Skip Navigation

Federal Communications Commission

English Display Options

Commission Document

Oceanic Time Warner Cable, a division of Time Warner Cable, Inc. Oceanic Oahu Central Cable System

Download Options

Released: December 31, 1969

Federal Communications Commission

DA 09-120

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
) File Number EB-07-SE-352
)
Oceanic Time Warner Cable,
) NAL/Acct. No. 200932100003
a division of Time Warner Cable, Inc.
)
Oceanic Oahu Central Cable System
) FRN 0018049841

FORFEITURE ORDER

Adopted: January 19, 2009

Released: January 19, 2009

By the Chief, Enforcement Bureau:

I.

INTRODUCTION

1.
In this Forfeiture Order, we find that Oceanic Time Warner Cable, a division of
Time Warner Cable, Inc., Oceanic Oaha Central Cable System (collectively, "TWC"), willfully
and repeatedly violated Section 76.1201 of the Commission's Rules ("Rules") in its Oceanic Oahu
Central Cable System.1 Specifically, TWC violated Section 76.1201 by moving certain channels
to a Switched Digital Video ("SDV") platform on November 6, 2007, thereby preventing
subscribers with CableCARD-equipped unidirectional digital cable products ("UDCPs") from
using their navigation devices to access these channels.2 Further, in its deployment of SDV on
November 6, 2007, TWC violated Section 76.640(b)(1) by failing to provide a virtual channel
table which conforms to the standards required under Sections 76.640(b)(1)(i) and
76.640(b)(1)(v). We conclude, pursuant to Section 503(b) of the Communications Act of 1934, as
amended ("Act"),3 that TWC is liable for a forfeiture in the amount of twenty thousand dollars
($20,000). As discussed below, we further direct TWC to comply with the Bureau's Order to
make appropriate refund of fees charged to customers affected by TWC's movement of linear
channels to the SDV platform on November 6, 2007.4


1 47 C.F.R. 76.1201.
2 Navigation devices refer to "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." 47 C.F.R. 76.1200(c). UDCPs refer to devices that have the ability to receive encrypted
digital cable programming, but do not have any upstream, or bidirectional, capabilities. For example, such devices
cannot support two-way services such as Electronic Programming Guides (EPGs), Voice on Demand (VOD), Pay
Per View (PPV), and other interactive capabilities. See Implementation of Section 304 of the Telecommunications
Act of 1996, Commercial Availability of Navigation Devices, Compatibility Between Cable Systems and Consumer
Electronics Equipment
, Third Further Notice of Proposed Rulemaking, 22 FCC Rcd 12024, 12025-26 (2007)
("Third Further Notice of Proposed Rulemaking"). See also 47 C.F.R. 15.123(a).
3 47 U.S.C. 503(b). This Forfeiture Order is issued through the coordinated effort of the Commission's
Enforcement Bureau and Media Bureau. See 47 C.F.R. 0.61(f)(5), 0.111(15).
4 TWC's notice to its customers, as well as technical papers submitted by the company to the Bureau, support our
(continued....)

Federal Communications Commission

DA 09-120

II.

BACKGROUND

2.
Congress and the Commission have long recognized the importance of allowing
consumers the freedom to purchase their own navigation devices from sources other than their
cable operator, satellite provider, or other multichannel video programming distributor
("MVPD"). Thus, Congress adopted Section 629 of the Act,5 which requires the Commission to
ensure the commercial availability of navigation devices. By separating the security and
navigation functions of equipment used to receive MVPD programming, Congress hoped to spur
competition and expand consumer choice. As the House Report accompanying Section 629
noted, "competition in the manufacturing and distribution of consumer devices has always led to
innovation, lower prices and higher quality. Clearly, consumers will benefit from having more
choices among telecommunications subscription services available through various distribution
sources."6 At the same time, Congress recognized that MVPDs have "a valid interest, which the
Commission should continue to protect, in system or signal security and in preventing theft of
service."7
3.
In its order proposing rules implementing Section 629, the Commission stated that
its overarching goal was to assure competition in the availability of set-top boxes and other
customer premises equipment.8 "As navigation devices are the means to deliver analog and
digital communications, competition in the navigation equipment market is central toward
encouraging innovation in equipment and services, and toward bringing more choice to a broader
range of consumers at better prices." 9
4.
Thus, in adopting Section 76.1201 of the Commission's Rules,10 which allows
subscribers to acquire, attach, and use any compatible navigation device with an MVPD's
system, subject to the proviso that such equipment not cause harmful interference or facilitate
theft of service, the Commission likened its actions to the Carterfone principle it previously
adopted in the telephone environment.11 In Carterfone, the Commission allowed consumers to
attach legal devices to the telephone network unless that equipment would damage the network.
"As a result of Carterfone and other Commission actions, ownership of telephones moved from
the network operator to the consumer. As a result, the choice of features and functions
incorporated into a telephone has increased substantially, while the cost of equipment has


(...continued from previous page)
characterization of TWC's actions as "moving" or "migrating" linear programming to a SDV platform.
5 47 U.S.C. 549. Section 629 was adopted as part of the Telecommunications Act of 1996. Pub. L. No. 104-104,
110 Stat. 56 (1996).
6 H.R. REP. NO. 104-204, at 112 (1995).
7 Id.
8 Implementation of Section 304 of the Telecommunications Act of 1996, Commercial Availability of Devices, Notice
of Proposed Rulemaking, 12 FCC Rcd 5639, 5641 (1997).
9 See Implementation of Section 304 of the Telecommunications Act of 1996, Commercial Availability of Navigation
Devices,
Report and Order, 13 FCC Rcd 14775, 14776, para. 2 (1998) ("Navigation Devices Order").
10 47 C.F.R. 76.1201.
11 See Navigation Devices Order, 13 FCC Rcd at 14478 (citing Use of the Carterfone Device in Message Toll
Service,
Decision, 13 FCC 2d 420, 424-25 (1968), recon. denied, 14 FCC 2d 571(1968)).
2

Federal Communications Commission

DA 09-120

decreased."12 The Commission emphasized that "[f]ollowing the Carterfone principle adopted in
the telephone context would allow subscribers the option of owning their own navigation devices
and would facilitate the commercial availability of equipment."13 The Commission stated that
"[t]he steps taken in this Report and Order, if implemented promptly and in good faith, should
result in an evolution of the market for navigation devices so that they become generally and
competitively available."14
5.
The Commission recognized that its work on these issues was not complete and
reiterated its commitment to monitoring developments regarding the compatibility of set-top
boxes and digital televisions.15 Five years later, in the Plug and Play Order,16 the Commission
took further steps to facilitate the direct connection of digital navigation devices (including
commercially available UDCPs) to MVPD systems. Specifically, the Commission considered
standards agreed upon by the cable and consumer electronics ("CE") industries17 and adopted a
cable compatibility standard for integrated, unidirectional digital cable television receivers, as
well as other UDCPs, to ensure the compatibility and commercial availability of UDCPs with
cable television systems.
6.
Generally, the Plug and Play Order required MVPDs to support operation of
UDCPs and ensure the utilization of such navigation devices in connection with their cable
systems. In addition, the Commission required MVPDs to make available a security element
separate from the basic navigation device. Under this framework, the Commission sought to
enable unaffiliated manufacturers, retailers, and other vendors to commercially market UDCPs
while allowing MVPDs to retail control over their system security.
7.
Consumers with UDCPs access MVPD programming by using a CableCARD
leased from the cable operator.18 UDCPs, and certain related CE equipment, employ a standard


