Since the original 2007 rule had been adopted, the agency found,
“rapid changes in the marketplace and technology,” including the
proliferation of digital television sets and the widespread availability of
inexpensive digital set-top boxes, made feasible “alternative means by which
must-carry television signals can be made viewable.” Sunset Order ¶1 (JA
297).
The record revealed “marketplace changes that have occurred over the
past five years.” Sunset Order ¶8 (JA 301); accord id. ¶6 (JA 299). In 2007,
roughly half of all television households were analog-only cable subscribers,
id. ¶12 (JA 305), and there were no inexpensive converters available to
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ensure that analog subscribers would have the equipment needed for
viewability, ibid. In those circumstances, “a significant number of cable
customers could lose access to must-carry channels if hybrid systems were
permitted to carry such signals only in digital format.” Ibid.
Today, by contrast, “[t]he state of technology and the marketplace is
significantly different.” Sunset Order ¶13 (JA 305). At the time of the order,
about 20 percent of cable subscribers received analog-only service. The
Commission expected that number to drop below 16 percent by the end of
2012. Ibid. (JA 306). Since cable accounts for about half of all television
households, ibid., analog-only subscribers were expected to make up about 8
percent of the total television audience – down from 40 percent five years
earlier. And that number is falling: the Commission predicted that “the
number of analog cable subscribers is expected to continue to decrease as
more cable customers choose to upgrade to full digital service and as more
hybrid cable systems complete their transition to all-digital systems.” Id. ¶15
(JA 309-310).
Thus, by the end of 2012, analog-only subscribers would constitute at
most only 8 percent (and falling) of the market. Moreover, the Commission
anticipated that some of those households could view must-carry stations
even without the use of additional equipment because many analog-only
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customers have digital television sets: today, 64 percent of all television
viewers have them. Sunset Order n.59 (JA 306). Television sets
manufactured since 2007 have the tuners needed to receive digital cable
signals, ibid., so any analog customer who has bought a new set in at least the
past five years is digital-ready.
Today, technological improvements have simplified device-assisted
viewability for the relatively few remaining analog-only customers without
digital television sets. In 2007, the only signal conversion devices available
were full-featured digital set-top boxes, which were expensive and bulky.
Now, however, “low-functionality/low cost digital [conversion] equipment is
… readily available.” Id. ¶14 (JA 306). As the Commission noted in the
Sunset Order, equipment manufacturers now produce “Digital Transport
Adapters” (DTAs), which are “small, low-cost set-top boxes” that “enable
customers to view digital signals, without having to obtain full-featured
digital set-top boxes.” Ibid. Twenty-seven million DTAs already had been
deployed by the end of 2011, and cable operators collectively serving a large
majority of analog-only customers, pledged to make the devices available at
low cost. Ibid. & nn.65 & 90 (JA 307, 312). Indeed, one large cable
company, Comcast, has made DTAs available free of charge, and another,
Time Warner, offers two years of free usage, after which it charges less than a
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dollar per month. Ibid. (JA 307-308). Such minimal cost, the Commission
determined, “is unlikely to discourage use of this equipment” and thus would
satisfy the viewability requirement. Ibid. (JA 308)
The FCC determined further that the record evidence did not support
the claims of broadcasters that allowing the viewability rule to expire on
schedule would threaten the viability of must-carry stations. Sunset Order
¶15 (JA 308). The Commission explained that this argument improperly
“assumes that elimination of the rule will automatically result in the
broadcaster’s signal being unavailable to all analog subscribers.” Ibid. (JA
309). Instead, the FCC predicted, the availability of DTAs at no cost or low
cost would ensure the continued availability of access to those signals. Ibid.
The Commission acknowledged that its 2007 Viewability Order had
understood Section 614(b)(7) to require viewability of must-carry stations on
analog sets without additional equipment, such as a converter box. Sunset
Order ¶7 (JA 300). On further review in 2012, however, and in light of
dramatically different market conditions, the Commission found the statute
“less definitive than our earlier decision suggested.” Id. ¶8 (JA 300). As the
agency explained, the text of the statute “do[es] not state that a signal is not
‘viewable’ if the consumer needs to use additional equipment,” and does not
“unambiguously require[] that cable subscribers must be capable of viewing
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must-carry signals without the use of additional equipment.” Ibid. (JA 301-
302). Indeed, “[n]othing in the language of the statute plainly prohibits cable
operators from offering equipment to satisfy the viewability requirement”;
rather, the statute does not “state that a signal is not ‘viewable’ if the
consumer needs to use additional equipment.” Ibid.
“Viewable,” the Commission determined, “can reasonably be read to
mean that the [cable] operator must make the broadcast signal available or
accessible to its subscribers by an effective means, which may include
offering the necessary equipment for sale or lease.” Sunset Order ¶8 (JA
301). The Commission specified, however, that the cost to subscribers of
signal conversion equipment would have to be “either … free or at an
affordable cost that does not substantially deter use of the equipment.” Ibid.
The Commission explained that not only did its “reasonable
interpretation of the statutory text … best effectuat[e] the statutory purpose in
light of current marketplace conditions,” but also that the interpretation was
buttressed by “the doctrine of constitutional avoidance.” Sunset Order ¶ 11
(JA 304). As the agency observed, that doctrine counsels against a statutory
interpretation that would impose “a rigid analog-carriage requirement on
cable operators, where the record establishes a reasonable, less burdensome
alternative that meets the statutory objectives.” Ibid. Cognizant of the
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Supreme Court’s recognition that cable operators engage in speech when
deciding which channels to carry, the FCC determined that, unlike the record
before the agency in 2007, “[t]he current record lacks evidence that infringing
on cable operators’ discretion … is necessary to protect the viability of over-
the-air broadcasting where an affordable set-top box option, that will achieve
the same viewability, is readily available to customers.” Sunset Order ¶11
(JA 304).
The Commission deferred the sunset date for six months, until
December 12, 2012, as a “transitional period.” Sunset Order ¶6 (JA 299).
During that period, cable operators will be able to “acquire an adequate
supply of equipment” necessary to supply to analog-only subscribers. Id. ¶17
(JA 311). Cable operators also will have sufficient time to “comply with …
existing [FCC] rules requiring notification to broadcasters and customers
about any planned change in carriage or service and the operator’s equipment
offerings.” Ibid. Specifically, FCC Rule 76.1601, 47 C.F.R. § 76.1601,
requires written a minimum 30-day notice prior to the repositioning of any
station. FCC Rule 76.1603(b), 47 C.F.R. § 76.1603(b), similarly requires a
minimum 30-day notice of any changes in programming services. See Sunset
Order n.89 (JA 311). If a broadcaster believes that a cable operator is not
complying with the viewability requirement, it may file a complaint pursuant
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to 47 C.F.R. § 76.61. See Sunset Order ¶18 (JA 313). The Commission also
observed that it would “consider informal consumer complaints.” Ibid. If it
receives multiple complaints “that an operator is not effectively making
affordable set-top boxes available to customers,” the Commission noted, “one
of the possible remedies would be to require the operator to resume analog
carriage of the channel.” Ibid.
5. Subsequent Proceedings.
On August 1, 2012, petitioners asked the Commission to stay the
Sunset Order. The Commission’s Media Bureau denied the stay on August
24. Stay Order, 27 FCC Rcd 10217 (MB 2012). Petitioners then asked this
Court to stay the Sunset Order. By order of September 24, 2012, the Court
denied the stay. As a result, the viewability rule sunset on December 12,
2012.
Petitioners now ask the Court to reverse the Sunset Order and reinstate
the requirement that hybrid systems provide the signals of must-carry stations
in analog format.

