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ItalicCourierSymbol"i~'K2^6=U\\===\====\\\\\\\\\\==Qs~sm=Gsizbsw===\\=Q\Q\Q=\\33\3\\\\DG3\\\\QQ\Q\=\\\\\=\\\\\\\\\3QQQQQz~QsQsQsQsQ=3=3=3=3\\\\\\\\\\Q\\\\\i\Q\QyQyQ~\~\trQs\s\rQ\\\\\\\>3\\\\=\f\\\r3rIs\s3s3\m\\\\y>y>z\gFbGgFb\rMr3s\\\\\\\\rQwQrQ\s\\b\s\\t=\\===WxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN\\\=QKK\\\\\\@\\\\@==__\00\\pp\\\mff=_\@"\_\壣4\==p=\\f\z\=\Q\iwUzpNmń\QQ====ńpsfpfzQsGwQ\Q=3QzffQz\Qpi\p\\sQQzpfppps=\pQpppp==\\\\\\\p=i\Q=xiw{Sp*cSiille{@@S37cVcVSSSSSS5I>>VV22SMMMg=KaOO;IBB@>HOQQQi_VcTTT\Sc_F^tBVBQQQQ(BXQ3__QQQ00QQQQQV(QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ^^^^ZZZZZZZZZZrrHHQQQQQQXXQQFFFF__QQOOOOQQII_IFFFF*!9FQQ"i~'K2^6=U\\===\====\\\\\\\\\\==\zzpGXzpfzz===\\=\fQfQ@\f3=f3f\ffQG=f\\\Q\\\\=\\\\\=\\\\\\\\f3\\\\\QzQzQzQzQG3G3G3G3f\\\\ffff\\g\\\\pf\\\QQ\\yQz\z\yQ\\\\\ffF3\f\\Gfi\\fy3ySz\zGz3ggf\\ψQQ\gFfGgFf\y^y>z\fgffgf\yQzQyQfz\ff\z\\=\\===WxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN\\\=\NN\\\\\\@\\\\@==ii\00\\pp\\\sff=i\@"\i\壣4\==p=\\f\z\=\Q\i~XzpNmń\\\====ńpzfpfzQzGzQQQG3QzffQz\Qpp\p\\zQQzpfpppzG\pQpppp==\\\\\\\p=p\Q=xiw{Sp*cSiille{@@S37cVcVSSSSSS5I>>VV22SMMMg=KaOO;IBB@>HOQQQi_VcTTT\Sc_F^tBVBQQQQ(BXQ3__QQQ00QQQQQV(QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ^^^^ZZZZZZZZZZrrHHQQQQQQXXQQFFFF__QQOOOOQQII_IFFFF*!9FQQ2_A`rC5ZH"^4?U^\=??^g/g/4^^^^^^^^^^44gggTs~sm=Gsizbsw==?\\=Q\Q\Q=\\33\3\\\\DG3\\\\QZ&ZNW\x\=Q\^\\\\\@==__\00\\p\\\mff=_\@\n\gnn|gggg4g>>gggrr0Kf\g4]/NrrSrr|]gggKw~fsGwQ\Q=3Qzfmbz\Qgigppfpps=\pQpppp==\\\\ y.X80,QwX\  P6G;P 7jC:,Xj\  P6G;XP 2a=5,r&a\  P6G;&P  2e=5,d[&e4  pG;&68xC;,%Xx PE37XPt7zC;,.c!Xz_ pi7X63n=6,%b&n PE37&Pt2p=6,.L&p_ pi7& P:% ,J:\  P6G;JP H5!,x,5\  P6G;,P {,W80,<~UW*f9 xr G;X 0_=5,<]&_*f9 xr G;&X  y.\80,G\4  pG;Z 1a=5,S\&a9 xOG;&lr5ddd,oOed6X@`7@ 2^=4,w&^\  PA&P S(  > S(  Federal Communications Commission`(#FCC 9995 ă  yxdddy ՊP  #&a\  P6G;r&P# Before the Federal Communications Commission  S("Washington, D.C. 20554 ă  S`(In the Matter of: MhhX) ` `  MhhX)  S(Implementation of Section 304 of the hhX)ppCS Docket No. 9780  S(Telecommunications Act of 1996hhX) ` `  MhhX)  S(Commercial Availability ofhhX)  Sp(Navigation Devices MhhX) ` `  MhhX` hp x (#%'0*,.8135@8: L yO~$(ԍ47 U.S.C.  549(a).>(#" d 0*&&88Z"Ԍ  S( d 4. ` ` In the Navigation Devices Order, the Commission adopted rules to implement Section 629  2!Lwhich expand opportunities to purchase navigation devices from sources other than the service provider,  2!so that navigation devices become available through commercial retail outlets. The decisions made and  Sb(rules adopted in the Navigation Devices Order were as follows:  @vX(1) Section 629 is broad in terms of the multichannel video programming distributors ("MVPDs")  @covered including cable television, direct broadcast satellite ("DBS"), multichannel multipoint distribution service ("MDS") and satellite master antenna television ("SMATV"); (#  @X(2) Section 629 covers not just equipment used to receive video programming, but also equipment  @used to access other services offered over multichannel video programming systems. Such  @equipment includes televisions, VCRs, cable settop boxes, personal computers, program guide equipment, and cable modems; (#  @X(3) Subscribers have the right to attach any compatible navigation device to a multichannel video programming system; (#  @X(4) Service providers are prohibited from taking actions which would prevent navigation devices  @that do not perform conditional access functions from being made available by retailers, manufacturers, or other unaffiliated vendors; (#  @X(5) MVPDs must separate out conditional access or security functions from other functions by July  @1, 2000 and make available modular security components, also called Point of Deployment Modules ("PODs"); (#  @XXBX(6) After January 1, 2005, MVPDs shall not provide new navigation devices that have security and nonsecurity functions combined; (#  @PX(7)MVPDs must provide information sufficient to permit the manufacture, retail sale, and operation of devices for their systems; and (#  @|X(8)MVPDs can take the actions necessary to protect their operations from technical harm and theft of service. (#  S( d 5. ` ` Additionally, in the Navigation Devices Order, the Commission required the cable multiple  2!>system operators ("MSOs") supporting the project to standardize, design and produce digital security  SV( 2!modules to file semiannual progress reports regarding the progress of their efforts.\VL {O(ԍNavigation Devices Order, 13 FCC Rcd at 14808.\ The MSOs are also  2!required to notify the Commission regarding changes in the schedule that could affect the July 1, 2000  2!deadline for making modular security components available. The first report, filed on January 7, 1999,  S( 2!bstates that the project is ahead of schedule.wZL {O(ԍ See Status Report of NCTA, et al. (Jan. 7, 1999) ("Status Report").w The Commission continues to monitor the standards  2!development project to ensure that satisfactory progress is being made toward achievement of the statutory  2!goals of Section 629. We encourage interested parties concerned with the standards development process  2!to comment on the status reports filed by the MSOs, which are available on the Commission's web site, www.fcc.gov. " 0*&&88"Ԍ S( d 6. ` ` Five petitions requesting reconsideration or clarification of the rules adopted in the  S( 2! Navigation Devices Order were filed. Petitioners seek reconsideration of: (1) the application of the  S( 2! separation of security requirement to analog equipment;`L {O(ԍSee Navigation Devices Order, 13 FCC Rcd at 14793.` (2) the prohibition on MVPDs offering equipment  S( 2!rcombining embedded security functions and nonsecurity functions after January 1, 2005;;ZL {O(ԍId. at 14803.; (3)  Sb( 2!implementing the prohibition on integrated equipment starting in 2005 instead of an earlier date;1 bL {O(ԍId.1 (4) the  S:( 2!exemption for DBS operators from the requirement to separate security functions;1 :~L {OX (ԍId.1 (5) the reliance on  S( 2!CableLabs to develop standards for separating security and nonsecurity functionality;G L {O (ԍId. at 1480614808.G and (6) the  S( 2!Hexclusion for Open Video Systems ("OVS") from the requirements of Section 629.A L {O,(ԍId. at 1478314784.A Clarification is  2!>sought regarding: (1) whether the prohibition on deploying integrated equipment applies to navigation  2! devices which are in inventory on January 1, 2005; (2) whether the definition of a navigation device  2!includes wireless cable antennas and downconverters; (3) whether Section 76.1204 allows functions other  2!bthan those performing conditional access to be included in the security module; (4) what technical  2!information must be released pursuant to Section 76.1205; (5) the extent of MVPDs liability to third  2!parties for damages caused by customer attachment of equipment; and (6) the definition of the term "theft  2!8of service" as used in Section 76.1209. Additionally, petitioners asked that the Commission take further  2!actions to implement the mandate of Section 629. Specifically, petitioners ask the Commission to: (1)  2!Bestablish a demarcation point for subscriber attachment of navigation devices; (2) prohibit the labeling of  2!navigation devices as cable ready unless such equipment meets the OpenCable standard; and (3) apply the  2!prohibition on MVPDs precluding the addition of extra features and functions into navigation devices to consumer electronics manufacturers and retailers.  S( III.DISCUSSION  Sj( A.` ` Application of Rules to Analog Equipment   S( d (7. ` `   The rules adopted in the Navigation Devices Order implement a statutory right to allow  2!.subscribers to connect navigation devices to the multichannel video programming systems to which they  2!subscribe. This authority, however, does not include the right to obtain and attach equipment that  2!8unscrambles scrambled programming or otherwise frustrates the operation of conditional access systems  2!that prevent theft of service without authorization from the MVPD. In order to both protect operators  2!against service theft and promote the right to attach and the retail availability of equipment, the rules  2!require a separation of security (conditional access) from equipment that performs other functions. As",4 0*&&88"  2!these rules become fully effective, subscribers will have the option of obtaining the security portion of  2!|the equipment from the service provider and the remaining equipment from retail outlets. The  2!LCommission believed that this separation would enhance the development and commercial availability of  S( 2!Bnavigation devices.l L {O(ԍSee Navigation Devices Order, 13 FCC Rcd at 14793.l Although there are significant differences between analog and digital devices in the  2!mechanisms available for separating security from non security functions, the rules adopted apply to both analog and digital equipment.  S( d 8. ` ` Petitioners NCTA, TIA and Time Warner ask the Commission to reconsider the  2!application of the separated security requirement to equipment performing conditional access functions  S( 2!in the analog environment.ZL yO (#X\  P6G;QwP#эNCTA Petition at 7; TIA Petition at 2; Time Warner Petition at 7.Ė This request is supported by a wide range of interested parties, including  2!equipment manufacturers, the computer and electronic technologies communities, various MVPDs, and  SH ( 2!lrepresentatives of the consumer electronics industry.H L yO( 2!#X\  P6G;QwP#эAmeritech Comments at 4; Circuit City Comments at 18; Echelon Reply at 2; GI Comments at 5; CEMA,  {O(Circuit City, ITIC joint ex parte filing at 2 (March 4, 1999). Petitioners and supporting parties urge the  2!Commission to reconsider the requirement based on what they allege are numerous logistical, technical,  S ( 2!:and economic concerns. DL {O( 2!ԍSee e.g., Ameritech Comments at 4 (modifying analog security systems would require the replacement of costly  2!analog scrambling equipment at each cable system's headend); GI Comments at 4 (the cost of a separated analog  2!security module is likely to be substantial given the declining market for analog products); TIA Petition at 4 (cost  2!$of designing and developing devices to separate analog security for the different scrambling methods could be  2!considerable); Time Warner Petition at 6 n.7 (mandating separation of security and nonsecurity functions in digital devices will be easier to accomplish and entail far less disruption than for analog devices). They contend that the inclusion of analog equipment in the separation  2!Vrequirements will force the industries involved to devote resources toward analog separation of functions  S ( 2!instead of focusing on advanced technologies. L yO(#X\  P6G;QwP#эNCTA Petition at 10; Echelon Reply at 3; GI Comments at 5. Application of the separation rules, it is said, will actually  2!delay a rapid transition to digital technologies because the requirement will cause an increase in the  SX( 2!embedded base of analog equipment.}XN L yOF(#X\  P6G;QwP#эEchelon Reply at 3; Time Warner Petition at 8.} NCTA notes that there are over 15 different analog scrambling  2!Lsystems in use today, including systems developed by companies that are no longer in existence. NCTA  2!contends that the separation requirement too readily assumes that rights to license the particular analog  2!scrambling technique to produce the necessary separated security devices can be obtained from defunct  S(companies or their successors.bL yO6"(#X\  P6G;QwP#эNCTA Petition at 9.b  Sh( d ~9. ` `  The Consumer Electronics Manufacturers Association ("CEMA"), Circuit City and the  2!Information Technology Information Council ("ITIC") propose that we adopt a rule that excludes MVPDs"@n0*&&88"  2!from the requirement to offer separated security equipment for any device that: (1) employs conditional  2!access mechanisms only to access analog video programming; (2) is capable only of providing access to  2!analog video programming offered over a multichannel video programming distribution system; and (3)  2!does not provide access to any digital transmission of multichannel video programming or any other digital  2!service through any receiving, decoding, conditional access, or other function, including any conversion  S8(of digital programming or service to an analog format.r8L {O(ԍCEMA, Circuit City, ITIC joint ex parte filing at 2 (March 4, 1999).r  S( d  10. ` `  Under the proposed exception, an MVPD is free from the requirement to provide separated  2!Lsecurity devices for devices in which the conditional access component only performs conditional access  2!Bfor analog scrambled programming. The intent of the proposed rule is to exempt navigation devices that  2!provide strictly analog service from the separation of security requirement. Digital security modules  2!tremain a requirement if an MVPD makes available equipment that performs conditional access for digital programming.  