12 Navigation Devices Order Id. at 14780, para. 11.
13 Id. at 14786.
14 Id. The Commission recognized that "the parallel to the telephone has limitations" and specifically stated that the
rules it adopted in implementing Section 629 of the Act sought to accommodate the differences from the telephone
model.
15 Id. at 14781.
16 Implementation of Section 304 of the Telecommunications Act of 1996, Commercial Availability of Navigation
Devices, Compatibility Between Cable Systems and Consumer Electronics Equipment
, Second Report and Order and
Second Further Notice of Proposed Rulemaking, 18 FCC Rcd 20885 (2003) ("Plug and Play Order"). "The term
`plug and play' refers to a device's ability to plug into a cable system and receive digital cable programming without
a cable-operator provided set-top box." Third Further Notice of Proposed Rulemaking, 22 FCC Rcd at n.9.
17 See December 2002 Memorandum of Understanding Among Cable MSOs and Consumer Electronics
Manufacturers. Id
. at note 3 (citing Letter from Carl E. Vogel, President and CEO, Charter Communications, et al.,
to Michael K. Powell, Chairman, FCC (Dec. 19, 2002) ("2002 MOU")). The MOU "reflects a compromise
agreement among the parties [cable and consumer electronics industries] on a specification that will permit the
manufacture of unidirectional cable television receivers that include [the same] ... navigation functionality [that
currently exists for set-top boxes]."
18 In most cases, the MVPDs have employed CableCARDs as their separate-security solution to enable non-
integrated conditional access. But see Cablevision Systems Corporation's Request for Waiver of Section
76.1204(a)(1) of the Commission's Rules
, Memorandum Opinion and Order, 22 FCC Rcd 220, 221-222 (2007). The
Commission granted Cablevision a waiver of the ban on cable operator deployment of set-top boxes with integrated
security to allow Cablevision to use a Smart-Card-based separate-security solution, which is CableCARD-
(continued....)
3

Federal Communications Commission

DA 09-120

interface that permits them to negotiate with the CableCARD. The CableCARD descrambles the
MVPD's encoded digital signal and allows the subscriber to view the programming. Thus,
commercially available UDCPs can be compatible with cable systems nationwide, while cable
operators maintain their ability to secure programming content from unauthorized viewing. In
theory, this arrangement allows consumers access to all of a cable operator's linear programming19
without the need of a separate set-top box leased from their cable operator, while protecting the
cable operator from theft of its programming services.20
8.
But recent events have demonstrated the limits of this theory. Traditionally, cable
systems have used broadcast-type technologies that deliver all programs to all subscribers
whether the subscribers view the programs or not. The programs not viewed nonetheless occupy
system bandwidth (which prevents the use of that bandwidth for any other purpose). Many cable
operators, however, have begun to test and deploy SDV technology in their cable systems. In an
SDV system, a subset of programming is delivered in the traditional way to all subscribers whether
they are viewing the programs or not. For those channels, the CableCARD-equipped UDCP will
work as described above, allowing the subscriber to view the channels delivered in the traditional
broadcast manner. The remaining channels are switched through the use of SDV network
equipment located at a "hub" (where signals are converted and placed onto the "last mile" coaxial
portion of the network). These switched channels do not occupy bandwidth, and are not available
to subscribers until a subscriber tunes to that channel by sending a request, using a remote or
program guide, upstream through the use of a set-top box to the hub. At the hub, the SDV
equipment directly receives and processes set-top channel change requests for switched content
and responds to that set-top with the frequency and program number where that content can be
found. Once the hub receives the request, it immediately begins to transmit the channel. A
customer who uses a CableCARD-equipped UDCP to receive programming must have
additional equipment with the necessary upstream signaling capability to obtain the switched
(i.e., bi-directional) channels. The UDCP cannot perform the bi-directional functions necessary
to request that a channel be delivered via SDV. Nor can the CableCARD, which is designed
only to provide the separate security element, provide the necessary interface needed to send the
signal to the SDV server. Thus, in essence, in an SDV system, all subscribers must have a cable-
operator supplied set-top box to view channels placed on the SDV platform.
9.
On November 8, 2007, the Spectrum Enforcement Division of the Enforcement
Bureau ("Bureau") issued a Letter of Inquiry ("LOI")21 to TWC based on complaints that the
company had moved certain cable channels that previously had been accessible to subscribers
using CableCARD-equipped UDCPs, such as digital cable ready television sets and digital video
recorders, to an SDV platform. Specifically, one complainant alleged that Oceanic had deployed
SDV and moved a large number of channels to an SDV platform, including popular high


(...continued from previous page)
compatible with the use of an adaptor.
19 The term "linear programming" is generally understood to refer to video programming that is prescheduled by the
programming provider. Cf. 47 U.S.C. 522(12) (defining "interactive on-demand services" to exclude "services
providing video programming prescheduled by the programming provider").
20 Third Further Notice of Proposed Rulemaking, 22 FCC Rcd at 12025 3-4.
21 See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal
Communications Commission to Mark Lawrence-Apfelbaum, Esq., Executive Vice President and General Counsel,
Time Warner Cable, Inc. (Nov. 8, 2007) ("LOI").
4

Federal Communications Commission

DA 09-120

definition ("HD") sports and entertainment channels.22 According to the complaints, Oceanic's
implementation of SDV necessarily required customers using a CableCARD to obtain additional
equipment, i.e., a set-top box, from the cable company to continue to receive all cable channels
available to them prior to the change to the SDV platform.23 The LOI sought information on a
number of issues, and asked the company to explain how its implementation of SDV was
consistent with Section 629 of the Act, Commission rules implementing that statute,24 the 2002
MOU,25 and in particular, the policies and rules established by Commission in the Plug and Play
Order
26 The Bureau issued a Supplemental LOI to TWC on August 25, 2008 to obtain additional
information concerning the company's deployment of SDV.27
10.
TWC responded to the LOI on November 30, 2007,28 and responded in part to the
Supplemental LOI on September 12, 200829 and in full on September 23, 2008.30 In its response,
TWC admits that its Oceanic and Oahu Central cable systems deployed SDV for customers on
the islands of Oahu and Oahu Central on November 6, 2007, moving 62 linear channels to an
SDV platform.31 TWC reports that its Hawaii Division, which includes the cable systems at