SUMMARY OF ARGUMENT


Five years ago, when the Commission adopted the requirement that
hybrid cable systems provide the signals of must-carry stations in analog
format, forty percent of all television viewers were analog-only cable
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subscribers, and no inexpensive signal conversion devices were commercially
available. The loss of a major portion of their audience would have
threatened the economic viability of stations that the must-carry statute is
designed to protect.
Today, the situation is very different. All television sets sold during
the past five years can process digital cable signals, and many cable systems
have converted to all-digital operation. As a result, by the end of 2012, a
predicted 8 percent of television viewers – one-fifth of the 2007 figure – will
be analog-only cable subscribers. That percentage is expected to continue to
fall as more systems convert to all-digital and more people buy new
television sets. At the same time, inexpensive new signal conversion devices
have become widely available, and cable operators serving the majority of
analog-only customers have pledged to make the devices available either free
of charge or at nominal cost.
On that record, the Commission reasonably determined that there was
no longer a threat to the viability of must-carry stations that justified the
burden on cable-operator speech imposed by an analog carriage requirement.
Taking account of the significant technological changes in the marketplace
since 2007, the Commission re-interpreted Section 614(b)(7), and reasonably
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determined that cable operators could satisfy the viewability requirement by
making signal conversion devices available for at most a nominal charge.
1. The Commission’s interpretation of Section 614(b)(7) is consistent
with the text, structure, and purposes of that provision. The statute provides
only that must-carry stations must be “viewable,” a term that the Commission
reasonably understood to mean “capable of being seen.” The statute says
nothing about whether cable subscribers must be able to view must-carry
stations without the use of additional equipment, such as a signal converter –
and petitioner NAB itself advised the Commission that the statute could be
satisfied with the use of DTAs. “Viewable” thus can be reasonably construed
to mean making the signal accessible by an effective means, which includes
an inexpensive signal converter. That interpretation is supported by other
provisions in the Cable Act and FCC precedent reflecting the understanding
that set-top boxes are often required to watch must-carry stations. Indeed,
petitioners themselves support conversion of hybrid systems to all-digital
systems, which require the use of a set-top box.
The Commission’s approach is also consistent with the structure of
Section 614(b)(7). The second and third sentences of the statute address
different situations and perform distinctive functions. The second sentence –
which contains the viewability requirement that applies only to must-carry
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stations – applies only to subscribers who are “connected to a cable system by
a cable operator or for which a cable operator provides a connection.” 47
U.S.C. § 534(b)(7). By contrast, the third sentence, which applies more
broadly to “all broadcast stations,” requires cable operators to offer or sell
converter boxes to subscribers to whom the operator “does not provide”
additional receiver connections or “the equipment and materials for such
connections.” Ibid. (emphasis added). Thus, the third sentence ensures that
cable operators may not simply refuse necessary equipment to customers who
choose to install their own connections, a function not addressed by the
second sentence. Moreover, the required price for boxes supplied under the
second sentence to satisfy the viewability requirement – free or nominal –
may be less than the price for boxes supplied under the third sentence, which
can be based on the cost of the equipment.
2. The Commission’s revised interpretation of Section 614(b)(7) was
also reasonable. Must-carry is intended to protect the economic viability of
local broadcast stations, and the Commission reasonably predicted that
allowing the analog carriage requirement to sunset, as planned, would not
undermine the must-carry regime. The Commission properly balanced the
insubstantial benefits of continued mandatory analog carriage against the
burdens such carriage imposed on the First Amendment rights of cable
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operators. In light of the fact that a single analog channel takes up the same
bandwidth as 12 digital channels, the Commission reasonably concluded that
the burden of mandatory analog carriage is not constitutionally justified given
the diminishing threat to must-carry stations and the widespread availability
of inexpensive signal conversion equipment.
3. The Commission properly revisited its interpretation of Section
614(b)(7). Statutory interpretations are not carved in stone; otherwise,
agencies would be powerless to respond to rapid changes in technology.
Here, the Commission explained at length the changes in the market that
justified a revised interpretation of the viewability provision. It also
explained the basis for its predictive judgment that sunset of the analog
carriage requirement would not adversely affect the viability of must-carry
stations.
Petitioners raise a host of arguments claiming that the Commission
acted arbitrarily, but each lacks merit. Substantial record evidence showed
that signal converters are now available at minimal prices. And the agency
had good reason to adopt a six-month transition period after the viewability
rule was scheduled to expire.
4. Finally, the Commission provided reasonable notice that it would
consider a device-based viewability approach. By its own terms, the analog
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carriage requirement was scheduled to expire in three years; subject to the
six-month transition period, the Commission let it do so as planned. Thus,
parties had ample notice of the impending sunset. If any additional notice of
device-based viewability was required, it was supplied. The Commission
asked for comment on whether extending the current rule was necessary
given the current state of technology,” Sunset Notice ¶5 (JA 71), and
specifically sought data on “the range of costs per digital converter box, and
the range of rental fees” for boxes, id. ¶¶10, 12 (JA 74, 75). Device-based
viewability was thus squarely raised, as demonstrated by comments filed with
the agency on that very subject.

STANDARD OF REVIEW

Petitioners contend principally that the Commission misread 47 U.S.C.
§ 534(b)(7). “Chevron’s familiar framework applies.” NCTA v. FCC, 567
F.3d 659, 663 (D.C. Cir. 2009), citing Chevron U.S.A., Inc. v. NRDC, 467
U.S. 837, 842–843 (1984). The Court must first determine “if the statute
unambiguously forecloses the agency’s interpretation.” NCTA, 567 F.3d at
663. If so, the Court will “give effect to the unambiguously expressed intent
of Congress.” Chevron, 467 U.S. at 843. If Congress has not “directly
spoken to the precise question at issue,” id. at 842, the Court will defer to the
agency’s interpretation of an ambiguous provision “so long as it is
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reasonable.” NCTA, 567 F.3d at 663. Deference applies equally when an
agency changes its interpretation of a statute. Chevron, 467 U.S. at 863-864.
Petitioners also contend that allowing the viewability rule to sunset as
planned was not the product of reasoned decision-making. Under 5 U.S.C.
§ 706(2)(A), the Court may reverse a Commission order “only if it is
“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.” Ibid. The Court’s review is “necessarily deferential.” Consumer
Electronics Ass’n v. FCC, 347 F.3d 291, 300 (D.C. Cir. 2003). The Court
will “presume the validity of the Commission’s action and will not intervene
unless the Commission failed to consider relevant factors or made a manifest
error in judgment.” Ibid.
To the degree this case turns on the adequacy of the rulemaking record,
the question is whether the Commission’s judgments were supported by
substantial evidence. 5 U.S.C. § 706(2)(E). That standard requires only that
the record contain “such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.” AT&T Corp. v. FCC, 86 F.3d 242, 247
(D.C. Cir. 1996).
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ARGUMENT

I.

THE COMMISSION’S READING OF THE VIEWABILITY
REQUIREMENT IS CONSISTENT WITH THE STATUTE
AND WITHIN THE AGENCY’S INTERPRETIVE
DISCRETION UNDER CHEVRON

.

A. The Commission’s Interpretation Is Consistent With The

Statutory Language.