S ( d  11. ` ` In the Navigation Devices Order, we concluded that Section 629 applies to all types of  S ( 2!equipment and adopted rules covering analog, hybrid analog/digital and digital equipment.\ ZL {O(ԍNavigation Devices Order, 13 FCC Rcd at 14785.\ We noted  2!that considerable engineering work had already taken place in connection with the Commission's order  SZ( 2!in Implementation of Section 17 of the Cable Television Consumer Protection Act of 1992, Memorandum  S4( 2!8Opinion and Order ("Equipment Compatibility Report and Order"), looking toward the development of  2!La "decoder interface" that would have permitted many of the functions of existing analog cable television  2!convertor boxes to be incorporated into television receivers with the security features separated out into  S( 2!La separate device that would plug directly into the back of the receiver.{^L {OJ( 2!ԍNavigation Devices Order, 13 FCC Rcd at 1479495 citing Implementation of Section 17 of the Cable  {O( 2!Television Consumer Protection Act of 1992, Memorandum Opinion and Order, 11 FCC Rcd 4121 (1996) and First  {O(Report and Order, 9 FCC Rcd 1981 (1994).{ The industry work undertaken  2!in connection with this proceeding persuaded us that such a separation was feasible from an engineering  2!point of view. Given the additional flexibility that exists in the digital environment, it was also believed  SF(that digital devices could be separated out in this same manner.\FL {O(ԍNavigation Devices Order, 13 FCC Rcd at 14800.\  S( d  12. ` ` The objective of Section 629 is to open new competitive outlets for devices that have in  2!the past tended to be exclusively available from or under the control of service suppliers. This is not a  2!development that is easily mandated by a set of Commission rules. For this type of equipment to become  2!effectively available through retail outlets, a confluence of events must take place that are not under the  2!control of any of the market participants: service suppliers (MVPDs), equipment manufacturers, or retail  2!sales outlets. Moreover, within each segment of the market there may be different visions of how the  2!market will develop. In many respects, however, the market incentives of all of the parties are working  2!.synchronously. Service suppliers can potentially divest themselves of the large investment in equipment"0*&&88@"  2!that they have previously had to maintain. Retail outlets can both add new lines of equipment to their  2!inventory as well as improve the appeal of electronic equipment that is sold by adding new features and  2!functions previously under the exclusive control of service providers. Manufacturers can enter new  2!markets and integrate a broader range of features into the devices they sell. For the market to flourish,  2!thowever, it is necessary that consumers as well as all of the other participants have some confidence that  2!the devices they manufacture, retail, supply service to, or purchase will interface and function with the service or equipment of other market participants.  S( d  13. ` ` Evidence presented to us on reconsideration leads us to conclude that our earlier decision  2!to apply the separation rules to both analog and digital devices in July 2000 would not create the  2!incentives for which Section 629 was intended. Section 629 is premised on a belief that consumers will  SH ( 2!benefit from competition in the manufacturing and sale of equipment.XH L yO ( 2!ԍIn the portion of the House Report for the 1996 Telecommunications Act discussing the navigation devices,  2!Congress noted that "competition in the manufacturing and distribution of consumer devices has always led to innovation, lower prices and higher quality." H.R. Rep. No. 104204, 104th Cong., 1st Sess. 112 (1995).  There now appears to be a  2!considerable consensus among the market participants that the confluence necessary to create competitive  2!outlets is unlikely to take place in the analog environment and indeed that trying to force it to take place  S ( 2!will have an adverse influence on progress with respect to digital equipment.'$ L {OX( 2!ԍSee e.g., Time Warner Petition at 6 n.7 (mandating separation of security and nonsecurity functions for digital  2!devices will be easier to accomplish and entail far less disruption than for analog devices); CEMA, Circuit City, ITIC  {O( 2!njoint ex parte filing at 1 (March 4, 1999) (cable operators not likely to face competition for providing analog nonsecurity features and functions through a standard analog conditional access interface)' Given this situation we  2!are now persuaded that at this time, we should focus exclusively on the emerging market for digital  S ( 2!devices. Commenters maintain that shipments of analog settop equipment have been declining rapidly, L yO( 2!ԍGI contends that shipments of analog settop equipment in 1998 declined 25% from 1997 levels. GI anticipates a similar reduction in shipments in 1999. GI Comments at 7 n.22.  SX( 2!~and that there will not be a market demand for analogonly devices.X, L {O$( 2!~ԍCEMA, Circuit City, ITIC joint ex parte filing at 1 (March 4, 1999); TIA maintains that a considerable cost would be incurred developing security modules for a nonexistent analog equipment market. TIA Comments at 4. We believe that the perceived lack  2!of consumer demand would make manufacturers unlikely to manufacture and retailers unlikely to carry  2!analog navigation devices even if the Commission denied rehearing on this issue. Commenters also  2!8contend that, given the transition to digital services, the development of an analog security module is not  2!Teconomically feasible and that the application of Section 629 to analog devices would result in  S( 2!unnecessary expenditures by MVPDs for a module that will soon be obsolete.?Z L {O ( 2!ԍNCTA argues that due to the costs involved, e.g., royalty payments, patents, etc., the cost of the security device  2!could be more than the cost of the commercial navigation device to which the device would be connected. NCTA Petition at 9. ? In addition, we do not  2!believe it would be advisable for the Commission to apply a rule in a manner which could interfere with  2!the development of competition in the digital marketplace. With the limited exclusion from the  2!requirement to offer analog security devices, MVPDs will be able to concentrate their resources on the"0*&&88"  2!development of digital technologies and services. Likewise, the deferral allows a more efficient use of  2!the Commission's resources by permitting the Commission to focus on monitoring digital developments.  S( 2!$As we stated in the Navigation Devices Order, we believe that the digital age promises to bring broader  S( 2!choices and opportunities to a wider group of consumers.\L {O(ԍNavigation Devices Order, 13 FCC Rcd at 14782.\ Subscribers benefit from the additional video  2!and other services digital technology allows MVPDs to provide. Digital services cannot be accessed by  2!existing analog equipment, and thus require the provision of new navigation devices to support these services.  S( d  14. ` ` Accordingly, on reconsideration we are persuaded that the statute does not require us, at  2!this time, to apply our rules to the type of equipment set forth in the joint proposal of CEMA, Circuit City  2!~and ITIC, i.e, devices that (1) employ only an analog conditional access mechanism; (2) are capable only  2!.of providing access to analog video programming offered over an MVPD system and (3) do not provide  2!Xaccess to any digital transmission of MVPD programming or any other digital service through any  2!receiving, decoding, conditional access, or other function, including any conversion of digital programming  2!or services to an analog format. Instead, we believe that deferring application of the rule to such  2!\equipment will foster the transition from analog to digital services consistent with the goals of Section  2!629. Specifically, we find that excepting analog devices from the rules at this time will further Section 629's goal of commercial availability more expeditiously.  S ( @15. We will continue to monitor developments relating to the transition and to the rollout of  2!navigation devices in order to determine whether the marketplace develops in a manner consistent with  2!$our expectations. If analog boxes do not become obsolete, as we expect, the Commission intends to act  2!promptly to ensure that analogonly boxes are made commercially available. We are reconsidering the  2!scope of our rule and limiting it to hybrid and digital equipment in part because we believe it will hasten  2!the rollout of digital services by MVPDs and bring consumers the numerous technological advances  2!~associated with this transition. Section 629(c) allows the Commission to grant waivers that are necessary  2!to assist in the introduction of new multichannel video programming or other services offered over  S(multichannel video programming systems.HZL {O(ԍSee 47 U.S.C.  549(c).H  Sz( d F16. ` ` Under the rules we adopt, we defer the requirement that MVPDs provide security devices  2!Bfor analogonly equipment. Hybrid devices which perform conditional access for both analog and digital  2!scrambled services are not covered by the deferral. Unlike analogonly devices, we believe that hybrid  2!devices could interfere with competition in the digital marketplace. If hybrid devices were included in  2!the deferral, it is more likely that subscribers would lack incentives to look to the marketplace for a digital  2!navigation device if their equipment choice to receive all services was either to lease a box from the  2!MVPD, or to purchase a digital box at retail and obtain a separate analog box and a digital security module from the MVPD.   S ( d 17. ` ` Although some parties oppose any deferral to the separation of security requirement, we  2!jdo not believe their concerns are sufficiently compelling to warrant a different conclusion for analogonly" 0*&&88"  S( 2!devices.{L yOh(#X\  P6G;QwP#эMotorola Comments at 2; Tandy Comments at 6.{ Tandy contends that allowing cable operators to maintain their monopoly on analog equipment  S( 2!provides an incentive not to introduce digital technology.c XL yO(#X\  P6G;QwP#эTandy Comments at 5.c We find Tandy's argument unpersuasive in  2!light of the digital technological developments of cable operators and other MVPDs. Cable operators have  2!already placed orders for over 200,000 digital security modules in anticipation of consumer demand for  S`( 2!digital services._!`L {O(ԍSee Status Report of NCTA, et al. (Jan. 7, 1999)._ The Annual Assessment of the Status of Competition in Markets for the Delivery of  S:( 2!Video Programming, Fifth Annual Report, ("Fifth Annual Report") noted the activities of cable operators  2!and other MVPDs to develop and deploy advanced technologies in order to deliver additional video  S( 2!programming and other services (e.g., data access, telephony) to their customers."\zL {O ( 2!^ԍSee Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, CS  {O ( 2!Docket No.98102, Fifth Annual Report, FCC 98335 (rel. Dec. 23, 1998) at  196 ("Fifth Annual Report") (noting TCI's employment of an advanced digital compression technique in order to provide more digital services). In addition, television  S( 2!broadcast stations are transitioning from analog to digital television broadcasting.#L {O( 2!hԍSee Advance Television Systems and Their Impact Upon of Existing Television Broadcast Service, Fifth Report and Order, MM Docket 87268, 12 FCC Rcd 12809 (1997). We do not believe that  2!it would be in the interest of cable operators to decline to introduce potentially profitable new services,  2!4especially in light of the potential for increased competition in the MVPD marketplace and consumer  SL ( 2!Vdemand for digital services.$L L yO( 2!ԍFor example, the number of DBS subscribers, a competing digital multichannel video programming service,  {O(has grown 43% from June 1997 to June 1998. Fifth Annual Report at  62. Contrary to the assertion of Motorola, we do not see our decision to defer  S$ ( 2!application of this rule to analogonly devices as one that favors one technology over another.f%$ R L yO(#X\  P6G;QwP#эMotorola Comments at 2.f Rather  2!as explained above, we have decided to defer application of the rule on the basis of practical and legal  2!considerations that recognize the differences between the types of equipment for purposes of advancing the goals of Section 629.  