22 See Letter from Robert A. Flatt to Kevin J. Martin, Chairman, Federal Communications Commission dated Nov.
7, 2007 (available as a comment in CS Docket No. 97-08) ("Flatt Complaint"). According to the August 21, 2007
notice that TWC sent to its Hawaii subscribers, Oceanic planned to move certain channels to a two-way switched
digital platform on September 24, 2007. TWC ultimately delayed its deployment of SDV until November 6, 2007.
See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew A. Brill, Latham & Watkins LLP,
counsel for TWC, dated September 12, 2008 ("Initial Supplemental LOI Response") at Exhibit A.
23 Id. at 1. In addition to the Flatt Complaint, the Commission has received several other complaints from TWC
customers about Oceanic's SDV deployment. We provided relevant excerpts and identifying information for those
complaints in Attachment A to the Oceanic Time Warner Cable, a subsidiary of Time Warner Cable, Inc., Notice of
Apparent Liability for Forfeiture and Order, 23 FCC Rcd 14981 (Enf. Bur. 2008) ("TWC NAL and Order"). Unlike
the Flatt Complaint, these complaints were not filed in a public Commission docket, so we will treat the
complainants' names as confidential for privacy reasons.
24 The LOI stated we were investigating possible violations of Section 629 of the Act, 47 U.S.C. 549, and Sections
76.640, 76.980(f), 76.984, 76.1204, 76.1206, and 76.1603 of the Commission's rules, 47 C.F.R. 76.640,
76.980(f), 76.984, 76.1204, 76.1206, and 76.1603.
25 See Plug and Play Order, 18 FCC Rcd at 20885 n.3.
26 Id. at 20885.
27 See Letter from JoAnn Lucanik, Deputy Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal
Communications Commission to Arthur H. Harding, Fleischman and Harding LLP and Matthew A. Brill, Latham &
Watkins LLP, counsel for TWC, (Aug. 25, 2008) ("Supplemental LOI"). The Supplemental LOI noted that the
investigation now included possible violations by TWC of Sections 76.1201 and 76.1202 of the Rules. 47 C.F.R.
76.1201, 76.1202. Id., at note 3.
28 See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew A. Brill, Latham & Watkins LLP,
Counsel for Time Warner Cable, to Kathryn S. Berthot, Chief, Spectrum Enforcement Division, Enforcement
Bureau, Federal Communications Commission (Nov. 30, 2007) ("LOI Response").
29 See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew A. Brill, Latham & Watkins LLP,
Counsel for Time Warner Cable, to Marlene H. Dortch, Secretary, Federal Communications Commission (Sept. 12,
2008) ("Initial Supplemental LOI Response").
30 See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew A. Brill, Latham & Watkins LLP,
Counsel for Time Warner Cable, to Marlene H. Dortch, Secretary, Federal Communications Commission (Sept. 23,
2008) ("Final Supplemental LOI Response").
31 Initial Supplemental LOI Response, Exhibit A.
5

Federal Communications Commission

DA 09-120

issue here, had 415,534 subscribers at the time of SDV deployment.32 The company does not
have a precise estimate of the number of CableCARD-using UDCPs affected by its SDV
deployment, but believes it to be less than 583.33 For CableCARD customers affected by its
SDV deployment, TWC offered set-top boxes at the same price as the customers' CableCARDs
for two years from the date of SDV deployment.34 TWC states that it had planned to deploy
SDV on several other Hawaiian islands, but has deferred that action until it has provided 30 days
notice to the relevant Local Franchising Authority ("LFA").35
11.
On October 14, 2008, after reviewing the evidence and TWC's arguments, the
Bureau issued a Notice of Apparent Liability for Forfeiture and Order,36 finding that TWC
apparently had willfully violated Sections 76.1201 and 76.640(b)(1) of the Rules by moving
certain channels to a SDV platform on November 6, 2007, thereby preventing subscribers with
CableCARD-equipped UDCPs from using their navigation devices to access these channels and
by failing to provide a virtual channel table which conforms to the standards required under
Sections 76.640(b)(1)(i) and 76.640.(b)(1)(v).
12.
TWC responded to the NAL on November 14, 2008.37 With respect to the NAL's
finding of apparent liability under Section 76.1201, TWC makes three principal arguments.
First, TWC asserts that the NAL's finding of apparent liability violates the plain meaning of the
rule. According to TWC, the language "prevent the connection or use" of a navigation device
means that a cable operator can be held liable only where it has made it impossible for a
customer to connect or use the device.38 Second, TWC asserts that the NAL's "overly expansive
reading" of the rule violates important public policy objectives.39 Third, TWC argues that the
NAL intrudes upon its First Amendment rights.40 TWC similarly asserts that the Bureau's
finding that TWC apparently violated Section 76.640 is flawed.41 Finally, TWC asserts that the


32 Id.
33 TWC reported 583 UDCP CableCARD subscribers at the time of deployment for its entire Hawaii Division,
which includes not only the Oceanic and Oahu Central cable system, but also several other systems. Although some
subscribers may have more than one UDCP, this number probably overstates the number of affected devices. Id.
34 Id.
35 In its most recent offer, TWC limited the period for affected CableCARD customers to receive a free set-top box
to six months. Id.
36 Oceanic Time Warner Cable, a subsidiary of Time Warner Cable, Inc., Notice of Apparent Liability for Forfeiture
and Order, 23 FCC Rcd 14981 (Enf. Bur. Oct. 15, 2008) ("TWC NAL and Order").
37 Time Warner Cable Inc. Response to Notices of Apparent Liability and Request for Cancellation of Proposed
Forfeitures
, File No. EB-07-SE-352 (filed Nov. 14, 2008) (TWC NAL Response). Together with its NAL
Response, TWC also filed Time Warner Cable Inc. Request for Stay Pending Resolution of Petition for
Reconsideration and Request for Cancellation of Proposed Forfeitures,
EB-07-SE-352 (filed Nov. 14, 2008) and
Petition for Reconsideration of Time Warner Cable Inc., EB-07-SE-352 (filed Nov. 14, 2008). TWC's Request for
Stay
and Petition for Reconsideration will be addressed in subsequent orders.
38 TWC NAL Response at 15-20.
39 Id. at 20-28.
40 Id. at 32-37.
41 Id. at 37-42.
6

Federal Communications Commission

DA 09-120

NAL findings present novel interpretations of the rules at issue and thereby exceed the bounds of
the Bureau's delegated authority.42

III.

DISCUSSION

A.

TWC Willfully and Repeatedly Violated Section 76.1201 By Requiring
Subscribers To Obtain A Set-Top Box To View Previously Accessible
Linear Programming

13.
Section 76.1201 of the Rules prohibits an MVPD from "prevent[ing] the
connection or use of navigation devices to or with its system" unless such devices would cause
electronic or physical harm or allow the unauthorized receipt of service.43 Based on the record
before us, we find that TWC willfully and repeatedly44 violated Section 76.1201 by moving
certain linear channels to an SDV platform in its Oahu Central and Oceanic cable systems45 on
November 6, 2007.46 In so doing, TWC prevented subscribers with UDCPs, such as "digital
cable ready" televisions and TiVo recorders, from viewing the switched linear channels that were
already part of their subscription package without the use of a TWC-supplied set-top box, thus
effectively impairing the use of those UDCPs within each affected cable system. Additionally,
because a TWC-leased set-top box now is required to view many TWC channels, even on UDCP
devices, TWC's migration of channels to an SDV platform has prevented the use of some
functions available on those UDCPs, such as the capacity to view picture-in-picture and record
content.47
1.

The NAL's Findings Are Not Foreclosed by the Plain Language of
Section76.1201

14.
Notwithstanding its effect on CableCARD users, TWC contends that the language
"prevent the connection or use of navigation devices," as used in Section 76.1201, makes clear
that a cable operator can be held liable only where it has stopped or made it impossible for a
customer to connect or use the device.48 According to TWC, its implementation of SDV does
not stop a subscriber from doing so or "make[it] impossible" for a customer to do so.49 TWC


42 Id. at 43.
43 47 C.F.R. 76.1201.
44 See 47 U.S.C. 312(f)(1) & (2) (defining a "willful" violation as the "conscious and deliberate commission or
omission of such act, irrespective of any intent to violate any provision of this Act or any rule or regulation of the
Commission," and defining "repeated" as "the commission or omission of such act more than once."). The
definition of willful and the definition of repeated apply to violations for which forfeitures are assessed under
Section 503(b) of the Act. See Southern California Broadcasting Co., Memorandum Opinion and Order, 6 FCC
Rcd 4387 (1991), recon. denied 7 FCC Rcd 3454 (1992).
45 As noted earlier, TWC states that its Oceanic and Oahu Central cable systems deployed SDV for the islands of
Oahu and Oahu Central. Initial Supplemental LOI Response, Exhibit A.
46 We are aware that other TWC cable systems have implemented SDV and will address the legality of those actions
in future proceedings.
47 As enacted, Section 624A of the Act expressly mandates that the Commission "minimize interference with or
nullification of the special functions of subscriber's television receivers or video cassette recorders," and thus ensure
the full compatibility of these devices with the cable system. 47 U.S.C. 544a(c)(1)(B).
48 TWC NAL Response at 15.
49 Id.
7