1. The viewability requirement of Section 614(b)(7) states in its
entirety: “Such [must-carry] signals shall be viewable via cable on all
television receivers of a subscriber which are connected to a cable system by
a cable operator or for which a cable operator provides a connection.” 47
U.S.C. § 534(b)(7). The ordinary meaning of “viewable” is simply “capable
of being seen.” Sunset Order ¶8 (JA 301) (emphasis added), quoting
Webster’s Third New International Dictionary 2551 (1993).
As the Commission explained, the statute “do[es] not state that a signal
is not ‘viewable’ if the consumer needs to use additional equipment,” nor
does it “unambiguously require[] that cable subscribers must be capable of
viewing must-carry signals without the use of additional equipment.” Sunset
Order ¶8 (JA 301). Congress thus did not address the “precise” question at
issue in petitioners’ claim that the statute plainly forbids the requirement of a
signal conversion device. Chevron, 467 U.S. at 842. That legislative silence
renders the statute ambiguous. See Texas Mun. Power Agency v. EPA, 89
F.3d 858, 869 (D.C. Cir. 1996).
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Consistent with the statutory text, the Commission determined that
must-carry signals are “viewable” – capable of being seen – on analog
televisions when a viewer uses a device provided by the cable system at a
nominal charge to convert digital signals into an analog format. “Viewable,”
in other words, reasonably can be read “to mean that the [cable] operator
must make the broadcast signal available or accessible to its subscribers by an
effective means.” Sunset Order ¶8 (JA 301) (emphasis added). Section
614(b)(7) thus is satisfied when a cable operator “offer[s] the necessary
equipment for sale or lease, either for free or at an affordable cost that does
not substantially deter use of the equipment.” Ibid. If the price of the
equipment is sufficiently low not to deter usage, the equipment is an effective
means of achieving viewability.
Before the Commission, petitioner NAB agreed with that reading of the
statute. It informed the agency of its view that cable operators could,
“without controverting the plain language or intent of Section 614(b)(7),”
comply with the viewability requirement by providing signal conversion
equipment free of charge. NAB May 23, 2012 ex parte (JA 218); see Sunset
Order ¶8 & n.33 (JA 301). The language of the statute draws no distinction
between a set-top box supplied free of charge and one supplied for a nominal
fee.
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NAB now tries to change its tune, claiming that the only permissible
reading of Section 614(b)(7) is that “must-carry signals be viewable without
added equipment.” Br. 25, 30. A regime that requires a converter box, it
says, violates the unambiguous language of the statute. But, as NAB
recognized previously, the statute says nothing about the use of equipment
provided by the cable system; it requires only that the signal be viewable.
Although NAB attempts to disavow its earlier position, Br. 38-39 n.11, the
admission that the statute could be fulfilled through conversion equipment
refutes a claim that any “equipment-based solution” to viewability, ibid.,
necessarily violates the only permissible reading of the statute.
NAB’s new position is also inconsistent with its recognition that cable
systems may lawfully switch to all-digital service. Br. 46. Subscribers to all-
digital cable systems who have analog television sets must obtain either a set-
top box with a signal converter or an entirely new television set to view must-
carry stations. Petitioners do not claim that the necessity of a conversion
device in that situation is inconsistent with Section 614(b)(7).
Indeed, Section 614(b)(7) itself refutes the idea that the statute
unambiguously forbids a device-based approach to viewability. Congress
recognized that some stations “cannot be viewed via cable without a
converter box” and required cable systems to “offer to sell or lease … a
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converter box” to subscribers that install their own wiring. 47 U.S.C.
§ 534(b)(7) (we discuss that provision at pages 31-34 below in a different
context). Congress understood that many signals, including must-carry
signals, would not be viewable in the absence of the additional equipment.
Congress expressed the same understanding in Section 623(b)(3)(A), which
regulates the price cable companies can charge for “installation and lease of
the equipment used by subscribers to receive the basic tier, including a
converter box.” 47 U.S.C. § 543(b)(3)(A).
The legislative history similarly demonstrates that Congress recognized
that a set-top box would often be required to view must-carry stations. The
Senate Report expressed concern that stations located above channel 13 “are
not viewable on cable-connected sets that are not ‘cable ready.’” S. Rep. No.
102-92 at 44 (1991). The House Report explained similarly that in many
places “television sets connected to the cable do not have converter boxes”
and that stations located above channel 13 “are not viewable via cable on
these television sets.” H.R. Rep. No. 102-628 at 55 (1992). Thus, far from
intending to prohibit viewability via added equipment, Congress recognized
at the time of the 1992 Cable Act that viewability could be achieved in many
instances only with the use of a set-top box.
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The Commission has long recognized that signal conversion devices
may be necessary to make cable television signals viewable. In 1994, the
Commission faced the situation where “a converter box supplied by a cable
operator does not contain the necessary channel capacity to permit a
subscriber to access a UHF must-carry signal through the converter.” It ruled
that “converter boxes must be capable of passing through all of the signals
entitled to carriage on the basic service tier of the cable system, not just some
of them.” Implementation of the Cable Television Consumer Protection and
Competition Act of 1992, 9 FCC Rcd 6723 ¶16 (1994); see Sunset Order n.31
(JA 301). Additional equipment plainly was necessary to view must-carry
stations.
The understanding expressed by Congress, the Commission, and NAB
(before its change of heart) that viewability can be satisfied by signal
conversion equipment is based soundly on the nature of television reception.
Both broadcast and cable signals are transmitted electromagnetic waves; they
are never “viewable” without conversion to a picture at some point. In some
television sets, the conversion takes place inside the set itself, by the installed
tuner. Other sets do not have internal tuners capable of processing the
available signals, which therefore must be converted externally by a set-top
box. In every instance, however, a signal conversion device of some sort is
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required. See generally, Simon Haykin, Communications Systems 2 (4th Ed.
2001).
Petitioners argue that the statute’s use of the word “shall” in the phrase
“shall be viewable” mandates that every subscriber have the capability to
convert signals and disallows a regime that gives cable customers the option
to obtain a converter. Br. 21. But that claim begs the question of what
“viewable” means. Petitioners’ argument that “viewable” means “actually
viewable” (Br. 21) is no more illuminating. As set forth above, the
Commission reasonably determined that providing cable subscribers with an
effective and affordable option to view signals makes must-carry stations
viewable within the meaning of the statute. That is all Congress required.
2. Petitioners next contend that the Commission’s interpretation of
“viewable” is invalid because it “renders the distinction between the second
and third sentences of Section 614(b)(7) meaningless.” Br. 22. The second
and third sentences read:
[Must-carry] signals shall be viewable via cable on all
television receivers of a subscriber which are connected to
a cable system by a cable operator or for which a cable
operator provides a connection. If a cable operator
authorizes subscribers to install additional receiver
connections, but does not provide the subscriber with such
connections, or with the equipment and materials for such
connections, the operator shall notify such subscribers of all
broadcast stations carried on the cable system which cannot
be viewed via cable without a converter box and shall offer
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to sell or lease such a converter box to such subscribers at
rates in accordance with section 543(b)(3) of this title.

47 U.S.C. § 534(b)(7).
Petitioners assert that the third sentence’s allowance of an “offer to sell
or lease” a converter demonstrates that the second sentence disallows the
Commission from allowing cable operators to satisfy the viewability mandate
by offering a converter at a nominal charge. Br. 22.
The Commission acted reasonably in rejecting that reading of the
statute. The substantial differences between the second and third sentences of
Section 614(b)(7) show that the two provisions address different
circumstances; they are, the agency explained, “distinct mandates” that apply
to different situations. Sunset Order ¶9 (JA 303).
Specifically, the second sentence requires that must-carry stations be
viewable when “a cable operator provides a connection” to the customer’s
television set. 47 U.S.C. § 534(b)(7). The third sentence, by contrast, comes
into play “in [the] more limited situation,” Sunset Order ¶9 (JA 303), when
the customer himself “install[s] additional receiver connections” using his
own “equipment and materials.” In that situation, the cable operator must
notify the customer “of all broadcast stations” that cannot be viewed without
a converter box “and shall offer to sell or lease such a converter box … at
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rates in accordance with” FCC rate regulations. 47 U.S.C. § 534(b)(7)
(emphasis added).
Thus, as the Commission recognized, the two provisions address
entirely different situations. The second sentence establishes a viewability
requirement only for must-carry stations when the cable operator provides the
customer’s connection – for example, to the customer’s main television set in
the living room. The third sentence, by contrast, applies to all broadcast
stations, and only when the customer provides his own connection by, for
example, purchasing the necessary hardware and running his own line to a
bedroom with an extra television set. By requiring the cable operator to offer
a signal converter in that situation, the third sentence ensures that the cable
operator may not refuse necessary equipment and divest itself of all
viewability obligations; instead, it must offer to make a converter box
available.
Furthermore, the Commission interpreted the second sentence to allow
cable operators to ensure viewability of must-carry stations by making a
signal converter available “at no cost or an affordable cost,” Sunset Order ¶9
(JA 303). By contrast, the third sentence requires cable operators “in a more
limited situation, to offer to sell or lease converter boxes … at regulated
rates” under 47 U.S.C. § 543(b)(3). Sunset Order ¶9 (JA 303) (emphasis
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added). In other words, the statutory text does not preclude the cable operator
from charging more for set-top boxes offered under the third sentence than
for DTAs offered under the second.
Petitioners are thus wrong that the Commission has “render[ed] the
distinction between the second and third sentences … meaningless.” Br. 22.
As explained, the two sentences address different situations and retain
different functions and purposes. Petitioners’ argument fails because it does
not come to grips with the substantial differences between the two provisions.
3. Petitioners argue that a Senate Report described the second and
third sentences of the statute to mean that giving subscribers an option to
obtain a conversion box would not satisfy the second sentence. Br. 23, citing
S. Rep. No. 102-92 at 86. That is wrong because the cited passage simply
paraphrases the two sentences of the statute. It does not state the proposition
5
for which petitioners cite it. Thus, petitioners’ argument is identical to its
claim, addressed immediately above, that the Commission’s interpretation of

