Skip Navigation

Federal Communications Commission

English Display Options

Commission Document

Charter Communications, Inc. Waiver Of Section 76.1204(a)(1)

Download Options

Released: April 18, 2013

Federal Communications Commission

DA 13-788

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Charter Communications, Inc.
)
MB Docket No. 12-328
Request for Waiver of Section 76.1204(a)(1)
)
CSR-8740-Z
of the Commission’s Rules
)
)

Implementation of Section 304 of the
)
Telecommunications Act of 1996
)
CS Docket No. 97-80
)
Commercial Availability of
)
Navigation Devices
)
)

MEMORANDUM OPINION AND ORDER

Adopted: April 18, 2013

Released: April 18, 2013

By the Chief, Media Bureau:

I.

INTRODUCTION

1.
Charter Communications, Inc. (“Charter”) has filed with the Chief of the Media Bureau
the above-captioned request for a two year waiver (the “Waiver Request”) of the ban on integrated set-top
boxes set forth in Section 76.1204(a)(1) of the Commission’s rules.1 For the reasons stated below, we
grant the Waiver Request with conditions.

II.

BACKGROUND

2.
Congress directed the Commission to adopt regulations to assure the commercial
availability of navigation devices as part of the Telecommunications Act of 1996.2 The Commission
implemented this directive in 1998 through the adoption of the “integration ban,” which established a date
after which cable operators no longer may place into service new navigation devices (e.g., set-top boxes)
that perform both conditional access and other functions in a single integrated device.3 Originally, the

1 47 C.F.R. § 76.1204(a)(1). The separation of the security element from the basic navigation device required by this
rule is referred to as the “integration ban.”
2 See Section 629(a) of the Communications Act of 1934, as amended, 47 U.S.C. § 549(a) (requiring the FCC “to
adopt regulations to assure the commercial availability, to consumers of multichannel video programming and other
services offered over multichannel video programming systems, of converter boxes, interactive communications
equipment, and other equipment used by consumers to access multichannel video programming and other services
offered over multichannel video programming systems, from manufacturers, retailers, and other vendors not
affiliated with any multichannel video programming distributor”); see also Telecommunications Act of 1996, Pub.
L. No. 104-104, § 304, 110 Stat. 56, 125-126 (1996).
3 See Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of Navigation
Devices
, 13 FCC Rcd 14775, 14803, ¶ 69 (1998) (“First Report and Order”) (adopting Section 76.1204 of the
Commission’s rules, subsection (a)(1) of which (1) required multichannel video programming distributors
(continued....)

Federal Communications Commission

DA 13-788

Commission established January 1, 2005 as the deadline for compliance with the integration ban.4 On
two occasions, the National Cable and Telecommunications Association (“NCTA”), on behalf of all cable
operators, sought and obtained extensions of that deadline.5 The Commission ultimately fixed July 1,
2007 as the deadline in order to afford cable operators additional time to determine the feasibility of
developing a downloadable security function that would permit compliance with the Commission’s rules
without incurring the costs associated with the separation of security.6
3.
The purpose of the integration ban is to assure reliance by both cable operators and
consumer electronics manufacturers on a common, separated-security solution.7 This “common reliance”
is necessary to achieve the broader goal of Section 629 – i.e., to allow consumers the option of purchasing
navigation devices from sources other than their MVPD by ensuring that cable systems support such
equipment.8 Although the cable industry has challenged the lawfulness of the integration ban on three
separate occasions, in each of those cases the D.C. Circuit upheld the ban.9 In limited circumstances,
however, operators may be eligible for waiver of the integration ban.10
4.
In EchoStar Satellite L.L.C. v. FCC11 (“EchoStar”), the D.C. Circuit vacated the FCC’s
Second Report and Order12 and Order on Reconsideration,13 which had the effect of vacating various

(...continued from previous page)
(“MVPDs”) to make available by July 1, 2000 a security element separate from the basic navigation device, and, in
its original form, (2) prohibited MVPDs covered by this subsection from “plac[ing] in service new navigation
devices … that perform both conditional access and other functions in a single integrated device” after January 1,
2005); see also 47 C.F.R. § 76.1204(a)(1) (1998).
4 First Report and Order, 13 FCC Rcd at 14803, ¶ 69.
5 In April 2003, the Commission extended the effective date of the integration ban until July 1, 2006. See
Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of Navigation
Devices
, 18 FCC Rcd 7924, 7926, ¶ 4 (2003) (“Extension Order”). Then, in 2005, the Commission further extended
that date until July 1, 2007. See Implementation of Section 304 of the Telecommunications Act of 1996:
Commercial Availability of Navigation Devices
, 20 FCC Rcd 6794, 6810, ¶ 31 (“2005 Deferral Order”).
6 2005 Deferral Order, 20 FCC Rcd at 6810, ¶ 31.
7 See Cablevision Systems Corporation’s Request for Waiver of Section 76.1204(a)(1) of the Commission’s Rules, 22
FCC Rcd 220, 226, ¶ 19 (2007) (“Cablevision Order”) (citing the 2005 Deferral Order, 20 FCC Rcd at 6809, ¶ 30)
(explaining why the Commission “require[d] MVPDs and consumer electronics manufacturers to rely upon identical
separated security with regard to hardware-based conditional access solutions”).
8 See S. REP. 104-230, at 181 (1996) (Conf. Rep.). See also Bellsouth Interactive Media Services, LLC, 19 FCC Rcd
15607, 15608, ¶ 2 (2004). As the Bureau noted, Congress characterized competition in navigation devices as an
important goal, stating that “[c]ompetition in the manufacturing and distribution of consumer devices has always led
to innovation, lower prices and higher quality.” Id.
9 Comcast Corp. v. FCC, 526 F.3d 763 (D.C. Cir. 2008); Charter Comm., Inc. v. FCC, 460 F.3d 31 (D.C. Cir. 2006);
General Instrument Corp. v. FCC, 213 F.3d 724 (D.C. Cir. 2000). The Commission argued, and the D.C. Circuit
agreed, that the integration ban was a reasonable means to meet Section 629’s directive. Charter Comm., Inc. v.
FCC
, 460 F.3d 31, 41 (D.C. Cir. 2006) (“this court is bound to defer to the FCC's predictive judgment that, ‘[a]bsent
common reliance on an identical security function, we do not foresee the market developing in a manner consistent
with our statutory obligation.’”).
10 For example, petitioners who have been deemed by the Commission to have shown good cause have received
waivers of the integration ban pursuant to Sections 1.3 and 76.7 of the Commission’s rules. 47 C.F.R. §§ 1.3, 76.7.
See, e.g., Cablevision Order, 22 FCC Rcd at 226-7, ¶ 20. See also 47 U.S.C § 549(c) (providing that the
Commission shall grant a waiver of its regulations implementing Section 629(a) upon an appropriate showing that
such waiver is necessary to assist the development or introduction of new or improved services).
11 704 F.3d 992 (D.C. Cir. 2013).
2