Federal Communications Commission

DA 09-120

asserts that the Bureau found only that the company's implementation of SDV "impairs," rather
than prevents, the use of such devices and thus the Bureau's finding is insufficient for purposes
of finding a violation of the standard set forth in the rule.50
15.
We do not agree that a violation of Section 76.1201 occurs only where a cable
operator "stops" or "makes it impossible" for a customer to connect or use a navigation device.
At its core, TWC would have us find that unless a cable operator prevents access to each and
every program and service that constitutes the customer's subscribed programming tier, no
violation of Section 76.1201 has occurred. Under TWC's interpretation of Section 76.1201, a
cable operator may prevent (non-cable operator-supplied) UDCPs from accessing any portion of
a programming service (or transport stream) -- such as closed captioning or content advisory
information -- or may prevent these devices from accessing any linear video programming--
such as select channels within a subscriber's purchased programming tier -- and nonetheless act
consistently with the Commission's mandate to support CableCARD-equipped devices. As we
stated in the TWC NAL and Order, taken to its logical conclusion, TWC's reasoning would
permit an MVPD to move all of its programming to an SDV platform without regard for the
impact its actions would have on customers using or wishing to use CableCARD-equipped
UDCPs. TWC's interpretation would eviscerate the rule, is inconsistent with the operative text
of Section 76.1201 "use of navigation devices," and the Commission's goal to ensure
commercial compatibility of such devices. Considering that the primary objective of Section 629
of the Act and Sections 76.1200-76.1210 of the Rules is to maximize the commercial availability
of navigation devices, we decline to adopt a view of our Rule that ignores the plain text and the
purpose of these sections.51
16.
Moreover, TWC's strained interpretation of the Rule would be fundamentally at
odds with the Commission's goal of protecting cable subscribers' ability to view signals through
the use of commercially available navigation devices offered in a competitive market. TWC's
movement of linear channels that were previously accessible with a CableCARD-equipped
UDCP to a switched digital platform that can only be accessed with a TWC-provided set-top box
conflicts with the Commission's rules and policies designed to promote competition and
consumer choice of navigation devices. Our conclusion is not affected by the fact that customers
can still attach and use navigation devices to receive cable services, and that customers may
access switched digital programming by obtaining a set top box from TWC. In the Plug and
Play Order,
the Commission sought to enable unaffiliated manufacturers, retailers, and other
vendors to compete with MVPD-provided equipment by facilitating the direct connection of
digital navigation devices to MVPD systems.
17.
TWC further argues that the rule was historically intended to do no more than
provide a right to attach commercially available equipment and does not include an obligation
that an operator carry any service used by such equipment.52 We concur that in adopting this
rule, the Commission agreed that the `right to attach' must be subject to the limitation that the
equipment does not harm the MVPD network.53 Thus, the Commission adopted rules that would


50 Id.
51 See Thomas Jefferson University v. Shalala, 512 U.S. 504 (1994) (agency's interpretation of its own rule must be
given controlling weight unless clearly erroneous).
52 TWC Response at 15-16.
53 See Navigation Devices Order, 13 FCC Rcd at 14789.
8

Federal Communications Commission

DA 09-120

permit MVPDs to restrict the attachment or use of equipment to their systems where electronic
or physical harm would be caused by the attachment or operation of such equipment.54 The
Commission was clear however, that "[t]hese standards [set forth in Section 76.1203] shall be
used only to prevent attachment of navigation devices that raise reasonable and legitimate
concerns of electronic or physical harm or theft of service, and not as a means to unreasonably
restrict the use of navigation devices obtained from a source other than the MVPD
."55 The
Commission was equally clear that it expected the cable industry to dedicate the resources
necessary to ensure that commercially available CableCARD-enabled devices continue to
interoperate properly with cable systems.56 The equipment at issue does not raise concerns of
electronic or physical harm or theft of service.
18.
Finally, we disagree with TWC's claims that there is no record support for the
allegation that as a result of the deployment of SDV, UDCPs lose certain functions, such as
picture-in-picture, and that the NAL does not take the balanced approach to equipment
compatibility that is required by Section 624A.57 Section 624A of the Act expressly mandates
that the Commission "minimize interference with or nullification of the special functions of
subscriber's television receivers or video cassette recorders," 58 and thus ensures the full
compatibility of these devices with the cable system. The deployment of SDV and the
requirement that a customer use a company-supplied set top box to view the now switched
channels, negates whatever functionalities were available in the UDCP for those of the company-
supplied set-top box. The Commission received numerous complaints from affected consumers.
For instance, some cable operators have migrated linear HD programming to an SDV format,
thus rendering useless the high definition capability of the navigation device. In addition, many
complaints from consumers indicate that SDV deployment has affected their use of TiVo. One
of TiVo's main features is the ability to watch one program while recording another (i.e., TiVo
Series 3 was designed with two CableCARD slots one single-stream CableCARD ("S-Card")
to decrypt the programming that the TiVo is recording, and another S-card to decrypt the
programming that the TiVo is displaying). The functionality of TiVo is lost with the use of the
company-supplied set-top box, which has its own built-in functionality.
2.

The NAL's Findings Are Fully Consistent with the Public Policy
Underlying the Commission's Rules and Orders on "Plug and Play"


19.
TWC next argues that its manner of implementing SDV is not inconsistent with
the Plug and Play Order.59 Specifically, it contends that the interactive or advanced two-way
capabilities envisioned by that order are not limited to video on demand (VOD), electronic
programming guides (EPG), and impulse pay per view (IPPV); are essentially without limit; and
thus include SDV within its auspices.60 TWC impliedly states that it may move all of its
programming to an SDV format because Plug and Play provided for this eventuality by
mandating DVI/HDMI connections, which allow for connection of UDCPs with two-way


54 47 C.F.R. 76.1203.
55 Id. (emphasis added).
56 But see 2005 Deferral Order, 20 FCC Rcd at 6814.
57 TWC Response at 17-20.
58 47 U.S.C. 544a(c)(1)(B).
59 TWC Response at 21.
60 Id. at 22.
9

Federal Communications Commission

DA 09-120

navigation devices. According to TWC, such an action is also supported by Rules that permit
cable operators to move any programming for any reason -- no law provides subscribers with an
entitlement to receive any particular service.61
20.
The Bureau previously considered, and rejected, the arguments raised by TWC.
As we have previously found, TWC's arguments are inconsistent with the language and the
intent of the Commission's Rules and orders.62 We do not believe that, in adopting the Plug and
Play Order
, the Commission intended to permit an MVPD move all of its programming to an
SDV platform "without regard" for the impact such a move would have on its UDCP-owning
customers. Such an outcome would be fundamentally inconsistent with the Commission's goal
of protecting cable subscribers' ability to view signals through the use of commercially available
navigation devices offered in a competitive market. TWC's movement of linear channels that
were previously accessible with a CableCARD-equipped UDCP to a switched digital platform
that can only be accessed with a TWC-provided set-top box is clearly at odds with the
Commission's Rules and policies designed to promote competition and consumer choice of
navigation devices.
21.
While we recognize that the Plug and Play Order does not prohibit cable
operators from developing and deploying new technology and services, we conclude that it does
not permit TWC's actions here. By moving linear programming to an SDV platform, TWC
prevents CableCARD-equipped UDCPs from receiving previously available channels and
negates the usefulness of competitive commercially available navigation devices, in violation of
the intent of Section 629 and the Commission's Rules.63 The Commission recognized that
devices made pursuant to the standard adopted in the Plug and Play Order lacked upstream or
bi-directional capabilities and therefore could not receive certain programming or services, but
that recognition did not extend to services that consumers traditionally experienced as one-way
services.64 At no point did the Commission authorize MVPDs to modify their transmission of
linear programming such that UDCP devices could no longer receive such programming without
a cable operator-provided set-top box.65 Such an outcome is fundamentally at odds with the
policy and regulatory objectives of the Plug and Play Order.