S\( d  18. ` ` Because we are persuaded that deferring the application of our rules to analog devices at  2!this time will actually advance accomplishment of the retail availability objectives of Section 629, we need  2!fnot discuss in detail several arguments suggesting that application of the separation requirement in the  2!janalog context is impermissible. NCTA, TIA, GI, and Ameritech argue that this requirement violates the  2!mandate in Section 629(b) that the Commission not prescribe regulations that would jeopardize the  2!security of MVPD systems because analog delivery of signals presents a substantially greater security risk  Sl( 2!~than digital delivery.&lL yO#(#X\  P6G;QwP#эAmeritech Comments at 2; GI Comments at 3; NCTA Petition at 7; TIA Comments at 4. NCTA maintains that not only does Section 629(b) prohibit the Commission from  2!prescribing regulations which would jeopardize security, but given the history of theft with analog service,"D r&0*&&88"  2!Section 629(b) also can be read to require the Commission to take affirmative steps to protect against theft  S( 2!of cable service, including the exclusion of analog equipment from the separation requirement.d'L yO@(#X\  P6G;QwP#эNCTA Petition at 89.d The rules  2!adopted place a high priority on the protection of system security as is required by Section 629(b). No  2!Bdevice need not be made available for retail sale when to do so would jeopardize system security and no  2!obligation to separate security and nonsecurity functions applies where that would not be feasible without  S8( 2! jeopardizing system security.("8XL {O0( 2!FԍSee 47 C.F.R.  76.1204(d)(2) (obligation to separate security and nonsecurity does not apply where it is not  2!feasible to do so without jeopardizing security); 47 C.F.R.  76.1209 (commercial availability rules shall not be  2!construed to authorize or justify use of equipment intended for the unauthorized reception of multichannel video programming service). Thus, NCTA's argument is essentially that analog devices inherently  2!cannot be made in a fashion that will both protect security and permit retail sales. As a technical matter  2!zwe recognize that analog devices are more dependent than digital devices on physical control over the  2!:equipment in question. The difficulties involved were demonstrated in the industry work done in  S( 2!connection with the "decoder interface" device and our proceeding in the Equipment Compatibility Report  Sr( 2! and Order. )rBL {OT( 2!ԍImplementation of Section 17 of the Cable Television Consumer Protection and Competitive Act, Report and  {O(Order, 9 FCC Rcd 1981 (1994) ("Equipment Compatibility Report and Order").  However, we continue to believe that engineering techniques are available that could be used to separate analog security from the other functions of analog devices.  S ( d & 19. ` ` Section 629(d)(1) of the Communications Act, under a general heading entitled "Avoidance of Redundant Regulations," contains the following:  XDeterminations made or regulations prescribed by the Commission with respect to  commercial availability to consumers of converter boxes, interactive communications  equipment, and other equipment used by consumers to access multichannel video  programming and other services offered over multichannel video programming systems,  before the date of enactment of the Telecommunications Act of 1996 shall fulfill the  S(requirements of this section.A*L yO(ԍ47 U.S.C.  549(d)(1).A    Sl( d 20. ` ` Some commenters contend that the Commission's policy decisions with respect to the  2!decoder interface constitute prior decisions under Section 629(d)(1), and thus exempt analog devices from  S( 2!compliance with the commercial availability requirement.u+. L yO (#X\  P6G;QwP#эGI Comments at 2; TIA Petition at 2. u Parties argue the Commission's decision in  S( 2!the Equipment Compatibility Report and Order to reject proposals to require cable operators to allow  2!consumers to own descrambling equipment and to purchase such equipment from third parties is a  S(determination that the requirements of Section 629 should not be applied to analog equipment., L {O%(ԍGI Comments at 2; TIA Petition at 2 citing Equipment Compatibility Report and Order, 9 FCC Rcd at 1986. " P ,0*&&88v"Ԍ S( d ԙ21. ` ` We believe these claims misconstrue the relevance of our decisions in the equipment  2!fcompatibility proceeding regarding commercial availability. Although Section 629(d)(1) precludes the  2!Commission from revisiting some prior policy decisions, the decision cited by petitioners is consistent with  S( 2!4the approach taken in the Navigation Devices Order. The Commission's decision in the Equipment  Sb( 2!Compatibility Report and Order did not bear on the issue of the separation of security, but rather gave  S<( 2!jMVPDs exclusive control of their systems' security. The decisions in the Navigation Devices Order are  S( 2!congruous with this determination. The Navigation Devices Order allows MVPDs to maintain control of  S( 2!system security. The Order specifically states that separated security allows individual cable operators  S( 2! to design and operate equipment reflecting their particular security needs.\-L {O2 (ԍNavigation Devices Order, 13 FCC Rcd at 14799.\ Further, the decision to require  S( 2! separation of security conforms to the statement in the Equipment Compatibility Report and Order  2!>maintaining that separation of security functions is a means to promote competition in the market for  SV (equipment used to receive cable service.j.V ZL {OP (ԍEquipment Compatibility Report and Order, 9 FCC Rcd at 1986.j  S ( d V22. ` `  In its comments, Echelon argues that the 1996 Amendments to Section 624A limit the  S ( 2!Commission's ability to take actions in this proceeding.d/ L yOj(#X\  P6G;QwP#эEchelon Reply at 6. d Section 624A(c)(2)(D) directs the Commission,  2!in implementing the consumer electronics equipment compatibility provisions of the law, "to ensure that  2!any standards or regulations developed . . . do not affect features, functions, protocols, and other product  Sf( 2!`and service options. . . ."E0f|L yO(ԍ47 U.S.C.  544a(c)(2)(D).E In the Navigation Devices Order, we concluded that Section 624A does not  2!preclude adoption of the rules because no specific or detailed standards are included in the rules  S( 2!implementing Section 629.b1 L {O(ԍNavigation Devices Order, 13 FCC Rcd at 14804.b We also noted that the amended language of Section 624A, by its terms,  2!applies only to rules required or prescribed by Section 624A, not another statutory section, such as Section  S(629.72L {O(ԍId.7 Echelon has presented no new evidence that would persuade us to change our earlier decision.   Sx( B. ` ` Prohibition on MVPD Sale or Lease of Integrated Boxes   S(( d 23. ` `  The Navigation Devices Order concluded that MVPDs' continued ability to provide  2!integrated equipment combining both security and nonsecurity functions would likely interfere with the  S( 2!statutory mandate of commercial availability.h30 L {O"(#X\  P6G;QwP#эId. at 14803.h Section 76.1204(a)(i) prohibits MVPDs from selling or" 30*&&88"  S( 2!leasing new integrated equipment after January 1, 2005.4XL yOh( 2!#X\  P6G;QwP#э47 C.F.R. 76.1204(a)(1) states, "Commencing on January 1, 2005, no multichannel video programming  2!distributor. . . shall place into service new navigation devices for sale, lease, or use that perform both conditional access and other functions in a single integrated device." Petitioners NCTA, Time Warner and TIA seek  2!\reconsideration of this requirement, maintaining that the prohibition is beyond the Commission's legal  S( 2!authority and does not serve the public interest.5L {O8(#X\  P6G;QwP#эNCTA Petition at 17; TIA Petition at 5; Time Warner Petition at 3; see also Echelon Comments at 20. They argue that the prohibition on the sale of integrated  2!Xequipment after January 1, 2005 violates the express language of Section 629(a) which states that  2!"regulations shall not prohibit any multichannel video programming distributor from also offering  S8( 2!convertor boxes," conveys an express right to provide integrated boxes.68zL {OR (ԍ47 U.S.C.  549. See Ameritech Comments at 6; GI Comments at 10; NCTA Petition at 19. GI argues that at the time the  2! 1996 Act was adopted the term convertor boxes was commonly understood by the Commission and  S(Congress to include integrated boxes incorporating both security and nonsecurity features and functions.`7 L yO(#X\  P6G;QwP#эGI Petition at 8.`  S( d 24. ` ` A number of parties in opposition contend that the restriction on combining security and  2!nonsecurity functions complies with the Communications Act and is within the Commission's statutory  SH ( 2!authority.8H L yO(#X\  P6G;QwP#эCEMA Comments at 6; Circuit City Comments at 5; ITIC Comments at 5; Tandy Comments at 7. Circuit City argues that the authority to adopt rules related to navigation devices is supported  S ( 2!by the Commission's broad authority under Sections 2 and 4(i) of the Act.9 , L {O(#X\  P6G;QwP#эCircuit City Comments at 6, citing 47 U.S.C.  152 & 154(i). CEMA contends that Section  2!629(f) does not limit the authority the Commission had in effect before enactment of the 1996 Act, and  S (the Commission's authority over cable system provision of premises equipment is well established.: L {O.(#X\  P6G;QwP#эCEMA Comments at 6, citing 47 U.S.C.  543(b)(3).   S ( d .25. ` ` We disagree with the contention that Section 629(a) provides MVPDs with an express  2!right to provide integrated boxes. Further, we do not believe that Section 629(a) implies a mandate that  S0( 2! hardwired security could never be regulated for any reason.g;0P L yO (#X\  P6G;QwP#эCircuit City Reply at 5.g The directive in Section 629(a) that MVPDs  2!pbe allowed to offer navigation devices is one of several directives in Section 629. Section 629(a) also  2! directs the Commission to take actions to assure that consumers have the ability to obtain navigation  S( 2!devices from manufacturers, retailers, and other vendors not affiliated with the MVPD. In the Navigation  S( 2!.Devices Order, we concluded that achievement of this express mandate required prohibition of MVPDs  Sl( 2!providing security and nonsecurity functionality in a single device.<lL {O#(#X\  P6G;QwP#эNavigation Devices Order, 13 FCC Rcd at 14803. The resulting restriction is one of"l r<0*&&88"  2!~the actions taken under the authority granted in Section 629 in order to assure the commercial availability of navigation devices.   S( d j26. ` ` Petitioners NCTA and GI make similar arguments regarding the application of Sections  2!L629(b) and 629(d) to the integrated device prohibition as they make regarding the general requirement to  S8( 2!separate analog security and nonsecurity functionality.R=8L yO(ԍGI Comments at 12; NCTA Petition at 1921.R NCTA argues that the prohibition is contrary  2!to the requirement of Section 629(b) that security not be jeopardized because embedded security contained  2!0in integrated equipment is a more effective method of protecting intellectual property than having  S( 2!separated security modules.?>XL yO (ԍNCTA Petition at 1920.? GI maintains that Section 629(d) binds the Commission by its decision in  2!4the equipment compatibility ruling which allowed cable operators to incorporate signal access control  Sp(functions in multifunction component devices.n?LpL {O ( 2!HԍGI Comments at 12; NCTA Petition at 1921. Petitioners cite the clarification made in the Equipment  {O( 2!Compatibility Reconsideration Order that, at the present time, cable operators could provide multifunction  2!8component descramblers that connect cable systems to "cable ready" televisions and VCR through the decoder  {OT( 2!`interface connector without the need for a settop box. Implementation of Section 17 of the Cable Television  {O( 2!Consumer Protection and Competitive Act, Memorandum Opinion and Order, 11 FCC Rcd 4121, 4127 (1996)  {O( 2!("Equipment Compatibility Reconsideration Order"). CEMA argues that this decision is not a prior decision because  2!<it was not made before the date of enactment of the 1996 Act. The Act was signed into law February 8, 1996. The  {Oz(Equipment Compatibility Reconsideration Order was adopted on March 22, 1996. CEMA Comments at 9. n  S ( d `27. ` ` Section 629(b) does not, in our view, require the Commission to abandon its obligation  2!to ensure commercial availability of navigation devices in any situation that could raise a security concern.  2!Rather, Section 629(b) requires the Commission to adopt regulations that promote commercial availability  2!while protecting system security. The rules adopted to implement Section 629 are consistent with this  2!requirement. Under the rules, MVPDs retain control and ownership of the security equipment for their  SX( 2!Lsystems. The Navigation Devices Order noted the consensus of several cable operators, as well as two  2!Bequipment manufacturers, that separation of security from nonsecurity functions in the digital context is  S ( 2!Vpossible.\@  L {O(ԍNavigation Devices Order, 13 FCC Rcd at 14800.\ Likewise the Commission has acted consistently with its obligations under Section 629(d)(1).  