Federal Communications Commission

DA 13-788

rules adopted in those orders, including the encoding rules,14 the technical standards for CableCARD
(Sections 76.602 and 76.640),15 and labeling with respect to CableCARD compatibility (Section
15.123).16 The integration ban was adopted in the First Report and Order17 and therefore is unaffected by
the Echostar decision.18
5.
On November 1, 2012, Charter filed a request, pursuant to Sections 1.3 and 76.7 of the
Commission’s rules, for a limited, two-year waiver of the prohibition on integrated set-top boxes set forth
in Section 76.1204(a)(1) of the Commission’s rules.19 According to Charter, securing a two-year waiver
of the integration ban would allow Charter to “initiate implementation of an open-standard, downloadable
security solution that supports third party retail devices.”20 Charter explains that it needs two years to roll
out downloadable security set-top boxes to customers before its cable systems will be fully ready to
support downloadable security.21 Therefore, during this interim period, Charter would deploy boxes that
include two security systems – one that includes a hardware chip that would eventually be used for
downloadable security and a second that includes traditional integrated security to be used for a two-year
“transitional period before downloadable security is activated.”22 Charter’s proposed downloadable
security system would “combine a software-based security with a hardware root of trust housed in a

(...continued from previous page)
12 Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of Navigation
Devices
, Second Report and Order and Second Further Notice of Proposed Rulemaking, 18 FCC Rcd 20885 (2003).
13 Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of Navigation
Devices,
Order on Reconsideration, 18 FCC Rcd 27059 (2003) .
14 47 C.F.R. §§ 76.1901-76.1908. The encoding rules limited copy protection techniques that MVPDs could use to
prevent consumers from making copies of their programming.
15 47 C.F.R. §§ 76.602, 76.640.
16 47 C.F.R. § 15.123. In EchoStar, the majority concluded that the Commission lacked authority to adopt the
encoding rules and, viewing those rules as “not severable” from the challenged orders, vacated the Second Report
and Order
and Order on Reconsideration in their entirety. 704 F.3d at 1000.
17 See supra n.3.
18 Sections 15.123 and 76.640 were modified, among other sections, by the Third Report and Order in the
navigation devices proceeding. See Implementation of the Telecommunications Act of 1996: Commercial
Availability of Navigation Devices
, 25 FCC Rcd 14657, 14698-703 (2010). It is not necessary, in the context of this
order, to address the continued effectiveness of these modifications.
19 On November 7, 2012, the Media Bureau released a Public Notice seeking comment on the Waiver Request,
setting a deadline of November 30, 2012 for Comments and December 10, 2012 for Reply Comments. Charter
Communications, Inc. Files Request for Waiver
, 27 FCC Rcd 13600 (MB 2012). Samuel J. Biller (“Biller”), the
Consumer Electronics Association (“CEA”), and Public Knowledge all filed comments. Charter, AllVid Tech
Company Alliance (“ATCA”), Beyond Broadband Technology, LLC (“BBT”), Biller and CEA filed Reply
Comments. CEA filed ex parte letters on December 13, 2012, January 28, 2013, February 14, 2013, March 7, 2013,
March 15, 2013, March 22, 2013, March 29, 2013 and April 8, 2013. In addition, TiVo, Inc. submitted an ex parte
letter on January 22, 2013 and Biller submitted an ex parte letter on March 8, 2013. Charter submitted ex parte
letters on January 28, 2013, February 6, 2013, February 28, 2013, March 13, 2013, March 20, 2013, and April 4,
2013. All submissions were made in MB Docket 12-328.
20 Charter Communications, Inc., Request for Waiver, CSR-8740, MB Docket 12-328, CS Docket 97-80 (filed Nov.
1, 2012) (“Waiver Request”) at 1.
21 Id. at 2-3.
22 Id. at 3.
3