61 Id. at 23-25.
62 See Oceanic Oahu Central NAL, 23 FCC Rcd at 14987. TWC also argues that "curtailing TWC's ability to
deliver its programming of choice based on its selection of the most efficient technology available would likely run
afoul of the First Amendment." See Oct. 14 Supplemental LOI Response at 5 (citation omitted). We reject this
argument. The requirements at issue are content neutral and are narrowly tailored to further the substantial federal
interest of maximizing commercial availability of navigation devices to the consumer. See Turner Broadcasting
System, Inc. v. FCC,
512 U.S. 622, 662 (1994).
63 See 47 U.S.C. 549; 47 C.F.R. 76.1201.
64 "Due to the unidirectional nature of this receiver specification, an external navigation device would still be needed
to receive advanced features such as cable operator-enhanced electronic programming guides (`EPGs'), impulse pay
per view (`IPPV') or video on demand (`VOD')." Plug and Play Order, 18 FCC Rcd at 20890, 7. See also Third
Further Notice of Proposed Rulemaking,
22 FCC Rcd at 12025-26, 4 ("Devices made pursuant to this standard
have the ability to receive encrypted digital cable programming, but do not have any upstream, or bidirectional,
capabilities (i.e., consumer electronics manufacturers can only make unidirectional devices under the technical
standard adopted in the Plug and Play Order). For example, such devices cannot support two-way services such as
EPGs, VOD, PPV, and other ITV [Interactive Television] capabilities.").
65 TWC's LOI Response cites an ex parte letter it filed in the Plug and Play docket in 2006. In that letter, TWC
states that it informed staff from the Commission's Media Bureau "that SDV would impact some subscribers using
[UDCPs], but noted that these subscribers would continue to receive nearly all the same channels as subscribers
using digital set top boxes
. Contrary to the suggestions of the Consumer Electronics Association in its March 23,
(continued....)
10

Federal Communications Commission

DA 09-120

22.
Section 76.1201 was adopted to achieve the statutory requirement of alternative
sources of navigation devices and to ensure the commercial availability of navigation devices.66
The Plug and Play Order sought to provide further assurance of the commercial availability of
navigation devices by requiring that cable operators support the operation of UDCP in
connection with their cable systems. TWC's implementation of SDV in this case clearly negates
the use of CableCARD-equipped UDCPs and fundamentally limits the commercial and
competitive viability of those devices in cable systems where SDV has been deployed. In the
instant case, customers who used CableCARD-equipped UDCPs are unable to receive dozens of
linear channels after the deployment of SDV.67 As such, TWC is effectively preventing
CableCARD-equipped UDCPs from receiving channels previously available and undermining
the underlying policy goals of the Act and the Commission's Rules to ensure the commercial
availability and use of navigation devices. Thus, we find TWC's November 6, 2007 migration of
linear channels to an SDV platform in its Oceanic Oahu Central Cable System constitutes a
willful and repeated violation of Section 76.1201 of the Rules.
23.
TWC again reasserts that it cannot achieve the efficiencies enabled by SDV
without moving linear channels.68 According to TWC, a finding of liability as a consequence for
such migration would undermine "vital public policy interests," such as additional HD
programming and other digital content for all customers.69 TWC also asserts that a restriction on
SDV would harm the Commission's own policy objectives, such as the digital transition,
increased programming diversity, MVPD competition, and enhanced broadband capabilities.70
24.
As we stated in the TWC NAL and Order, we do not dispute that the deployment
of SDV technology may provide significant public benefits. It is not TWC's deployment of SDV
technology that violates Section 76.1201, but TWC's migration of existing linear programming
to an SDV tier that we find inconsistent with Commission Rules. As we noted in the TWC NAL
and Order
, charging for channels not presently accessible to subscribers with CableCARD-
equipped UDCPs undermines the policy and regulatory objectives of the Plug and Play Order.


(...continued from previous page)
2006 ex parte, the use of SDV by TWC in no way contravenes our support of UDCPs." Letter from Steven N.
Teplitz, Time Warner Cable, Inc. to Marlene Dortch, Secretary, Federal Communications Commission dated May
11, 2006 (filed in CS Docket 97-80) ("TWC Ex Parte Letter") (emphasis added). As the facts of this case
demonstrate, TWC's removal of more than 60 channels, including popular HD channels, is inconsistent with the
company's ex parte letter more than a year beforehand.
66 See Navigation Devices Order, 13 FCC Rcd at 14786.
67 According to the TWC notice announcing the deployment that ultimately took place on November 6, 2007, more
than 40 channels would be moved to the SDV platform and no longer available without the use of a TWC-supplied
set-top box: Digital Cable Service: (CSPAN-3, CSPAN-2, CNBC World, Bloomberg TV, The Weather Channel,
AZN TV, Imaginasian, The Outdoor Channel, Country Music TV, VH1 Classic, BET On Jazz, Ovation), Sports
Pak: (Fuel, NBA TV, The Tennis Channel, Fox College Sports-Atlantic, Fox College Sports-Central, Fox College
Sports-Pacific, College Sports TV), Encore Service: (Fuse), Spanish Pak: (Galavision, Fox Sports World Espanol,
CNN Espanol, Discovery en Espanol, CNN Espanol, ESPN Deportes), Premium: (Chinese Channel), HD
Entertainment Pak: (HD Golf/HD Versus, HD Versus & Golf, HD Fsn, HD National Geographic, HD Net, HD Net
Movies, iNDemand HD, ESPN HD, ESPN2HD, HD Universal), Jewelry Channel, Pentagon Channel, KOAM,
Ocean Network, and Inspirational TV. See also TWC Initial Supplemental LOI Response, Exhibit A (stating that 62
channels ultimately were moved to SDV platform).
68 TWC Response at 28-32.
69 Id. at 30.
70 Id. at 31-32.
11

Federal Communications Commission

DA 09-120

Moreover, we are not convinced that the only way TWC can create additional capacity using
SDV is to move existing linear programming to an SDV platform. Regardless of the benefits
touted, the manner in which TWC has migrated linear channels prevents certain UDCP
customers the use and functionality of their navigation devices.71
3.