2!The Commission's actions in the equipment compatibility proceeding regarding the functionality of the  2!decoder interface standard were adopted in response to the provisions of Section 624A which required the  2!Commission to adopt regulations to ensure compatibility between cable systems and consumer electronics  Sj( 2!`equipment.zAj L {O!(ԍEquipment Compatibility Reconsideration Order, 11 FCC Rcd at 4121 n.1.z The Commission made no decision regarding the contents of security modules attaching to  SB( 2!Hsettop boxes, stating specifically in the Equipment Compatibility Reconsideration Order that issues  S(regarding separating security in settop boxes would be addressed at a later time.7B L {O$(ԍId.7" B0*&&88"Ԍ S( d Rԙ28. ` ` Petitioners also maintain that the ban on integrated devices will not serve the public  S( 2!interest.CL yO@(#X\  P6G;QwP#эNCTA Petition at 1821; Time Warner Petition at 5. Petitioners argue that in banning integrated devices after 2005, the Commission has ignored  S( 2!the engineering and economic benefits of product integration.DXL yO(#X\  P6G;QwP#эNCTA Petition at 23; Time Warner Petition at 5; WCA Comments at 6. Requiring separation, even when both  2!pparts of the device will be packaged, leased, and used as a single piece of equipment, it is argued, will  S`( 2!jincrease costs to consumers due to the requirement of manufacturing two separate devices.aE`L yO(#X\  P6G;QwP#эTIA Petition at 7.a Petitioners  2!also claim that continued availability of integrated devices would prevent confusion among consumers who  S( 2!are not technically sophisticated.vFxL yO( (#X\  P6G;QwP#эNCTA Petition at 23; TIA Petition at 5.v NCTA argues that as long as consumers are aware of their options,  2!cable operator provision of integrated boxes will not impede the development of a retail market for  S( 2!Lnavigation devices.cGL yOh(#X\  P6G;QwP#эNCTA Petition at 25.c Some parties contend that preventing consumers from obtaining integrated devices  S( 2!tfrom MVPDs limits consumer choice rather than enhances it.zHL yO(#X\  P6G;QwP#эAmeritech Comments at 7; WCA Comments at 5.z NCTA maintains that because consumer  2!electronics manufacturers intend to incorporate nonsecurity functions into other electronics equipment  2!such as television sets, VCRs and DVD players, it would be inconsistent to prohibit cable systems from  S (providing bundled equipment.cI ( L yO(#X\  P6G;QwP#эNCTA Petition at 24.c  S ( d 29. ` ` Other parties support the phaseout of integrated boxes.J L yO((#X\  P6G;QwP#э CEMA Comments at 6; Circuit City Comments at 5; ITIC Comments at 5; Tandy Comments at 7. Tandy argues that allowing  S ( 2!monopolists to continue bundling is not in the public interest.K H L yO(#X\  P6G;QwP##X\  P6G;QwP##&a\  P6G;r&P##X\  P6G;QwP#эCEMA Comments at 11; Tandy Comments at 8. Motorola maintains that unbundling will  2!benefit consumers and petitioner's request would delay, if not defeat the ultimate availability of a  SX( 2!\competitive marketplace for navigation devices.fLXL yO(#X\  P6G;QwP#эMotorola Comments at 2.f CEMA disputes that bundling increases efficiency,  S0( 2!Lmaintaining that petitioners fail to provide any specific example of how bundling reduces costs.cM0hL yO8!(#X\  P6G;QwP#эCEMA Comments at 13.c Circuit  2!$City argues that making cable operators reliant on the separate security module provides assurances that  2!they will not allow monopolistic equipment suppliers to walk away from promises to support efficient and"M0*&&88"  S( 2!inexpensive security device development, manufacture and utilization.NL yOh(#X\  P6G;QwP#эCircuit City Comments at 11; Tandy Comments at 8. CEMA contends that the  2!regulatory treatment of cable operators is not comparable to the treatment of consumer electronics  2!^manufacturers because cable operators retain monopoly power, whereas consumer equipment  S(manufacturers compete in a vigorously competitive market.cOXL yO(#X\  P6G;QwP#эCEMA Comments at 15.c  S8( d B30. ` ` We continue to believe that the ban on integrated devices will serve the public interest.  S( 2!tIn the Navigation Devices Order, we stated our belief that competition among equipment manufacturers  2!zin the marketplace will lead to increased consumer choice and a corresponding decrease in the cost of  S( 2!equipment. PL yOJ ( 2!#X\  P6G;QwP#эSuch a result was achieved when ownership of telephones moved from the network operator to the consumer.  {O (Navigation Devices Order, 13 FCC Rcd at 14780.  The ban does not impede MVPDs from their current practice of leasing equipment to  2!*subscribers, provided the boxes have a severable security component. Consumers also will have the  2!Vadditional opportunity of purchasing their own equipment from sources other than the MVPD. Allowing  2!MVPDs the advantage of being the only entity offering bundled boxes could adversely affect the  2!development of this equipment market. Thus, the prohibition on integrated boxes allows for equal  2!competition in the marketplace. We agree that cost savings in bundled equipment have not been specified  2!jand are in any event likely to be offset by the manufacturing savings an open, competitive market offers.  S ( 2!For example, the Navigation Devices Order notes that the requirement to separate security should lead to  2!lower equipment costs by increasing portability, which increases the market base and facilitates volume  S\(production.nQ\BL {O>(#X\  P6G;QwP#эId. at 14793.n   S ( d f31. ` ` Regarding petitioner's contention that the unbundling requirement creates consumer  S( 2!confusion, the Navigation Devices Order addressed this issue, stating that "[w]e anticipate that subscribers  2!who obtain their boxes from their MVPD will obtain security modules at the same time, and will not  S( 2!notice a functional difference between integrated and nonintegrated boxes."bRL {O (#X\  P6G;QwP#эId. at 14803.b We expect that plugging  2!a security module into the back of a navigation device should be no more complicated than connecting a television to a VCR, a printer to a computer, or a phone to an answering machine.  S( C.` ` Provision of Integrated Equipment Until 2005   S( d  32. ` `   CEMA in its reconsideration petition, with the support of Circuit City and ITIC in  2!subsequent responsive pleadings, urges the Commission to accelerate implementation of the ban on  SV( 2!MVPDs offering integrated navigation devices.SVf L {O\$(ԍCEMA Petition at 2; CEMA, Circuit City, ITIC joint ex parte filing at 2 (March 4, 1999). CEMA argues that the prohibition should become  2!jeffective on July 1, 2000, the day that operators are first required to separate out security functions from". S0*&&88"  2!nonsecurity functions in their navigation devices. CEMA also argues that the Commission ignored its  2!precedent in the context of telephone customer premises equipment ("CPE"), where the Commission gave  S( 2!phone carriers only two years to cease the practice of bundling of telecommunications service and CPE.TL {O( 2!#X\  P6G;QwP#эCEMA Petition at 9, citing Amendment of Section 64.702 of the Commission's Rules and Regulations (Second  {O(Computer Inquiry), 77 FCC 2d 384, 44749 (1980).  2!CEMA maintains that allowing MVPDs to provide integrated equipment after July 1, 2000 will impede  2!Vthe competitive availability of navigation devices by providing cable operators time to lock up the market  S8( 2!before new manufacturers enter.bU8$L yO(#X\  P6G;QwP#эCEMA Petition at 5.b In opposition, GI argues that accelerating the ban on integrated devices  S( 2!to an earlier date increases the adverse impact of the ban.aVL yOd (#X\  P6G;QwP#эGI Comments at 17.a NCTA argues that the requirement to  S(unbundle telecommunications CPE from service rates has no relevance here.cWDL yO (#X\  P6G;QwP#эNCTA Comments at 12.c  S( d  33. ` ` We decline, at this time, to adopt the suggestion to require the phaseout of integrated  Sp( 2!boxes by an earlier date. In the Navigation Devices Order, we explained that a transition period will help  2!*to minimize the economic impact of the prohibition on manufacturers and MVPDs by allowing them  S" ( 2!`sufficient time to respond to equipment modifications and a changed market.X" L {O(#X\  P6G;QwP#эNavigation Devices Order, 13 FCC Rcd at 14803. The Navigation Devices  S ( 2!tOrder cited several instances in which the Commission, in other contexts, has provided for the phaseout  S ( 2!of equipment for both technical and economic reasons.~Y f L {O(#X\  P6G;QwP#эId. See also nn.167, 168. ~ CEMA's proposal to ban integrated boxes on  2!July 1, 2000 could have an adverse impact on MVPDs who have purchased, but not deployed new  2!~integrated boxes in anticipation of consumer demand for digital services. We do not believe that MVPDs  2!hwill be able to use the transition period to establish a monopoly in the equipment market. The  2!Jrequirement that MVPDs provide separated security devices beginning on July 1, 2000 allows  2!Rmanufacturers to offer equipment in markets to which MVPDs had been able to restrict access. The  2!separated security requirement also ensures that manufacturers will be able to offer consumers equipment  2!Vchoices during the phaseout. In addition, as we made clear in the original Order, in the year 2000, once  2!nonintegrated equipment is available, the Commission will assess the state of the market to determine  2!whether the designated time frame is appropriate and will review the mechanics of the phaseout of  SF( 2!integrated boxes.qZF L {O (#X\  P6G;QwP#эId. at 14777, 147812.q In the course of that assessment, we will seriously consider whether acceleration of  2!the phaseout date would be appropriate. In particular, if the commercial market in navigation devices  2!Bis not developing as expected, one option that we would review would be moving the date from the year  2!V2005 to 2003. Finally, we note that although the length of the current transition period is longer than the  2!transition period allowed following the decision to require that telephone CPE be provided on an  2!untariffied unbundled basis, the underlying circumstances are distinguishable. The telephone CPE decision"~ Z0*&&88z"  2!required changes in existing tariffs, accounting practices, and in the organization of entities providing  2!$services and equipment, but did not entail redesign of the underlying equipment used by subscribers. In  2!the context of navigation devices, our decision requires equipment to be redesigned because of new technical requirements after the January 1, 2005 deadline.  S8( D.` ` Devices in Inventory   S( d j!34. ` `   In the Navigation Devices Order, we adopted new Section 76.1204(a)(1) which states  2!`"Commencing on January 1, 2005, no multichannel video programming distributor subject to this section  2!shall place in service new navigation devices for sale, lease, or use that perform both conditional access  Sr( 2!8and other functions in a single integrated device."v[rL {O (#X\  P6G;QwP#эSee 47 C.F.R.  76.1204(a)(1).v Petitioners seek clarification of how this rule applies  2!Rto navigation devices that are in inventory on January 1, 2005, and whether the prohibition applies to  2!navigation devices that are in consumer use on January 1, 2005 and are returned to inventory at a later  S ( 2!date.\ ZL {O(#X\  P6G;QwP#эNCTA Petition at 17; WCA Petition at 4; see also Ameritech Comments at 7. NCTA interprets Section 76.1204(a) as allowing operators to continue to redeploy equipment that  S ( 2!had been placed in service before January 1, 2005 because such boxes are not "new" equipment.b] L yO^(#X\  P6G;QwP#эNCTA Comments at 4.b WCA  2!jand Ameritech argue that MVPDs should have the ability to deploy (or redeploy) equipment in inventory  2!or in use prior to January 1, 2005 to prevent MVPDs from having to bear the cost of "stranded" inventory  SZ( 2! prior to the expiration of the useful life of such inventory.z^Z|L yOv(#X\  P6G;QwP#эAmeritech Comments at 8; WCA Petition at 4.z CEMA disputes these interpretations of  2!Section 76.1204(a), arguing that the ability to deploy bundled boxes in inventory to new customers for  2!Ban indefinite period of time would make the January 1, 2005 deadline meaningless by allowing operators  S( 2!the ability to stockpile devices prior to the deadline.c_ L yO(#X\  P6G;QwP#эCEMA Comments at 16.c CEMA argues that the Commission has provided  2!MVPDs sufficient advanced notice to adjust their purchasing plans to accommodate their regulatory  S(obligations._`L {O(#X\  P6G;QwP#эId. at 17._  SB( d `"35. ` ` Section 76.1204 is not intended to allow MVPDs to stockpile integrated equipment nor  2!is it intended to render equipment obsolete that has already been manufactured and deployed and still has  2!a useful life. The January 1, 2005 date was chosen to allow an MVPD to recover its investment in  2!subscriber equipment that has been placed into service prior to January 1, 2005 and a reasonable period  2!of time to transition its equipment inventory to unbundled equipment. MVPDs' transition to boxes  2!requiring a separate security module can begin in July 2000 once the digital security module is made  2!Vavailable. We recognize that the unpredictable pace at which the competitive market will develop makes  2!the prospective inventory requirements of MVPDs difficult to estimate. MVPDs should use this transition  2!period to draw down their inventories of integrated devices. MVPDs should not use this transition period". `0*&&88"  2!8to increase inventories of integrated devices once separate security modules are widely available. As we  S( 2!