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Viewability Rule Sunsets; Affordable Boxes Or Analog Carriage Allowed.

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Released: June 12, 2012

Federal Communications Commission

FCC 12-59

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Carriage of Digital Television Broadcast
)
CS Docket 98-120
Signals: Amendment to Part 76 of the
)
Commission’s Rules
)

FIFTH REPORT AND ORDER

Adopted: June 11, 2012

Released: June 12, 2012

By the Commission: Commissioners McDowell, Clyburn, and Pai issuing separate statements.

TABLE OF CONTENTS

Heading
Paragraph #
I.
INTRODUCTION .................................................................................................................................. 1
II. VIEWABILITY REQUIREMENT ........................................................................................................ 2
A. Background ...................................................................................................................................... 2
B. Discussion ........................................................................................................................................ 6
1. Statutory Analysis ..................................................................................................................... 7
2. Changes in Technology and the Marketplace.......................................................................... 12
3. Effect on Must-Carry Stations, Cable Operators, and Consumers .......................................... 15
4. Six-Month Transition Period ................................................................................................... 17
III. HD CARRIAGE EXEMPTION........................................................................................................... 19
A. Background .................................................................................................................................... 19
B. Discussion ...................................................................................................................................... 20
IV. CONCLUSION .................................................................................................................................... 24
V. PROCEDURAL MATTERS................................................................................................................ 25
A. Final Regulatory Flexibility Act Analysis ..................................................................................... 25
B. Final Paperwork Reduction Act of 1995 Analysis......................................................................... 26
C. Congressional Review Act............................................................................................................. 27
D. Additional Information .................................................................................................................. 28
VI. ORDERING CLAUSES....................................................................................................................... 29
APPENDIX A – List of Commenters
APPENDIX B – Final Rules
APPENDIX C – Final Regulatory Flexibility Act Analysis

I.

INTRODUCTION

1.
With this Fifth Report and Order (Fifth R&O) in the DTV cable carriage docket, we
announce the sunset of the Commission’s current “viewability” rule, which mandates that cable operators

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with hybrid systems1 carry digital must-carry signals2 in an analog format for the benefit of analog-service
customers. As explained below, we believe the statutory viewability requirement is best read to give the
operator of a hybrid system greater flexibility in deciding how to comply with the viewability mandate.
In particular, while such an operator may continue to carry a must-carry signal in a format that is capable
of being viewed by analog-service customers without the use of additional equipment, rapid changes in
the marketplace and technology – in particular the widespread availability of small digital set-top boxes
that cable operators are making available at low cost (or no cost) to analog customers of hybrid systems –
provide alternative means by which must-carry television signals can be made viewable to all analog
customers who are served by hybrid systems, as required by statute. Because a cable operator’s exercise
of this additional flexibility would involve operational changes that affect must-carry broadcast stations
and viewers, we establish a six-month transitional period, until December 12, 2012, during which hybrid
systems will continue to carry the signals of must-carry stations in analog format to all analog cable
subscribers. In addition, we find it is in the public interest to extend for three more years the HD carriage
exemption for eligible small cable system operators.

II.

VIEWABILITY REQUIREMENT

A.

Background

2.
Pursuant to Section 614(b)(4)(B) of the Communications Act of 1934, as amended (the
“Act”),3 the Commission initiated this proceeding in 1998 to address the responsibilities of cable
television operators with respect to carriage of digital broadcast stations in light of the nation’s transition
to digital television.4 After Congress selected a date certain for the digital transition of full-power
broadcast television stations, the Commission, in 2007, adopted the Viewability Order which, among
other things, established a rule to ensure that after the DTV transition, cable subscribers would continue to
be able to view broadcast stations, as required by statute.5 The Commission was concerned that there
would “continue to be a large number of cable subscribers with legacy, analog-only television sets after
the end of the DTV transition.”6 In 2007, the Commission estimated that about 35 percent of all
television homes, or approximately 40 million households, were analog-only cable subscribers.7


1 A hybrid system is a cable system that offers both analog and digital cable service to its subscribers. By contrast,
an analog-only system or all-digital system provide only analog or digital service, respectively.
2 The “must-carry” provisions of the Communications Act entitle local television stations to have qualifying signals
carried on cable systems in the same markets. Section 614(a) of the Communications Act provides that “[e]ach
cable operator shall carry, on the cable system of that operator, the signals of local commercial television stations
and qualified low power stations as provided in this section.” 47 U.S.C. § 534(a). Section 615(a), 47 U.S.C. §
535(a), imposes a similar requirement to carry “the signals” of qualifying non-commercial television stations.
3 47 U.S.C. § 534(b)(4)(B).
4 Carriage of the Transmissions of Digital Television Broadcast Stations: Amendment to Part 76 of the
Commission’s Rules
, CS Docket No. 98-120, Notice of Proposed Rulemaking, 13 FCC Rcd 15092, 15093, ¶¶ 1-2
(1998). See also 47 U.S.C. § 534(b)(4)(B) (directing the Commission to “initiate a proceeding to establish any
changes in signal carriage requirements of cable television systems necessary to ensure cable carriage of such
broadcast signals of local commercial television stations which have been changed to conform with such modified
standards”).
5 See generally Carriage of Digital Television Broadcast Signals: Amendment to Part 76 of the Commission’s
Rules,
CS Docket No 98-120, Third Report and Order and Third Further Notice of Proposed Rulemaking, 22 FCC
Rcd 21064 (2007) (“Viewability Order” or “Third Further Notice”).
6 Id. at 21065, ¶ 1.
7 Id. at 21065, n.3.
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Although all cable systems were expected to eventually transition to all-digital systems, the Commission
recognized that there may be two different types of cable systems in operation for some period of time
after completion of the DTV transition.8 Some operators may choose to deliver programming in both
digital and analog format (“hybrid systems”), i.e., in addition to a digital tier, the operator would offer an
analog tier and continue to provide local television signals and, in some cases, a subset of cable channels,
to analog receivers in a format that does not require additional equipment.9 Other operators may choose
to operate or transition to all-digital systems, providing cable service in only digital format.10 Thus, in
anticipation of the approaching end of the digital television transition and in light of the state of
technology and the marketplace, the Commission adopted a rule providing cable operators of hybrid
systems two options to comply with the statutory viewability requirement for must-carry broadcast
television stations: (1) carry the digital signal in analog format to all analog cable subscribers in addition
to any digital version carried, or (2) transition to an all-digital system and carry the signal only in digital
format, provided that all subscribers have the necessary equipment to view the broadcast content.11
3.
The Commission did not make the viewability rule permanent. Instead, the Commission
decided to have the rule remain in force for three years after the date of the digital transition, subject to
review by the Commission during the last year of the three-year period.12 With respect to the viewability
rule, the Commission stated that “[i]n light of the numerous issues associated with the transition, it is
important to retain flexibility as we deal with emerging concerns.”13 The Commission explained that a
three-year sunset “provides the Commission with the opportunity after the transition to review these rules
in light of the potential cost and service disruption to consumers, and the state of technology and the
marketplace.”14 The Commission identified certain factors it believed would be relevant to its later
review, including digital cable penetration, cable deployment of digital set-top boxes with various levels
of processing capabilities, and cable system capacity constraints.15
4.
The full-power digital television transition was successfully completed on June 12, 2009,
after Congress chose to delay it from the originally scheduled conclusion on February 17, 2009.
Accordingly, under the terms of the 2007 Viewability Order, absent Commission action, the viewability
rule is scheduled to sunset on June 12, 2012.16
5.
On February 10, 2012, we initiated the Fourth Further Notice of Proposed Rulemaking
(“Fourth FNPRM”) in this docket to determine whether it would be in the public interest to retain the
viewability rule, given the current state of technology and the marketplace.17 We received four


8 Id. at 21072, ¶ 20.
9 Id.
10 Id.
11 47 C.F.R. § 76.56(d)(3).
12 Viewability Order, 22 FCC Rcd at 21070, ¶ 16.
13 Id.
14 Id.
15 Id. at n. 39.
16 Id. at ¶ 16.
17 Carriage of the Transmissions of Digital Television Broadcast Stations: Amendment to Part 76 of the
Commission’s Rules
, CS Docket No. 98-120, Fourth Further Notice of Proposed Rulemaking and Declaratory Order,
27 FCC Rcd 1713 (2012) (Fourth FNPRM).
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comments, five reply comments, and numerous ex parte submissions in response to our Fourth FNPRM.18
In their comments, broadcasters support retention of the viewability rule, while cable operators urge us to
let it expire.19

B.

Discussion

6.
Based on significant changes in the marketplace and technology that have occurred over
the past five years, and our current understanding of the statutory viewability requirement as explained
herein, we find it in the public interest to allow the viewability rule to sunset as scheduled, on June 12,
2012. Because we anticipate that our revised interpretation of the statutory viewability requirement will
lead to the widespread deployment of small, affordable set-top boxes, we establish a transitional period of
six months after expiration of the current rule – that is, until December 12, 2012 – during which hybrid
systems will continue to carry the signals of must-carry stations in analog format to all analog cable
subscribers. This transitional period will give consumers, cable operators, and broadcasters that rely on
must-carry access an opportunity to prepare for that deployment and to take other necessary steps
resulting from changes in cable carriage.
1.

Statutory Analysis

7.
Section 614(b)(7) of the Communications Act, which covers commercial stations, states
that broadcast signals that are subject to mandatory carriage “shall be viewable via cable on all television
receivers of a subscriber which are connected to a cable system by a cable operator or for which a cable
operator provides a connection.”20 Similarly, Section 615(h) for noncommercial stations states that
“[s]ignals carried in fulfillment of the carriage obligations of a cable operator under this section shall be
available to every subscriber as part of the cable system’s lowest priced tier that includes the
retransmission of local commercial television broadcast signals.”21 In the 2007 Viewability Order, the
Commission found that these statutory requirements “plainly apply” to cable carriage of digital broadcast


18 We identify the list of commenters and reply commenters in Appendix A. In addition, we note that we received
numerous ex parte submissions. All of the filings made in this docket are available to the public both online via the
Commission’s Electronic Comment Filing System (“ECFS”) at http://www.fcc.gov/cgb/ecfs/ and during regular
business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, S.W., CY-
A257, Washington, D.C., 20554.
19 See, e.g., NAB comments at 3; NCTA comments at 5; TWC comments at 25.
20 47 U.S.C. § 534(b)(7).
21 47 U.S.C. § 535(h). As the Commission observed in the 2007 Viewability Order, although Sections 614(b)(7) and
615(h) use different language – (i.e., 614(b)(7) directs that signals shall be “viewable” whereas 615(h) directs that
signals shall be “available”) – the Commission consistently has treated them as imposing identical obligations.
Viewability Order, 22 FCC Rcd at 21070, ¶ 15, n.36. See also Implementation of the Cable Television Consumer
Protection and Competition Act of 1992, Broadcast Signal Issues
, MM Docket No. 92–259, Report and Order, 8
FCC Rcd 2965, 2974, ¶ 32 (1993) (“Analog Must Carry Order”) (noting that all must-carry signals must be
available to all subscribers); see also Implementation of Section 302 of the Telecommunications Act of 1996, Open
Video Systems,
CS Docket No. 96-46, Second Report and Order, 11 FCC Rcd 18223, 18308-09, ¶ 162 (1996)
(“1996 OVS Order”) (“Pursuant to Section 614(b)(7) and 615(h), the operator of a cable system is required to ensure
that signals carried in fulfillment of the must-carry requirements are provided to every subscriber of the system”).
Cf. U.S. v. Taylor, 640 F.3d 255, 258 (7th Cir. 2011) (“It would be unrealistic to suppose that Congress never uses
synonyms—that every word or phrase in a statute has a unique meaning, shared by no other word or phrase
elsewhere in the vast federal code”). We note that no commenter has suggested that we impose different carriage
obligations for commercial stations and noncommercial stations. But see Bright House Reply at 9-10, n.12 (arguing
the Commission erred in adopting an expansive reading of Section 614(b)(7) and applying that reading to
noncommercial stations governed by Section 615(h)). For purposes of this proceeding, we will continue to treat
614(b)(7) and 615(h) as imposing identical obligations.
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signals, and, “as a consequence, cable operators must ensure that all cable subscribers – including those
with analog television sets – continue to be able to view all commercial and non-commercial must-carry
broadcast stations” after the DTV transition.22 The Commission interpreted the viewability mandate to
require that a cable operator “ensure that the broadcast signals in question are actually viewable on their
subscribers’ receivers.”23 The Commission rejected cable commenters’ argument that the viewability
mandate is satisfied when a cable operator transmits broadcast signals and offers to sell or lease a set-top
box to their customers that will allow those signals to be viewed on their receivers.24 The Commission
found that argument “at odds with both the plain meaning of the statutory text as well as the structure of
the provision,” explaining that “[t]o the extent that such subscribers do not have the necessary equipment,
… the broadcast signals in question are not ‘viewable’ on their receivers.”25 To implement the
viewability mandate, the Commission concluded that cable operators that choose to operate a hybrid
system – i.e., operators that offer both analog and digital service tiers – were required to carry the must-
carry stations’ signals in analog format to their analog cable subscribers, while also ensuring the signals
were viewable to digital subscribers.26
8.
After consideration of the statutory arguments raised by the parties to this proceeding,27
and upon further review of the statute, we find that the language of the Act is less definitive than our
earlier decision suggested. Nothing in the language of the statute plainly prohibits cable operators from