The NAL's Reading of Section 76.1201 Does Not Conflict with the
First Amendment

25.
TWC's arguments that the NAL runs afoul of the First Amendment are
insubstantial. As an initial matter, TWC's contention that the NAL renders the Commission's
Viewability Order unconstitutional lacks any merit.72 In the Viewability Order, the Commission
set forth a comprehensive analysis of why the requirement that all cable subscribers be able to
view the signals of all must-carry stations after the digital transition was consistent with the First
Amendment,73 and the U.S. Court of Appeals for the District of Columbia Circuit recently
dismissed a constitutional challenge to the Viewability Order.74 The analysis contained in the
Viewability Order in no way depended on the use of SDV under the circumstances present here,
and the interpretation of our Rules set forth in the NAL neither alters the Commission's
expectation that "cable capacity will continue to expand in future years, thus further decreasing
the relative burden on cable operators" nor its observation that "because digital cable systems
offer so much more capacity, the proportion of overall bandwidth devoted to must-carry signals
is that much smaller than was the case at the time of the [U.S. Supreme Court decisions
upholding the constitutionality of must-carry regulation]."75
26.
Neither is there any merit to TWC's contention that the NAL violates the First
Amendment by "impermissibly curtail[ing] TWC's editorial discretion to deliver programming
of its choice using the most efficient technology available to it."76 Simply put, TWC has no First
Amendment right to undermine the development of a competitive market for navigation devices
by preventing consumers from accessing linear programming in their existing programming
packages with a CableCARD-equipped UDCP and instead requiring the consumer to obtain a
TWC-provided set-top box. To the extent that the rules at issue here implicate the First
Amendment at all, the requirements are content neutral and narrowly tailored to further the
substantial federal interest in developing and maintaining a competitive market for navigation
devices, an interest whose importance has been recognized by both Congress and the courts.77
Finally, while TWC complains that the First Amendment is implicated by the treatment of other


71 We note TWC's claim that bi-directional navigation devices "are now becoming available at retail." TWC
Response
at 26. The development of bi-directional navigation devices without limitations on the ability to integrate
broadband capability into competitive navigation devices and the ability to integrate web-based or IP content with
cable-providing programming will further Congress and the Commission's shared policy goal of expeditious
commercial availability of bi-directional navigation devices.
72 See Carriage of Digital Television Broadcast Signals, Third Report and Order, 22 FCC Rcd 21064 (2007)
("Viewability Order").
73 See Viewability Order at 41-63.
74 See C-SPAN, Inc. v. FCC, 545 F.3d 1051 (D.C. Cir. 2008).
75 Viewability Order at 60.
76 TWC Response at 33.
77 See 47 U.S.C. 549; Comcast Corp. v. FCC, 536 F.3d 763 (D.C. Cir. 2008); Charter Communications, Inc. v.
FCC
, 460 F.3d 31 (D.C. Cir. 2006).
12

Federal Communications Commission

DA 09-120

MVPDs under the integration ban, the D.C. Circuit previously rejected the cable industry's
attempt to raise the differential treatment of cable and DBS in another proceeding, noting the
evidence set forth by the Commission of the distinctions in the navigation-device market for
cable and DBS and observing that "the cable industry is `perfectly capable of filing a petition
tomorrow with the Commission' that will generate a record appropriate for consideration of
those issues."78 The same holds true here.

B.

TWC Willfully Violated Section 76.640(b) by Failing to Comply with
the Commission's Technical Rules Regarding the Provision of a
Virtual Channel Table for SDV Programming

27.
TWC contends that the TWC NAL and Order's finding that the standard
incorporated by reference in Section 76.640(b)(1)(i) applies to all services, including two-way
services like SDV is wrong.79 According to TWC, Section 76.640(b)(1)(i), through the
incorporated standard SCTE 40 (2003), stands for the proposition that SCTE 65 tables must be
presented only for services that are offered to the UDCP host device. Since two-way services are
not offered, they need not be included.80 TWC further asserts that because the text of the rule is
limited to one-way products, it cannot reasonably be applied to two-way services.81 Issues
relating to two-way services, TWC states, were not yet ripe for consideration during the
Commission's consideration of its Plug and Play Order, and so were never intended to be
encompassed by this rule. TWC also cites to the technical standard SCTE 65 to suggest that the
standard was not intended to apply to two-way services, partly because hidden channels are
skipped when the subscriber is channel surfing, and partly because the standards state that
UDCPs may disregard virtual channel data associated with an application-type virtual channel.
TWC argues that the virtual channel table is designed to present only channels that are
accessible.82
28.
TWC's arguments are without merit. On its face, Section 76.640 applies only to
unidirectional products.83 Section 76.640(b)(1) makes no distinction between unidirectional and
bi-directional services. Indeed, by its own terms, the standard incorporated by reference in
Section 76.640(b)(1)(i) applies to all services there is no exception for bi-directional services.84
Therefore, TWC is required to describe programming on an SDV platform in the out-of-band
forward data channel and populate the virtual channel table with all of its programming services.


78 Charter, 460 F.3d at 43 (quoting FCC counsel). Similarly, although TWC complains about a waiver given by the
Media Bureau to Verizon, TWC never sought Commission review of that waiver, and this is not the appropriate
proceeding for challenging its merits.
79 TWC Response at 37.
80 Id. at 37-38.
81 Id.
82 TWC Response at 38-40.
83 See 47 C.F.R. 76.640 ("Support for unidirectional digital cable products on digital cable systems.").
84 Id. at 76.640(b)(1)(i) (incorporating by reference SCTE 40 2003, Section 5.5, which states that "[w]hen one or
more scrambled services are offered on the cable system, System and Service Information for all services (both
scrambled and in-the-clear) shall be carried in an out-of-band Forward Data Channel...").
13

Federal Communications Commission

DA 09-120

29.
TWC next argues that, because Section 15.123 provides that a UDCP cannot be
labeled as digital-ready unless it can navigate channels through the virtual channel table, the
provision of SDV data to UDCPs would render them non-compliant since the devices would be
unable to navigate to SDV programming.85 According to TWC, as a result, the UDCP would be
rendered noncompliant with the Part 15 rules, could not be marketed as digital cable ready, and
cable operators would be relieved of any obligation to support these devices since they are
required only to "support unidirectional digital cable products . . ."86 TWC argues that rules are
not to be interpreted in manner that would nullify corresponding rules. Lastly, TWC argues that
there is no practical benefit to transmitting information for channels that cannot be viewed
without a set-top box.87
30.
We disagree. Requiring compliance with Section 76.640(b) does not conflict with
Section 15.123 and provides a significant practical benefit. As we stated in the TWC NAL and
Order
, including the SDV programming in the virtual channel table would make it clear to TWC
subscribers using CableCARD-equipped UDCPs that their cable operator is charging them for
programming that they cannot see.88 We reiterate that if TWC believed it had a legitimate reason
to exclude two-way programming from the virtual channel table provided to customers with
CableCARD-equipped UDCPs, the company should have sought a waiver of the relevant rules.89
Accordingly, based on the record before us, we find that TWC willfully violated Section
76.640(b) by failing to provide a virtual channel table as required by Section 76.640(1)(b)(i) and
76.640(b)(1)(v) in its Oceanic Oahu Central Cable System.

C.

The Bureau Did Not Exceed Its Delegated Authority in Issuing the NAL

31.
TWC argues that the Bureau's expansive interpretations of the Rules and its
decision to penalize the company present novel questions of policy and law; the issues, therefore,
fall outside the scope of the Bureau's delegated authority and must be submitted to the
Commission for en banc disposition under Section 0.311(a)(1).90
32.
The Enforcement Bureau serves as the primary Commission entity responsible for
enforcement of the Act, the Commission's rules, and Commission orders.91 The Bureau has
delegated authority to issue orders taking appropriate action in response to complaints or
investigations, including issues notices of apparent liability and related orders.92 The Bureau has
delegated authority to decide matters unless they "present novel questions of law, fact or policy
that cannot be resolved under existing precedents and guidelines."93 The questions presented
here are consistent with the Commission's Plug and Play Order, the rules found in Section


85 TWC Response at 41-42.
86 TWC Response at 41.
87 Id. at 42.
88 TWC NAL and Order, XXX at para. 27.
89 47 C.F.R. 76.1207.
90 TWC Response at 43.
91 47 C.F.R. 0.111.
92 47 C.F.R. 0.111(17).
93 47 C.F.R. 0.311(a)(3).
14

Federal Communications Commission

DA 09-120

76.1201 implementing that order, and the technical rules of Section 76.640(b). As such, the
Bureau acted within its delegated authority in issuing the TWC NAL and Order. The Bureau is
merely applying existing rules and case law to the instant facts.