5 The Senate Report states: “If the cable operator installs wires for
connection to a television set or provides materials to connect a television set
to the cable system, it must ensure that all must-carry signals can be viewed
on that set. If, however, the cable system authorizes subscribers to connect
additional receivers, but neither provides the connections nor the equipment
or material needed for such connections, its only obligation is to notify
subscribers of any broadcast stations carried on the cable system which
cannot be viewed via cable without a converter box, and to offer to sell or
lease such a converter at reasonable rates.” S. Rep. No. 102-92 at 86.
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the second sentence renders the third sentence meaningless. It fails for the
same reason.
Petitioners’ assertion that the Senate Report states that Section
614(b)(7) was “intended to prevent cable operators from carrying local
broadcast signals ‘on a channel … that subscribers cannot view without
added equipment’” is groundless. Br. 23-24, quoting S. Rep. No. 102-92 at
45. That part of the Report discusses a number of factors that can influence
“[h]ow a cable operator’s market power will be exercised” over a broadcast
station. S. Rep. No. 102-92 at 45. The factors are phrased in the form of
illustrative questions, one of which is: “Will the station be located on … a
channel location that subscribers … cannot view without added equipment?”
Ibid. Taking that statement wholly out of context, petitioners claim that the
Report expresses a congressional intention to forbid any requirement that
additional equipment may be offered. It says nothing of the sort. In fact, on
the prior page of the same Report, the Senate recognized that more than 40
percent of television sets in the country at the time were not “cable ready”
and could not receive UHF channels on cable without a conversion device. S.
Rep. No. 102-92 at 44.
Petitioners similarly are not helped by a statement in a House Report
that the general policy favoring “competition in the video marketplace will be
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threatened if cable systems have unfettered discretion” to carry must-carry
stations “in a disadvantageous manner.” Br. 24, citing H.R. Rep. No. 102-
628 at 51. That statement does not address device-based viewability and thus
is not relevant to petitioners’ plain meaning argument. Moreover, petitioners’
reliance on the statement rests on the assumption that device-based
viewability will materially impede the competitive viability of must-carry
stations, a position that the Commission reasonably rejected. See Sunset
Order ¶15 (JA 309); pp. 38-39, infra.
Petitioners’ argument also is not advanced by the fact that, in enacting
the 1992 Cable Act, Congress rejected a proposal to use an “A/B input
selector” approach – i.e., a physical switch between cable and over-the-air
viewing. The A/B switch was rejected as an alternative to any form of must-
carry obligation – not as a means of ensuring viewability. See Turner
Broadcasting System, Inc. v. FCC, 520 U.S. 180, 220 (1997) (Turner II).
More to the point, as the Commission explained, the A/B switch suffered
from “numerous technical problems” that do not exist here. Sunset Order
n.77 (JA 309); see also Turner II, 520 U.S. at 220; Viewability Order, 22
FCC Rcd at 21090 ¶53. Petitioners have failed to refute (or even
acknowledge) the Commission’s discussion of this issue. In short, Congress’
rejection of the flawed A/B switch as an alternative to must-carry does not
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mean that Congress rejected any “equipment-based solution to viewability.”
Br. 24.
Also without merit is petitioners’ claim (Br. 27-30) that the Sunset
Order violates Section 614(b)(4)(A), entitled “Nondegradation; technical
specifications,” which requires that “the quality of signal processing and
carriage provided [for must-carry stations] … will be no less than that
provided by the system for carriage of any other type of signal.” 47 U.S.C.
§ 534(b)(4)(A).
As the Commission explained, that provision “speaks specifically to
the issue of ‘nondegradation’ and ‘technical specifications,’ and does not
address the issue of viewability.” Sunset Order ¶10 (JA 303). If the statute
applied at all, the Commission held, “carrying must-carry signals only in a
digital format would [not] violate the terms of 614(b)(4)(A)” because both
digital and analog signals have the same quality of signal processing. Sunset
Order ¶10 (JA 303). Moreover, the record did not show that digital carriage
would degrade the signal. Ibid. Petitioners read “quality” to mean identical
treatment in all respects, Br. 29, but they provide no basis for such an
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6
assertion. The statutory text refers to “quality of signal processing,” 47
U.S.C. § 534(b)(4)(A), and petitioners offer no sound reason for rejecting the
views of the expert agency regarding the meaning of that term.
In sum, petitioners have failed to show that the Commission’s reading
of the statute is unambiguously foreclosed by its text. See Cablevision
Systems Corp. v. FCC, 649 F.3d 695, 704 (D.C. Cir. 2011) (deferring to
FCC’s reasonable construction of the Communications Act “if Congress has
not unambiguously foreclosed the agency’s construction”).

B. The Commission’s Interpretation Was Reasonable.

1. The Commission “offered a reasoned explanation for why it chose
[its] interpretation” of Section 614(b)(7). Village of Barrington v. STB, 636
F.3d 650, 660 (D.C. Cir. 2011). The purpose of the must-carry regime and its
viewability component is to protect against “significant numbers of broadcast
stations … deteriorat[ing] to a substantial degree or fail[ing] altogether” if a
lack of cable-based audience eroded stations’ financial viability. Turner II,