22 Viewability Order, 22 FCC Rcd at 21070, ¶ 15.
23 Id. at 21074, ¶ 22.
24 Id. at 21073-4, ¶ 22.
25 Id.
26 Id. at 21070, ¶ 15. See also 47 C.F.R. § 76.56(d)(3).
27 We disagree with NAB’s contention that the Fourth FNPRM did not ask for comment on the Commission’s prior
statutory analysis of the viewability requirement in Section 614(b)(7) and that cable commenters, having failed to
seek timely review or reconsideration of the 2007 Viewability Order, are barred from reopening the issue now. See
NAB Reply Comments at 2-3. To the contrary, the Fourth FNPRM specifically asked for parties to include a
statutory analysis with any proposals for changing the viewability rule. See Fourth FNPRM, 27 FCC Rcd at 1721, ¶
16 (“To the extent any parties find the current rule burdensome, we seek comment on proposals that will satisfy the
statute in a less burdensome manner. Is any rule necessary to effectuate the statutory intent? If so, any proposals for
an alternative rule to ensure the actual viewability of must-carry signals should include specific proposed wording,
as well as an analysis of how the proposal is consistent with the statute”). As requested in the Fourth FNPRM, cable
operators provided a statutory analysis to support their alternative proposal for satisfying the viewability
requirement. See, e.g., TWC Comments at 3-7. We also reject ION’s claim that the Fourth FNPRM did not provide
interested parties with an opportunity to comment on the DTA proposal nor “consider[] alternative proposals that
would result in eliminating the rule.” ION Media Networks and Liberman Broadcasting Ex Parte (dated Jun. 1,
2012) at 6-7. To the contrary, the Fourth FNPRM specifically sought comment on possible alternatives to the
viewability rule. See Fourth FNPRM, 27 FCC Rcd at 1721, ¶ 16 (“we seek comment on any other proposals that
would achieve the results necessary to assure the viewability of must carry signals through an approach different
than that of our existing rule. To the extent any parties find the current rule burdensome, we seek comment on
proposals that will satisfy the statute in a less burdensome manner.”) In response, cable commenters generally
argued that offering to sell or lease equipment to consumers would satisfy the statute, and specifically argued that
the availability of DTAs that provided analog customers access to digital must-carry signals made our rule obsolete.
NCTA Comments at 12 (“DTAs could be used to receive digital must-carry signals”). Indeed, the cable industry has
argued the former point since 2007, so there is nothing new about an approach to satisfy the viewability requirement
by offering to sell or lease equipment to cable customers. Thus, the public had ample notice and opportunity to
respond during the comment cycle and to file ex parte responses to any alternative proposals suggested by
commenters, as ION itself has done in this proceeding.
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offering equipment to satisfy the viewability requirement, i.e., the statutory sections at issue do not state
that a signal is not “viewable” if the consumer needs to use additional equipment. Accordingly, we do not
believe that Section 614(b)(7) unambiguously requires that cable subscribers must be capable of viewing
must-carry signals without the use of additional equipment. We instead conclude that “viewable” can
reasonably be read to mean that the operator must make the broadcast signal available or accessible to its
subscribers by an effective means, which may include offering the necessary equipment for sale or lease,
either for free or at an affordable cost that does not substantially deter use of the equipment.28 We believe
this interpretation is reasonable in light of marketplace changes that have occurred over the past five
years. This reading ensures access to must-carry stations as a practical matter – rather than just a
theoretical option if the customer is willing to incur significant additional expense.29 It is consistent with
both the ordinary meaning of the word “viewable” – defined as “capable of being seen or inspected”30 –
and also prior interpretations of the Communications Act.31 Accordingly, we disagree with broadcasters’
sweeping arguments that requiring any sort of equipment use at all by subscribers would be “contrary to
the statute” and “flatly inconsistent” with Section 614(b)(7).32 Indeed, even NAB suggested that a cable
operator could satisfy the statutory viewability requirement by providing “free equipment to subscribers
that enables access to digital broadcast signals for a period of three years,” which acknowledges that the
statute is not as inflexible as NAB otherwise argued.33 We thus agree with cable commenters that the


28 See, e.g., TWC Comments at 4 (“A station plainly is capable of being viewed if it can be seen with the purchase
or lease of equipment (such as a set-top box or digital terminal adapter)”).
29 In 2001, we determined that Section 614(b)(7) did not require cable operators to sell or lease set top boxes to
subscribers that could not view digital broadcast signals on their analog television sets. See Carriage of Digital
Television Broadcast Signals, Amendments to Part 76 of the Commission’s Rules Implementation of the Satellite
Home Viewer Improvement Act of 1999
, CS Docket No. 98-120, First Report and Order and Further Notice of
Proposed Rulemaking, 16 FCC Rcd 2598, 2631-2633, ¶¶ 77-79 (2001). In 2001, the Commission’s simulcast
requirements were about to commence (requiring television broadcast licensees to simulcast a certain percentage of
their analog channel’s programming on their DTV channel), and the Commission decided that subscribers should
not be forced to pay “substantial additional costs” for equipment that would serve only to convert to analog format
digital programming that could be identical in content to the analog programming subscribers already could access
directly through their analog televisions. Id. In that context, the Commission sought to avoid forcing upon
customers “substantial additional costs” associated with receiving duplicative programming. Although made in a
very different context, our decision today once again ensures that compliance with the viewability mandate does not
impose “substantial additional costs” on consumers.
30 See Webster’s Third New International Dictionary 2551 (1993); see also TWC Comments at 4 (seeking this
definition for “viewable”).
31 See, e.g., Implementation of the Cable Television Consumer Protection and Competition Act of 1992, Broadcast
Signal Carriage Issues
, Memorandum Opinion and Order, 9 FCC Rcd 6723, ¶ 16 (1994) (“Where a cable operator
chooses to provide subscribers with signals of must-carry stations through the use of converter boxes supplied by the
cable operator, the converter boxes must be capable of passing through all of the signals entitled to carriage on the
basic service tier of the cable system, not just some of them. In addition, any converter boxes provided for this
purpose must be provided at rates in accordance with Section 623(b)(3). Therefore, in a situation where the
subscriber’s converter is supplied by the cable operator, and is incapable of receiving all signals as required by
Section 614(b)(7), the cable operator must make provision for a converter which is capable of providing these
signals.” (emphasis added)).
32 See NAB Ex Parte (dated April 13, 2012) at 1. See also ION Media Networks Ex Parte (dated Apr. 27, 2012) at
1; Affiliates Associations Ex Parte (dated May 9, 2012) at 1; FOX Affiliates Association Ex Parte (dated May 14,
2012) at 1 (arguing that “the viewability rule is dictated by the plain meaning of [Section 614(b)(7)]”).
33 See NAB Ex Parte (dated May 23, 2012) at 2-3; see also Consumers Union Ex Parte (dated June 5, 2012) at 1
(noting that if the Commission “chooses to revise the [viewability] rule, it should require the availability of set-top
(continued….)
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term “viewable” does not unambiguously require that must-carry stations must be capable of being seen
without the use of additional equipment.34 In reaching this conclusion, we note that agencies may change
their interpretation of an ambiguous statutory provision and that such a revised interpretation is entitled to
deference.35
9.
Broadcasters argue that allowing cable operators to satisfy the viewability requirement by
requiring subscribers to purchase or lease equipment would “make the second sentence [in] Section
614(b)(7) surplusage, and remove any meaning from the word ‘additional’ in the third sentence of Section
614(b)(7).”36 We disagree. The first sentence of Section 614(b)(7) requires that each must carry signal
“shall be provided to every subscriber to a cable system.”37 As the Commission has explained, this
provision requires that every class of subscriber must receive all must carry signals.38 Cable operators
have complied with this requirement through the use of a basic service tier,39 i.e., a level of service to
which subscription is required in order to be eligible for access to any other tier of service at additional
charge.40 The second sentence of Section 614(b)(7) is concerned with a subscriber’s ability actually to
“view” the must carry signals that have to be provided under the first sentence. The second and third
(Continued from previous page)


boxes at no cost to the consumer.”). We note that in an ex parte dated June 8, 2012, NAB sought to “withdraw” its
statement that cable operators may satisfy their viewability obligations through the use of DTAs. See NAB Ex
Parte
(dated June 8, 2012).
34 See TWC Comments at 4.
35 See, e.g., Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 863 (1984) (“The fact that the agency
has from time to time changed its interpretation of the term ‘source’ does not, as respondents argue, lead us to
conclude that no deference should be accorded the agency’s interpretation of the statute.”); see also FCC v. Fox
Television Stations
, Inc., 556 U.S. 502, 515 (2009) (To be sure, the requirement that an agency provide reasoned
explanation for its action would ordinarily demand that it display awareness that it is changing position…. But it
need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the
old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the
agency believes it to be better, which the conscious change of course adequately indicates.”)
36 See NAB Ex Parte (dated May 4, 2012) Attachment at 2. Section 614(b)(7) provides:
SIGNAL AVAILABILITY. – Signals carried in fulfillment of the requirement of this section shall be
provided to every subscriber of a cable system. Such signals shall be viewable via cable on all television
receivers of a subscriber which are connected to a cable system by a cable operator or for which a cable
operator provides a connection. If a cable operator authorizes subscribers to install additional receiver
connections, but does not provide the subscriber with such connections, or with the equipment and
materials for such connections, the operator shall notify such subscribers of all broadcast stations carried on
the cable system which cannot be viewed via cable without a converter box and shall offer to sell or lease
such a converter box to such subscribers at rates in accordance with section 623(b)(3).
47 U.S.C. § 534(b)(7) (emphasis added).
37 Id.
38 See, e.g., Analog Must Carry Order, 8 FCC Rcd at 2974, ¶ 34 (1993) (declining request for a special exception for
commercial subscribers (e.g., hotels and hospitals) that receive specially designed channel line-up; finding the Act is
clear in its application of 614(b)(7) to every subscriber of a cable system and that it grants no authority to exempt
specific classes of cable subscribers from the carriage requirements).
39 See 1996 OVS Order,11 FCC Rcd at 18308-09, ¶ 163 (1996) (recognizing that cable operators have complied
with the must carry rules through the use of a basic tier, but allowing OVS operators to comply with the must carry
rules without necessarily using a basic tier, reasoning that OVS operators “may discover alternate methods to ensure
that subscribers receive all appropriate must carry channels”).
40 47 U.S.C. § 543(b)(7)(A).
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sentences of Section 614(b)(7) likewise are distinct mandates, as we observed in the 2007 Viewability
Order
.41 The second sentence covers “all television receivers of a subscriber which are connected to a
cable system by a cable operator or for which a cable operator provides a connection,” whereas the third
sentence covers the situation where a “cable operator authorizes subscribers to install additional receiver
connections, but does not provide the subscriber with such connections, or with the equipment and
materials for such connections.”42 Because of this difference, allowing cable operators to satisfy the
viewability obligation of the second sentence either without the use of additional equipment or by making
equipment available at no cost or an affordable cost does not render the second sentence “irrelevant” or
“surplusage” in light of the third sentence, which requires operators, in a more limited situation, to offer
to sell or lease converter boxes to subscribers at regulated rates.43 In short, our interpretation of the term
“viewable” in the second sentence is different in scope and substance from the requirement set forth in the
third sentence, which requires cable operators to offer or sell converter boxes to certain subscribers “at
rates in accordance with section 623(b)(3).”44
10.
NAB further argues that allowing cable operators to satisfy the viewability requirement
by providing equipment conflicts with the “signal quality” provision set forth in Section 614(b)(4)(A),
and in particular the requirement that “the quality of signal processing and carriage provided by a cable
system for the carriage of local commercial television stations will be no less than that provided by the
system for carriage of any other type of signal.”45 NAB argues that reliance on set-top equipment “would
allow cable operators to discriminate by, for example, offering non-broadcast programming in a viewable
format but not local broadcast signals,” or to provide some local signals to analog subscribers, but not
others.46 It is not clear, however, that this provision applies here. Section 614(b)(4)(A) speaks
specifically to the issue of “nondegradation” and “technical specifications,” and does not address the issue
of viewability. In any event, even if that provision were to apply, it is not clear that carrying must-carry
signals only in a digital format would violate the terms of 614(b)(4)(A). From a technical standpoint, a
must-carry signal carried in standard definition (SD) arguably has the same “quality of signal processing
and carriage” as a signal carried in analog format because both versions received at the headend should
have the same resolution – 480i – and thus there should be no perceivable difference between them.47
Moreover, there is no evidence in the record to suggest that cable operators intend to use digital
compression or other bandwidth saving techniques to “degrade” must-carry signals in such a way as to
affect the subscriber’s viewing experience.
11.
Based on the foregoing, we agree with cable commenters that the statutory viewability
requirement is ambiguous, and reasonably can be read in a manner to permit cable operators to require the


41 See Viewability Order, 22 FCC Rcd at 21073, ¶ 22.
42 47 U.S.C. § 534(b)(7).
43 See note 36, supra.
44 47 U.S.C. § 534(b)(7). We note that our new statutory interpretation (i.e., that a hybrid system cable operator may
satisfy the viewability mandate by offering analog subscribers equipment for free or at an affordable cost) is being
implemented pursuant to Sections 614(b)(7) and 615(h) of the Act, not as a rate regulation prescribed under Section
623(b)(3) of the Act. Although some requirements set forth in Section 623(b) are lifted when an operator is
deregulated, deregulation would not be an exemption from the carriage requirements of the statute. See Viewability
Order,
22 FCC Rcd at 21078, ¶ 29.
45 47 U.S.C. § 534(b)(4)(A). See also NAB Ex Parte (dated May 4, 2012) Attachment at 2.
46 NAB Ex Parte (dated April 13, 2012) at 2.
47 Carriage of Digital Television Broadcast Signals, CS Docket No. 98-120, Fourth Report and Order, 23 FCC Rcd
13618, 13620, ¶ 5 (2008) (“Fourth Report & Order”).
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use of equipment to view must-carry signals – although we emphasize that such equipment must be both
available and affordable (or provided at no cost). We here choose a reasonable interpretation of the
statutory text that best effectuates the statutory purpose in light of current marketplace conditions.48
Moreover, the doctrine of constitutional avoidance49 counsels us to interpret the Act as not imposing a
rigid analog-carriage requirement on cable operators, where the record establishes a reasonable, less
burdensome alternative that meets the statutory objectives.50 Specifically, we are persuaded by cable
commenters’ argument that the dramatic changes in technology and the marketplace over the past five
years render less certain the constitutional foundation for an inflexible rule compelling carriage of
broadcast signals in both digital and analog formats.51 The current record lacks evidence that infringing
on cable operators’ discretion by requiring both digital and analog carriage of the same broadcast stations
is necessary to protect the viability of over-the-air broadcasting where an affordable set-top box option,
that will achieve the same viewability, is readily available to customers. Nor is there evidence showing
that allowing the viewability rule to sunset where the cable operator makes the digital signal available to
its analog subscribers by offering the necessary equipment at an affordable cost will diminish the
availability or quality of broadcast programming.52 We thus find that the burden placed on cable
operators by the viewability rule is not justified on the current record, which demonstrates that a less
burdensome alternative is available. Based on our analyses of current technology and marketplace
conditions,53 set forth in detail below, we now find that the most reasonable interpretation of the statute is


