May 13, 1999

Re:	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 phase-out 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. MPVDs 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.