6 In support of the proposition that DTAs provide a “bad quality” signal,
petitioners rely on a website (http://www.bocsco. com/comcast_dta.php)
operated by a company whose products compete with DTAs. Br. 30, citing
NAB ex parte of June 8, 2012 (JA 281). It is clear from the context that the
website’s evaluation of “bad quality” is based on a comparison with the high-
definition output available using a full-function digital cable box, not with a
standard definition signal. The Commission has determined that an analog
signal converted from a digital signal has the same quality as a standard
definition digital signal. Viewability Order, 22 FCC Rcd at 21069 ¶13.
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520 U.S. at 191-192; see id. at 197 (must-carry serves the purpose of
“broadcasters’ economic viability”); see id. at 193 (Congress’s purpose was
“to prevent any significant reduction in the multiplicity of broadcast
programming sources”); Viewability Order, 22 FCC Rcd at 21092 ¶55 (must-
carry intended to prevent harm of “stations deteriorat[ing] or ceas[ing] to
exist”).
The Commission found that the record showed no likelihood of such
harm in the absence of mandatory analog carriage. By the end of 2012, more
than 90 percent of television households are expected to have access to digital
must-carry signals in the same manner as all other channels they receive,
without the use of any additional equipment. The remaining 8 percent –
dwindling in number – will either have television sets capable of displaying
digital signals or the opportunity to obtain signal converters, which will be
available “at little or no additional expense.” Sunset Order ¶15 (JA 309-310).
On that record, the Commission reasonably predicted that sunset of the
viewability rule would not “threaten the viability of must-carry stations.”
Sunset Order ¶15 (JA 308).
The Commission also properly took account of the changing
technology of video distribution. Broadcast television has already switched
to digital format – and every over-the-air viewer with an analog television has
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had to obtain and install a converter box (or get a new television set) in order
to continue to receive signals – while cable is in the transition process.
Because an analog signal requires the same amount of bandwidth as 10 to 12
standard definition digital signals and up to 3 high definition digital signals,
Sunset Order ¶16 (JA 310), analog carriage imposes significant costs on
cable operators. In the Sunset Order, the Commission properly found that
those costs – which ultimately result in less programming choice for
consumers – outweighed the minimal risk of harm to must-carry stations.
The Commission properly considered the costs and benefits of the
viewability rule. The Supreme Court established in the Turner cases that
cable operators “transmit speech” through “exercising editorial discretion
over which stations or programs to include in [their] repertoire.” Turner I,
512 U.S. at 636. Restrictions on cable operator choice of programming thus
are subject to intermediate scrutiny under the First Amendment. Under that
standard, the Commission must consider whether the rule “burden[s]
substantially more speech than necessary to further” the governmental
interests at stake. Turner II, 520 U.S. at 189. Intermediate scrutiny does not
require the least restrictive means of carrying out the government’s interests,
Turner I, 512 U.S. at 662, but the FCC reasonably determined that
constitutional concerns counseled against continued adherence to a “rigid
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analog-carriage requirement … where the record establishes a reasonable,
less burdensome alternative that meets the statutory objectives.” Sunset
Order ¶11 (JA 304), citing Frisby v. Schultz, 487 U.S. 474, 483 (1988).
Especially in light of intervening technological changes, the
Commission had good reason to emphasize the burden imposed by the 2007
viewability rule on cable operators’ First Amendment rights. As a practical
matter, that rule required that cable systems carry signals in both analog and
digital format. Sunset Order ¶11 (JA 304). The “signal degradation”
provision, 47 U.S.C. § 534(b)(4)(A), requires that the “quality of signal
processing and carriage” for must-carry stations be no less than that for other
signals. That provision therefore requires cable systems to carry broadcast
signals in high-definition when they are transmitted in that format. Because
the viewability rule required analog carriage, cable systems had been required
to carry both analog and high-definition versions of the same signal. That
burden, the Commission determined, “is not justified on the current record.”
Sunset Order ¶11 (JA 304). The burden is particularly significant because as
many as 12 digital stations can be carried in the bandwidth required by a
single analog station. Id. ¶16 (JA 310). In light of those constitutional
concerns, petitioners are flatly wrong in contending that the burden on cable
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operators is “a factor entitled to no weight in the analysis.” Br. 17; see Br.
35.
Though the constitutional dimensions of viewability were expressly
relied on by the Commission, petitioners fail to address them anywhere in
their brief. As a result, petitioners have waived any objection to the
Commission’s constitutional analysis and should not be heard about the
matter on reply. See Cablevision Sys. Corp., 649 F.3d at 719 (“because
petitioners first raised this argument in their reply brief, we treat it as
forfeited.”) (citation omitted).
2. Petitioners nevertheless challenge (Br. 25-27) the Commission’s
prediction that the sunset of the viewability rule will not “threaten the
viability” of must-carry stations, Sunset Order n.52 (JA 304), and is thus fully
consistent with the must-carry regime. Petitioners’ claim to the contrary
assumes that no analog-only subscriber will obtain and install a signal
converter, even though substantial evidence showed that such converters are
inexpensive and widely available. The Commission reasonably rejected
petitioners’ assumption about the future use of such equipment. Sunset Order
¶15 (JA 309). When an agency must predict uncertain future events, “a
forecast of the direction in which future public interest lies necessarily
involves deductions based on the expert knowledge of the agency,” and the
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Court will defer to the agency’s reasonable judgment. Melcher v. FCC, 134
F.3d 1143, 1151 (D.C. Cir. 1998) (citation omitted).
The Commission’s determination that the basic viability of must-carry
stations is not threatened when they retain access to at least 92 percent of
their audience was a classic line-drawing exercise. The Commission has
“wide discretion to determine where to draw administrative lines,” AT&T
Corp. v. FCC, 220 F.3d 607, 627 (D.C. Cir. 2000), and the Court is generally
“unwilling to review line-drawing performed by the Commission unless a
petitioner can demonstrate that lines drawn ... are patently unreasonable,
having no relationship to the underlying regulatory problem.” Home Box
Office, Inc. v. FCC, 567 F.2d 9, 60 (D.C. Cir. 1977) (en banc). The line-
drawing was especially reasonable given the Commission’s finding that the
minimal threat to viability did not justify a more burdensome analog carriage
requirement under the First Amendment. See pp. 40-41, supra.
Finally, petitioners are wrong in suggesting that the must-carry statute
was intended to place must-carry stations “on equal footing with other signals
and channels,” which the Sunset Order allegedly does not do. Br. 31-32.
Petitioners point to no language in the must-carry statute that establishes such
a non-discrimination regime. Had Congress intended such an approach, it
would have so indicated explicitly, as it did, for example, with respect to
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satellite-based television service. See 47 U.S.C. § 338(d) (satellite video
distributors must “provide access to [television] stations’ signals at a
nondiscriminatory price and in a nondiscriminatory manner”).

II.

THE COMMISSION ACTED CONSISTENTLY WITH
THE APA IN ADOPTING THE SUNSET ORDER

.

A. The Commission Properly Revised Its Interpretation Of

Section 614(b)(7).

In the Viewability Order, the Commission determined that the “plain
meaning of the statutory text” would not be satisfied by an “offer to sell or
lease” a converter box to an analog-only cable subscriber. 22 FCC Rcd at
21073 ¶22. In the Sunset Order, the Commission acknowledged that, “upon
further review of the statute,” the key term “viewable” was ambiguous.
Sunset Order ¶8 (JA 300). That word could “reasonably be read to mean that
the operator must make the broadcast signal available or accessible to its
subscribers by an effective means, which may include offering the necessary
equipment for sale or lease, either for free or at an affordable cost that does
not substantially deter use of the equipment.” Ibid. (JA 301). Petitioners
claim that the Commission erred in changing its reading of the statute. Br.
35-38.
An agency’s initial reading of a statute is not “carved in stone;” rather,
it is entirely proper for the agency to “consider varying interpretations and the
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wisdom of its policy on a continuing basis.” Chevron, 467 U.S. at 863-864;
accord FCC v. Fox Television Stations, Inc., 556 U.S. 502, 514-515 (2009).
Chevron deference thus applies to an agency’s interpretation of a statute it
administers even if the agency had previously interpreted the statute
differently. NCTA v. Brand X Internet Services, 545 U.S. 967, 981-982
(2005). For that reason, petitioner’s assertion, Br. 38, that “nothing in the
language of Section 614 has changed” since 2007 misses the mark.
Petitioners claim (Br. 38) that the Commission “depart[ed] from its
settled precedent absent reasoned explanation” fares no better. The
Commission acknowledged expressly that it was changing its interpretation
of the statute and explained at length why it was doing so. Faced with two
plausible definitions of the term “viewable,” the Commission adopted a
device-based interpretation in light of “dramatic changes in technology and
the marketplace” that had taken place since the Viewability Order had been
issued. Sunset Order ¶11 (JA 304). Specifically, in 2007 nearly half of all
television households received analog-only cable service, and mandatory
analog carriage was “a reasonable measure to ensure that must-carry signals
were ‘viewable,’” id. ¶12 (JA 305). Today, by contrast, only about 8 percent
are analog-only customers. See pp. 13-14, supra; Sunset Order ¶¶12-13 (JA
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305-306). The importance of the analog-only cable subscriber to must-carry
stations today is a fraction of what it was five years ago.
The need for viewability without a conversion device is lessened
considerably by the ready availability of “low-functionality/low cost” signal
conversion equipment, which did not exist in 2007. Id. ¶14 (JA 306). Cable
operators have made the converters – 27 million of which are currently in use
– available either free of charge or for a nominal fee. Ibid. (JA 307-308).
Such a minimal cost, the Commission predicted, “is unlikely to discourage
use of this equipment.” Ibid. (JA 308).
The “dramatic changes in technology and the marketplace” also altered
the constitutional calculus and weighed in favor of eliminating the mandatory
analog carriage rule. Id. ¶11 (JA 304). The agency reasonably concluded
that, to the extent new technology and marketplace developments permitted a
less burdensome alternative to the requirement set forth in 2007, that less
speech-restrictive alternative was preferable so long as it was consistent with
the text and purposes of the statute. See pp. 40-41, supra.
In the 2007 Viewability Order, moreover, the Commission explicitly
foreshadowed that the agency might change its application of Section
614(b)(7). The Commission set the viewability rule to expire in three years,
stating that it would review the rule “in light of the potential cost and service
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disruption to consumers, and the state of technology and the marketplace.”
Viewability Order ¶16. Upon consideration of those very factors five years
later, the Commission chose a different approach, based on a revised
interpretation of the statute. The Commission thus advanced a reasoned
explanation of the changes in marketplace conditions and technology that led
it to allow the viewability rule to sunset as originally planned.