48 See, e.g., NCTA v. Brand X Internet Services, 545 U.S. 967, 980 (2005) (“ambiguity in statutes within an agency’s
jurisdiction to administer are delegations of authority to the agency to fill the statutory gap in reasonable fashion”).
49 See Frisby v. Schultz, 487 U.S. 474, 483 (1988) (it is a “well-established principle that statutes will be interpreted
to avoid constitutional difficulties”).
50 See TWC Comments at 7-8 (“particularly in light of significant First Amendment concerns presented by the
Commission’s viewability mandate, the Commission should allow that mandate to sunset as planned”); Bright
House Reply at 9 (“The realities of today’s video marketplace render obsolete any logical basis for burdening the
First Amendment rights of cable operators and limiting the viewing options of cable customers by continuing to
insist that hybrid cable systems not only carry must-carry signals, but carry them in analog”); but see NAB Reply
Comments at 7-9; NAB Ex Parte (dated April 13, 2012) at 3-4 (“cable operators offer no evidence that the impact of
the viewability rule on their First Amendment rights has materially changed since 2007; indeed, as more cable
systems increase capacity or convert to digital, the actual impact of the rule will steadily decrease”).
51 See, e.g., TWC Comments at 18. NAB observes that compliance with the viewability rule remains voluntary as
operators have the option to convert their systems to all-digital operation, and thereby obviate the need to comply
with the rule’s analog carriage requirement. See NAB Ex Parte (dated April 13, 2012) at 4-5. Cable commenters,
on the other hand, maintain that forcing operators to carry must-carry signals in analog format unduly hampers the
efforts of cable operators to manage their own gradual transition to all-digital service in a manner that attracts
customers to digital services while retaining value for those customers who still choose to rely only on analog
service. See NCTA Ex Parte (dated April 5, 2012) at 2; see also Bright House Reply at 6 (a cable system’s digital
transition must continue at a pace that properly balances the needs of its subscribers with available spectrum and
allowing the viewability rule to sunset would aid the cable industry’s digital transition).
52 We are not persuaded by broadcasters’ argument that allowing the rule to sunset will threaten the viability of local
broadcasters because their analysis assumes that elimination of the viewability rule will automatically result in the
broadcaster’s signal being unavailable to all analog subscribers. See NAB Ex Parte (dated April 23, 2012)
Attachment. Their analysis fails to take into account that those analog customers who value must-carry channels
may opt for equipment made available by the cable operator to continue accessing must-carry channels and other
programming offered by the cable operator in a digital format. See infra, ¶ 16.
53 See American Trucking Assns. v. Atchison, T. &S.F. Ry., 386 U.S. 397, 416 (1967) (“Regulatory agencies do not
establish rules of conduct to last forever; they are supposed, within the limits of the law and of fair and prudent
administration, to adapt their rules and practices to the Nation’s needs in a volatile, changing economy. They are
(continued….)
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that an operator of a hybrid system may comply with the viewability mandate by carrying a must-carry
signal in a format that is capable of being viewed by analog customers either without the use of additional
equipment or alternatively with equipment made available by the cable operator at no cost or at an
affordable cost that does not substantially deter use of the equipment.
2.

Changes in Technology and the Marketplace

12.
Significant changes that have occurred in the marketplace and technology over the past
five years confirm our determination that it is in the public interest to allow the 2007 viewability rule to
sunset. At the time the rule was adopted, the Nation was preparing for the digital television transition,
and a significant number of television viewers were unequipped to receive a digital signal.54 In 2007,
about 58 percent of television households subscribed to cable service and 46 percent of these cable
subscribers (40 million households) received analog service. Moreover, there was no low-functionality
and/or low-cost digital set-top box option available to ensure analog cable subscribers could access digital
must-carry signals.55 Consequently, the Commission faced the very real possibility that a significant
number of cable customers could lose access to must-carry channels if hybrid cable systems were
permitted to carry such signals only in digital format. Based on the state of the marketplace in 2007, the
rule requiring hybrid cable systems serving analog subscribers to carry must-carry stations in analog
format was a reasonable measure to ensure that must-carry signals were “viewable” and “available” to all
subscribers as required by statute.56
13.
The state of technology and the marketplace is significantly different now. About 50
(Continued from previous page)


neither required nor supposed to regulate the present and the future within the inflexible limits of yesterday”);
American Civil Liberties Union v. FCC, 823 F.2d 1554, 1565 (D.C. Cir. 1987) (FCC should “carefully monitor the
effects of its regulations [of cable television rates] and make adjustments where circumstances so require…. [W]e
would not expect the Commission to adhere blindly to regulations that are cast in doubt by new developments or
better understanding of the relevant facts”), cert. denied, 485 U.S. 959 (1988); Natural Resources Defense Council,
Inc. v. Herrington,
768 F.2d 1355, 1408 (D.C. Cir. 1985) (DOE efficiency standards for household appliances
“would be patently unreasonable” if “based on data half a decade old”).
54 See, e.g., Brighthouse Reply at 4 (“When the Commission adopted the Viewability Order, it was confronting the
broadcast industry’s DTV transition and the fear that this historic event would trigger major viewer disruption. In
that context, the Commission chose – on a temporary basis -- to broadly apply cable’s must-carry obligations so as
to minimize the transitional impact on cable customers who were accustomed to receiving broadcast channels in
analog. With that same transitional objective in mind, the cable industry acquiesced”).
55 See Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of
Navigation Devices; Compatibility Between Cable Systems and Consumer Electronics Equipment; Oceanic Time
Warner Cable, A subsidiary of Time Warner Cable, Inc.; Oceanic Time Warner Cable, a division of Time Warner
Cable, Inc. Oceanic Kauai Cable System; Oceanic Time Warner Cable, a division of Time Warner Cable, Inc.
Oceanic Oahu Central Cable System; Cox Communications, Inc. Fairfax County, Virginia Cable System; Cable
One, Inc.’s Request for Waiver of Section 76.1204(a)(1) of the Commission’s Rules,
Third Report and Order and
Order on Reconsideration, 25 FCC Rcd 14657, 14681-14682, ¶¶ 49-50 (2010) (“2010 CableCARD Order”)
(exempting for the first time HD DTAs from the Commission’s integration ban; see 47 C.F.R. §§ 76.640(b)(4) and
76.1204(a)(1)). In addition, we note that only about 25 percent of television households had HD television sets.
The Nielsen Company, Nielsen Universe Estimates, Jan. 1, 2007 - Jan. 1, 2011, “Mkt Breaks”; National Media
Related Universe Estimates
, Feb. 2011, “Media UE Trends”; Television Audience Report, 2010-2011, at 4,
http://www.nielsen.com/us/en/insights/reports-downloads/2011/television-audience-report-2010-2011.html (visited
Mar. 23, 2012).
56 See NCTA Reply at 4 (cable industry’s commitment to comply with federal rules and to carry must-carry stations
in analog format reflected a commitment the cable industry had previously made to Congress – “a commitment that
also was expressly limited to three years”).
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percent of television households now subscribe to cable service (down from 58 percent in 2007), about 20
percent of these cable subscribers (about 12 million households) receive analog service (down from 40
million households in 2007), and the latter number is expected to drop to 16 percent (or fewer than 10
million households) by the end of 2012.57 We continue to expect most cable operators will eventually
transition to all-digital systems.58
14.
More importantly, unlike in 2007, low-functionality/low cost digital equipment is now
readily available as an option to cable consumers.59 The cable industry has encouraged the development
of small, low-cost set-top boxes, called “Digital Transport Adapters” (“DTAs”),60 to enable customers to
view digital signals, without having to obtain full-featured digital set-top boxes.61 NCTA states that


57 See SNL Kagan, “Video growth enjoys seasonal lift in Q1; service providers notch sub gains,” (May 16, 2012)
(“More than 80% of basic subs are now digital.”); SNL Kagan, “SNL Kagan’s 10-Year Cable TV Projections,” (Jul.
28, 2011).
58 Id. See also NCTA Ex Parte in MB Docket No. 11-169 (dated Feb. 7, 2012) at 4 (noting that “in light of … pro-
consumer benefits, cable operators have strong incentives to migrate rapidly to all-digital networks”); SNL Kagan,
“Cable’s all-digital transition marches on without universal support,” (Dec. 14, 2011) (stating that “the U.S. cable
industry’s all-digital future is inevitable”). We note, for example, that BendBroadband and RCN have completed
their transition to all-digital service, and Comcast and Cablevision are rapidly transitioning to all-digital service. See
BendBroadband Comments in MB Docket No. 11-169 at 1-2; RCN Comments in MB Docket No. 11-169 at 2;
Comcast Comments in MB Docket No. 11-169 at 4; Cablevision Comments in MB Docket No. 11-169 at 13; SNL
Kagan, “Video growth enjoys seasonal lift in Q1; service providers notch sub gains,” (May 16, 2012) (“Greater than
93% of Comcast basic subs and more than 97% of Cablevision basic subs are now digital. Cablevision intends to
complete the conversion of its entire network to digital later this year.”).
59 We note that the number of television households with HD television sets has increased to about 64 percent for
the 2010-2011 TV season (up from 25 percent in 2007). See The Nielsen Company, Nielsen Universe Estimates,
Jan. 1, 2007 - Jan. 1, 2011, “Mkt Breaks”; National Media Related Universe Estimates, Feb. 2011, “Media UE
Trends”; Television Audience Report, 2010-2011, at 4, http://www.nielsen.com/us/en/insights/reports-
downloads/2011/television-audience-report-2010-2011.html (visited Mar. 23, 2012). We also note that analog cable
subscribers with digital TV sets with QAM tuners will be able to continue to view must-carry signals in digital
without attaching additional equipment. Most television sets, consumer electronics devices, and leased set-top
boxes have included QAM tuners since at least 2007, meaning that those devices are capable of tuning unencrypted
digital cable service. See Basic Service Tier Encryption, MB Docket No. 11-169, Between Cable Systems and
Consumer Electronics Equipment
, PP Docket No. 00-67, Notice of Proposed Rulemaking, 26 FCC Rcd 14870,
14872-14876, ¶¶ 4-6 (2011) (“BST Encryption NPRM”). In the pending BST Encryption NPRM, the Commission
sought comment on whether to retain the basic service tier encryption prohibition for all-digital cable systems; the
Commission did not propose to allow encryption of basic service tier signals on hybrid systems, which are at issue
here. Id. at 14877-78, ¶ 9. See also Bright House Reply at 5 (explaining that many cable customers who have not
yet subscribed to a digital service tier are able to directly access unencrypted digital signals included in their cable
system’s basic service tier through their television sets purchased within the last five years).
60 DTAs are simple one-way digital-to-analog set-top boxes that can provide cable consumers with access to the
basic service tier and the expanded basic service tier. These devices are small enough to be attached to the back of a
television set. See, e.g., “The Comcast Digital Transport Adapter” at http://www.bocsco.com/comcast_dta.php
(BOCS website visited May 3, 2012) (link contained in NCTA Comments at 13); “All About Digital Adapters” at
http://customer.comcast.com/help-and-support/cable-tv/digital-adapter/ (Comcast website visited May 3, 2012); Jeff
Baumgartner, “Digital Transport Adapters (DTAs),” Light Reading (Jul. 15, 2009), available at
http://www.lightreading.com/document.asp?doc_id=179245 (visited May 3, 2012). See also Cisco Systems, Inc. Ex
Parte
(dated May 23, 2012) Attachments.
61 See NCTA Comments at 12. See also TWC Ex Parte (dated May 7, 2012) at 1 (in connection with one of its
system’s all-digital transition, the cable operator offered its subscribers the use of one or more DTAs at no charge
for two years, as an alternative to leasing full-featured set-top boxes or purchasing CableCARD-equipped retail
(continued….)
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“some cable operators … are already providing digital transport adapters (DTAs) to some or all of their
customers at minimal or no cost.”62 According to industry reports, about 27 million DTAs were already
deployed by year-end 2011.63 In addition to DTAs, NCTA explains that “[o]ther operators … are
providing other types of affordable digital set-top boxes, with lesser capabilities and/or at substantially
reduced prices for basic-only customers.”64 Moreover, NCTA states that “the eight largest incumbent
cable operators” have committed to “make available to analog-only households, upon request, low-cost
set-top devices capable of displaying basic service tier signals on analog television sets.”65 Therefore, we
expect that DTAs, or similar devices, will be made broadly available on cable systems throughout the
country.66 The low cost set-top box offers reflected in our record will satisfy our new interpretation of the
viewability requirement, permitting a cable operator to make the must-carry signals available by offering
analog customers the necessary digital equipment at an affordable cost.67 Specifically, the record reflects
that Comcast, for a period of time after migrating a system to all-digital, typically offers two or three free
DTAs to customers at no cost, and charges less than $2 for additional boxes.68 Similarly, Time Warner
(Continued from previous page)