Federal Communications Commission

DA 13-788

commodity chip.”23 Charter states that the “key ladder”24 for the hardware root of trust25 will be “made
available on an open royalty-free basis” so that third-party manufacturers can manufacture and market
commercially available devices that could interconnect and operate with Charter’s cable systems
nationwide.26
6.
The system that Charter plans to deploy is apparently the same downloadable system now
being used by Cablevision.27 Charter contends that the Media Bureau’s 2009 grant to Cablevision of a
two-year waiver extension of Section 76.1204(a)(1) is comparable to the Waiver Request because,
according to Charter, the waiver extension would not have been granted without Cablevision’s promise to
deploy downloadable security (as Charter also promises to do) and the Commission “determined that
Cablevision’s downloadable security plan was sufficiently beneficial to the public interest to warrant a
waiver” even though Cablevision would not be deploying CableCARDs in its own equipment.28
Furthermore, because Charter argues it is using the “same approach employed by Cablevision,” Charter
submits that its use of the system “will broaden the downloadable security footprint available for retail
implementations.”29 After it tests and launches the new system, Charter “anticipates that the availability
of set-top boxes (with downloadable chips) from a broad set of suppliers will lower equipment costs
borne by consumers.”30 Charter also contends that after its downloadable system becomes operational, “it
will be better positioned to support a wider variety of devices if and when content providers grow more
comfortable with software-based security.”31 Grant of the waiver, according to Charter, “would facilitate
Charter’s transition to an all-digital network,” which the Commission has observed can free up spectrum
to offer new and improved services to cable consumers.32 In particular, Charter argues that “waiver grant
. . . will uniquely accelerate the digital transition in rural America, an area that the Commission has
previously acknowledged is in greater need of digital investment” because Charter will be able to use the
cost savings realized from not deploying more expensive CableCARD compatible set-top boxes for
“finite investments to be directed instead to headend, plant and security faster and at lower cost to
consumers.”33 Both during the waiver period and then after the company initiates downloadable security,

23 Id. “Commodity chips” are computer chips “that are produced in the hundreds of thousands, often in the millions.”
Colin Picker, A View From 40,000 Feet: International Law and the Invisible Hand of Technology, 23 CARDOZO L.
REV. 149, 211 (2001). Because each chip manufacturer makes chips that are “approximately the same as chips
available from competitors, market competition for [commodity chips] is primarily based on price.” MICHAEL R.
KINNEY & CECILY A. RAIBORN, COST ACCOUNTING: FOUNDATIONS AND EVOLUTIONS 457 (2008).
24 It is our understanding that when Charter refers to a “key ladder,” it is referring to the conditional access codes
necessary to operate the system.
25 It is our understanding that when Charter uses the term “hardware root of trust” it is referring to the commodity
chip that will contain, among other things, the key ladder.
26 Waiver Request at 3-4.
27 See Waiver Request at 3-4; Charter Reply Comments at 2-3.
28 Waiver Request at 3 (citing Cablevision System Corporation’s Request for Waiver of Section 76.1204(a)(1) of the
Commission’s Rules
, Memorandum Opinion and Order, 24 FCC Rcd 393 (2009) (“Cablevision 2009 Waiver”));
Charter February 28, 2013 ex parte at 6-7.
29 Charter Reply Comments at 3.
30 Waiver Request at 4.
31 Id. at 4-5.
32 Charter Reply Comments at 6 (citing Basic Service Tier Encryption, Compatibility Between Cable Systems and
Consumer Electronics Equipment
, 27 FCC Rcd 12786, ¶ 3 (2012)).
33 Charter February 6, 2013 ex parte at 2; Charter February 28, 2013 ex parte at 4-5.
4

Federal Communications Commission

DA 13-788

“Charter would continue to ‘simulcrypt’34 its services using both security technologies” to support both
devices using downloadable security and retail and legacy devices being leased by Charter that rely on
CableCARDs.35 Charter argues that it is highly incentivized to continue support of CableCARD, and
commits to doing so indefinitely, because it “has enormous common reliance on CableCARDs,” with
2.75 million leased CableCARD set-top boxes currently deployed to Charter customers.36 Charter states
that including a CableCARD interface within a box with downloadable security would be prohibitively
costly and would prevent the company from rolling out the new downloadable security technology in an
expeditious and seamless fashion.37 Charter submits that the FCC has “held, repeatedly, that deploying
downloadable security rather than CableCARDs is permissible without a waiver”38 and that Cablevision’s
experience demonstrates that grant of the Waiver Request would have no impact on the retail market for
CableCARD devices.39
7.
Beyond Broadband Technology, LLC (“BBT”) commented in support of the Waiver
Request, contending that Charter’s proposed dual security box for use in migrating to downloadable
security is “sensible and consistent with the public interest.”40 BBT urges the Commission to continue
allowing experimentation and development of security systems and argues that Charter’s proposal is a
positive outgrowth of allowing for such experimentation.41
8.
AllVid Tech Company Alliance (“ATCA”), Samuel J. Biller, the Consumer Electronics
Association (“CEA”), and Public Knowledge oppose the Waiver Request.42 These parties argue that there
are no consumer benefits in granting the waiver43 and are skeptical that third-party manufacturers will
develop devices compatible with Charter’s downloadable system because consumers will not purchase