B. The Commission Properly Considered The Record.

Petitioners allege that the FCC “failed to examine the relevant data” or
to set forth a rational basis for its decision. Br. 42. Not so.
The Administrative Procedure Act requires that an agency “examine
the relevant data and articulate a satisfactory explanation for its action.”
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983). The Commission did just that. The agency acknowledged that sunset
of the viewability rule could affect the 8 percent (and falling) of television
households that continue to receive analog-only service. Sunset Order ¶15
(JA 309-310). It concluded, however, that sunset of the rule would not
adversely affect the economic viability of must-carry stations. Ibid. As set
forth above, the FCC explained that the relatively small number of affected
customers, the availability of simple and affordable signal conversion
devices, and the probability that some analog-only customers already own
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digital television sets would ensure an adequate viewership. The
Commission also explained that in light of changes in the marketplace and
technology, constitutional considerations weighed against any decision to
perpetuate the significant burdens of a dual carriage requirement. See pp. 45-
46, supra.
Petitioners identify no specific record data that the Commission did not
consider. They rely on an ex parte letter submitted by NAB claiming that
must-carry stations would suffer “severe economic consequences,” Br. 40-41,
but that is a conclusion, not evidence. The other “evidence” relied on by
petitioners (Br. 41) similarly amounts to speculation about cable subscribers’
willingness to employ conversion boxes. The Commission expressly
considered such submissions and rejected them. It concluded that NAB’s
claims of harm rested upon the unwarranted assumption that no analog-only
subscribers would acquire a signal conversion device. Sunset Order n.52 (JA
304). Instead, the Commission reasonably predicted that cable customers
would not be deterred by the need to obtain such widely available and
inexpensive equipment. Id. ¶14 (JA 306-308).
Petitioners do not challenge, or even acknowledge, those findings,
which refute their claim that the Commission failed to consider the evidence
presented. See Thompson Med. Co. v. FTC, 791 F.2d 189, 196 (D.C. Cir.
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1986) (Court’s role “is not to reweigh the evidence de novo,” but simply “to
determine if the Commission’s finding is supported by substantial evidence
on the record as a whole.”). Petitioners also fail once again to confront the
Commission’s determination that the constitutional implications of the
viewability rule outweighed any minimal adverse impact on must-carry
stations. See pp. 40-41, supra.
At bottom, petitioners’ argument reduces to a request that the Court
accept their predictions about the effect of the viewability rule sunset rather
than the FCC’s predictions. But the Court has recognized that it “will not
substitute [its] judgment for the agency’s, especially when, as here, the
decision under review requires expert policy judgment of a technical,
complex, and dynamic subject.” Cablevision Systems Corp. v. FCC, 597
F.3d 1306, 1311 (D.C. Cir. 2010). That is particularly so when the matter
turns on judgments of future consumer behavior. In that situation, the Court
accords “substantial deference” to the FCC’s predictive judgments.
Cablevision Systems Corp., 649 F.3d at 716, citing Nuvio Corp. v. FCC, 473
F.3d 302, 306 (D.C. Cir. 2006); see Int’l Ladies’ Garment Workers’ Union v.
Donovan, 722 F.2d 795, 821 (D.C. Cir. 1983) (“predictive judgments about
areas that are within the agency’s field of discretion and expertise” are
entitled to “particularly deferential” treatment).
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C. The Commission Reasonably Concluded That

Conversion Devices Are Available.

Petitioners claim that the record fails to support the Commission’s
finding that digital transport adapters would be available at affordable rates.
Br. 42-44. They raise three specific claims, all of which are baseless.
First, petitioners claim that the record showed that cable companies
were charging up to $7.00 per month for DTAs, not $2.00 per month or less
as determined by the agency. Br. 43 (citing a pleading filed by the National
Cable & Telecommunications Association). In fact, the pleading says
nothing of the sort. Supporting the Commission’s conclusion, NCTA
informed the agency that many cable companies “are already providing
digital transport adapters (DTAs) to some or all of their customers at minimal
or no cost.” NCTA April 26, 2012 ex parte at 2 (JA 188). NCTA then
indicated that “other types of affordable digital set-top boxes” – i.e., not
DTAs – were being made available for prices between one and seven dollars
per month, “depending on the particular cable operator and the box
capabilities.” Id. at 2 & n.6 (JA 188) (emphasis added). The letter supports
the Commission’s findings.
Second, petitioners claim that the record does not support the
Commission’s determination that DTAs would be affordable. Br. 43; see Int.
Br. 21. The argument is that $2.00 per month is unaffordable for some
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families. In fact, the Commission determined that the “range of charges”
reflected in the record varied from free-of-charge to $2.00 and that several
large cable companies were charging no more than a dollar. Sunset Order
¶14 (JA 308). A free device plainly is “affordable.” It was reasonable for the
Commission to conclude that analog-only cable customers could afford a fee
of $2.00 or less in light of the price of cable service. As of January 2011, the
average nationwide price for basic cable service was about $20.00 per month,
a cost borne by every subscriber, and the average cost of “expanded basic”
cable (the basic tier plus the most popular national cable networks, such as
CNN) approached $60.00 per month. See Report on Cable Industry Prices,
27 FCC Rcd 9326, 9331 Table 1 (Media Bur. 2012). Moreover, if cable
companies convert to more all-digital service that requires rental of a more
expensive set-top box – an outcome to which petitioners’ do not object, see
Br. 46 – subscriber costs may well rise. Faced with this evidence of
consumer behavior, it was reasonable for the Commission to conclude that a
$2 charge for conversion equipment is not so onerous as to render the
viewability requirement meaningless.
Third, petitioners claim that the Commission erroneously found that
that DTAs would be readily available. Br. 43-44. The record showed,
however, that 27 million DTAs have been deployed as of December 2011,
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and that “there is no shortage of DTAs in the marketplace,” Sunset Order
n.88 (JA 311), quoting NCTA June 11, 2012 ex parte (JA 294). On that
record, and with decreasing numbers of analog-only subscribers, the
Commission reasonably predicted that sufficient DTAs would be available to
ensure customers’ ability to view must-carry stations. Id. ¶¶14, 15 (JA 307,
309).
Furthermore, the Sunset Order defines “viewability” to exist only when
the cable provider can make a must-carry signal available “by an effective
means.” Sunset Order ¶8 (JA 301). If the cable provider cannot supply the
necessary signal conversion equipment (at the requisite price), it may not
discontinue analog service. See Sunset Order ¶18 (JA 312) (“after December
12, 2012, an operator of a hybrid system may choose to satisfy the
viewability mandate by making must-carry signals available to analog
subscribers by offering the necessary equipment for sale or lease, either for
free or at an affordable cost that does not substantially deter use of the
equipment.”); Stay Order, 27 FCC Rcd at 10227 n.83 (“hybrid cable
operators must first make the necessary equipment available to subscribers
before they can stop carrying must-carry channels in analog format”).
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D. The Commission Reasonably Considered The Burden Of

Analog Carriage.