devices, and offered subscribers the opportunity to lease one or more DTAs for 99¢ per month after the initial free
offer expires).
62 NCTA Ex Parte (dated April 26, 2012) at 2.
63 See SNL Kagan, “Cable set-top forecast: Industry’s move to IP video impacts projections,” (Sept. 16, 2011).
64 NCTA Ex Parte (dated April 26, 2012) at 2. See also ACA Ex Parte (dated Jun. 4, 2012) at 3 (stating that “ACA
members who operate hybrid analog/digital systems make available for lease digital set-top boxes that permit
digital-only signals to be viewed on analog television sets, and analog-only cable customers that are served by these
hybrid systems can commonly obtain boxes from their providers at low cost”).
65 NCTA Ex Parte (dated May 17, 2012) at 2 (noting that the eight largest cable operators “collectively serve more
than 70 percent of all analog-only cable customers”).
66 We understand that DTAs are widely available to cable systems using Motorola technology and, according to
TWC, “Cisco does make DTAs available for use with Cisco headend equipment.” See TWC Ex Parte (dated May 7,
2012) at 2 (noting, however, that “TWC to date has not deployed DTAs in a Cisco cable system”). See also Cisco
Systems, Inc. Ex Parte (dated May 23, 2012) at 1 (stating it has produced and “markets Digital Transport Adaptors
for use in conjunction with multichannel video programming distribution systems”).
67 Our ruling today is not inconsistent with Section 629 of the Act, which was enacted to ensure the commercial
availability of navigation devices. 47 U.S.C. § 549. We expect many cable operators will offer DTAs to analog
subscribers to fulfill the viewability mandate. Therefore, we do not expect that these low-cost limited functionality
devices will have an effect on the development of a commercial market for navigation devices. See, e.g., 2010
CableCARD Order
, 25 FCC Rcd at 14681, ¶ 49 (exempting limited capability HD set-top boxes from the integration
ban); Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of Navigation
Devices: Cable One, Inc.’s Request for Waiver of Section 76.1204(a)(1)
, CS Docket No. 97-80, Memorandum
Opinion and Order, 24 FCC Rcd 7882, 7887, ¶ 13 (2009) (“Cable One Waiver”). As noted previously, for purposes
of the retail market, consumers prefer advanced two-way devices capable of receiving the electronic programming
guide, video on demand, and other interactive features, which are not made available by DTAs. See Cable One
Waiver
, 24 FCC Rcd at 7887, ¶¶ 13-14. Nevertheless, to the extent such advanced two-way boxes are offered below
the cost reasonably allocable to such box, we remind operators of their obligations to offer a comparable discount to
CableCARD customers on the same service plan. 47 C.F.R. § 76.1205(b)(5)(ii)(B)(2).
68 See NCTA Ex Parte (dated Feb. 21, 2012) in MB Docket No. 11-169 at 4; New Jersey Division of Rate Counsel
Comments in MB Docket No. 11-169 at 6. See also, e.g., SNL Kagan, “All-digital migration drives set-top
outlook,” (Sept. 22, 2009); Jeff Baumgartner, “Comcast Seeds Digital Shift With Free Boxes,” Light Reading (Nov.
4, 2008), available at http://www.lightreading.com/document.asp?doc_id=167256&site=lr_cable (visited May 3,
2012); Jeff Baumgartner, “Comcast Starts to Kiss Analog TV Goodbye,” Light Reading (Jan. 6, 2012), available at
http://www.lightreading.com/document.asp?doc_id=216104&site=lr_cable (visited May 3, 2012).
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Cable states that in transitioning one of its systems to digital it has offered subscribers “one or more”
DTAs free of charge for the first two years and 99 cents per month thereafter.69 In addition, Bright House
states that it offers set-top boxes to basic service tier subscribers for $1 a month.70 We find that this range
of charges for DTAs and set-top boxes – i.e., free or a monthly fee of no more than $2 – would satisfy the
requirement for affordable equipment because the minimal additional cost, if any, is unlikely to
discourage use of this equipment.71 Materially higher leasing fees, however, could deter subscriber
willingness to order the equipment needed to ensure viewability on a hybrid cable system.72 Accordingly,
such fees would not meet the statutory viewability requirement as we interpret it.73
3.

Effect on Must-Carry Stations, Cable Operators, and Consumers

15.
We are not persuaded by the broadcasters’ analysis that allowing the current viewability
rule to expire on schedule will threaten the viability of must-carry stations.74 According to the


69 TWC Ex Parte (dated May 7, 2012) at 1.
70 Bright House Ex Parte (dated May 14, 2012) at 1.
71 We note that, to the extent a cable operator of a hybrid system elects to cease down-converting a must-carry signal
and instead chooses to provide analog customers the necessary digital equipment to view such signal, such
equipment must continue to meet the affordability requirements described herein until the operator completes its
transition to all-digital service.
72 Concerns in the record about the cost of equipment appear to assume costs comparable to those ordinarily charged
for full-function boxes, while our affordability requirement ensures that if equipment is used to provide viewability,
that equipment will be available at a nominal cost or no charge. See, e.g., National Black Religious Broadcasters,
Lieberman Broadcasting Inc., Una Vez Mas, ION Media Networks, NRJ TV LLC (collectively “Must-Carry
Broadcasters”) Joint Ex Parte (dated Jun. 9, 2012) at 4, n.6.
73 We note that, to the extent such equipment is subject to rate regulation, operators must also comply with those
requirements. See 47 U.S.C. § 543(b)(3); 47 C.F.R. § 76.923.
74 See NAB Ex Parte (dated April 23, 2012) Attachment (providing an economic analysis on the impact of reduced
cable carriage on must-carry stations). See also NAB Ex Parte (dated April 23, 2012) Attachment at 3 (if a must-
carry station “were to lose access to a number of cable households through the elimination of the viewability rule, its
revenue would certainly decrease”); NAB Ex Parte (dated April 13, 2012) at 2-3 (if the viewability rule were
allowed to sunset, “there is a significant potential for must carry stations to lose audience share” and to the extent a
must carry station’s financial viability is harmed, it “would harm not only the cable subscribers that can no longer
view must carry stations, but potentially all of those stations’ viewers”). Several must-carry broadcasters filed ex
parte
letters to support NAB’s analysis. See, e.g., Liberman Broadcasting, Inc. (“Liberman”) Ex Parte (dated Apr.
26, 2012); National Religious Broadcasters Ex Parte (dated Apr. 26, 2012); ION Media Networks (“ION”) Ex Parte
(dated Apr. 27, 2012); Una Vez Mas, LP Ex Parte (dated Apr. 27, 2012); Francis Wilkinson (Costa De Oro Media,
LLC) Ex Parte (dated Apr. 30, 2012); Sunbelt Multimedia Co., Ex Parte (dated May 1, 2012); WTVA, Inc. Ex
Parte
(dated May 2, 2012); Named State Broadcaster Associations Ex Parte (dated May 3, 2012); Mapale LLC Ex
Parte
(dated May 7, 2012); The ABC Television Affiliates Association, the CBS Television Network Affiliates
Association, and the NBC Television Affiliates (the “Affiliates Associations”) (dated May 9, 2012); The Ohio
Association of Broadcasters (OAB), the Virginia Association of Broadcasters (VAB), and the North Carolina
Association of Broadcasters (NCAB) Ex Parte (dated May 9, 2012); Daystar Television Network (DTN) Ex Parte
(dated May 11, 2012); FOX Affiliates Association Ex Parte (dated May 14, 2012); Christian Television Network Ex
Parte
(dated May 22, 2012); Trinity Christian Center of Santa Ana, Inc. d/b/a Trinity Broadcasting Network (TBN)
Ex Parte (dated May 24, 2012); Regional News Network (WRNN-TV) Ex Parte (dated May 25, 2012); Bert Ellis
Ex Parte (dated Jun. 4, 2012); Entravision Holdings, LLC Ex Parte (dated Jun. 4, 2012); KVMD Licensee Co.,
L.L.C. Ex Parte (dated Jun. 4, 2012); NRJ TV LLC (“NRJ”) Ex Parte (dated Jun. 4, 2012); Rancho Palos Verdes
Broadcasters, Inc.(RPVB) Ex Parte (dated Jun. 4, 2012); Northwest Broadcasting Inc. Ex Parte (dated Jun. 5, 2012);
Ramar Communications, Inc. Ex Parte (dated Jun. 5, 2012); OTA Broadcasting Ex Parte (dated Jun. 6, 2012); Must-
Carry Broadcasters Joint Ex Parte (dated Jun. 9, 2012).
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broadcasters, approximately 12.6 million households receive only analog cable service, representing
approximately 11 percent of all U.S. television households, and removing that percentage of a station’s
audience “could well have a profound impact on affected stations.”75 As NCTA points out, however, the
broadcasters’ analysis overstates the impact on such stations because it assumes that elimination of the
rule will automatically result in the broadcaster’s signal being unavailable to all analog subscribers.76 To
the contrary, our new statutory interpretation – which hinges on a cable operator making equipment
available at no cost or an affordable cost77 – will ensure that subscribers on hybrid systems may continue
to access these signals at little or no additional expense.78 As cable commenters explain, a must-carry
signal carried only in digital format would still be included in the basic service tier; analog cable
subscribers would not be required to subscribe to an enhanced tier of service to view the digital version of
a must-carry channel.79 We also expect this issue to diminish over time given that the number of analog
cable subscribers is expected to continue to decrease as more cable customers choose to upgrade to full


75 See also NAB Ex Parte (dated April 23, 2012) Attachment at 2. In addition, Affiliate Associations argue that if
the viewability rule was allowed to sunset, stations electing retransmission consent could also “face audience and
revenue losses because many retransmission consent agreements reference the requirements of the viewability rule.
If the rule were to go away, cable operators likely would insist that they have no obligation to ensure retransmission
consent signals are available to all subscribers.” See Affiliates Associations Ex Parte (dated May 9, 2012) at 2;
FOX Affiliates Association Ex Parte (dated May 14, 2012) at 2. We do not find this argument to be persuasive or to
provide a basis for extending the viewability rule. As we have said before certain local broadcast station
programming is “highly valued by consumers” and “carriage of local television broadcast station signals is critical to
MVPD offerings.” General Motors Corporation and Hughes Electronics, Corp. Transferors and the News
Corporation, Limited, Transferee
, MB Docket No. 03-124, Memorandum Opinion and Order, 19 FCC Rcd 473,
565, ¶ 202 (2004). Given cable subscribers’ demand for access to retransmission consent stations, we do not expect
our approach to the viewability requirement for must-carry stations to significantly impact carriage of broadcast
stations that elect to negotiate terms for retransmission consent rather than invoking their statutory must-carry rights.
76 See NCTA Ex Parte (dated April 26, 2012) at 2.
77 We are not persuaded by broadcasters’ argument that equipment use here should be banned for the same reason
the “A/B switch” solution was rejected in the early 1990s. See ION and Liberman Joint Ex Parte (dated June 1,
2012) at 6. An “A/B switch” is a method of manually toggling between cable and broadcast programming to allow
cable subscribers to watch broadcast programming not carried on cable. The “A/B switch” solution was rejected
because of numerous technical problems associated with the device and considerable evidence (including two
empirical studies) showing a lack of consumer acceptance of the switch. See Turner Broad. Sys., Inc. v. FCC, 520
U.S. 180, 219-21 (1997). We are presented with a very different situation here. First, while the “A/B switch”
required subscribers to access must-carry stations over-the-air, in the situation here must-carry stations will continue
to be carried on the digital tier of the cable system. There will be no manual toggling involved to access must-carry
stations. Rather, the available DTA (or similar equipment) will provide subscribers equivalent access to all cable
programming, including must-carry stations. In addition, the record lacks any suggestion of technical problems
associated with the use of DTAs or low-cost set-top boxes. Likewise, there is no evidence of any problem with
customer acceptance. As indicated above, for example, approximately 27 million DTAs had been deployed by year-
end 2011. See supra, ¶ 14.
78 We note that subscribers served by analog-only systems would not be impacted by the sunset of the viewability
rule because those systems would be required to continue to carry must-carry channels in analog format. See 47
C.F.R. § 76.56. According to NCTA, more than half a million cable customers are served by analog-only systems as
of year-end 2011. See NCTA Ex Parte (dated April 26, 2012) at 2, n.7.
79 Id. at 2. See also TWC Ex Parte (dated May 7, 2012) at 2 (explaining that the rates TWC charges for the basic
service tier do not vary depending on whether the subscriber accesses an analog or digital version of services carried
on that tier).
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digital service and as more hybrid cable systems complete their transition to all-digital systems.80
16.
The record further reflects that eliminating the rule will result in significant benefits to
cable operators in meeting the increasing demands of the large majority of their customers, i.e., those
subscribing to digital services.81 NCTA explains that “cable operators face capacity demands from an
increasing proliferation of HD programming services as well as from broadband video services” and need
flexibility to “serve the needs of all their customers while transitioning from analog to digital service.”82
NCTA explains that there are currently more than 183 HD cable networks (including basic, premium, and
regional sports channels), up from only 22 in September 2007 when the Commission adopted the
viewability rule.83 According to staff review of the 2011 Annual Cable Operator Report data and the
2010 Cable Price Survey data, more than 96 percent of cable systems carry at least one must-carry station,
and, on average, each system carries more than seven must-carry stations.84 Each must-carry station
carried in analog occupies 6 MHz of bandwidth that the cable operator could otherwise use for 10-12
standard definition (“SD”) digital streams, 2-3 HD video streams, or significant broadband capacity.85
Thus, as cable commenters explain, elimination of the viewability rule will provide operators the needed
flexibility to meet fast-changing consumer demands for HD cable services and high-speed broadband
services.86