34 Charter uses the term “simulcrypt” to refer to the process of encrypting a cable transmission simultaneously in
two different ways. The effect of simulcrypt as Charter proposes it would allow both a Charter subscriber operating
a device with a CableCARD and a Charter subscriber operating a box with Charter’s downloadable security to
access Charter programming services on the same Charter system. See Waiver Request at 3.
35 Id.
36 Id. at 7; Charter February 6, 2013 ex parte at 3; Charter April 4, 2013 ex parte at 1. In its April 4, 2013 ex parte,
Charter also voluntarily committed to convert 100% of its systems to all-digital by nine months after the end of the
two-year waiver period and to make broadband Internet access service of 100 Mbps or greater available to 200,000
additional homes before the end of the waiver period. See Charter April 4, 2013 ex parte at 1.
37 Waiver Request at 8-9; Charter January 28, 2013 ex parte at 1-2; Charter February 28, 2013 ex parte at 4-5.
38 Charter February 28, 2013 ex parte at 2 (citing Comcast Corporation Request for Waiver of Section 76.1204(a)(1)
of the Commission’s Rules, Implementation of Section 304 of the Telecommunications Act of 1996, Commercial
Availability of Navigation Devices
, 22 FCC Rcd 228, ¶ 34 (MB 2007) (“Bureau Comcast Waiver Denial”); Comcast
Corporation Request for Waiver of Section 76.1204(a)(1) of the Commission’s Rules, Implementation of Section 304
of the Telecommunications Act of 1996, Commercial Availability of Navigation Devices, Application for Review
, 22
FCC Rcd 17113, ¶ 4 (2007) (“Commission Comcast Waiver Denial”); Public Notice, Commission Reiterates that
Downloadable Security Technology Satisfies the Commission’s Rules on Set-top Boxes and Notes Beyond
Broadband Technology’s Development of Downloadable Security Solution, 22 FCC Rcd 244 (2007)).
39 Charter March 13, 2013 ex parte at 1 (citing Letter from Neal M. Goldberg, Vice President and General Counsel,
National Cable & Telecommunications Association, to Marlene H. Dortch, Secretary, FCC, CS Docket No. 97-80
(Jan. 31, 2013) (“January 2013 NCTA Letter”) at 3).
40 BBT Reply Comments at 5.
41 See id.
42 TiVo filed an ex parte in MB Docket 12-328, which generally argued that waivers of the rules implementing
Section 629 were counterproductive. See TiVo January 22, 2013 ex parte at 1-2.
43 See Biller Reply Comments at 2; Biller March 8, 2013 ex parte at 3-4; CEA December 13, 2012 ex parte at 2.
5

Federal Communications Commission

DA 13-788

devices that work with only one or two cable systems and are not nationally portable.44 They further
argue that Charter’s proposed downloadable system does not separate security, does not support
portability, and does not further the purposes of Section 629.45 Opposing parties seek to distinguish the
Cablevision 2009 Waiver case on the ground that Cablevision continued to separate its security during the
waiver period and argue that, in any event, the Bureau did not determine whether Cablevision’s
downloadable security system complies with the integration ban.46 Furthermore, opposing parties claim
that granting the waiver will undermine common reliance and effectively end cable operators’ obligation
to support CableCARD.47 Opponents claim that expediting a transition to digital is not a valid basis for
waiver, and that in any event Charter has already committed to transitioning to digital regardless of
whether it receives the waiver.48 Finally, opponents argue that past Commission statements supporting
the development and deployment of downloadable security are not applicable to Charter’s proposed
system.49

III.

DISCUSSION

9.
We find good cause to grant Charter a limited two-year waiver of Section 76.1204(a)(1)
subject to conditions. We recognize that, in vacating the Second Report and Order, the EchoStar decision
eliminated the requirement that cable operators continue to support CableCARD as a means of complying
with the integration ban. Charter does not need a waiver in order to implement a downloadable security
system as long as such system complies with the integration ban. Prior to the EchoStar decision, the
Commission’s CableCARD rules furthered Section 629 by ensuring that consumers could purchase
CableCARD retail devices with the knowledge that such devices would work on their cable operators’
digital cable system. After the EchoStar decision, we recognize that there is the potential for a fractured
cable set-top box market should different cable operators adopt differing non-CableCARD separated-
security standards. In the past, the Commission has encouraged the development of an industry-wide
downloadable separate security standard to further the purposes of Section 629.50 We believe granting
Charter’s waiver under the circumstances presented in this proceeding will increase the chance of an
industry-wide standard developing. Through acceptance of this waiver and its conditions, Charter is
committing to adopt the same downloadable system being utilized by Cablevision.51 We believe
Charter’s adoption of the same system will make it more likely that other operators considering moving to

44 See Biller Comments at 2-3; Biller March 8, 2013 ex parte at 2; CEA Comments at 5; CEA December 13, 2013 ex
parte
at 2; CEA March 22, 2013 ex parte at 1.
45 See ATCA Reply Comments at 3-5; Biller Comments at 3; Biller March 8, 2013 ex parte at 4; CEA Comments at
2; CEA January 28, 2013 ex parte at 1; CEA January 28, 2013 ex parte at 2; TiVo ex parte at 2.
46 See Biller Comment at 3-4; CEA Comments at 3; CEA February 14, 2013 ex parte at 1-2; CEA March 7, 2013 ex
parte
at 5.
47 See Biller Reply Comments at 1; Biller March 8, 2013 ex parte at 4; Public Knowledge Comments at 3; CEA
Comments at 7; CEA December 13, 2012 ex parte at 2; TiVo ex parte at 2.
48 Biller March 8, 2013 ex parte at 4; CEA February 14, 2013 ex parte at 1-2.
49 Biller March 8, 2013 ex parte at 1-2; CEA March 7, 2013 ex parte at 2-5.
50 See 2005 Deferral Order at ¶ 31.
51 See Charter February 28, 2013 ex parte at 3 (“Charter’s downloadable security system is being designed
specifically to increase interoperability and portability, so that the same device can be trusted on a Charter network
as well as a downloadable Cablevision network.”). Once Charter’s four million customers begin using
downloadable security, it will more than double the market for devices using this particular type of downloadable
security, which currently consists of Cablevision’s subscriber base of more than three million. See NCTA, Industry
Data, http://www.ncta.com/industry-data. We presume retail devices would also be compatible with any additional
cable systems owned by other operators that adopt the same downloadable security system as Charter and
Cablevision.
6