Petitioners contend that the Commission erred when it considered the
burden analog carriage places on cable systems because Congress already
struck the appropriate balance by requiring cable systems with more than 12
channels to devote up to one-third of their channel capacity to must-carry
stations. Br. 44-47, citing 47 U.S.C. § 534(b)(1)(B).
There is no logical reason, however, why Congress’s choice of a
maximum permissible burden arising under a statutory must-carry
requirement should forbid the FCC from determining whether the burden of
an agency-crafted rule is justified. Congress itself recognized limitations on
mandatory carriage below the limit. It specified, for example, that cable
operators are not required to carry any station that “substantially duplicates
the signal of another … station” carried on the system. 47 U.S.C.
§ 534(b)(5). For its part, the Commission rejected a requirement of “dual
must-carry” of both analog and digital signals during the broadcast transition
to digital format. See Carriage of Digital Television Broadcast Signals, 20
FCC Rcd 4516 (2005). The Commission appropriately recognized then that
it must consider the benefits and burdens of mandatory analog carriage. It
did so again in the Viewability Order when it promised to weigh the benefits
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and burdens again at the sunset date, 22 FCC Rcd at 21070 ¶16. Petitioners
show no error in that approach.
Petitioners’ claim that the Commission is required to maximize the
number of must carry stations up to the statutory limit not only lacks a basis
in the statutory text, but also runs afoul of the First Amendment. Under
intermediate scrutiny, the Commission must consider any speech-restrictive
effects of its rules and ensure that those rules do not burden “substantially
more speech than necessary” to further the government’s legitimate interests.
Turner II, 520 U.S. at 189. The Commission appropriately weighed those
burdens here.

E. The Six-Month Transition Period Is Reasonable.

The Commission established a six-month transition period during
which cable systems would continue to carry analog must-carry signals.
Petitioners contend that period of time is unreasonably short because there
was a longer transition period when broadcast television switched from
analog to digital. Br. 47-49.
The comparison is inapt. The over-the-air transition to digital involved
the complete termination of all analog service that rendered almost all
television sets in the country incapable of receiving broadcast signals
overnight. Without a signal converter, everyone who relied on broadcast
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television signals would lose all service entirely, including access to
emergency communications. The matter was described by a commenter
before the Commission as “the most significant event for television-viewers
since the invention of television itself.” DTV Consumer Education Initiative,
23 FCC Rcd 4134, 4136 (2008). As petitioners themselves recognize, those
circumstances called for “a massive effort by government and industry to
educate consumers regarding necessary equipment.” Br. 49.
The transition here is not remotely comparable. The sunset of the
viewability rule will require a dwindling number of cable subscribers to
obtain a signal converter to watch at most a small handful of stations. Unlike
the digital broadcast transition, not all cable systems will decide to
discontinue analog carriage at the same time or even at all. Because of the
dramatically less complex process involved here, a shorter transition was
7
fully justified.
Petitioners charge the Commission with “fail[ing] to adopt any
measures to ensure consumer awareness of this new transition,” Br. 50, but

7 The same reasoning applies to intervenor’s argument – never raised before
the Commission – that the Commission’s decision here is inconsistent with its
decision in the Basic Service Tier Encryption proceeding, 27 FCC Rcd at
12799, to require notice and the provision of free de-encryption equipment.
Int. Br. 28-29. Analogous to the digital broadcast transition, encryption of
the basic tier would render viewers who lack the necessary equipment unable
to view all broadcast stations and all other content on the tier.
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that is not so. The Commission requires cable systems to provide
“notification to broadcasters and customers about any planned change in
carriage or service” 30 days in advance. Sunset Order ¶17 & n.89 (JA 311),
citing 47 C.F.R. §§ 76.1601, 76.1603(b). The Commission also made its
ruling contingent upon the commitment by cable operators “to inform
affected subscribers that equipment is required to continue viewing the must-
carry signal and how to obtain that equipment.” Sunset Order ¶17 (JA 312).
Must-carry stations, to which cable operators have pledged to provide 90
days notice before any change, ibid, may also inform their viewers of the
impending change (and have been able to do so since the Sunset Order was
released in June 2012). Petitioners provide no reason to second-guess the
Commission’s judgment that those steps will allow adequate time to prepare.
Indeed, cable operators have an economic incentive to ensure that they
adequately inform their customers of material service changes lest irate
customers switch service providers or cancel their service entirely. In short,
petitioners fall far short of meeting their burden to show that the Commission
has “failed to consider relevant factors or made a manifest error in judgment.”
Consumer Electronics Ass’n, 347 F.3d at 300.
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III. THE COMMISSION GAVE ADEQUATE NOTICE THAT

IT WOULD CONSIDER A DEVICE-BASED
VIEWABILITY APPROACH.

Finally, petitioners advance the perfunctory claim that the Commission
“failed to provide interested parties with adequate notice that it was
considering an equipment-based alternative” to the 2007 viewability rule. Br.
51. Intervenors make this claim their principal argument. Int. Br. 20-24. In
fact, parties had notice.
The Administrative Procedure Act requires an agency to provide notice
of “either the terms or substance of the proposed rule or a description of the
subjects and issues involved.” 5 U.S.C. § 553(b)(3) (emphasis added). This
Court has held that “the notice must be sufficient to fairly apprise interested
parties of the issues involved, but it need not specify every precise proposal
which [the agency] may ultimately adopt as a rule.” Action for Children’s
Television v. FCC, 564 F.2d 458, 470 (D.C. Cir. 1977) (internal quotation
marks and citations omitted). In short, the notice must give “interested
parties a reasonable opportunity … to present relevant information” on the
central issues. WJG Tel. Co. v. FCC, 675 F.2d 386, 389 (D.C. Cir. 1982)
(internal quotation marks and citations omitted).
Petitioners’ argument is curious at the outset because, by its own terms,
the viewability rule expired three years from its inception, see 47 C.F.R.
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§ 76.56(d)(5) (2010) (rule “shall cease to be effective” in three years), and in
the Sunset Order the Commission allowed it to expire as planned. See Sunset
Order ¶29 (ordering that previous rule be removed from the C.F.R.) (JA 317);
8
App. B (JA 319). The expiration of the rule was announced three years in
advance and subject to an additional round of comment prior to the end of
that period. The Commission took the very action it had indicated.
Petitioners nevertheless insist that the Commission was required to
announce that its decision to allow the viewability rule to expire as planned
would turn on the availability of signal conversion equipment. Br. 52. If that
is the case, the FCC provided adequate notice. The Commission described
the proceeding initiated by the Sunset Notice as “an opportunity … to
determine whether extending the current rule is necessary to fulfill th[e]
statutory [viewability] mandate, given the current state of technology and the

8 To be sure, the original sunset date was extended during the six-month
transitional period. But petitioners do not complain about the allowance for
an additional transitional period; indeed, they assert that the period was too
short. Br. 47-49.
58

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 68 of 76
9
marketplace.” Id. ¶5 (JA 71) (emphasis added). In particular, the
Commission noted that set-top boxes would be required in the absence of an
analog carriage requirement and asked interested parties to provide data on
“the range of costs per digital [converter] box …, and the range of rental
fees” for boxes, and “any marketplace or other changes” since 2007. Id.
¶¶10, 13, 16 (JA 74, 75, 77). Market developments such as the availability
and cost of signal converters were plainly raised as topics relevant to the
Commission’s ultimate decision.
Furthermore, the Commission noted in the Sunset Notice that in the
Viewability Order it had considered and rejected “possible alternatives,” such
as “a rule that would allow [cable systems] to carry must-carry signals in
digital so long as they made [signal conversion] equipment available for lease
or sale to subscribers.” Sunset Notice ¶14 & n.48 (JA 76). When the agency
called for comment on “proposals that would achieve the results necessary to
assure the viewability of must carry signals through an approach different
than that of [the] existing rule,” including solutions “that will satisfy the