80 See SNL Kagan, “SNL Kagan’s 10-Year Cable TV Projections,” (Jul. 28, 2011). SNL Kagan projects that the
percentage of cable subscribers subscribing to digital cable service will reach about 84 percent by year-end 2012, 88
percent by year-end 2013, 91 percent by year-end 2014, and 93 percent by year-end 2015. Id. See also NCTA Ex
Parte
dated April 26, 2012, at 2-3 (noting that the number of digital households increased from 54% to 78% during
the four years between 2007 and 2011, and that the percentage of digital households had further increased by
December 2011 to 79.4%; and stating that “there is no reason to believe that the steady decline in the number of
analog-only households will not continue”).
81 See, e.g., Bright House Reply at 5-6 (arguing that the viewability rule inefficiently consumes “precious cable
capacity that could be better deployed for enhanced broadband services” with “little to no offsetting public benefit”).
82 NCTA Reply at 5; Bright House Reply at 4 (“[a]nalog carriage of each and every must carry station imposes a
heavy burden on capacity-strained cable systems”). See also Bright House Reply at 6 (“Data-usage by the average
Internet user has increased a thousand-fold in the last decade. Over the next three years, this trend will continue and
even accelerate, and cable operators will need flexibility to meet fast-changing consumer demands”). Broadcasters
do not dispute that carriage of analog signals take up more bandwidth than digital signals, but respond that a cable
operator could avoid the bandwidth issue by transitioning its hybrid system to an all-digital system. NAB
Comments at 5 (“As cable systems convert, whatever burden the Viewability Rule might have imposed will
disappear.”).
83 NCTA Comments at 13.
84 See Fourth FNPRM, 27 FCC Rcd at 1718, ¶ 10, n.36. In the Fourth FNPRM, we estimated that almost 40 percent
of all broadcast stations elected or defaulted to must-carry rather than electing retransmission consent. Id.
85 See , e.g., SNL Kagan, “All-digital footprints make gains amid uneven commitment by operators,” (Dec. 13,
2010) (noting potentially significant efficiencies from reclaiming analog channels); Communications Technology,
“QAM Modulator: Tactics at the Edge,” (Aug. 24, 2009) available at
http://www.cable360.net/ct/news/ctreports/QAM-Modulator-Tactics-at-the-Edge_37234.html (visited May 7, 2012).
See also Bright House Reply at 6-7 (“Requiring a cable operator to carry a single must-carry channel in analog
consumes the same cable spectrum as a dozen standard digital services. This lopsided loss of programming (which
will only grow more extreme as new compression advancements are implemented) is clearly contrary to the best
interests of the vast majority of cable customers, who can already view must carry programming in digital”).
86 See, e.g., NCTA Comments at 15 (stating that “greatly increased demand for capacity to accommodate HD cable
services and broadband video services has made it imperative for cable operators to use their capacity efficiently.”);
NCTA Reply at 5 (explaining that the rule impedes consumer demands for “an increasing proliferation of HD
(continued….)
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4.

Six-Month Transition Period

17.
To facilitate a smooth transition, we adopt, for a six-month transition period following
the sunset of our viewability rule,87 an interim requirement that operators of hybrid cable systems must
continue to carry the signals of must-carry stations in analog format to all analog cable subscribers.
Critical to our decision to allow the viewability rule to sunset is the availability of affordable set-top
boxes to affected cable subscribers. A six-month transition period will provide cable operators an
opportunity to acquire an adequate supply of equipment for subscribers impacted by any carriage
change.88 It will also provide time for cable operators to comply with our existing rules requiring
notification to broadcasters and customers about any planned change in carriage or service and the
operator’s equipment offerings, as well as allow consumers sufficient time to make any necessary
arrangements.89 As part of the cable operators’ required notification to their subscribers of any carriage
(Continued from previous page)


programming services as well as from broadband video services”); Bright House Reply at 6 (explaining that data-
usage by the average Internet user has increased a thousand-fold in the last decade and over the next three years this
trend will continue and even accelerate).
87 I.e., December 12, 2012.
88 See TWC Ex Parte (dated May 7, 2012) at 2 (confirming that “TWC to date has not deployed DTAs in a Cisco
cable system, but TWC understands that Cisco does make DTAs available for use with Cisco headend equipment”).
See also Baja Broadband Operating Company, LLC, Request for Waiver of Section 76.1204(a)(1) of the
Commission’s Rules, CSR-8357-Z, DA No. 12-899 (rel. Jun. 7, 2012) (noting that HD DTAs are expected to be
available to the small cable operator by October 2012). Contrary to the broadcasters’ suggestion, the Baja waiver
grant does not suggest an issue with the availability of DTAs in general. See NAB Ex Parte (dated Jun. 8, 2012) at
2, n.5; Must-Carry Broadcasters Ex Parte (dated Jun. 9, 2012) at 4. First, the Bureau Order pertains to a small cable
operator’s short term need for HD DTAs. The Bureau Order does not address the availability of SD DTAs, which
would also be sufficient for purposes of accessing the signals of must-carry stations carried in digital format. See
NCTA Ex Parte (dated Jun. 11, 2012) at 2 (“Analog customers typically use standard-definition DTAs to access
digital cable services on their analog TVs. There is no shortage of such DTAs in the marketplace. In fact, cable
operators have deployed tens of millions of such DTAs to date, and these DTAs are in plentiful supply from a
variety of vendors. The types of DTAs referenced in the Baja Broadband Waiver Order – HD DTAs – are just now
coming to market and are expected to become more widely available in coming months.”). Second, the Bureau
Order observes that the HD DTAs are expected to be available in October 2012 (i.e., within seven months of the
waiver request date of March 9, 2012), a time frame consistent with the six-month transition period that we adopt
today. Thus, the transition period should afford small operators the time needed to acquire any necessary
equipment, including HD DTAs. Moreover, we expect that our Order today will provide an incentive for DTA
manufacturers to ramp up production. Third, we reiterate that cable operators must have an adequate supply of
affordable boxes to offer their customers in order to satisfy the statutory viewability requirement. To the extent that
DTAs or low cost set-top boxes are not otherwise available to a particular hybrid cable operator, that operator could
not terminate analog carriage of the must-carry stations.
89 See 47 C.F.R. §76.1601 (requiring cable operators to “provide written notice to any broadcast television station at
least 30 days prior to either deleting from carriage or repositioning that station. Such notification shall also be
provided to subscribers of the cable system.”); 47 C.F.R. §76.1603(b) (requiring cable operators (i) to notify
customers of any changes in rates, programming services or channel positions “as soon as possible in writing”; (ii)
to give customers notice at least 30 days in advance of such changes if the change is within the control of the cable
operator; and (iii) to notify subscribers 30 days in advance of any significant changes in other information listed in
Section 76.1602); 47 C.F.R. §76.1602(b) (listing customer service-general information to include (1) products and
services offered and (2) prices and options for programming services and conditions of subscription to programming
and other services). See also NCTA Ex Parte (dated May 17, 2012) at 2 (stating that the eight largest incumbent
cable operators have committed to “make available to analog-only households, upon request, low-cost set-top
devices capable of displaying basic service tier signals on analog television sets” and to “provide ample notice to
affected subscribers of these set-top box offers”); TWC Ex Parte (dated May 7, 2012) at 2 (“where TWC chooses to
(continued….)
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changes, the cable operators have committed to inform affected subscribers that equipment is required to
continue viewing the must-carry signal and how to obtain that equipment.90 We believe informing
consumers about equipment is a critical part of a hybrid operator’s viewability obligations in these
circumstances and thus rely upon this commitment in rendering our decision today. Similarly, we rely
upon the cable operators’ commitment to give broadcasters a minimum of 90 days notice before
undertaking any carriage changes.91 We believe that such advance notice will provide repositioned must-
carry stations sufficient time to communicate with their viewers. Advance notice about planned carriage
changes will allow must-carry stations to notify their viewers – through on-air messages, website
postings, mailings or other forms of communications of their choosing – about the planned change in
carriage, and about the viewers’ options to ensure continued access to the station’s programming.92 We
believe effective consumer outreach, particularly during the six-month transition period, will greatly
minimize the impact that sunset of our viewability rule may have on consumers and must-carry stations.
18.
We remind cable operators that the sunset of our viewability rule does not otherwise
affect the must-carry requirements of Section 76.56 of our rules.93 Cable operators providing digital cable
service must continue to carry local broadcast stations electing mandatory carriage, including in HD
format when broadcast in such format, and cable operators providing only analog cable service (no digital
service) must continue to carry local broadcast stations electing mandatory carriage in analog format.94
By allowing our current viewability rule to sunset, however, we provide hybrid cable system operators the
flexibility to best meet the needs of their subscribers during their move to an all-digital system. Under
our more flexible statutory interpretation, operators of hybrid systems may choose to comply with the
statutory viewability mandate by continuing to down-convert digital must-carry stations to analog format
in addition to carrying those stations in digital SD and/or HD format if that best suits their individual
business plans. Alternatively, after December 12, 2012, an operator of a hybrid system may choose to
satisfy the viewability mandate by making must-carry signals available to analog subscribers by offering
the necessary equipment for sale or lease, either for free or at an affordable cost that does not substantially
deter use of the equipment.95 Additionally, sunset of the current viewability rule allows hybrid cable
system operators the flexibility to benefit from future marketplace and technology developments through
possible methods of compliance not contemplated on the record now before us. We emphasize that, while
(Continued from previous page)


cease analog transmission of one or more must-carry stations in a hybrid digital/analog cable system, it will provide
advance notice regarding available equipment that will enable subscribers with direct connections to analog
television sets to continue viewing such broadcast signals”); Bright House Ex Parte (dated May 14, 2012) at 1;
NCTA Ex Parte (dated May 17, 2012) at 2; TWC Ex Parte (dated May 7, 2012) at 2 (committing to providing
advance notice when terminating analog carriage).
90 See NCTA Ex Parte (dated May 17, 2012) at 2 (stating that the eight largest incumbent cable operators will
“provide ample notice to affected subscribers” of the availability of low-cost set-top devices capable of displaying
basic service tier signals on analog television set); ACA Ex Parte (dated Jun. 11, 2012) at 1 (stating similar
commitment by ACA’s 14 largest members serving more than 50% of all subscribers served by ACA membership).
91 See NCTA Ex Parte (dated Jun. 8, 2012) at 2 (stating that where the eight largest incumbent cable operators wish
to stop carrying the analog version of a must-carry station’s signal, such cable systems will provide notice to the
affected must-carry station at least 90 days in advance of the carriage change); ACA Ex Parte (dated Jun. 11, 2012)
at 1-2 (stating similar commitment by ACA’s 14 largest members serving more than 50% of all subscribers served
by ACA membership).
92 Id.
93 47 C.F.R. § 76.56.
94 See id.
95 See ¶ 14, supra.
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we allow our viewability rule to sunset, the statutory viewability requirement remains in effect.
Therefore, a must-carry station may file a complaint pursuant to Section 76.61 of our rules if it believes a
cable operator has failed to meet its statutory carriage obligations.96 In addition, we will consider
informal consumer complaints when evaluating compliance with the statutory viewability requirement.97
If we receive a significant number of well-founded consumer complaints that an operator is not
effectively making affordable set-top boxes available to customers in lieu of analog carriage of a channel,
one of the possible remedies would be to require the operator to resume analog carriage of the channel.98

III.

HD CARRIAGE EXEMPTION

A.

Background

19.
The Act requires that cable operators carry broadcast signals “without material
degradation.”99 In the context of the carriage of digital signals, the Commission has interpreted this
requirement to contain two parts: first, cable operators may not discriminate in their carriage between
broadcast and non-broadcast signals, and, second, HD broadcast signals must be carried to viewers in
HD.100 In response to concerns from small cable operators about cost and technical capacity, the Fourth
Report & Order
afforded a temporary exemption from the HD carriage requirement for certain small
systems.101 Specifically, the Commission exempted small cable systems with 2,500 or fewer subscribers
that are not affiliated with a cable operator serving more than 10 percent of all MVPD subscribers, and
those with an activated channel capacity of 552 MHz or less. The exemption from the material
degradation rules allows such systems to carry broadcast signals in standard definition (SD) digital and/or
analog format, even if the signals are broadcast in HD, as long as all subscribers can receive and view the
signal.102 The Commission provided that the exemption would expire three years after the conclusion of


96 See 47 C.F.R. § 76.61.
97 Consumers may file a complaint electronically using the Commission’s online complaint form, Form 2000e -
Media (General) Complaint, available at http://esupport.fcc.gov/complaints.htm. Consumers may also file
complaints by fax to 1-866-418-0232 or by letter mailed to Federal Communications Commission, Consumer &
Governmental Affairs Bureau, Consumer Inquiries & Complaints Division, 445 12th Street, SW, Washington, DC
20554. Consumers who want assistance filing their complaint may contact the Commission’s Consumer Call Center
by calling 1-888-CALL-FCC (1-888-225-5322) (voice) or 1-888-TELL-FCC (1-888-835-5322) (tty). There is no
fee for filing a consumer complaint.
98 We recognize that resolving whether an analog carriage remedy is appropriate could in some cases raise issues
that would appropriately be considered by the full Commission in the first instance.
99 See 47 U.S.C. § 534(b)(4)(A) (“The signals of local commercial television stations that a cable operator carries
shall be carried without material degradation. The Commission shall adopt carriage standards to ensure that, to the
extent technically feasible, the quality of signal processing and carriage provided by a cable system for the carriage
of local commercial television stations will be no less than that provided by the system for carriage of any other type
of signal.”) and § 535(g)(2) (“A cable operator shall provide each qualified local noncommercial educational
television station whose signal is carried in accordance with this section with bandwidth and technical capacity
equivalent to that provided to commercial television broadcast stations carried on the cable system and shall carry
the signal of each qualified local noncommercial educational television station without material degradation.”).
100 Viewability Order, 22 FCC Rcd at 21067, ¶ 7; see also 47 C.F.R. § 76.62.
101 See generally Fourth Report & Order.
102 Fourth Report & Order, 23 FCC Rcd at 13620, ¶ 5. We note that our rules do not require cable operators,
irrespective of system size, to carry an SD digital version of a broadcast station’s signal, in addition to the analog
version, to satisfy the material degradation requirement. This is because both an SD digital version and an analog
version of the digital broadcast signal received at the headend should have the same resolution – 480i – and thus
there should be no perceivable difference between the two versions of the signal. Id.
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the DTV transition, but said it would consider whether to extend the exemption in the final year.103 The
Fourth FNPRM undertook this review and tentatively concluded to extend the existing exemption for
three more years, given small cable systems’ apparent widespread reliance on it.104 In response to the
Fourth FNPRM, cable commenters support extension of the HD carriage exemption, while broadcasters
suggest that the exemption should not apply if a system carries any signal in HD.105

B.