$stated in the Navigation Devices Order, in the year 2000, once separate security modules are available,  2!we will assess whether the continued deployment by MVPDs of integrated boxes is impeding commercial  S(availability.\aL {O(ԍNavigation Devices Order, 13 FCC Rcd at 14803.\  S:( E. ` ` Application of Rules to DBS Equipment   S( d #36. ` `   In the Navigation Devices Order, we concluded that differences in the marketplace for  2!.DBS equipment provided justification for not applying the rule requiring separation of security functions  S( 2!Lto devices used to receive DBS service.AbZL {O (ԍId. at 14800.A Time Warner asks for reconsideration of this determination.jcL yO( (#X\  P6G;QwP#эTime Warner Petition at 15.j  2!.Time Warner argues that Section 629 does not grant the Commission authority to pick and choose from  SL ( 2!among various types of MVPDs in applying standards set pursuant to Section 629._dL |L {Oh(#X\  P6G;QwP#эId. at 16._ Time Warner argues  2!Bthat DBS should be deemed to have met the commercial availability and security separation requirement  S ( 2!already rather than excluded from the unbundling requirement.ee L {O(#X\  P6G;QwP#эId. at 15.e In doing so the Commission is urged  2!to recognize, as a general matter, that devices using a "smart card" as part of the security system could  2!tsatisfy the separation requirement even if some conditional access circuitry remained in the commercially  2!available portion of the device. Several parties oppose Time Warner's petition, contending that the  2!decision not to apply the unbundling requirement to DBS is distinguishable because navigation devices  S4( 2!for that service are commercially available.f4L yOt(#X\  P6G;QwP#эCEMA Comments at 20; Circuit City Comments at 16; DirecTV Comments at 2; PrimeStar Comments at 2. DirecTV and PrimeStar argue that it is not necessary to  2!apply the unbundling requirement to an MVPD that already meets the goals that the requirement is  S(designed to achieve.~g0 L yO(#X\  P6G;QwP#эDirecTV Comments at 5; PrimeStar Comments at 2.~  S( d $37. ` ` We believe that legitimate distinctions exist between DBS equipment and that used in  Sl( 2!connection with other MVPDs and decline to depart from our approach in the Navigation Devices Order.  2!~We reiterate our view that because DBS devices are widely available to consumers at retail from multiple  2!vendors, as compared to equipment for other MVPD services, particularly cable operators, there is  S( 2!Vjustification for not applying the rule requiring separation of security functions to DBS services.h L {OV#(#X\  P6G;QwP#эNavigation Devices Order, 13 FCC Rcd at 14800. Time  2!Warner provides no basis to support its contention that Section 629(a) requires uniform regulations across  2!all multichannel video service platforms. The statute mandates the outcome of competitive availability,"R h0*&&88"  2!not uniform means to achieve this result. We similarly are not persuaded that because consumers have  2!Lchoices for DBS equipment, this service can be excluded from all regulations adopted in this proceeding.  S( 2!fIn the Navigation Devices Order, we fully considered whether to exclude DBS from the commercial  2!pavailability regulations and concluded we did not have authority to do so because the standards of the  Sb( 2!"sunset" criteria in Section 629(e) have not been met.ibL yO( 2!2ԍSection 629(e) provides when the regulations adopted pursuant to Section 629 shall terminate. The provision states:  XThe regulations adopted under this section shall cease to apply when the Commission determines  that(1) the market for the multichannel video programming distributors is fully competitive; (2)  dthe market for converter boxes, and interactive communications equipment, used in conjunction  with that service is fully competitive; and (3) elimination of the regulations would promote competition and the public interest.  47 U.S.C.  549(e). Specifically, we concluded that the MVPD  S:( 2!market for all services is not fully competitive.\j:` L {O:(ԍNavigation Devices Order, 13 FCC Rcd at 14819.\ Time Warner presents neither new arguments nor evidence to persuade us to change our earlier conclusions.  S( F. ` ` CableLabs Standards Process  S(  Sr( d  %38. ` `   The rules adopted in the Navigation Devices Order provide for a separation of security  2!and nonsecurity functions in navigation devices. To connect these two devices, the rules provide that the  2!"conditional access function equipment" provided by MVPDs "be designed to connect to and function with  2!other navigation devices available through the use of a commonly used interface or an interface that  S ( 2!conforms to appropriate technical standards promulgated by a national standards organization."Lk L {Of(ԍSee 47 C.F.R.  76.1204(b).L With  2!Rrespect to the cable television, we relied on representations from the cable television industry that the  2!pCableLab's OpenCable initiative, an undertaking of major segments of the industry, would lead to the  2!Vstandardization, design, and production of digital security modules, permitting the design, production and  2!distribution of navigation devices for retail sale and would provide a "commonly used interface" as  S (provided for in Section 76.1204(b).\l  L {O0(ԍNavigation Devices Order, 13 FCC Rcd at 14806.\  S( d >&39. ` ` In its petition for reconsideration, CEMA asks the Commission to direct the Cable 2!Consumer Electronics Compatibility Advisory Group (C3AG) rather than CableLabs to develop standards  Sl( 2!for the separation of security and nonsecurity functions.mlL {O"#(#X\  P6G;QwP#эCEMA Petition at 11; see also MSTV Comments at 3. CEMA argues that CableLabs is illsuited for"lm0*&&88p"  S( 2!the task because it is not a standardssetting body, and does not represent all affected industries.cnL yOh(#X\  P6G;QwP#эCEMA Petition at 11.c Parties  2!\express concern that the standards developed in the OpenCable project will only reflect the work and  2!linterests of the cable industry and its favored suppliers, will not reflect the views of other industry  S( 2!participants, and will not be optimized for the public interest.woXL yO(#X\  P6G;QwP#эCEMA Petition at 11; MSTV Comments at 6.w Ameritech and WCA contend that certain  S`( 2!BMVPDs have been denied membership in CableLabs.zp`L yO(#X\  P6G;QwP#эAmeritech Comments at 9; WCA Petition at 12z They ask that the Commission make clear that  2!membership in CableLabs and participation in the standardssetting process should be open to all MVPDs,  2!and that deliberate exclusion of alternate MVPDs from the private standardssetting process will not be  S(tolerated.zqxL yO (#X\  P6G;QwP#эAmeritech Comments at 9; WCA Petition at 12z   S( d L'40. ` ` In opposition, parties support the OpenCable initiative and assert it is the proper forum  Sp( 2!:for developing navigation device standards.rpL yO(#X\  P6G;QwP#эCircuit City Comments at 19; NCTA Comments at 17. Circuit City maintains that it is important to assign  2!responsibility for the success of the interface to CableLabs so that the cable industry will be held  S ( 2!accountable if the effort does not meet all of its goals.ks L yOX(#X\  P6G;QwP#эCircuit City Comments at 20.k Circuit City argues that if a multiindustry  S ( 2!organization such as C3AG were given responsibility, then there would not be accountability.Xt ( L {O(#X\  P6G;QwP#эId.X NCTA  2!maintains that the cable operators and manufacturers that vouched for achieving the July 2000 date for  2!availability of digital security modules would not have done so without responsibility for the OpenCable  S (initiative.cu L yO(#X\  P6G;QwP#эNCTA Comments at 17.c  S0( d H(41. ` ` We continue to believe that the CableLabs/OpenCable efforts will lead to a useable  2!standard for the separation of security and nonsecurity functions by July 1, 2000 and decline to assign  S( 2!responsibility for this development to another group such as C3AG.v"J L yO( 2!PԍWe note that OpenCable is a voluntary standards development underwritten by several cable operators. These  2!^operators committed to the Commission that OpenCable would result in standards that allow equipment manufacturers  {OZ!( 2!to make equipment that can operate with their systems. See Navigation Devices Order, 13 FCC Rcd at 14807. We are not aware of a similar offer to develop standards from C3AG. In the Navigation Devices Order,  2!we ordered the eight MSOs involved in the OpenCable project, whose statements concerning their  2!commitments to that project were included in the record of this proceeding, to file semiannual progress"4v0*&&88>"  S( 2!reports.\wL {Oh(ԍNavigation Devices Order, 13 FCC Rcd at 14808.\ The first report, filed on January 7, 1999, states that OpenCable is ahead of schedule with  2!\respect to the development of specifications for the digital security module and for the digital security  S( 2!module interface.wxZL {O(ԍ See Status Report of NCTA, et al. (Jan. 7, 1999) ("Status Report").w Orders for over 200,000 digital security modules supporting the OpenCable standard  S( 2!8have been placed.7yL {O(ԍId. at 5.7 Switching the initiative to another group, such as C3AG, at this time would lead to  S`( 2!lan unnecessary delay in the development of the necessary interfaces.cz`~L yO~ (#X\  P6G;QwP#эNCTA Comments at 17.c Several milestones in the  2!$OpenCable process have occurred that allowed entities outside of the cable television industry input into  S( 2!the design of the interface specifications. {L yO ( 2!2ԍCompanies signing OpenCable's nondisclosure agreement are provided the opportunity to review and provide  {O(input to all draft specifications. OpenCable ex parte presentation (Jan. 5, 1999).  No party has brought forth evidence that their input is not  2!being accepted or considered. The status report states that in December 1998, the digital security module  2! interface specification was submitted to the Society of Cable Television Engineers ("SCTE"), an accredited  2!standards organization whose members include equipment manufacturers and other members of the  Sp( 2!telecommunications community.;|ph L yOx(ԍStatus Report at 4.; The specification has been reviewed and adopted by SCTE as a U.S.  SH ( 2!cable standard.7}H L {O(ԍ Id.7 We expect that the standards developed through the OpenCable process will be  2!sufficient (e.g., specific enough) for manufacturers and designers unaffiliated with MVPDs to build  2!devices that can be sold through national retail distribution. We will continue to monitor the OpenCable  2!project to ensure that the standards are specific enough and that a wide range of interests continue to have an opportunity to participate in the project.  SX( G. ` ` Application of Section 629 to "Open Video System" Equipment  S( d )42. ` `  Section 76.1200(a) of the Commission's rules excludes open video systems from the  2!definition of multichannel video programming systems with respect to application of the commercial  S( 2!availability regulations.~ L yO( 2!ԍ47 C.F.R.  76.1200(a) defines a multichannel video programming system as "A distribution system that makes  2!available for purchase, by customers or subscribers, multiple channels of video programming other than an open  2!video system as defined by  76.1500(a). Such systems include, but are not limited to, cable television systems,  2!multichannel multipoint distribution systems, direct broadcast satellite systems, other systems for providing directtohome multichannel video programming via satellite, and satellite master antenna systems." This rule was based on our conclusion in the Navigation Devices Order that  2!pSection 653(c)(1) of the Act states that any section of Part III of Title VI of the Communications Act":~0*&&88 "  S( 2!which applies to cable operators shall not apply to open video system operators.\L {Oh(ԍNavigation Devices Order, 13 FCC Rcd at 14784.\ Part III of Title VI  2!