D.

Forfeiture Calculation

33.
Under Section 503(b)(1)(B) of the Act, any person who is determined by the
Commission to have willfully or repeatedly failed to comply with any provision of the Act or any
rule, regulation, or order issued by the Commission shall be liable to the United States for a
forfeiture penalty.94 To impose such a forfeiture penalty, the Commission must issue a notice of
apparent liability and the person against whom such notice has been issued must have an
opportunity to show, in writing, why no such forfeiture penalty should be imposed.95 The
Commission will then issue a forfeiture if it finds by a preponderance of the evidence that the
person has violated the Act or a Commission rule.96 We conclude that TWC is liable for a
forfeiture in the amount of twenty thousand dollars ($20,000) for its willful violation of Sections
76.1201, 76.640(b)(1)(i), and 76.640(b)(1)(v) of the Rules.
34.
Under Section 503(b)(2)(A) and Section 1.80(b)(1) of the Commission's Rules,97
we may assess a cable television operator a forfeiture of up to $32,000 for each violation or each
day of a continuing violation, up to a statutory maximum forfeiture of $325,000 for any single
continuing violation. In exercising such authority, we are required to take into account "the
nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the
degree of culpability, any history of prior offenses, ability to pay, and such other matters as
justice may require."98
35.
The Commission's Forfeiture Policy Statement99 and Section 1.80 of the Rules do
not establish a specific base forfeiture for violation of Section 76.1201.100 In a similar case, the


94 47 U.S.C. 503(b)(1)(B); 47 C.F.R. 1.80(a)(1).
95 47 U.S.C. 503(b); 47 C.F.R. 1.80(f).
96 See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589, 7591 (2002).
97 47 U.S.C. 503(b)(2)(A); 47 C.F.R. 1.80(b)(1). The Commission has repeatedly amended Section 1.80(b)(1)
of the Rules to increase the maximum forfeiture amounts, in accordance with the inflation adjustment requirements
contained in the Debt Collection Improvement Act of 1996, 28 U.S.C. 2461. Most recently, the Commission
raised the maximum forfeitures applicable to cable operators, broadcast licensees, and applicants for such authority
from $32,500 to $37,500 for a single violation, and from $325,000 to $375,000 for continuing violation. See
Inflation Adjustment of Maximum Forfeiture Penalties, 73 Fed. Reg. 44663, 44664 (July 31, 2008). The new
forfeiture limits took effect September 2, 2008, apply to violations occurring after that date, and accordingly do not
apply to this case.
98 47 U.S.C. 503(b)(2)(E). See also 47 C.F.R. 1.80(b)(4), Note to paragraph (b)(4): Section II. Adjustment
Criteria for Section 503 Forfeitures. We consider TWC's apparent violations of Section 76.1201 to have begun on
the date its cable system moved previously available linear programming to an SDV platform. TWC's apparent
violations continue each day that such programming remains unavailable to customers using CableCARD-equipped
UDCPs.
99 See The Commission's Forfeiture Policy Statement and Amendment of Section 1.80 of the Rules to Incorporate
the Forfeiture Guidelines,
Report and Order, 12 FCC Rcd 17087, 17115 (1997) ("Forfeiture Policy Statement"),
recon. denied, 15 FCC Rcd 303 (1999).
100
The Bureau has substantial discretion in proposing forfeitures. See, e.g., InPhonic, Inc., Order of
Forfeiture and Further Notice of Apparent Liability, 22 FCC Rcd 8689, 8699 (2007); Globcom, Inc. d/b/a Globcom
(continued....)
15

Federal Communications Commission

DA 09-120

Commission proposed forfeitures for each cable system involved in the violation.101 Thus, we
establish a base forfeiture amount for each cable system in which linear programming has been
moved to an SDV platform, thereby impairing customers' use of navigation devices such as
UDCPs to view such programming. As noted above, this case involves one of TWC's Hawaii
Division cable systems Oceanic Oahu Central Cable System.
36.
As we stated in the TWC NAL and Order, one analogous violation for which the
Commission has already established a base forfeiture is violation of the cable broadcast signal
carriage rule, which has a base forfeiture of $7,500.102 Given the number of channels involved
and the effect of actions like those here on the Commission's policy objectives, however, we
conclude that a more significant penalty is appropriate. We conclude that $10,000 per cable
system in which linear programming is moved to an SDV platform is an appropriate base
forfeiture for violation of Section 76.1201. In this case, TWC moved linear programming to an
SDV platform in one cable system, Oceanic Oahu Central Cable System. Accordingly, we
conclude that TWC is liable for a $10,000 forfeiture for its willful violation of Section 76.1201
of the Rules.
37.
Additionally, we conclude that TWC is liable for a forfeiture in the amount of
$5,000 for its willful violation of Section 76.640(b)(1)(i) of the Rules and $5,000 for its willful
violation of Section 76.640(b)(1)(v) of the Rules. The Commission's Forfeiture Policy
Statement
and Section 1.80 of the Rules do not establish a specific base forfeiture for violation of
Section 76.640(b). However, we note that Section 1.80(b) establishes a base forfeiture of $5,000
for unauthorized discontinuance of service.103 We find that the actions of TWC effectively
discontinue a portion of the services for each of its CableCARD subscribers who choose to view
content via a UDCP. We also conclude that the amount of the forfeiture for each violation is
commensurate with the harm imposed upon cable subscribers. Because the violation of Section
76.640(b)(1) coincides with the migration of linear channels to an SDV platform, we will also
apply this base forfeiture amount of $5,000 for each technical violation of Section 76.640(b)(1)
on a per cable system basis. Accordingly, we conclude that TWC is liable for a forfeiture in the
amount of $10,000 for its willful violation of Sections 76.640(b)(1)(i) and 76.640(b)(1)(v) in its
Oceanic Oahu Central Cable System.


(...continued from previous page)
Global Commun., Order of Forfeiture, 21 FCC Rcd 4710, 4723-24 (2006). We may apply the base forfeiture
amounts described in the Forfeiture Policy Statement and the Commission's rules, or we may depart from them
altogether as the circumstances demand. See 47 C.F.R. 1.80(b)(4) ("The Commission and its staff may use these
guidelines in particular cases[, and] retain the discretion to issue a higher or lower forfeiture than provided in the
guidelines, to issue no forfeiture at all, or to apply alternative or additional sanctions as permitted by the statute.")
(emphasis added).
101
See, e.g., Cablevision Systems Corporation, Forfeiture Order, 15 FCC Rcd 24298 (2000) ("Cablevision
Forfeiture Order") (imposing forfeitures against Cablevision on a cable system basis). SDV is installed at separate
hubs throughout the cable system, but generally the operator will implement the technology on a system-wide basis.
102
47 C.F.R. 1.80(b)(4)(Note). See also Cablevision Forfeiture Order, 15 FCC Rcd at 24298.
103
47 C.F.R. 1.80(b)(4)(Note). Violation of the broadcast signal carriage rule is also analogous to TWC's
failure to provide the SDV programming information in its virtual channel table. In contrast with violations of
Section 76.1201, however, violations of Section 76.640(b)(1) do not affect the viewability of actual programming.
Therefore, it is appropriate to impose a somewhat lesser penalty for such technical violations.
16

Federal Communications Commission

DA 09-120

38.
TWC's implementation of SDV in its Oceanic Oahu Central Cable System, in
which previously available linear programming was moved to an SDV platform, resulted in the
removal of channel information and the loss of access to those switched channels for its
subscribers using CableCARD-equipped UDCPs. Moreover, such implementation of SDV,
without having in place standards to ensure bi-directional compatibility of cable television
systems and CE equipment, effectively harms the Commission's policies to move navigation
devices toward a fully competitive market. We note that TWC could have sought a waiver of
these rules under Section 76.1207, but failed to do so.104 Accordingly, we conclude that TWC is
liable for a total forfeiture amount of twenty thousand ($20,000) for its willful violation of
Sections 76.1201 ($10,000), 76.640(b)(1)(i) ($5,000), and 76.640(b)(1)(v) ($5,000) of the
Commission's Rules.