Discussion

20.
We find that the small-system HD carriage exemption continues to serve the public
interest and adopt our tentative conclusion to extend the exemption for three more years.106 The record
shows that a significant number of small systems with financial or channel capacity constraints continue
to rely on the HD carriage exemption and require additional time to come into compliance in a cost-
effective way.107 For example, ACA reports that at least 52 of its members, representing more than 385
small systems, still rely on the exemption.108
21.
We find that the same financial and capacity constraints that faced small cable operators
when we initially adopted this exemption continue to exist today. For example, cable commenters
persuaded the Commission in 2008 that, without an exemption from the material degradation rules,
“small systems [would] be forced to absorb or impose significant and unsustainable price increases, or in
some instances to shut down altogether.”109 This is because some small systems did not have the
technical capability or system capacity to carry high definition digital signals, and in some cases had so
few subscribers that per-subscriber costs to upgrade to that capacity would be so high as to make it not
worthwhile to continue operating the system.110 The record shows that the challenges facing small
systems have not diminished since the Commission adopted the exemption and that requiring small
systems to comply with the HD carriage requirement would result in these systems dropping existing
channels or shutting down.111 Thus, as ACA points out, the result for subscribers of these systems could
include “increased rates, loss of desired channels, loss of not only video service, but the potential for


103 Id. at 13622, ¶ 11 (stating that “a three-year sunset provides the Commission with the opportunity after the
transition to review these rules in light of the potential cost and service disruption to consumers, and the state of
technology and the marketplace”).
104 Fourth FNPRM, 27 FCC Rcd at 1714, ¶ 3. Based on the 2010 data from the Annual Cable Operator Report
(FCC Form 325), the Fourth FNPRM indicated that many small systems were relying on the exemption. Fourth
FNPRM
, 27 FCC Rcd at 1722, ¶ 20; see also Fourth FNPRM at Appendix B (discussing our analysis of FCC Form
325 data).
105 See, e.g., NAB comments at 8; NCTA comments at 29; ACA comments at 18-19.
106 We note that we are not changing the existing exemption in any way and this includes retaining our existing
definition of small systems that are eligible for this exemption.
107 See, e.g., ACA Comments at 4-6; NCTA Comments at 22.
108 See ACA comments at 5; ACA reply at 7-8 (“Of these 385 small systems, 45 rely on the exemption because they
have less than 553 MHz of capacity; 106 systems rely on it because they have fewer than 2,501 subscribers; and 234
systems rely on the exemption because they have both less than 553 MHz of capacity and fewer than 2,501
subscribers. These numbers only include the respondents to ACA’s survey, and the total number of ACA members
and the total number of their systems that are currently utilizing the HD carriage exemption is likely higher.”).
109 National Cable & Telecommunications Association Comments at 12 (March 3, 2008).
110 Fourth Report & Order, 23 FCC Rcd at 13620-1, ¶¶ 6-7.
111 See, e.g., ACA Reply at 3.
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broadband Internet access, and the loss of the benefits that flow from competition.”112 NCTA explains
that eliminating the HD exemption would also impede small operators’ “ability to offer new services like
video-on-demand, deploy broadband, or introduce enhanced new speed tiers of broadband to more rural,
smaller market customers.”113 ACA maintains that, for most capacity-constrained small systems, the
unused channel capacity available has actually decreased over the past three years.114 In addition, ACA
reports that, for most financially-constrained small systems, operation costs have increased more than
revenues over the last three years, leaving these systems without the financial resources to purchase the
necessary equipment to upgrade service.115 Notably, these small systems often serve rural and smaller
market consumers, making the potential loss of such service particularly troubling.116 As noted in the
Fourth Report & Order, the loss of a small cable system could mean the effective loss of all MVPD
service for some customers.117 Moreover, in some areas, due to poor over-the-air reception, the loss of a
small cable system could mean the loss of any access to some or all broadcast signals as well.
Accordingly, we find that the exemption remains necessary to protect the viability of small systems and
their service to rural and smaller market consumers.118
22.
This exemption will sunset on June 12, 2015, unless the Commission takes action to
extend it in light of the potential cost and service disruption to consumers and the state of technology and
the market at that time. We note that this exemption is not intended to be permanent and that its purpose
is to provide small systems with additional time to upgrade and, where necessary, expand their systems to
come into full compliance with the material degradation provisions of the carriage rules by carrying HD
versions of all HD broadcast signals without having to make relatively large expenditures over a short
period of time.
23.
We decline, at this time, to further restrict the exemption for small systems by eliminating
it for systems that carry any signal in HD, as suggested by NAB.119 The Commission has already crafted
the exemption quite narrowly to excuse only a limited number of systems with particularly limited
channel capacity or low subscribership.120 We agree with ACA that a small system’s ability to offer some
HD service does not refute an argument that it may be significantly burdensome to offer additional HD
service.121 Further, we do not want to create a disincentive for these systems to take incremental steps
toward offering more HD programming to their subscribers by using the carriage of any HD signals as a
threshold for applying the HD must-carry requirement to small cable systems.122 Although we understand


112 Id. at 5-6.
113 NCTA Comments at 27.
114 ACA Comments at 7.
115 ACA Comments at 11.
116 NCTA Comments at 23.
117 Fourth Report & Order, 23 FCC Rcd at 13621, ¶ 7.
118 ACA and NCTA also sought a permanent exemption from the HD carriage obligation to cable systems that offer
all of their programming in analog only. ACA Comments at 17-18; NCTA Comments at 28-29. We received little
in the record on this issue, and need not resolve it here. To the extent these systems are small systems as defined in
this Order, of course, they are exempted for three years from the HD carriage obligation.
119 See NAB Comments at 8.
120 See ACA Comments at 16 (exemption “is limited to only the smallest and most at-risk systems”).
121 ACA Reply at 6.
122 See ACA Reply at 7.
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NAB’s concern that small systems could possibly misuse the exemption of the HD carriage requirement
to unfairly discriminate against must-carry HD signals in favor of other HD signals,123 broadcasters have
not presented any evidence to suggest that this is, or ever has been, an issue. Moreover, to the extent that
cable operators utilizing the exemption do start to carry a wide range of HD channels, broadcasters are
free to bring such evidence to the Commission’s attention, and we will then be able to evaluate whether
the exemption’s contours should be adjusted.

IV.

CONCLUSION

24.
For the reasons stated above, we find the viewability rule is no longer necessary to ensure
must-carry signals are viewable to all subscribers and therefore will allow the rule to sunset. As an
interim measure, we require hybrid systems to continue to carry the signals of must-carry stations in
analog format to all analog cable subscribers for six months after expiration of the viewability rule, until
December 12, 2012. We extend for three more years the existing HD carriage exemption for eligible
small cable system operators.

V.

PROCEDURAL MATTERS

A.

Final Regulatory Flexibility Act Analysis

25.
As required by the Regulatory Flexibility Act of 1980 (“RFA”),124 the Commission has
prepared a Final Regulatory Flexibility Analysis (“FRFA”) relating to this Report and Order. The FRFA
is set forth in Appendix C.

B.

Final Paperwork Reduction Act of 1995 Analysis

26.
This Report and Order has been analyzed with respect to the Paperwork Reduction Act of
1995 (“PRA”),125 and does not contain any new or modified information collection requirements. In
addition, therefore, it does not contain any new or modified “information collection burden for small
business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act
of 2002.126

C.

Congressional Review Act

27.
The Commission will send a copy of this Report and Order in a report to be sent to
Congress and the Government Accountability Office, pursuant to the Congressional Review Act.127


123 NAB Comments at 8 (“Congress intended by [Section 614(b)(4)(A) of the Act] to make sure that cable systems
did not provide technically advantageous carriage to favored signals, and provide lower quality carriage to others,
particularly local television signals.).
124 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. § 601 et. seq., has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (“SBREFA”), Pub. L. No. 104-121, Title II, 110 Stat. 847 (1996). The SBREFA
was enacted as Title II of the Contract With America Advancement Act of 1996 (“CWAAA”).
125 The Paperwork Reduction Act of 1995 (“PRA”), Pub. L. No. 104-13, 109 Stat 163 (1995) (codified in Chapter
35 of title 44 U.S.C.).
126 The Small Business Paperwork Relief Act of 2002 (“SBPRA”), Pub. L. No. 107-198, 116 Stat 729 (2002)
(codified in Chapter 35 of title 44 U.S.C.); see 44 U.S.C. 3506(c)(4).
127 See 5 U.S.C. § 801(a)(1)(A).
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D.

Additional Information

28.
For more information on this proceeding, contact Steven Broeckaert,
Steven.Broeckaert@fcc.gov, or Evan Baranoff, Evan.Baranoff@fcc.gov, of the Media Bureau, Policy
Division, (202) 418-2120.

VI.

ORDERING CLAUSES

29.
Accordingly,

IT IS ORDERED

that pursuant to Sections 4, 303, 614, and 615 of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154, 303, 534, and 535, this Fifth Report and
Order
IS ADOPTED, and the Commission’s rules ARE HEREBY AMENDED by removing Section
76.56(d)(3)-(d)(5), as set forth in the final rule changes appendix (Appendix B) attached to this Fifth
Report and Order
.
30.

IT IS FURTHER ORDERED

that, pursuant to 5 U.S.C. § 553(d)(3) and 47 C.F.R. §
1.427(b), this Fifth Report and Order and the attached rule amendment SHALL BE EFFECTIVE
immediately upon publication in the Federal Register.128
31.

IT IS FURTHER ORDERED

that, pursuant to the Congressional Review Act, 5 U.S.C.
§ 801(a)(1)(A), the Commission WILL SEND a copy of this Fifth Report and Order in a report to
Congress and the General Accounting Office.
32.

IT IS FURTHER ORDERED

that the Commission’s Consumer and Governmental
Affairs Bureau, Reference Information Center, WILL SEND a copy of this Fifth Report and Order,
including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
FEDERAL COMMUNICATIONS COMMISSION




Marlene H. Dortch
Secretary


128 See 5 U.S.C. § 553(d)(3) (“The required publication or service of a substantive rule shall be made not less than
30 days before its effective date, except ... as otherwise provided by the agency for good cause found and published
with the rule.”); see also 47 C.F.R. §§ 1.103(a), 1.427(b). Section 76.56(d)(5) provides that the viewability
requirements set forth in Section 76.56(d)(3) will expire three years from the date on which all full-power television
stations cease broadcasting analog signals (June 12, 2012) unless the Commission extends the requirement. See 47
C.F.R. § 76.56(d)(5). The HD exemption for small cable operators will expire on June 12, 2012, unless the
Commission extends the exemption. We thus find good cause to make these rule changes effective upon publication
in the Federal Register. The sunset of the viewability requirement is contemplated in the original rule. The
transition period adopted herein will preserve the status quo for six months, and not impose any new requirements
on any entity. Similarly, extension of the HD exemption provides relief to small cable systems and will not impose
any new requirements on any entity. Accordingly, no entity will be harmed as a result of our decision to make these
rule changes effective upon publication in the Federal Register.
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APPENDIX A

List of Commenters

COMMENTS

1. American Cable Association (“ACA”)
2. National Association of Broadcasters (“NAB”)
3. National Cable & Telecommunications Association (“NCTA”)
4. Time Warner Cable Inc. (“TWC”)

REPLY COMMENTS

1. ACA
2. Bright House Networks, LLC (“Bright House Networks”)
3. NAB
4. NCTA
5. New Jersey Division of Rate Counsel (“NJ Rate Counsel”)
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APPENDIX B

Final Rule Changes

The Federal Communications Commission amends Part 76 of Title 47 of the Code of Federal Regulations
(CFR) as set forth below:
PART 76 – Multichannel Video and Cable Television Service.
1.
The authority citation for Part 76 continues to read as follows:
AUTHORITY: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317, 325,
339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556,
558, 560, 561, 571, 572, 573.
2. In §76.56, remove paragraphs (d)(3) through (d)(5).
§ 76.56 Signal carriage obligations.
* * * * *
(d) Availability of signals.
* * * * *
(3) [Removed]
(4) [Removed]
(5) [Removed]
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APPENDIX C

Final Regulatory Flexibility Analysis

1. As required by the Regulatory Flexibility Act of 1980, as amended (“RFA”)1 an Initial
Regulatory Flexibility Analysis (“IRFA”) was incorporated in the Fourth FNPRM in this proceeding.2
The Commission sought written public comment on the proposals in the Fourth FNPRM, including
comment on the IRFA. The Commission received no comments on the IRFA. This present Final
Regulatory Flexibility Analysis (“FRFA”) conforms to the RFA.3

A.