Federal Communications Commission

DA 13-788

a downloadable security system will adopt the same established and tested technology, which will in turn
make it more likely that third party manufacturers will develop retail devices given the expanded market.
Therefore, Charter’s expansion of the market for devices operating this particular downloadable system
should help “assure the commercial availability” of navigation devices, as Section 629 directs.52
Moreover we believe that our condition, further explained below, that requires Charter to work with a
consumer electronics manufacturer to bring a retail device using Charter’s downloadable system to the
retail market, will also further the purposes of Section 629 by mandating that Charter work towards
creating a retail market for devices that commonly rely “on an identical security technology and
conditional access interface.”53 In addition, waiver of the integration ban is likely to accelerate Charter’s
deployment of downloadable security. As even CEA acknowledges, Charter’s systems “are widely
dispersed and are the least densely concentrated among the six largest cable operators.”54 This footprint
presents Charter with additional challenges in rolling out downloadable security across all of its
headends.55 Waiver grant will enable Charter to accelerate adoption of the new downloadable security
system, notwithstanding its rural footprint, in an efficient manner that minimizes disruption to consumers
and, in doing so, more quickly establish a larger market for downloadable retail devices.56 As described
below, we also adopt a number of conditions that we believe will ensure that this waiver, on balance, will
serve the public interest and ensure that the waiver is consistent with the goals of Section 629.
10.
To ensure that a waiver grant will be in the public interest, we subject Charter to the
following conditions: First, prior to deployment of any set-top boxes that contain integrated security,
Charter must submit a declaration, signed by its Chief Executive Officer under penalty of perjury,
attesting that Charter is engaged in good faith negotiations with a consumer electronics manufacturer that
intends to develop a set-top box device to be sold at retail in the United States that utilizes Charter’s
downloadable security and can be used by a Charter customer on all of Charter’s cable systems. Second,
Charter must continue, indefinitely, to support CableCARD57 and comply with the Commission’s
CableCARD technical rules in 47 C.F.R. §§ 76.640, 76.1205 and 76.1602, including, but not limited to,
continued support of CableCARD self-installation,58 M-Card,59 switched digital video solutions,60

52 See 47 U.S.C. § 549.
53 2005 Deferral Order at ¶ 3.
54 CEA March 29, 2013 ex parte at 1.
55 See Charter February 28, 2013 ex parte at 4-5.
56 See Charter February 28, 2013 ex parte at 4-5.
57 By “support” we mean that as part of this condition, Charter must continue to simulcrypt its services so that all
third party CableCARD devices remain operable pursuant to the standards listed in 47 C.F.R. § 76.640 until such
point as no Charter customers wish to use CableCARD devices purchased at retail. As we explain below, once a
third party retail device using Charter’s downloadable security is available for purchase, Charter will no longer need
to provision new CableCARDs. Even after that point, however, Charter must continue simulcrypting its services to
ensure that all Charter customers who purchased third party retail CableCARD equipment prior to the availability of
a third party retail downloadable device, and in reliance on being able to operate the CableCARD equipment on
Charter’s systems, will be able to continue use of that third party CableCARD equipment indefinitely.
58 See 47 C.F.R. § 76.1205(b)(1) (MVPDs generally must provide the means to allow subscribers to self-install
CableCARDs and inform subscribers of this option when a subscriber requests a CableCARD.).
59 See 47 C.F.R. §76.1205(b)(2) (MVPDs must provide multi-stream CableCARDs unless subscribers request a
single stream CableCARD.).
60 See 47 C.F.R. § 76.1205(b)(4) (MVPDs must provide CableCARD compatible navigation devices that can tune to
switched digital channels.).
7

Federal Communications Commission

DA 13-788

uniform CableCARD fees,61 the IP output requirement,62 and the bring-your-own-box discount63
requirement.64 At such time that a third-party device compatible with Charter’s downloadable security is
available for purchase at retail, Charter will no longer be required to provision new CableCARDs to
customers.65 Third, similar to what we have required in previous waiver cases,66 and to enable us to
assess both Charter’s efforts to bring a third party downloadable device to market and the impact of this
waiver on the market for navigation devices, Charter must submit semi-annual reports (to coincide with
the January and July submissions made by NCTA on Charter’s behalf pursuant to the 2005 Deferral
Order
)67 to the Media Bureau for the next four years68 that include the following information: (1) during