E.

TWC Must Issue Refunds to Customers Harmed by its SDV Implementation

39.
As we noted in the TWC NAL and Order, TWC's implementation of SDV has
harmed its customers who opted to purchase and use television receiving equipment that does not
require a cable operator-supplied set-top device to receive cable service. Many consumers
purchased expensive UDCPs, such as "cable ready" televisions and digital video recorders like
TiVos, based on the reasonable assumption that no set-top box would be necessary to receive
linear programming.105 In effect, TWC's movement of linear programming to an SDV platform
has substantially diminished the value of its customers' UDCP devices. Moreover, CableCARD
customers affected by TWC's SDV deployment now must pay higher prices to lease set-top boxes
than they would have paid for CableCARDs. Those CableCARD customers who chose not to
obtain the TWC-supplied set-top boxes after the implementation of SDV nevertheless have paid
the same monthly rate for their cable service even though they can view significantly fewer
channels. Most importantly, however, TWC's movement of linear programming to an SDV
platform set back the shared goal of Congress and the Commission of a competitive market for
commercially available navigation devices, as required by Section 629 and the Commission's
Rules.
40.
In calculating the harm to TWC's customers who use UDCP equipment, we
recognize that TWC has made offers to its CableCARD customers to offset the costs of obtaining a
set-top box. While TWC's offer to provide a free set-top box to its CableCARD customers may
provide temporary relief to its customers, it is not a permanent solution the benefits promised by
TWC are, at best, limited in duration. TWC's offer does not address the critical problem
concerning the company's interference with its customers' use of independently obtained UDCPs,
i.e., the loss of service to the extent customers can view fewer channels than they did before the


104 Under Section 629(c) of the Act, 47 U.S.C. 549(c) and Section 76.1207 of the Commission's Rules, 47 C.F.R.
76.1207, the Commission may waive rules adopted under Section 629(a) of the Act for a limited time "upon an
appropriate showing by a provider of multichannel video programming and other services offered over multichannel
video programming systems, or an equipment provider, that such waiver is necessary to assist the development or
introduction of a new or improved multichannel video programming or other service offered over multichannel
video programming systems, technology, or products. See 47 U.S.C. 549(c), 47 C.F.R. 76.1207.
105 For instance, one complainant stated that after talking to a customer service representative who stated that the
CableCARDs would allow access to HD programming on a HD-Tivo DVR, the consumer spent $300 for the HD-
Tivo DVR and $300 for a Tivo Service subscription package. Three weeks later, when the technician came to install
the CableCARDs, the customer could not receive the HD package because TWC no longer "offered the cable cards
with HD." See Complaint No. 07-R522759 at Attachment A.
17

Federal Communications Commission

DA 09-120

movement of linear programming to an SDV platform, nor does it address the loss of functionality
of the device in question.
41.
In the TWC NAL and Order, we ordered TWC, within ninety (90) days of the NAL
and Order, to issue refunds to CableCARD customers affected by the November 6, 2007
implementation of SDV in its Oceanic Oahu Central Cable System.106 In addition, within thirty
(30) days of the release of the TWC NAL and Order, we required TWC to submit to the
Enforcement Bureau an explanation of the method the company planned to use to determine the
appropriate amount of refunds, the number of customers receiving refunds, the total value of
such refunds, and the planned timing of such refunds. TWC failed to comply with the Bureau's
Order and the Bureau is separately addressing that violation of the Commission's Rules.
42.
Thus, we order TWC, within ninety (90) days of this Forfeiture Order, to issue
refunds to CableCARD customers affected by the November 6, 2007 implementation of SDV in its
Oceanic Oahu Central Cable System. Specifically, TWC must provide refunds as follows:
(a) For former CableCARD customers that began to lease any set-top boxes
from TWC following notice of a possible SDV deployment, TWC must
refund the difference in cost (if any) between the charges for the TWC set-
top boxes and the CableCARD previously leased by such customers; and
(b) For CableCARD customers that kept their CableCARDs even after notice
of the SDV deployment, TWC must refund the customers' subscriber fees
based on the diminished value of their service following the movement of
linear programming to an SDV platform by $0.10 per month, per channel
moved and reduce their rates on a going-forward basis accordingly.107

IV.

ORDERING CLAUSES

43.
Accordingly,

IT IS ORDERED

that, pursuant to Section 503(b) of the Act,
Section 1.80 of the Rules, and the authority delegated by Sections 0.111 and 0.311 of the
Commission's Rules, Oceanic Time Warner Cable, a division of Time Warner Cable, Inc.,
Oceanic Oahu Central Cable System

IS LIABLE FOR A FORFEITURE

in the amount of
twenty thousand dollars ($20,000) for willful violation of Sections 76.1201, 76.640(b)(1)(i) and
76.640(b)(1)(v) of the Rules.
44.

IT IS FURTHER ORDERED

that, pursuant to sections 1, 4(i), 4(j), 601, and
629 of the Communications Act of 1934, as amended 47 U.S.C. 151, 154(i), 154(j), 521, 549,
Time Warner Cable, Inc. must take the steps set forth in paragraph 42 of this Forfeiture Order.


106 TWC NAL and Order at 39.
107 $0.10 is our best estimate of the relevant license fee per channel. We note that TWC did not provide an
explanation of the method the company planned to use to determine the appropriate amount of refunds as required
by the TWC NAL and Order. The Bureau will reconsider the appropriate license fee per channel should TWC
submit a petition for reconsideration that includes evidence that the license fees of the affected channels are lower
than $0.10 per month.
18

Federal Communications Commission

DA 09-120

45.
Payment of the forfeiture must be made by check or similar instrument, payable to
the order of the Federal Communications Commission within thirty (30) days of the release of
this Order. The payment must include the NAL/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal Communications
Commission, P.O. Box 979088, St. Louis, MO 63197-9000. Payment by overnight mail may be
sent to U.S. Bank Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St.
Louis, MO 63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by credit card, an
FCC Form 159 (Remittance Advice) must be submitted. When completing the FCC Form 159,
enter the NAL/Account number in block number 23A (call sign/other ID), and enter the letters
"FORF" in block number 24A (payment type code). Requests for full payment under an
installment plan should be sent to: Chief Financial Officer -- Financial Operations, 445 12th
Street, S.W., Room 1-A625, Washington, D.C. 20554. Please contact the Financial Operations
Group Help Desk at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures. TWC will also send electronic notification on the date said
payment is made to JoAnn.Lucanik@fcc.gov and Kevin.Pittman@fcc.gov.
46.

IT IS FURTHER ORDERED

that a copy of this Notice of Apparent Liability
for Forfeiture and Order shall be sent by first class mail and certified mail return receipt
requested to counsel for Time Warner, Inc.: Arthur H. Harding, Esq., Fleischman and Harding
LLP, 1255 23rd Street, N.W., Eighth Floor, Washington, D.C. 20037 and Matthew A. Brill, Esq.,
Latham & Watkins LLP, 555 Eleventh Street, N.W., Suite 1000, Washington, D.C. 20004-1304.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
19

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.