Need for, and Objectives of, the Fifth Report & Order

2.
Viewability Requirement. Sections 614(b)(7) and 615(h) of the Communications Act
require cable operators to ensure that commercial and non-commercial must-carry broadcast stations are
“viewable” or “available” to all cable subscribers. 47 U.S.C. § 534(b)(7), 535(h). In the 2007 Viewability
Order
, in anticipation of the approaching end of the digital television transition and in light of the state of
technology and the marketplace, the Commission adopted a rule providing cable operators operating
hybrid systems (i.e., cable systems that provide both digital and analog cable service) two options to
comply with the statutory viewability requirement: (1) carry the digital signal in analog format to all
analog cable subscribers in addition to any digital version carried, or (2) transition to an all-digital system
and carry the signal only in digital format, provided that all subscribers have the necessary equipment to
view the broadcast content. Thus, the “viewability” rule required cable operators with hybrid systems to
carry digital must-carry signals in both digital and analog format. The Commission, however, decided
that the rule would remain in force for three years after the date of the digital transition, subject to review
by the Commission during the last year of the three-year period. The Commission explained that a three-
year sunset “provides the Commission with the opportunity after the transition to review these rules in
light of the potential cost and service disruption to consumers, and the state of technology and the
marketplace.” Therefore, absent Commission action, the viewability rule is scheduled to sunset on June
12, 2012. The Fourth FNPRM considered whether to retain the viewability rule or allow it to sunset,
given the current state of technology and the marketplace.
3.
The Fifth Report and Order finds it in the public interest to allow the viewability rule to
sunset as scheduled, on June 12, 2012. The Fifth Report and Order determines that the statutory term
“viewable” is an ambiguous term. It then chooses a reasonable interpretation of the statutory text that
best effectuates the statutory purpose in light of current marketplace conditions and technology
developments that have occurred over the past five years (e.g., 80% of cable customers now subscribe to
digital cable service and the widespread availability of small digital set-top boxes that cable operators are
making available at low cost (or no cost) to analog customers of hybrid systems). The Fifth Report and
Order
reinterprets the statutory viewability requirement to permit cable operators to require the use of set-
top equipment to view must-carry signals, provided that such equipment is both available and affordable
(or provided at no cost). Therefore, until it completes its transition to all-digital service, a hybrid system
operator may comply with the statutory viewability requirement in two ways. The operator can carry a
must-carry signal in a format that is capable of being viewed by analog customers either (1) without the
use of additional equipment or (2) alternatively with equipment made available by the cable operator at no
cost or at an affordable cost that does not substantially deter use of the equipment. The Fifth Report and


1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601-612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (“SBREFA”), Pub. L. No. 104-121, Title II, 110 Stat. 847 (1996). The SBREFA
was enacted as Title II of the Contract With America Advancement Act of 1996 (“CWAAA”).
2 See, generally, Fourth FNPRM.
3 See 5 U.S.C. § 604.
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Order establishes a transitional period of six months after expiration of the current rule – that is, until
December 12, 2012 – during which hybrid systems will be required to continue to carry the signals of
must-carry stations in analog format to all analog cable subscribers. This post-sunset transitional period
will give consumers, cable operators, and broadcasters that rely on must-carry access an opportunity to
prepare for the widespread deployment of small, affordable set-top boxes and to take other necessary
steps resulting from changes in cable carriage.
4.
HD Carriage Exemption. Sections 614(b)(4)(A) of the Communications Act requires
that cable operators carry broadcast signals “without material degradation.” Accordingly, at the same
time the Commission adopted the viewability rule, it adopted a related rule prohibiting material
degradation of broadcast signals when carried by cable systems. The rule requires that any signal
broadcast in HD be carried by cable operators in HD. In response to concerns from small cable operators
about cost and technical capacity, the 2008 Fourth Report & Order afforded a temporary exemption from
this HD carriage requirement (“HD carriage exemption”) for certain small systems. Specifically, the
Commission exempted small cable systems with 2,500 or fewer subscribers that are not affiliated with a
cable operator serving more than 10 percent of all MVPD subscribers, and those with an activated
channel capacity of 552 MHz or less. The exemption from the material degradation rules allows such
systems to carry broadcast signals in standard definition (SD) digital and/or analog format, even if the
signals are broadcast in HD, as long as all subscribers can receive and view the signal. The Commission,
however, decided that the HD carriage exemption would remain in force for three years after the date of
the digital transition, subject to review by the Commission during the last year of the three-year period.
Therefore, absent Commission action, the HD carriage exemption is scheduled to sunset on June 12,
2012. The Fourth FNPRM considered whether to retain the HD carriage exemption or allow it to expire.
5.
The Fifth Report and Order concludes that the small-system HD carriage exemption
continues to serve the public interest and adopts the Fourth FNPRM’s tentative conclusion to extend the
existing exemption for three more years. The Fifth Report and Order finds that a significant number of
small systems with financial or channel capacity constraints continue to rely on the HD carriage
exemption and require additional time to come into compliance with the material degradation rules in a
cost-effective way. Accordingly, the HD carriage exemption will sunset on June 12, 2015, unless the
Commission takes action to extend it in light of the potential cost and service disruption to consumers and
the state of technology and the market at that time.

B.

Summary of Significant Issues Raised by Public Comments in Response to the IRFA

6.
The Commission did not receive any comments in response to the IRFA.

C.

Description and Estimate of the Number of Small Entities to Which Rules Will
Apply

7.
The RFA directs the Commission to provide a description of and, where feasible, an
estimate of the number of small entities that will be affected by the rules adopted.4 The RFA generally
defines the term “small entity” as having the same meaning as the terms “small business,” “small
organization,” and “small governmental jurisdiction”5 In addition, the term “small business” has the same
meaning as the term “small business concern” under the Small Business Act.6 A “small business


4 5 U.S.C. § 603(b)(3).
5 5 U.S.C. § 601(b).
6 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business
Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
(continued….)
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concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the Small Business Administration
(SBA).7 The final rules adopted herein affect small television broadcast stations and small cable
operators. A description of these small entities, as well as an estimate of the number of such small
entities, is provided below.
8.
Television Broadcasting. The SBA defines a television broadcasting station as a small
business if such station has no more than $14.0 million in annual receipts.8 Business concerns included in
this industry are those “primarily engaged in broadcasting images together with sound.”9 The
Commission has estimated the number of licensed commercial television stations to be 1,387.10
According to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television Database
(BIA) as of January 31, 2011, 1,006 (or about 78 percent) of an estimated 1,298 commercial television
stations11 in the United States have revenues of $14 million or less and, thus, qualify as small entities
under the SBA definition. The Commission has estimated the number of licensed noncommercial
educational (“NCE”) television stations to be 396.12 We note, however, that, in assessing whether a
business concern qualifies as small under the above definition, business (control) affiliations13 must be
included. Our estimate, therefore, likely overstates the number of small entities that might be affected by
our action, because the revenue figure on which it is based does not include or aggregate revenues from
affiliated companies. The Commission does not compile and otherwise does not have access to
information on the revenue of NCE stations that would permit it to determine how many such stations
would qualify as small entities.
9.
In addition, an element of the definition of “small business” is that the entity not be
dominant in its field of operation. We are unable at this time to define or quantify the criteria that would
establish whether a specific television station is dominant in its field of operation. Accordingly, the
estimate of small businesses to which rules may apply do not exclude any television station from the
definition of a small business on this basis and are therefore over-inclusive to that extent. Also, as noted,
(Continued from previous page)


for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.”
7 15 U.S.C. § 632.
8 See 13 C.F.R. § 121.201, NAICS Code 515120 (2007).
9 Id. This category description continues, “These establishments operate television broadcasting studios and
facilities for the programming and transmission of programs to the public. These establishments also produce or
transmit visual programming to affiliated broadcast television stations, which in turn broadcast the programs to the
public on a predetermined schedule. Programming may originate in their own studios, from an affiliated network, or
from external sources.” Separate census categories pertain to businesses primarily engaged in producing
programming. See Motion Picture and Video Production, NAICS code 512110; Motion Picture and Video
Distribution, NAICS Code 512120; Teleproduction and Other Post-Production Services, NAICS Code 512191; and
Other Motion Picture and Video Industries, NAICS Code 512199.
10 See News Release, “Broadcast Station Totals as of March 31, 2012,” 2012 WL 1243354 (F.C.C.) (dated Apr. 12,
2012) (“Broadcast Station Totals”); also available at
http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0412/DOC-313533A1.pdf.
11 We recognize that this total differs slightly from that contained in Broadcast Station Totals, supra, note 10;
however, we are using BIA’s estimate for purposes of this revenue comparison.
12 See Broadcast Station Totals, supra, note 10.
13 “[Business concerns] are affiliates of each other when one concern controls or has the power to control the other
or a third party or parties controls or has to power to control both.” 13 C.F.R. § 121.103(a)(1).
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an additional element of the definition of “small business” is that the entity must be independently owned
and operated. We note that it is difficult at times to assess these criteria in the context of media entities
and our estimates of small businesses to which they apply may be over-inclusive to this extent.
10.
Cable and Other Program Distribution. Since 2007, these services have been defined
within the broad economic census category of Wired Telecommunications Carriers; that category is
defined as follows: “This industry comprises establishments primarily engaged in operating and/or
providing access to transmission facilities and infrastructure that they own and/or lease for the
transmission of voice, data, text, sound, and video using wired telecommunications networks.
Transmission facilities may be based on a single technology or a combination of technologies.”14 The
SBA has developed a small business size standard for this category, which is: all such firms having 1,500
or fewer employees.15 According to Census Bureau data for 2007, there were a total of 955 firms in the
subcategory of Cable and Other Program Distribution that operated for the entire year.16 Of this total, 939
firms had employment of 999 or fewer employees, and 16 firms had employment of 1000 employees or
more.17 Thus, under this size standard, the Commission believes that a majority of firms operating in this
industry can be considered small.
11.
Cable Companies and Systems (Rate Regulation Standard). The Commission has also
developed its own small business size standards, for the purpose of cable rate regulation. Under the
Commission’s rules, a “small cable company” is one serving 400,000 or fewer subscribers, nationwide.18
Industry data indicate that, of 1,076 cable operators nationwide, all but 11 are small under this size
standard.19 In addition, under the Commission’s rules, a “small system” is a cable system serving 15,000
or fewer subscribers.20 Industry data indicate that, of 6,635 systems nationwide, 5,802 systems have
under 10,000 subscribers, and an additional 302 systems have 10,000-19,999 subscribers.21 Thus, under
this second size standard, the Commission believes that most cable systems are small.
12.
Cable System Operators. The Act also contains a size standard for small cable system
operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer
than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose


14 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial definition),
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
15 13 C.F.R. § 121.201, NAICS code 517110 (2007).
16 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms for
the United States: 2007, NAICS code 5171102 (located at http://factfinder.census.gov/servlet/IBQTable?_bm=y&;-
geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en).
17 See id.
18 47 C.F.R. § 76.901(e). The Commission determined that this size standard equates approximately to a size
standard of $100 million or less in annual revenues. Implementation of Sections of the 1992 Cable Act: Rate
Regulation,
Sixth Report and Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).
19 These data are derived from: R.R. Bowker, Broadcasting & Cable Yearbook 2006, “Top 25 Cable/Satellite
Operators,” pages A-8 & C-2 (data current as of June 30, 2005); Warren Communications News, Television &
Cable Factbook 2006
, “Ownership of Cable Systems in the United States,” pages D-1805 to D-1857.
20 47 C.F.R. § 76.901(c).
21 Warren Communications News, Television & Cable Factbook 2008, “U.S. Cable Systems by Subscriber Size,”
page F-2 (data current as of Oct. 2007). The data do not include 851 systems for which classifying data were not
available.
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gross annual revenues in the aggregate exceed $250,000,000.”22 The Commission has determined that an
operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues,
when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the
aggregate.23 Industry data indicate that, of 1,076 cable operators nationwide, all but 10 are small under
this size standard.24 We note that the Commission neither requests nor collects information on whether
cable system operators are affiliated with entities whose gross annual revenues exceed $250 million,25 and
therefore we are unable to estimate more accurately the number of cable system operators that would
qualify as small under this size standard.
13.
Open Video Services. Open Video Service (OVS) systems provide subscription
services.26 The open video system (“OVS”) framework was established in 1996, and is one of four
statutorily recognized options for the provision of video programming services by local exchange
carriers.27 The OVS framework provides opportunities for the distribution of video programming other
than through cable systems. Because OVS operators provide subscription services,28 OVS falls within the
SBA small business size standard covering cable services, which is “Wired Telecommunications
Carriers.”29 The SBA has developed a small business size standard for this category, which is: all such
firms having 1,500 or fewer employees. According to Census Bureau data for 2007, there were a total of
3,188 firms in this previous category that operated for the entire year.30 Of this total, 3,144 firms had
employment of 999 or fewer employees, and 44 firms had employment of 1000 employees or more.31
Thus, under this size standard, most cable systems are small. In addition, we note that the Commission
has certified some OVS operators, with some now providing service.32 Broadband service providers
(“BSPs”) are currently the only significant holders of OVS certifications or local OVS franchises.33 The
Commission does not have financial or employment information regarding the entities authorized to
provide OVS, some of which may not yet be operational. Thus, again, at least some of the OVS operators


22 47 U.S.C. § 543(m)(2); see also 47 C.F.R. § 76.901(f) & nn.1–3.
23 47 C.F.R. § 76.901(f); see FCC Announces New Subscriber Count for the Definition of Small Cable Operator,
Public Notice, 16 FCC Rcd 2225 (Cable Services Bureau 2001).
24 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006, “Top 25 Cable/Satellite
Operators,” pages A-8 & C-2 (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006, “Ownership of Cable Systems in the United States,” pages D-1805 to D-1857.
25 The Commission does receive such information on a case-by-case basis if a cable operator appeals a local
franchise authority’s finding that the operator does not qualify as a small cable operator pursuant to § 76.901(f) of
the Commission’s rules.
26 See 47 U.S.C. § 573.
27 47 U.S.C. § 571(a)(3)-(4). See 13th Annual Report, 24 FCC Rcd at 606, ¶ 135.
28 See 47 U.S.C. § 573.
29 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
30 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms for
the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
31 See id.
32 A list of OVS certifications may be found at http://www.fcc.gov/mb/ovs/csovscer.html.
33 See Thirteenth Annual Cable Competition Report, 24 FCC Rcd at 606-07, ¶ 135. BSPs are newer firms that are
building state-of-the-art, facilities-based networks to provide video, voice, and data services over a single network.
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may qualify as small entities.

D.

Description of Reporting, Record Keeping, and other Compliance Requirements for
Small Entities

14.
This Fifth Report & Order does not impose any reporting, record keeping, or other
compliance requirements.

E.