`contains Sections 621 through 629 of the Act. Time Warner seeks reconsideration of the decision not to  S( 2!Fapply the requirements of Section 629 to open video system operators.ZL {O(#X\  P6G;QwP#эTime Warner Petition at 15; see also Circuit City Comments at 19. Time Warner argues that Section  2!653(c)(1) is designed to exempt open video system operators from regulations as a cable system, but does  2!not exempt open video systems from Section 629, which applies to all MVPDs. Time Warner adds no  2!new information or arguments that would persuade us to alter our decision on this issue. As we noted  S( 2!.in the Navigation Devices Order, Section 653 makes no distinction regarding which rules apply to open  S( 2!fvideo systems based on whether a rule applies to all MVPDs or only applies to cable operators.\L {Ov (ԍNavigation Devices Order, 13 FCC Rcd at 14784.\ In  2! addition, Section 653 states which sections in Part III apply to operators of open video systems, and  S( 2!Section 629 is not listed.H~L {O(ԍSee 47 U.S.C.  573(c).H Thus, we believe that Congress clearly excluded open video system operators from Section 629.  S" ( H. ` ` Wireless Cable Antennas and Downconverters  S ( d n*43. ` ` In the Navigation Devices Order, we mandated that subscribers have a right to attach any  2!>compatible navigation device to an MVPD system, as long as the attached equipment does not cause  S (harmful interference, injury to the system, or compromise legitimate access control mechanisms.? L yO4(ԍ47 C.F.R.  76.1201.?  S4( d F+44. ` ` The Wireless Cable Association (WCA) argues that the rule, as written, would allow cable  2!subscribers to attach any class of equipment, including network equipment, anywhere on a MVPD  S( 2!network. The WCA seeks a determination that wireless cable antennas and downconverters are excluded  2!&from the definition of navigation devices essentially because this equipment is located outside the  S( 2!subscriber's premises.L {O( 2!#X\  P6G;QwP#эSee WCA Petition at 89 stating that "a wireless cable antenna is an outdoor device that directly receives a  2!nwireless cable operator's 2 GHz microwave signal. Once received, the signal is paced to the downconverter (which  2! is either integrated into the antenna of attached directly to it), which converts the wireless cable operator's 2 GHz  {O.( 2!frequencies to viewable frequencies. . .When wireless cable serves an MDU, each resident shares a common antenna/downconverter installed on the roof of the building." WCA requests that the Commission establish a demarcation point for subscriber  2!attachment of navigation devices, asserting that a demarcation point is needed to clarify where the MVPD  SD( 2!network ends and the subscriber's right to attach begins as is done in the context of inside wiring.DT L {O8#(#X\  P6G;QwP#эWCA Petition at 10, citing 47 C.F.R.  76.5(mm)(2). ĝ "D0*&&88t"  2!Circuit City concurs, and contends these devices fall outside the definition because they are part of the  S(wireless cable provider's network.kL yO@(#X\  P6G;QwP#эCircuit City Comments at 18.k  S( d $,45. ` ` We do not agree that equipment used to access wireless cable service can be excluded  2!from the definition of navigation devices in all circumstances or that we should adopt a separate  2!demarcation point for attachment of navigation devices as suggested by WCA. WCA suggests that the  2!test of whether a device is part of the MVPD network or a separate attachment to the network is whether  2!the device is inside or outside of the subscribers residence. Where the "network" involved is a one way  2!~radio frequency communications path and the receivers are not licensed, we see no inherent reasons why  2!reception equipment at a subscriber residence should not be treated as "navigation equipment." In the  Sp( 2!Navigation Devices Order, we noted that the language of Section 629 indicates that its reach is expansive  2!and that no category of equipment used to access multichannel video programming or services offered  S" ( 2!over such systems is automatically exempt from its coverage." XL {O(#X\  P6G;QwP#эNavigation Devices Order, 13 FCC Rcd at 14784. Some equipment that is outside of  2!Lresidences, such as DBS receiving equipment, was explicitly discussed as being covered by the rules and  S ( 2!has historically been commercially available through retail outlets without difficulty.; L {O\(ԍId. at 14800.; WCA states that  2!the placement of antennas and downconverters used by MDS systems are often unique to a particular  S ( 2!system or a particular receiver location. |L yO( 2!Z#X\  P6G;QwP#эWCA Comments at 9 ("The circumstances under which a given antenna/downconverter combination will work necessarily changes on a casebycase basis.") However, without specific information regarding the variety  2!of different equipment configurations that may be deployed by MDS operators, it is not possible to  2!evaluate fully whether wireless cable antennas and downconverters should be excluded from the definition of navigation devices in every instance.   S( I. ` ` Permitted Functions of Separated Conditional Access Equipment  Sj( d -46. ` ` Time Warner seeks clarification of Section 76.1204(a), which states "A multichannel video  SB( 2!programming distributor that utilizes navigation devices to perform conditional access functions shall make  S( 2!zavailable equipment that incorporates only the conditional access functions of such devices."EL yO(ԍ47 C.F.R.  76.1204(a)(1).E Time  2!*Warner asserts that MVPDs should be given the ability to provide security modules that also contain  2!`circuitry allowing the customer to receive new functionalities and features which are supported as part of  S( 2!the MVPDs' service and which may not be supported by a commercially available device.id L yO"(#X\  P6G;QwP#эTime Warner Petition at 5.i Time Warner  2!fargues that this approach would permit MVPDs to offer additional functions and features through the  2!4component security module as new services are offered. Time Warner also seeks clarification that a  2!Bnavigation device that supports all services and functions offered over a particular system is not required"* 0*&&88"  2!to support all services and features provided over other systems operated by that operator or by other  2!4operators. Circuit City contends that Time Warner's argument regarding the contents of the security  2!module evades the Commission's key determination in this proceeding that security functions must be  2!separated from the other functions of navigation devices. Circuit City maintains that ancillary functions  2!should only be included in the separated security device when the additional circuitry is closely related  2!Vto the security function of the module, and enhances, rather than assumes, a function of the host device,  S(and is not efficiently available in the host.kL yOx(#X\  P6G;QwP#эCircuit City Comments at 14.k  S( d .47. ` ` We clarify that Section 76.1204(a) regarding the components of the security module allows  2!jfor inclusion of circuitry used for conditional access functions. We agree with Circuit City that, were the  2!security modules to contain features and functions not related to security, commercial availability of  SH ( 2! navigation devices could be impaired.H XL {O@ ( 2!ԍIn the Navigation Devices Order, we found that separated security would allow individual cable operators to  2!"design and operate equipment reflecting their security needs, while still facilitating portability and the development  2!of the consumer equipment market . . . will also facilitate the commercial availability of navigation devices by  {O( 2!allowing manufacturers to provide a diverse array of equipment." Navigation Devices Order, 13 FCC Rcd at 14799 2!B800. We continue to believe that separation of security functions will facilitate the commercial availability of navigation devices. In general, we believe the formulation of what is permitted  2!jprovided by Circuit City in its comments as referenced above provides a useful focus for issues that may  2!Larise in this area in the future in a specific context. Time Warner has provided only a limited description  2!of the functions that it believes might appropriately be provided in association with the security device.  2!XIn particular how functions such as additional memory might be used, as it suggests, to assure the  2!~"backwards compatibility of both network components and commercially available navigation aids" is not  SX( 2!explained fully.1XL {O(ԍId.1 In light of the limited information provided we are not prepared to attempt to resolve this issue further here.  S( J. ` ` Portability   S( d p/48. ` `  Time Warner also seeks clarification that the phrase "function with other navigation  Sh( 2!devices" used in Section 76.1204(b) does not mandate portability or interoperability.+"hf L {On( 2!#X\  P6G;QwP#эTime Warner Petition at 9, citing 47 C.F.R  76.1204(b), which states "Conditional access function equipment  2!Pmade available pursuant to subsection (a)(1) of this section shall be designed to connect to and function with other  2!4navigation devices available through the use of a commonly used interface or an interface that conforms to appropriate technical standards promulgated by a national standards organization."+ The Commission  2!did not mandate that navigation devices be portable or interoperable. In this regard, Section 76.1204(b)  2!tdoes not address portability or interoperability. Rather, it requires that MVPDs provide security modules  2!Vthat connect to and function with navigation devices through the use of a commonly used interface or an  2!rinterface that conforms to appropriate technical standards promulgated by a national standards"P 0*&&88"  S( 2!organization.?L yOh(ԍ47 C.F.R.  76.1204.? In the Navigation Devices Order, we stated that the Commission has not adopted specific  2!rules that mandate portability or interoperability, although we noted that portability and interoperability  S( 2!increase the likelihood of subscribers obtaining navigation equipment by purchasing it.\XL {O(ԍNavigation Devices Order, 13 FCC Rcd at 14826.\ The Commission  S( 2!Xfurther stated that "[w]e are relying on the relevant industries to make progress towards achieving  2!pportability and interoperability, and in other areas. If they do not, or if the effort is unduly delayed, it  S:( 2!will be necessary for the Commission to consider whether further action is necessary."1:L {O (ԍId.1 In the cable  2! context, we understand that the specifications being developed as part of the CableLabs\OpenCable project  2!should enable a subscriber that purchases a navigation device manufactured according to the CableLabs  2!specifications to be able to use that device on any MSO's system anywhere in the United States that operates consistent with those specifications.  SJ ( K. ` ` Interface Information  S" (  S ( d ~049. ` `  Section 76.1205 states "Technical Information concerning interface parameters that are  S ( 2!needed to permit navigation devices to operate with multichannel video programming systems shall be  S ( 2!provided by the system operator upon request in a timely manner."? |L yO(ԍ47 C.F.R.  76.1205.? Time Warner seeks clarification  2! regarding the type of technical information that must be disclosed by a system operator pursuant to Section  2!76.1205. Time Warner maintains that the type of interface parameters that are appropriate for disclosure  2!.are those included in the OpenCable initiative, but not proprietary information concerning signal security  S ( 2!por other types of competitively sensitive information regarding the content of MVPD services.j  L yO(#X\  P6G;QwP#эTime Warner Petition at 11.j We  2!tclarify that Section 76.1205 requires the release of information sufficient to allow for interaction between  2!Rthe multichannel video programming system and the navigation device through the separated security  S( 2!device. As to specifics of the information, as we noted in the Navigation Devices Order, Section 76.1205  2!requires the release of meaningful information to allow manufacturers and retailers the ability to provide  SD( 2!zcompatible equipment.\DL {O(ԍNavigation Devices Order, 13 FCC Rcd at 14822.\ In the cable context, we believe CableLabs and the ensuing standardization  2!8processes will develop interface specifications that help define the required information. If problems are brought to our attention we will address this subject in our review in 2000.   S( L. ` ` Attachment of Equipment  ST( d 150. ` `   Section 76.1203 allows MVPDs to restrict the attachment of equipment to or use with their  2!systems where electronic or physical harm would be caused by the attachment or operation of such",. 0*&&88"  S( 2!equipment. L yOh( 2!Pԍ47 C.F.R.  76.1203 states "A multichannel video programming distributor may restrict the attachment or use  2!xof navigation devices with its system in those circumstances where electronic or physical harm would be caused by  2!the attachment or operation of such devices or such devices that assist or are intended or designed to assist in the unauthorized receipt of service. . . ." Time Warner asks the Commission to declare that MVPDs are immune from liability to  2!