61 See 47 C.F.R. § 76.1205(b)(5)(ii)(B)(1) (CableCARD rental fees must be priced uniformly throughout a cable
system; MVPDs may not charge for support of subscriber devices when there would be no charge for similar
support of a leased device.). Charter currently offers its subscribers CableCARDs for lease with a fee of $2 per
month and we expect that Charter will maintain a similar price point going forward. January 2013 NCTA Letter at
6.
62 See 47 C.F.R. § 76.640(b)(4)(iii) (Cable operators must ensure that all non-unidirectional cable operator provided
high definition set-top boxes comply with an open industry standard for home networking.).
63 See 47 C.F.R. § 76.1602(b)(7), (8) (Cable operators must provide written information to subscribers at time of
installation, annually, and upon request regarding assessed fees for rental of navigations devices and CableCARDs
and whether equipment fees are included in the charges for an offer of bundled services.).
64 Charter will therefore be subject to these provisions irrespective of the D.C. Circuit’s decision in Echostar.
Charter’s continued compliance with the requirements of these rules is important to ensure that Charter customers
can continue their use of retail CableCARD equipment (the only retail alternative currently available) on Charter
systems even as Charter moves away from using CableCARDs in its own leased equipment. We note that Charter
has voluntarily agreed to continue compliance with these rules for an unspecified time period notwithstanding the
impact of the Echostar case. Charter February 6, 2013 ex parte at 3. Charter also voluntarily committed to
providing “CableCARDs for new CableCARD devices until such time as a third-party retail device with
downloadable security is available for use by Charter subscribers.” Charter April 4, 2013 ex parte at 1. Should the
Commission address its CableCARD rules or adopt any new or revised rules that apply to set-top box conditional
access, Charter must come into compliance with any subsequent rule changes implementing Section 629. Cf.
Cablevision Systems Corp.
, 25 FCC Rcd 134, ¶16 (MB 2010) (“Cablevision Encryption Waiver”).
65 At the point that Charter wishes to stop provisioning new CableCARDs to subscribers, it must submit a
declaration to the Media Bureau, under penalty of perjury, attesting to and accompanied by documented evidence
that demonstrates the following: (1) a local or online seller has made available for retail purchase, to subscribers
throughout Charter’s entire footprint, a device utilizing Charter’s downloadable security; and (2) such a device is
available to all Charter subscribers at prices comparable to those charged for retail CableCARD devices. We
emphasize that at all times during and after the waiver period, Charter customers will be able to use a retail device
on Charter systems. Before a third party retail downloadable device is available, Charter customers can purchase
new CableCARD retail devices and receive CableCARDs from Charter. After the third party retail downloadable
devices are available, Charter will no longer be required to distribute new CableCARDs for new CableCARD
devices (though they must ensure through simulcrypt that previously purchased CableCARD devices can still
operate on Charter systems) but customers will have the downloadable retail option available.
66 See, e.g., Cable One, Inc.’s Request for Waiver of Section 76.1204(a)(1) of the Commission’s Rules, 24 FCC Rcd
7882,7887, ¶ 15 (2009); Cablevision Encryption Waiver at ¶ 16.
67 Pursuant to the requirements of the 2005 Deferral Order, which was not vacated by the EchoStar decision,
Charter, along with Comcast, Time Warner Cable and Cox, must make quarterly submissions to the Commission
“detailing CableCARD deployment and support.” See 2005 Deferral Order at ¶ 44. To comply with this
requirement, NCTA compiles reports from all four companies and jointly submits them in January, April, July and
October of each year. See, e.g., January 2013 NCTA Letter. Going forward, as a condition of waiver, Charter must
submit the additional report that we detail in this Order, independently of, but at the same time that NCTA submits
the January and July reports. Therefore the first report Charter must file pursuant to this Order will be in July of
2013. We are coinciding the timing of these two separate reports for administrative convenience.
8

Federal Communications Commission

DA 13-788

the two-year waiver period, status updates on the development and deployment of Charter’s
downloadable security system; (2) the status of Charter’s good faith efforts with the consumer electronics
manufacturer discussed above to develop a retail set-top box for Charter’s systems; (3) the status of any
additional negotiations with consumer electronics manufacturers seeking to develop retail devices that
will use the downloadable system being employed by Charter and the assistance rendered by Charter to
such manufacturers; (4) the number of set-top boxes using integrated security being deployed by Charter;
(5) the number of CableCARDs being deployed by Charter for use in retail devices and the number of
CableCARD-reliant leased Charter devices in use by Charter customers; (6) the number and type of
customer complaints received orally, via electronic mail, or in writing by Charter regarding third-party
navigation devices being used by Charter’s customers and Charter’s responses to these complaints; and
(7) pricing information regarding the lease fees charged to customers for boxes containing downloadable
components (whether those components are in use at the time or not) versus the fees charged for
CableCARD compatible boxes.69 Fourth, to the extent such components are within its rights to license,
Charter must offer the hardware, software, specifications and codes necessary to implement the
downloadable security system it proposes to use on an open, royalty-free basis.70 Fifth, Charter must
cooperate in a timely manner,71 with any third-party manufacturer seeking to develop retail devices that
will use the downloadable system being employed by Charter. Finally, similar to what we required in the
Cablevision 2009 Waiver case,72 upon completion of the two-year waiver period, Charter must file a
declaration certifying that it has deployed a downloadable security system that employs a software-based
security with a hardware root of trust housed in a commodity chip73 and is no longer using integrated
security on any of its systems.74 We reserve the right to revoke the waiver in the event that Charter fails
to meet the conditions of this waiver or if the public interest otherwise warrants such action.75
11.
In addition, Charter has committed to the following actions76 that we also impose as
public interest conditions to grant of the Waiver Request: 1) Charter must transition all of its cable
systems to all-digital within nine months of expiration of the two-year waiver period and 2) Charter must