Steps Taken to Minimize Significant Economic Impact on Small Entities, and
Significant Alternatives Considered

15.
The RFA requires an agency to describe any significant alternatives that it has considered
in reaching its approach, which may include the following four alternatives (among others): (1) the
establishment of differing compliance or reporting requirements or timetables that take into account the
resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of performance, rather than design,
standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.34
16.
Viewability Requirement. In this Fifth Report & Order, the Commission allows the
viewability rule to expire, subject to a six-month post-sunset transition period (as described above in
Section A of this FRFA), and revises its interpretation of the statutory viewability requirement to afford
greater flexibility to cable operators, including small operators, for complying with the statute.
Specifically, whereas hybrid cable operators were previously required to carry both the digital and analog
versions of a must-carry broadcast station, hybrid operators may, instead, comply with the statute by
carrying only the digital format and making set-top equipment available to their analog cable customers,
at no cost or at an affordable cost that does not substantially deter use of the equipment, that will enable
such customers to view the digital format. As a result, small hybrid cable system operators will have a
choice for complying with the statutory viewability requirement. In addition, we do not believe the
expiration of the viewability rule will have a significant impact on small broadcasters. We believe our
new statutory interpretation of the viewability requirement – which hinges on a cable operator making
equipment available at no cost or an affordable cost – will ensure that subscribers on hybrid systems may
continue to access these signals at little or no additional expense, thereby mitigating any adverse impact
on broadcasters. We note that a must-carry signal carried only in digital format will still be included in
the basic service tier; analog cable subscribers would not be required to subscribe to an enhanced tier of
service to view the digital version of a must-carry channel. We also expect this issue to diminish over
time given that the number of analog cable subscribers is expected to continue to decrease as more cable
customers choose to upgrade to full digital service and as more hybrid cable systems complete their
transition to all-digital systems.
17.
HD Carriage Exemption. The HD carriage exemption provides temporary regulatory
relief to small cable systems with 2,500 or fewer subscribers that are not affiliated with a cable operator
serving more than 10 percent of all MVPD subscribers, and those with an activated channel capacity of
552 MHz or less). This Fifth Report & Order extends this exemption for three more years. As noted in
the IRFA, the HD carriage exemption does not impose a negative economic impact on any small cable
operator, and, indeed, provides a positive economic impact to any operator of a system that chooses to
take advantage of the exemption. In addition, the exemption does not impose any significant burdens on
small television stations.


34 5 U.S.C. § 603(c)(1) – (c)(4).
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F.

Report to Congress

18.
The Commission will send a copy of this Fifth Report & Order, including this FRFA, in a
report to be sent to Congress pursuant to the SBREFA.35 In addition, the Commission will send a copy of
this Fifth Report & Order, including the FRFA, to the Chief Counsel for Advocacy of the SBA. A copy
of this Fifth Report & Order and the FRFA (or summaries thereof) will also be published in the Federal
Register.36


35 See id. § 801(a)(1)(A).
36 See id. § 604(b).
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STATEMENT OF

COMMISSIONER ROBERT M. McDOWELL

Re:
Carriage of Digital Television Broadcast Signals: Amendment to Part 76 of the Commission’s
Rules, CS Docket No. 98-120.

In 2007, the Commission implemented rules to ensure that analog cable subscribers (of which I
was one in 2007 and remain so to this day) did not lose their must-carry broadcast stations after the digital
television (DTV) transition. At that time, my colleagues and I endeavored to ensure a smooth and
seamless DTV transition by requiring hybrid cable systems to carry both the analog and digital signals of
must-carry broadcast stations. As stated in the 2007 order and as referenced in my statement to that order,
this requirement “shall be in force for three years from the date of the digital transition, subject to review
by the Commission during the last year of this period.” Thus, cable operators, broadcasters and
consumers have been on notice since 2007 that the elimination of this rule was more than a mere
possibility.
Since our consideration of this matter in 2007, the video programming marketplace has
experienced dramatic change. The DTV transition has been successfully completed, new technologies
and platforms have entered the market, high-definition (HD) channels now abound, and broadband
capacity is at a premium. Today, affordable set-top boxes that enable cable subscribers to view digital
signals are available. Such low-cost equipment was not obtainable by consumers when we adopted the
rules requiring cable operators to maintain analog streams for must-carry broadcast channels.
Further, to meet the demands of American consumers, many cable operators carry vast HD
offerings. In fact, HD channels have increased by 732 percent over the past five years. Many cable
systems dedicate bandwidth to carry separate high-definition, standard-definition (SD), and analog
streams of certain channels. Cable operators also need substantial capacity to provide the Internet
services that Americans require. In fact, each 6 megahertz analog channel can be used to provide 10 to 12
SD digital streams, 2 to 3 HD channels, or significant broadband capability. Required carriage of analog
signals, when there is a low-cost, less burdensome means for cable operators to comply with the statute, is
not an efficient use of resources.
For these reasons, I vote in support of today’s order that implements the 2007 intent to sunset the
viewability rule in favor of a more flexible approach that allows cable operators to decide whether to
maintain both the analog and digital streams or make available affordable set-top boxes. Although I had
hoped that cable operators would have migrated to all-digital cable systems by now alleviating the
understandable concerns of must-carry stations, I continue to maintain that Commission rules need to be
modernized to reflect the current media marketplace and development of new media technologies and
platforms – such as the Internet and mobile devices – that have revolutionized the video programming
market. We are doing so by taking this action today.
Finally, I expect that the cable industry will work with the affected broadcasters and their viewers
(such as myself) to ensure that, if analog signals will be ceased, consumers are aware of how to obtain an
affordable set-top box and that such equipment is provided in a timely manner so that consumers are not
inconvenienced and broadcasters do not lose viewership. I also trust, however, that the ability to
reimpose a dual carriage requirement as a remedy in the case of consumer complaints will be used with
great restraint and will not be utilized as a means to reinstate this rule on a case-by-case basis. I thank the
Chairman and Commissioners Clyburn, Rosenworcel and Pai for their willingness to engage in an open
dialogue on this matter. And many thanks to the Bureau for its work on this order.
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STATEMENT OF

COMMISSIONER MIGNON L. CLYBURN

Re:
Carriage of Digital Television Broadcast Signals: Amendment to Part 76 of the Commission’s
Rules, CS Docket No. 98-120.

The decision to allow the viewability rule to expire was not an easy one for me. Voting to let this
rule sunset requires this agency to once again trust corporate stakeholders to act in the public’s best
interest, and to do so in such a way that meshes with the spirit of the FCC’s intentions.
It is of the utmost importance that stations are able to reach any and all cable viewers, regardless
of whom or where they are. Cable providers have committed to this office that they will make the
transition as painless as possible and that if needed, set-top boxes will be widely available, at an
extremely low (if any) cost, easy to get, and easy to install. I will hold them to that commitment.
This step is the one of the biggest examples of a trust-based approach in quite some time, and yes,
it comes with some anxiety. As I have mentioned time and again, we look to industry to use best
practices, proactive and thorough outreach, and forward thinking when a large-scale change of service is
on the horizon. My staff and I have repeatedly pressed cable providers on this point, and have expressed
our concerns regarding the availability, affordability, and deployment of TV set-top boxes for the public
once the analog signal ceases to be utilized. I also made my hesitancy known to Chairman Genachowski,
and mentioned that the only way this transition can effectively serve all Americans is if low-cost
converter boxes are attainable to all consumers immediately prior to the transition. I also noted that some
consumers may lack the wherewithal to fully realize what has all of the sudden happened to their signals,
and we must stand ready to assist them should they seek answers from the Commission.
After stating these concerns, language was added to this rulemaking that contemplates a remedy
to resume analog carriage of channels should consumer outcry and confusion rise to a noticeable level.
As always, we are prepared to take into account complaints made to our consumer bureau, and will
closely monitor the transition. My interest in a smooth adaptation is so great that I will be personally
inquiring about it during every one of my field engagements, town halls, and public speaking
opportunities going forward. No matter the venue, the audience, nor the subject, I intend to gauge the
level of awareness and reaction to this rulemaking with individuals all across the nation. If set-top box
fees become higher than I have been led to expect, and viewers experience “box-shock”, I will be vocal
with the cable industry, and will seek appropriate and stiff remedies.
To be clear: Through this rulemaking, we are not instructing cable companies to shut off their
analog signals. Rather, we are giving them the flexibility to do so, consistent with the First Amendment.
These companies have a vested interest in providing their subscribers with comprehensive service at
reasonable rates, and I am confident that easing the transition away from analog service will be no
exception.
Cable companies, both large and small, have committed to provide stations with no fewer than 90
days of notice before switching away from analog service. Further, the six-month phase-in laid forth in
our ruling will enable must-carry stations to educate their viewers about the transition, via on-air
messages, website postings, mailings, and any other form of communication that will increase viewer
awareness regarding the change in service. The better the consumer expectations, the more likelihood
that subscribers will not be surprised, and I expect nothing less than an unprecedented and vigorous
canvassing operation from the cable industry in this regard.
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I feel it necessary to directly address the issue of diversity in the context of this ruling. While
there will be an initial adjustment period once the analog stream is removed, this transition may actually
help increase diverse programming via the dedication of more spectrum, which in actuality could lead to
more capacity for increased channel options. Going from analog to digital will result in better and more
efficient service to consumers, and will allow cable companies to offer more content with less bandwidth.
Stemming from this will be the ability to provide more diverse services, such as multiple digital streams
for a variety of unique offerings, like national diverse and ethnic programming that cannot be currently
carried due to space restrictions. Capacity to offer faster and better broadband can be reclaimed, over-the-
top video viewing can be done at increased speeds, and the number of new high-definition stations will
result in more competition between providers, thus driving down prices for consumers and providing new
services for viewers.
Finally, I want to dispel some of the misinformation that has persisted throughout our deliberation
of this ruling. All must carry stations will continue to be carried! They will be on the basic service tier
that is available to all consumers, and will not be carried in a duplicative nature. This is in furtherance of
the undeniable shift in the marketplace, in which everything is going digital. Moreover, it is consistent
with other recent rulemakings, most notably the nation’s shift to digital television via our DTV transition.
That undertaking was done with robust oversight and strong commitments from private industry, and I
hope this ruling mirrors it.
Customers must not be burdened any more than necessary, and on that, I will hold cable providers
accountable.
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STATEMENT OF

COMMISSIONER AJIT V. PAI

Re:
Carriage of Digital Television Broadcast Signals: Amendment to Part 76 of the Commission’s
Rules, CS Docket No. 98-120.

The Commission must routinely reevaluate its rules to ensure that they reflect current economic
and technological realities. Otherwise, agency inertia can allow regulations to stay on the books far
longer than they should. One way to avoid this result is through the use of sunset clauses. A sunset
clause forces an agency to take a fresh look at rules that are about to expire and decide whether they are
still warranted in the face of changes in the marketplace.
The viewability proceeding illustrates the benefits of this approach. Two key facts have changed
since the Commission adopted the viewability rule half a decade ago. First, in the wake of the digital
television transition, the number of households receiving analog-only cable service has dropped
substantially, from about 40 million in 2007 to 12 million today. And second, Digital Transport Adapters
(“DTAs”) that enable analog-only subscribers to view digital signals are increasingly available and
inexpensive.
Given these changed circumstances, I support the Commission’s decision to modify the five-year-
old viewability rule. Specifically, so-called hybrid systems (those carrying both analog and digital
signals) should no longer be subject to what effectively has been a dual-carriage mandate. Rather than
being required to carry the same broadcaster’s signals twice (in both analog and digital), cable operators
should have the flexibility to use the bandwidth to supply customers the advanced services and/or
additional programming options they demand.
That having been said, today’s decision was not an easy one. I take seriously my duty as a
Commissioner to implement the laws passed by Congress, and I agree with broadcasters that the
Commission’s 2007 interpretation of the viewability statute, 47 U.S.C. § 534(b)(7), appears more
consistent with its structure. In particular, I am sympathetic to the broadcasters’ argument that the
Commission’s new interpretation of the statute obscures the distinction between the provision’s second
and third sentences, and do not find the Order’s refutation of this point to be particularly persuasive.
However, the issue before us is not solely one of statutory interpretation. Constitutional
concerns, too, are involved. Cable operators present a powerful argument that renewing the viewability
mandate on the state of the current record would run afoul of the First Amendment.
In Turner Broadcasting System, Inc. v. FCC, 520 U.S. 180 (1997), the U.S. Supreme Court
rejected a First Amendment challenge to must-carry on the grounds that the carriage mandate was
justified by the government’s substantial interest in the preservation of over-the air broadcasting. But it is
difficult to see how that rationale would apply here. The rule change we adopt today will have absolutely
no effect on the ability of about 80% of cable subscribers to view must-carry stations. And the
diminishing minority of cable customers who have analog-only service will be able to continue viewing
must-carry stations on cable systems simply by obtaining affordable DTAs that cable operators must offer
as a result of this Order.
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In light of these facts, I have serious doubts that continuing to impose the current viewability
mandate would be consistent with the First Amendment. Moreover, cable operators correctly point out
that the viewability statute does not unambiguously preclude the use of affordable equipment provided by
cable operators to view must-carry signals. As a result, I believe that the Commission not only has the
discretion to interpret the statute in a manner that avoids constitutional difficulties, but that it is best to do
so.
During the next six months, cable operators and broadcasters must work together to ensure that
the transition proceeds as smoothly as possible for consumers. Must-carry stations need to educate their
viewers on the steps they must take to be able to continue viewing affected stations. It is therefore critical
that cable operators have committed in the record to notifying must-carry stations no fewer than 90 days
in advance of ceasing carriage of their analog signals. Cable operators also must give affected subscribers
timely information on how they can acquire DTAs, and I am pleased that they have committed to provide
such notices to their customers no fewer than 30 days ahead of time.
An old proverb says that the more things change, the more they stay the same. When it comes to
regulation, however, that shouldn’t be the case. The Commission should calibrate its rules to the current
state of the marketplace in order to secure for American consumers the benefits of innovation. After
listening to the views of all stakeholders and carefully reviewing the record, I have reached the conclusion
that now is the time to change the Commission’s 2007 viewability requirement. I therefore support this
Order.
36

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