9 Contrary to petitioners’ repeated assertion (Br. 6, 39, 51), the Commission
did not directly propose to extend the rule for an additional three years. Quite
to the contrary, the Commission was studiously neutral, simply “seek[ing]
comment on whether it is necessary to extend the rule in its current form.”
Sunset Notice ¶10 (JA 74). The Sunset Notice included proposed language
that would have extended the rule (JA 83), but the body of the notice cannot
fairly be read to propose any outcome.
59

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 69 of 76
statute in a less burdensome manner,” id. ¶16 (JA 77), it was referring to such
things as the previously rejected approach. The Sunset Notice thus
unquestionably gave interested parties fair notice that device-based
viewability was one of the issues presented.
Unsurprisingly, some parties interpreted the Sunset Notice as a call for
comment on device-based solutions. NCTA informed the Commission that
“even those customers who have not chosen to purchase the full array of
digital services available over full-service digital set-top boxes, now have
equipment that enables them to view digitally delivered must-carry signals.”
Comments of NCTA at 12 (Mar. 12, 2012) (JA 113). This Court has found
such pertinent comments to be evidence that notice was adequate. See Nuvio
Corp. 473 F.3d at 310.

CONCLUSION

The petition for review should be should be denied for the foregoing
reasons.


60

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 70 of 76

Respectfully submitted,
WILLIAM J. BAER
SEAN A. LEV
ASSISTANT ATTORNEY GENERAL
GENERAL COUNSEL


ROBERT B. NICHOLSON
PETER KARANJIA
KRISTEN C. LIMARZI
DEPUTY GENERAL COUNSEL
ATTORNEYS


JACOB M. LEWIS
UNITED STATES
ASSOCIATE GENERAL COUNSEL
DEPARTMENT OF JUSTICE

WASHINGTON, D.C. 20530
/s/ Joel Marcus


JOEL MARCUS
COUNSEL

FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740
February 14, 2013

61

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 71 of 76
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT



AGAPE CHURCH, INC., ET AL.,
PETITIONERS,
v.
NO. 12-1334
F

EDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS.



CERTIFICATE OF COMPLIANCE

Pursuant to the requirements of Fed. R. App. P. 32(a)(7), I hereby
certify that the accompanying Brief for Respondents in the captioned case
contains 12,677 words.

/s/ Joel Marcus

Joel Marcus

Counsel
Federal Communications Commission
Washington, D.C. 20554
(202) 418-1740 (Telephone)
(202) 418-2819 (Fax)
February 14, 2013



USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 72 of 76




















STATUTORY APPENDIX



47 U.S.C. § 534(a)
47 U.S.C. § 534(b)(7)

47 C.F.R. § 76.56(d)(2010)

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 73 of 76
47 U.S.C. § 534


UNITED STATES CODE ANNOTATED
TITLE 47. TELEGRAPHS, TELEPHONES, AND
RADIOTELEGRAPHS
CHAPTER 5. WIRE OR RADIO COMMUNICATION
SUBCHAPTER V-A. CABLE COMMUNICATIONS
PART II. USE OF CABLE CHANNELS AND CABLE
OWNERSHIP RESTRICTIONS

§ 534. CARRIAGE OF LOCAL COMMERCIAL TELEVISION
SIGNALS


(a) Carriage obligations

Each cable operator shall carry, on the cable system of that operator, the
signals of local commercial television stations and qualified low power
stations as provided by this section. Carriage of additional broadcast
television signals on such system shall be at the discretion of such operator,
subject to section 325(b) of this title.

(b) Signals required

* * * * * *

(7) Signal availability

Signals carried in fulfillment of the requirements of this section shall be
provided to every subscriber of a cable system. Such signals shall be
viewable via cable on all television receivers of a subscriber which are
connected to a cable system by a cable operator or for which a cable
operator provides a connection. If a cable operator authorizes subscribers
to install additional receiver connections, but does not provide the
subscriber with such connections, or with the equipment and materials for
such connections, the operator shall notify such subscribers of all broadcast
stations carried on the cable system which cannot be viewed via cable
without a converter box and shall offer to sell or lease such a converter box
to such subscribers at rates in accordance with section 543(b)(3) of this
title.
* * * * * *

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 74 of 76
47 C.F.R. § 76.56(d)(2010)



CODE OF FEDERAL REGULATIONS
TITLE 47. TELECOMMUNICATION
CHAPTER I. FEDERAL COMMUNICATIONS COMMISSION
SUBCHAPTER C. BROADCAST RADIO SERVICES
PART 76. MULTICHANNEL VIDEO AND CABLE TELEVISION
SERVICE
SUBPART D. CARRIAGE OF TELEVISION BROADCAST
SIGNALS

§ 76.56 SIGNAL CARRIAGE OBLIGATIONS.

* * * * * *

(d)Availability of signals.

(1) Local commercial television stations carried in fulfillment of the
requirements of this section shall be provided to every subscriber of a cable
system. Such signals shall be viewable via cable on all television receivers
of a subscriber which are connected to a cable system by a cable operator or
for which a cable operator provides a connection.

(2) Qualified local NCE television stations carried in fulfillment of the
carriage obligations of a cable operator under this section shall be available
to every subscriber as part of the cable system's lowest priced service tier
that includes the retransmission of local commercial television broadcast
signals.

(3) The viewability and availability requirements of this section require that,
after the broadcast television transition from analog to digital service for full
power television stations cable operators must either:
(i) Carry the signals of commercial and non-commercial must-carry stations
in analog format to all analog cable subscribers, or
(ii) For all-digital systems, carry those signals in digital format, provided
that all subscribers, including those with analog television sets, that are
connected to a cable system by a cable operator or for which the cable

USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 75 of 76
operator provides a connection have the necessary equipment to view the
broadcast content.

(4) Any costs incurred by a cable operator in downconverting or carrying
alternative-format versions of signals under § 76.56(d)(3)(i) or (ii) shall be
the responsibility of the cable operator.

(5) The requirements set forth in paragraph (d)(3) of this section shall cease
to be effective three years from the date on which all full-power television
stations cease broadcasting analog signals, unless the Commission extends
the requirements in a proceeding to be conducted during the year preceding
such date.

* * * * * *



USCA Case #12-1334 Document #1420505 Filed: 02/14/2013 Page 76 of 76

CERTIFICATE OF SERVICE


I, Joel Marcus, hereby certify that on February 14, 2013, I filed the foregoing final Brief
for Respondents with the Clerk of the Court for the United States Court of Appeals for
the D.C. Circuit using the CM/ECF system. Participants in the case who are registered
CM/ECF users will be served by the CM/ECF system. Any participant who is not a
registered CM/ECF user will be served by mail unless another attorney for the same party
is receiving electronic service.

Helgi C. Walker



Robert B. Nicholson
Kathleen A. Kirby



Kristen C. Limarzi
Eve Kindera Reed



U.S. Department of Justice
Christiane M. McKnight


950 Pennsylvania Ave., N.W. Rm 3223
Wiley Rein LLP



Washington, D.C. 20530
1776 K Street, NW
Washington, D.C. 20006


Counsel for the United States

Counsel for Petitioners

Andrew Jay Schwartzman
Michael S. Schooler
2000 Pennsylvania Avenue, NW
Diane B. Burstein
Suite 4300
Rick Chessen
Washington, DC 20006
National Cable & Telecommunications

Association
Counsel for Intervenor National Hispanic
25 Massachusetts Avenue, NW
Media Coalition
Suite 100
Washington DC 20001

Counsel for Intervenor National Cable &
Telecommunications Association

Richard P. Bress
Matthew A. Brill
Katherine I. Twomey
Amanda E. Potter
Latham & Watkins LLP
555 Eleventh Street, NW
Suite 1000
Washington, DC 20004

Counsel for Intervenor Time Warner Cable Inc.








/s/ Joel Marcus







Joel Marcus

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