\any third party where customer attachment of their own equipment causes harm to the network or to  2!another user's equipment, or where such equipment interferes with the transmission or reception of the  2!.authorized services of another. Time Warner argues that MVPDs will not be in a position to disconnect  2!offending equipment until after the harm has occurred, and thus must be insulated from liability to  S8(customers resulting from harmful attachments which they are powerless to prevent.j8L yO (#X\  P6G;QwP#эTime Warner Petition at 13.j  S( d 251.` ` We disagree with Time Warner that MVPDs are powerless to prevent harmful attachments  S( 2!to their networks. In the Navigation Devices Order, we recognized the importance of ensuring that a  S( 2!navigation device does not cause harm to the network to which it is attached.^@L {Oz(ԍNavigation Devices Order, 13 FCC Rcd at 14789. ^ Section 76.1203 contains  Sr( 2!provisions allowing MVPDs to protect network facilities.XrL yO( 2!^#X\  P6G;QwP#эSection 76.1203 allows MVPDs to restrict attachment to their systems of equipment that would cause electronic  2!or physical harm. MVPD must publish and provide to subscribers standards and descriptions of devices that may not be used with, or attached to, its system because of the potential for harm. 47 C.F.R.  76.1203. Additionally, we stated that, if necessary, we  SJ ( 2!would consider proposals for additional procedures to protect network facilities.J L {O(#X\  P6G;QwP#эNavigation Devices Order, 13 FCC Rcd at 14790. Time Warner has not,  2!however, presented a proposal to protect network facilities based on experience or technical attributes but  2!.rather asks for blanket immunity from liability. With no evidence that the current protections are or will  S (be insufficient, we decline to adopt Time Warner's proposal.  S ( M. ` ` Theft of Service in the Context of Copy Protection Issues  S2( d 352.` `  Section 76.1209 states that "Nothing in this subpart shall be construed to authorize or  S ( 2!justify any use, manufacture, or importation of equipment that would violate 47 U.S.C. 553 or any other  2!>provision of law intended to preclude the unauthorized reception of multichannel video programming  S( 2!service. "? L yO(ԍ47 C.F.R.  76.1209.? Time Warner seeks clarification of the term "theft of service" as that term is referenced in  2!`Section 76.1209. It argues that the term should include any device that can be used to defeat or assist in  Sj( 2!Ndefeating copy protection techniques employed by program producers or copyright holders.jjL yO#(#X\  P6G;QwP#эTime Warner Petition at 14.j In"j0*&&88"  2!opposition, parties argue that Time Warner's proposal is beyond the scope of this proceeding, requiring  S(the FCC to police the unrelated issue of copy control.~L yO@(#X\  P6G;QwP#эCircuit City Comments at 23; CIG Comments at 3.~   S( d  453. ` ` To the extent Time Warner is asking us to redefine more expansively what types of "use,  2!Vmanufacture, or importation" of equipment would violate Section 553 and other related provisions of the  S8( 2!law, we believe that request is beyond the present scope and record of this proceeding.~8XL yO0(#X\  P6G;QwP#эCircuit City Comments at 23; CIG Comments at 3.~ Section 629  S( 2!requires that the Commission not impede the legal rights of an MVPD to prevent theft of service.rL {O (#X\  P6G;QwP#э47 U.S.C.  549(b). r  2!0Section 633 (47 U.S.C. 553) of the Act and other parallel laws of this type provide penalties for  2!jintercepting or receiving or assisting in intercepting or receiving any communications service offered over  S( 2!a cable system unless specifically authorized to do so.ozL {O(#X\  P6G;QwP#эSee 47 U.S.C.  553(a).o Our intent is that Section 76.1209 be interpreted  2!in a manner consistent with these prohibitions. We express no opinion here as to the scope of Section 633 or related theft of service provisions in the copy protection context.  S ( N. ` ` "Cable Ready" Labeling  S ( d 554. ` `   Time Warner asks that the Commission prohibit any digital navigation device from being  2!labeled "cable ready" or "cable compatible" which does not meet OpenCable standards, in order to prevent  SX( 2!consumer confusion.jX L yO(#X\  P6G;QwP#эTime Warner Petition at 10.j Commenters seek denial of Time Warner's request, maintaining that it creates  S0( 2!Lunnecessary regulation.0L yOl(#X\  P6G;QwP#эCircuit City Comments at 22; MSTV Comments at 6. Circuit City argues that the market will govern the behavior of manufacturers  S( 2!interested in providing navigation devices.k, L yO(#X\  P6G;QwP#эCircuit City Comments at 22.k We agree that market forces, assisted by labeling and  2!consumer information requirements may be an effective means of ensuring equipment quality and avoiding  2!consumer confusion. Section 624A(c)(2)(A) of the Communications Act addresses issues regarding  2!zidentification of devices as "cable ready" and "cable compatible" relating to technical requirements for  Sh( 2!televisions and VCRs.Oh L {O (ԍSee 47 U.S.C.  544a(c)(2)(A).O We are not, however, prepared at this time to incorporate the OpenCable  S@(specifications into this definition.oZ@N L yO.#( 2!4ԍRepresentatives of the consumer electronics and cable industries are working together to identify the  {O#( 2!components of a cable ready digital television. See Letter from Gary Shapiro, President, CEMA and Decker Anstrom, President and CEO, NCTA to William Kennard (April 16, 1999).o "@p0*&&88"Ԍ S( d xԙ655. ` ` We note that OpenCable is a trademarked brand that allows CableLabs the ability to police  2!the use of its brand to ensure that only equipment bearing the OpenCable logo has been certified as  2!meeting the OpenCable specifications. We do not find broader requirements regarding equipment labeling  2!`to be appropriate at this stage of the market development of these devices. We recognize, however, that  2!Bhow these devices are labeled may in the future become an important element in whether the market for navigation devices functions in the open and competitive fashion that is intended by Section 629.  S( O. ` ` Equipment Availability Restrictions   S( d 756.` `   In the Navigation Devices Order, we adopted Section 76.1202, which prohibits MVPDs  2!8from taking certain actions in order to prevent equipment from being made available to subscribers from  SJ ( 2!unaffiliated retailers, manufacturers, or other vendors. J L yO ( 2!ԍ"No multichannel video programming distributor shall by contract, agreement, patent right, intellectual property  2!right or otherwise prevent navigation devices that do not perform conditional access or security functions from being  2!2made available to subscribers from retailers, manufacturers, or other vendors that are unaffiliated with such owner or operator, subject to  76.1209." 47 C.F.R.  76.1202. We also adopted Section 76.1204(c), which  2!prohibits MVPDs from precluding the addition of extra features and functions in commercially available  S ( 2!navigation devices.  L yOJ( 2!ԍ47 C.F.R.  76.1204(c) state " No multichannel video programming distributor shall by contract, agreement,  2!patent, intellectual property right or otherwise preclude the addition of features or functions to the equipment made  2!available pursuant to this section that are not designed, intended or function to defeat the conditional access controls  yO(of such devices or to provide unauthorized access to service."  These rules were enacted to ensure that equipment choices were made available to  2!\consumers. Time Warner maintains that Sections 76.1202 and 76.1204(c) should also be directed to  2!consumer electronics manufacturers and retailers because these entities are in a better position than an  2!MVPD to thwart the commercial availability of navigation devices and determine what features and  2!.functions will be offered as part of commercially available navigation devices. Time Warner argues that  S2( 2!it is unfair to single out MVPDs for prohibitions and regulatory burdens. 2L yOj( 2!#X\  P6G;QwP#эTime Warner request that the rules should be rewritten to include a provision which "prohibits any navigation  2!device manufacturer from taking any action or using any contract, agreement, patent right, intellectual property right  2!to prevent or hinder the manufacturer or distribution of navigation devices that operate to receive all services and features offered by MVPD systems." Time Warner Petition at 11. In opposition, Circuit City  2!and GI argue that there is no basis in the record to conclude that equipment manufacturers or retailers  S( 2!have any incentive to take steps to sell equipment that will not allow the delivery of MVPD services.~ L yO(#X\  P6G;QwP#эCircuit City Comments at 22; GI Comments at 20.~  2!jGI also argues that Time Warner has not identified a viable jurisdictional basis on which the Commission  S(could adopt rules which directly regulate the commercial activities of equipment manufacturers.aL yOB"(#X\  P6G;QwP#эGI Comments at 20.a  SB( d P857. ` ` We are not persuaded at this time that Sections 76.1202 and 76.1204(c) should be applied  2!`to consumer electronics manufacturers and retailers. We do not believe it is necessary to take regulatory"0*&&88"  2!action which dictates the functionality of this equipment. To the contrary, we believe denying equipment  2!manufacturers flexibility in their equipment design would discourage innovation in equipment and services.  2!Manufacturers have stated that they are actively working to design, manufacture and sell digital cable set S( 2!top boxes to a variety of customers.L {O(ԍSee Matsushita Electric Corporation of America ex parte presentation (Dec. 15, 1998). GI indicates interested parties are engaged in a significant level  S`( 2!of voluntary licensing undertaken in response to consumer demand and other market forces.a`ZL yOZ(#X\  P6G;QwP#эGI Comments at 23.a Given these developments, we decline to impose the regulatory requirements requested by Time Warner.  S(  S(IV. PROCEDURAL MATTERS  S( d 958. ` ` Supplemental Final Regulatory Flexibility Analysis. A Supplemental Final Regulatory  2!&Flexibility Analysis, required by Section 603 of the Regulatory Flexibility Act, as amended by the  2!bContract with America Advancement Act of 1996, Pub. L. No. 104121, 110 Stat. 847 (1996), is  S (contained in Appendix C . ` `   S ( d :59. ` ` Paperwork Reduction Act of 1995 Analysis. The requirements adopted in this Order on  2!BReconsideration have been analyzed with respect to the Paperwork Reduction Act of 1995 and found to impose no new or modified information collection requirements on the public.   S0( V.  ORDERING CLAUSES  S( d f;60. ` ` IT IS ORDERED that the Petitions for Reconsideration filed by the parties listed in Appendix B ARE GRANTED to the extent discussed herein, and ARE OTHERWISE DENIED.   Sh( d P<61. ` ` IT IS FURTHER ORDERED that, pursuant to authority found in Section 4(i), 303(r) and  S@( 2!629 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r) and 549, the Commission's rules ARE HEREBY AMENDED as set forth in Appendix A.  S( d =62. ` ` IT IS FURTHER ORDERED that the rules as amended in Appendix A shall become effective thirty days after publication in the Federal Register. "x0*&&88"  S( d >63. ` ` IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference  S( 2!Operations Division shall send a copy of this Order on Reconsideration, including the Supplemental Final  2!Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of Small Business Administration, in  S(accordance with paragraph 603(a) of the Regulatory Flexibility Act.uL {O(ԍPub. L. No. 96354, 94 Stat.1164, 5 U.S.C.  601 et seq. (1981).u  ` `  M FEDERAL COMMUNICATIONS COMMISSION ` `  M Magalie Roman Salas ` `  M Secretary"J Z0*&&88"  S(6 à APPENDIX A  S`( Part 76 of Title 47 of the Code of Federal Regulations is amended as follows: PART 76 MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE 1. The authority citation for Part 76 is amended to read as follows:  2!AUTHORITY: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a, 307, 308, 309, 312, 315, 317, 325,  2!8503, 521, 522, 531, 532, 533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558, 560, 561, 571, 572, 573. 