(...continued from previous page)
68 We believe an additional two years of reporting beyond the waiver period is necessary to provide additional
information to confirm this Order’s conclusion that development of Charter’s downloadable security is consistent
with the goals of Section 629.
69 If necessary to protect confidential business information, Charter may file portions of its reports with a request for
confidentiality. See 47 C.F.R. § 0.459.
70 By “open, royalty-fee basis” we mean that the licenses for the components are made available to any requesting
party at no charge and without any restrictions. Charter explains that the “key ladder,” will be offered on an “open-
royalty free basis.” Waiver Request at 3-4. It appears that the only hardware necessary is a commodity chip that
Charter does not license, which Charter refers to as a “hardware root of trust.” See id.; see also supra n.24.
71 See 47 C.F.R. § 76.1205(a). Section 76.1205(a) was adopted by the First Report and Order and is therefore
unaffected by the EchoStar decision.
72 Cablevision 2009 Waiver at ¶¶ 8, 13.
73 See Waiver Request at 3; supra n.23.
74 After the expiration of the waiver, Charter is not required to remove the dual-security boxes from the field, but it
must rely solely on the downloadable security component of those boxes and no longer use the integrated security
component. We anticipate that at the end of the waiver period, many of Charter’s customers will still be relying
upon leased equipment that includes CableCARDs, which would also be compliant with the integration ban.
75 In the event that upon expiration of the waiver Charter does not fully comply with Section 76.1204 of the
Commission’s rules, or any of the other conditions that apply beyond the two-year waiver period, Charter would be
subject to the imposition of a forfeiture.
76 See Charter April 4, 2013 ex parte at 1.
9

Federal Communications Commission

DA 13-788

make broadband Internet access service of 100 Mbps or greater available to 200,000 additional homes
before the expiration of the two-year waiver period.77 These conditions, which are designed to promote
one of the Commission’s goals of furthering broadband deployment, represent additional public interest
benefits of this waiver that contribute to a finding of good cause.
12.
We do not believe that the concerns raised by opponents of the Waiver Request compel
denial in view of the conditions described above.78 As an initial matter, we note that while several
opponents of the Waiver Request have argued Charter’s proposed downloadable system does not separate
security because the system utilizes a hardware chip component,79 the Waiver Request is not a request for
approval of Charter’s downloadable system. In any event, Charter claims,80 and we find that the record
does not refute this claim, that Charter’s approach of using a hardware chip as part of the downloadable
security system is also used by the system developed by BBT, which the Bureau has specifically found is
compliant with the integration ban.81 In addition, opponents of the Waiver Request have expressed
skepticism that third parties would be willing to work with Charter on a retail solution.82 It is our
expectation that our condition, which will require Charter to obtain a commitment from a consumer
electronics retailer to work in conjunction with Charter to bring to market a retail device utilizing
Charter’s proposed downloadable security system, will ensure that Charter customers will have the option
of purchasing equipment from a third party that takes advantage of Charter’s downloadable technology
for use on Charter systems, thereby helping to foster a competitive retail market as Section 629
intended.83 Furthermore, it is notable that if not for the condition that we impose, Charter would not have
been obligated to affirmatively seek out a consumer electronics retailer for collaboration.84 In addition,

77 We expect Charter to file into this proceeding’s docket, letters attesting that it has met the deployment deadlines
for these two conditions.
78 We agree with Biller and CEA that the Cablevision 2009 Waiver is not analogous to the Waiver Request. See
Biller Comment at 3-4; CEA Comments at 3; CEA February 14, 2013 ex parte at 1-2; CEA March 7, 2013 ex parte
at 5. The Cablevision 2009 Waiver was not granted, as Charter claims, based on Cablevision’s deployment of
downloadable security, but rather based on Cablevision’s “demonstrated efforts stretching back to 2001 to
implement the integration ban and to ensure the compatibility of SmartCard technology with CableCARD devices.”
Cablevision 2009 Waiver, 24 FCC Rcd at 396, ¶ 6. However, irrespective of the applicability of the Cablevision
2009
Waiver, as we discuss above, we find good cause to grant the Waiver Request.
79 See ATCA Reply Comments at 3-5; Biller Comments at 3; Biller March 8, 2013 ex parte at 4; CEA Comments at
2; CEA January 28, 2013 ex parte at 1; CEA January 28, 2013 ex parte at 2; TiVo ex parte at 2.
80 See Charter February 28, 2013 ex parte at 2.
81 National Cable & Telecommunications Assoc., 22 FCC Rcd 11767, 11779, ¶ 31 (MB 2007) (“We note that should
NCTA’s members deploy a downloadable conditional access security solution that is available today, such as that
developed by Beyond Broadband Technology, no waiver of the [integration] ban would be necessary”); Bureau
Comcast Waiver Denial
, 22 FCC Rcd at 242-43 ¶ 34. CEA correctly points out that the Charter system is not
identical to BBT’s. See CEA March 7, 2013 ex parte at 6-7. However, CEA does not refute Charter’s claim that
both systems are similar in that they rely on a commodity hardware chip. We also agree with Biller and CEA that
Charter’s downloadable security is not the same system envisioned by the Commission when it made its statements
about downloadable security in the 2005 Deferral Order. See Biller March 8, 2013 ex parte at 1-2; CEA March 7,
2013 ex parte at 2-5. But the Bureau found the BBT system compliant under the Commission’s rules even though
the BBT system, like Charter’s, also differed from the effort being described in the 2005 Deferral Order.
82 See Biller Comments at 2-3; Biller March 8, 2013 ex parte at 2; CEA Comments at 5; CEA December 13, 2013 ex
parte
at 2; CEA March 22, 2013 ex parte at 1.
83 See 47 U.S.C. § 549(a); First Report and Order, 13 FCC Rcd at 14775, ¶ 1 (“The purpose of Section 629 and the
rules we adopt is to expand opportunities to purchase [MVPD] equipment from sources other than the service
provider.”).
84 Like all MVPDs Charter must provide, “technical information concerning interface parameters that are needed to
permit navigation devices to operate” with its systems upon request, see 47 C.F.R. § 76.1205(a), but our condition
(continued....)
10

Federal Communications Commission

DA 13-788

because our condition requires that Charter continue to provide CableCARDs to customers until a third
party retail device is made available, Charter will be incentivized to foster the creation of a retail device.
As discussed above, we also find that the development of a competitive retail market is more likely in the
unique factual circumstances of this case, where Charter plans to use the same downloadable system as
Cablevision, because a retail device manufactured for a Charter system will have a larger market beyond
Charter customers.85
13.
Opponents have also expressed concern that Charter’s downloadable system will not be
portable,86 but we believe the collaboration between Charter and a consumer electronics manufacturer that
we are requiring will ensure that the retail device developed will be nationally portable on Charter
systems, Cablevision systems, and the systems of any other cable operator that may subsequently adopt
the same type of downloadable security technology as Charter. Furthermore, concerns that Charter will
abandon support of CableCARD87 or adopt a downloadable system that does not rely on commodity chips
or royalty-free key ladders88 are explicitly addressed by our conditions that require Charter to indefinitely
support CableCARD and implement a downloadable system relying on commodity chips and royalty-free
key ladders.89 Finally, although Charter claims that waiver will accelerate its transition to an all-digital
platform throughout its entire footprint, this is not, in and of itself, an adequate basis for waiver grant.90
We note, however, that the conditions we impose relating to Charter’s digital transition efforts will serve
the public interest by giving Charter customers access to improved services.

IV.

CONCLUSION

14.
For the reasons stated herein, we conclude that Charter has, on balance, shown good
cause for a waiver of Section 76.1204(a)(1) of the Commission’s rules to allow Charter to use the
integrated security component of its dual-security boxes for a period of two years until April 18, 2015,
subject to the conditions enumerated above.

(...continued from previous page)
places the additional onus on Charter to find a consumer electronics manufacturer for collaboration to create a third
party retail device using Charter’s downloadable security.
85 See Charter February 28, 2013 ex parte at 3 (“Charter’s downloadable security system is being designed
specifically to increase interoperability and portability, so that the same device can be trusted on a Charter network
as well as a downloadable Cablevision network.”).
86 See ATCA Reply Comments at 3-5; Biller Comments at 3; Biller March 8, 2013 ex parte at 4; CEA Comments at
2; CEA January 28, 2013 ex parte at 1; CEA January 28, 2013 ex parte at 2; TiVo ex parte at 2.
87 See Biller Reply Comments at 1; Biller March 8, 2013 ex parte at 4; Public Knowledge Comments at 3; CEA
Comments at 7; CEA December 13, 2012 ex parte at 2; TiVo ex parte at 2.
88 See CEA March 29, 2013 ex parte at 2.
89 See discussion supra at ¶ 10, n.57.
90 See Commission Comcast Waiver Denial, 22 FCC Rcd at 17118-19, ¶¶ 8-10 (rejecting Comcast’s request for a
waiver of 47 C.F.R. § 76.1204(a) under Section 629(c) of the Communications Act on the grounds that waiver was
necessary to continue digital deployment and consumer adoption of digital services); Cablevision Order, 22 FCC
Rcd at 224, ¶¶ 12-16 (rejecting similar waiver argument by Cablevision). See also Biller March 8, 2013 ex parte at
1-2; CEA March 7, 2013 ex parte at 2-5 (arguing that Charter intends to continue its digital transition regardless of
whether it receives waiver). Charter attempts to argue that the above cited decisions are inapplicable because the
Waiver Request is pursuant to Sections 1.3 and 76.7 of our rules rather than Section 629(c). See Charter February
28, 2013 ex parte at 6. However, we believe that the reason this rationale was previously rejected for waiver
requests in the context of Section 629(c) applies equally to waiver requests filed under the Commission’s general
waiver rules.
11

Federal Communications Commission

DA 13-788

V.

ORDERING CLAUSES

15.
Accordingly,

IT IS ORDERED

that, pursuant to Sections 1.3 and 76.7 of the
Commission’s rules, 47 C.F.R. §§ 1.3, 76.7, a limited, conditional waiver of Section 76.1204(a)(1) of the
Commission’s rules, 47 C.F.R. § 76.1204(a)(1),

IS GRANTED

to Charter Communications, Inc. until
April 18, 2015, consistent with the terms of this Order and subject to the conditions enumerated above.
16.
This action is taken pursuant to authority delegated by Section 0.283 of the
Commission’s rules.91
FEDERAL COMMUNICATIONS COMMISSION
William T. Lake
Chief, Media Bureau

91 47 C.F.R. § 0.283.
12

Note: We are currently transitioning our documents into web compatible formats for easier reading. We have done our best to supply this content to you in a presentable form, but there may be some formatting issues while we improve the technology. The original version of the document is available as a PDF, Word Document, or as plain text.

close
FCC

You are leaving the FCC website

You are about to leave the FCC website and visit a third-party, non-governmental website that the FCC does not maintain or control. The FCC does not endorse any product or service, and is not responsible for, nor can it guarantee the validity or timeliness of the content on the page you are about to visit. Additionally, the privacy policies of this third-party page may differ from those of the FCC.