2. Section 76.1204 is amended by adding paragraph (f) to read as follows: * * * * * (f) Subsections (a)(1), (b), and (c) shall not apply to the provision of any navigation device that: (1) employs conditional access mechanisms only to access analog video programming;  @(2) is capable only of providing access to analog video programming offered over a multichannel video programming distribution system; and  @N(3) does not provide access to any digital transmission of multichannel video programming or any  2!8other digital service through any receiving, decoding, conditional access, or other function, including any conversion of digital programming or service to an analog format."h0*&&88"  S(   APPENDIX B 6 LIST OF SUBMISSIONS6  S`(  S8( PETITION S FOR RECONSIDERATION Consumer Electronics Manufacturers Association (CEMA) National Cable Television Association (NCTA) Telecommunication Industry Association (TIA) Time Warner Entertainment Company L.P. (TW) Wireless Cable Association International, Inc. (WCA)  S ( OPPOSITIONS TO PETITION S FOR RECONSIDERATION Ameritech New Media, Inc. (Ameritech) Association for Maximum Service Television, Inc. (MSTV) Circuit City Stores, Inc. (Circuit City) Computer Industry Group (CIG) Consumer Electronics Manufactures Association (CEMA) DIRECTV, Inc. (DirecTV) Echelon Corporation (Echelon) General Instruments Corporation (GI) Information Technology Industry Counsel (ITIC) Motorola, Inc. (Motorola) National Cable Television Association (NCTA) PrimeStar, Inc. (PrimeStar) Tandy Corporation (Tandy) Wireless Cable Association International, Inc. (WCA)  SP( REPLIES TO OPPOSITIONS TO PETITION S FOR RECONSIDERATION Circuit City Stores, Inc. (Circuit City) Consumer Electronics Manufactures Association (CEMA) Echelon Corporation (Echelon) National Cable Television Association (NCTA)" 0*&&88"  S( APPENDIX C 6  S( SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS  S`(6     S( As required by the Regulatory Flexibility Act (RFA),ZL {Ox( 2!8#X\  P6G;QwP#эSee 5 U.S.C. 603. The RFA, see 5 U.S.C. 601 et seq,. has been amended by the Contract With America  2!Advancement Act of 1996, Pub. L. No. 104121, 110 Stat. 847 (1996) ("CWAAA"). Title II of the CWAAA is the  yO (Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA").  an Initial Regulatory Flexibility  S(Analysis ("IRFA") was incorporated into the Notice of Proposed Rule Making ("NPRM") in this  S(proceeding.cL {OL ( 2!^#X\  P6G;QwP#эImplementation of Section 304 of the Telecommunications Act of 1996 Commercial Availability of Navigation  {O (Devices, CS Docket No. 9780, Notice of Proposed Rule Making, 12 FCC Rcd 5639, Appendix A (1997) ("NPRM").c The Commission sought written public comment on the possible impact of the proposed  S(policies and rules on small entities in the NPRM, including comments on the IRFA. Based on the  St(comments in response to the NPRM, the Commission included a Final Regulatory Flexibility Analysis  SN (("FRFA") in the Navigation Devices Order.^N FL {O4( 2!"#d6X@`7Oe@##X\  P6G;QwP#эImplementation of Section 304 of the Telecommunications Act of 1996, Commercial Availability of Navigation  {O( 2!nDevices, CS Docket No. 9780, Report and Order, 13 FCC Rcd 14775, Appendix C (1998) ("Navigation Devices  {O(Order"). While no petitioners seeking reconsideration of the  S( (Navigation Devices Order raised issues directly related to the FRFA, the Commission is amending the rules in a manner that may affect small entities. Accordingly, this Supplemental Regulatory Flexibility  S (Analysis ("Supplemental FRFA") addresses those amendments and conforms to the RFA.t l L {O(#X\  P6G;QwP#эSee 5 U.S.C. 604. Mt  S 2 A.Need for Action and Objectives of the Rules The 1996 Act added a new Section 629 to the Communications Act of 1934, as amended, that  S(requires the Commission to develop rules to assure competitive availability of navigation devices used  S(in conjunction with multichannel video programming distributors ("MVPD").b L yO(#X\  P6G;QwP#э47 U.S.C. 549.b The statutory objective of Section 629 is assure that navigation devices used by consumers to access a particular MVPD's programming are available to consumers from manufactures, retailers and other vendors not affiliated  Ss(with that MVPD. The Commission adopted the Navigation Devices Order in this proceeding on June  SM(11, 1998, promulgating rules to implement this mandate. The current Order on Reconsideration clarifies and refines these rules.  R2 B.XSummary of Significant Issues Regarding FRFA Raised in Petitions for Reconsideration (# No parties address the FRFA in their petitions for reconsideration, or any subsequent filings. "! 0*&&88R"Ԍ R2ԙ C.XDescription and Estimate of the Number of Small Entities to Which the Rules Will Apply (#  @The RFA directs the Commission to provide a description of and, where feasible, an estimate of  2!`the number of small entities that might be affected by the rules here adopted. The RFA defines the term  2!j"small entity" as having the same meaning as the terms "small business," "small organization," and "small  S8( 2!Rgovernmental jurisdiction."8L yO(#X\  P6G;QwP#э#X\  P6G;QwP#5 U.S.C.  601(6). In addition, the term "small business" has the same meaning as the term  S( 2!~"small business concern" under the Small Business Act.XL yO ( 2!#X\  P6G;QwP#э5 U.S.C. 601(3) (1980) (incorporating by reference the definition of "small business concern" in 15 U.S.C.  2!~632). Pursuant to 5 U.S.C. 601(3), the statutory definition of small business applies "unless an agency after  2!<consultation with the Office of Advocacy of the Small Business Administration and after an opportunity for public  2!comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definitions in the Federal Register." Under the Small Business Act, a small business  2!Xconcern is one which: (a) is independently owned and operated; (b) is not dominant in its field of  S(operation; and (c)satisfies any additional criteria established by the SBA.|L {Oh(#X\  P6G;QwP#эSmall Business Act, 15 U.S.C.  632.|  Sp( @@As noted, a FRFA was incorporated into the Navigation Devices Order. In that analysis, the  SJ ( 2!Commission described in detail the various small business entities that may be affected by these rules. J L {O(#d6X@`7Oe@##X\  P6G;QwP#эReport and Order, 13 FCC Rcd at 1483641.  2!fThose entities consist of cable systems, multipoint multichannel distribution systems, direct broadcast  2!>satellites, home satellite dish, satellite master antenna television, local multipoint distribution systems,  2!small manufacturers, electronic equipment manufacturers, computer manufacturers, and small retailers.  S ( 2!In this present Order on Reconsideration, we address petitions for reconsideration filed in response to the  S ( 2!Navigation Devices Order. In this Supplemental FRFA, we incorporate by reference the description and  S^(estimate of the number of small entities from the FRFA in this proceeding.  ^, L {O*( 2!Z#d6X@`7Oe@##X\  P6G;QwP#эSee "Description and Estimate of the Number of Small Entities to Which Rules Apply," Report and Order, 13 FCC Rcd at 1483641.   R2 D.XDescription of Reporting, Recordkeeping and Other Compliance Requirements(#  S(  S( @*The rules adopted in the Navigation Devices Order require MVPDs to make available upon request  2!Htechnical information concerning interface parameters. The Commission believes, however, that this  2!>requirement would not necessitate any additional professional, engineering, or customer service skills  2!beyond those already utilized in the ordinary course of business by MVPDs. The rules adopted on reconsideration do not affect this requirement. "" 0*&&88"Ԍ R2 @  :E.XSteps Taken to Minimize Significant Economic Impact On Small Entities and Significant  R2Alternatives Considered (#  S( @In the Navigation Devices Order, we stated our belief that our rules, implemented to assure  2!commercial availability of navigation devices, would have the result of opening up to small retailers the:  S:( 2!tmarket to sell or lease navigation devices to MVPD subscribers. :L {O(#d6X@`7Oe@##X\  P6G;QwP#эReport and Order, 13 FCC Rcd at 14842. Our rules also consider situations and  2!&offer relief where the commercial availability of navigation devices performing conditional access  2!functions could adversely impact an MVPD. An MVPD is not subject to the rules requiring the  2!commercial availability of navigation devices if: (1) it is not reasonably feasible to separate conditional  2!>access functions from other functions; or (2) it is not reasonably feasible to prevent the unauthorized  Sr( 2!reception of service by subscribers using navigation devices obtained from other sources. In the Order  SL ( 2!on Reconsideration, an additional subpart of a rule is adopted to defer the requirement that an MVPD  2!offer equipment that incorporates only the conditional access functions of device if a navigation device  2!(1) employs conditional access mechanisms only to access analog video programming; (2) is capable only  2!Nof providing access to analog video programming offered over a multichannel video programming  2!Hdistribution system; and (3) does not provide access to any digital transmission of multichannel video  2!programming or any other digital service through any receiving, decoding, conditional access, or other  S^( 2!Lfunction, including any conversion of digital programming or service to an analog format. ^ZL {OX(#d6X@`7Oe@##X\  P6G;QwP#эSee 47 C.F.R.  76.1204. The deferral of analog boxes at this time is to allow the market participants to focus on digital devices.  R2 F.Report to Congress    S( @The Commission will send a copy of the Order on Reconsideration, including this Supplemental  2!FRFA, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of  SH( 2!1996. HL yO(#d6X@`7Oe@##X\  P6G;QwP#э5 U.S.C.  801(a)(1)(A). In addition, the Commission will send a copy of this Order on Reconsideration, including the  2!Supplemental FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy  S( 2!of the Order on Reconsideration and this Supplemental FRFA (or summaries thereof) will also be  S(published in the Federal Register.|L {O(#d6X@`7Oe@##X\  P6G;QwP#эSee 5 U.S.C. 604(b). "#0*&&88v"  S(Բ#&a\  P6G;r&P# Separate Statement *of Commissioner Susan Ness  S(6 6 6  Q(6Re: Commercial Availability of Navigation Devices Order on Reconsideration Since our Report and Order just eleven months ago, "set top boxes" have become Page One news. Today, in ruling on five petitions for reconsideration, the Commission has again recognized how important navigation devices will be in the digital age. Digital set top devices are likely to be the gateway between digital bitstreams and new applications that may reside in the intelligent appliances of the future. These devices not only will control television service, but are likely to be the customer's gateway to the Internet and the world of electronic commerce. Thus, the directive of Section 629 of the Communications Act that our rules enable the commercial availability of these devices has potential consequences well beyond the provision of multichannel video. I write separately to highlight my concern over a potential loophole that remains. As of January 1, 2005, our rule prohibits MVPDs from placing in service new navigation devices that have security integrated with other features. But our rule apparently would allow an MVPD to stockpile integrated devices even after separated security modules become widely available, and to deploy unlimited numbers of integrated devices on the eve of the phaseout deadline. In our Report and Order, we scheduled a review of several issues in the year 2000, after separate security modules will be available. That review will include an evaluation and forecast whether the continued deployment by MVPDs of integrated devices beyond January 1, 2005 will impede commercial availability. The six year transition we established in the Report and Order is intended to allow MVPDs to draw down their inventories of integrated devices. MVPDs should not use this transition period to increase inventories of integrated devices once separate security modules are widely available. It is important that we monitor this issue in our review to ensure that manipulation of inventory does not undermine the implementation of Section 629. I commend the cable industry for being ahead of schedule in its development of standards for the separate security module. I encourage all interested parties to review the progress reports filed with us. Those reports should be available, if they are not already, on the Commission's website at www.fcc.gov. "`$0*&&88 "  S(&` X  &`    &` (##&a\  P6G;r&P# STATEMENT OF { COMMISSIONER MICHAEL K. POWELL  S(DISSENTING IN PART 6  Q`("Re: Commercial Availability of Navigation Devices, CS Docket No. 9780 6 Although I support most aspects of this decision on reconsideration of our Report and Order on Commercial Availability of Navigational Devices, I dissent from Section B of this decision. I continue to disagree with the assumption that this agency must prevent multichannel video providers (MVPDs) from offering settop boxes that integrate security with other functions in a settop box (as opposed to a separable point of deployment or POD element) in order to assure commercial availability of settop boxes. As I explained in my dissent to the Report and Order, I do not find this level of market engineering necessary to fulfill the goal of Section 629 nor do I find it to be sound public policy. I will not repeat the discussion in my prior statement, but only note the following:  SX(X` (#%'0*,.8135@8: