Lawyer Article

The Federal Communications Commission recently released its Second Further Notice of Proposed Rulemaking ("Second FNPRM"), addressing issues concerning the carriage of digital broadcast television signals after the conclusion of the digital television ("DTV") transition. Specifically, the Commission seeks comment on the post-transition obligations of cable operators under the Cable Act’s mandatory carriage provisions (Section 614 in the case of local commercial television stations and Section 615 in the case of noncommercial educational television stations). The following is a brief summary of the item.

Viewability of Signals
Addressing the statutory requirement that cable operators must make mandatory carriage broadcast signals viewable by all of their subscribers, the Commission proposed that cable operators can achieve compliance with this "viewability" requirement after the DTV transition by either: (1) carrying the digital signal in analog format, or (2) by carrying the signal only in digital format, provided that all subscribers have the necessary equipment to view the broadcast content. The Commission stated that, "[i]n the absence of such a requirement, analog cable subscribers (currently about 50% of all cable subscribers, or approximately 32 million households would no longer be able to view commercial must-carry stations or non-commercial stations after February 17, 2009," a result it believes "would adversely impact the DTV transition and would unduly burden millions of consumers."

The Commission has rejected the notion that the mere transmission is sufficient to meet the viewability requirements. It nevertheless seeks comment on this issue.

The Commission also seeks comment on whether cable operators electing option number one above should be responsible for the costs of conversion. Under its current interim down-conversion policy, digital-only stations that request carriage of analog versions of their signals must assume the down-conversion costs. The Commission suggests that a departure from this policy is warranted by the fact that by electing Option one, it is the cable operator that is electing to carry the signal in analog format.

The Commission also seeks comment on the applicability of its earlier decision not to require cable operators to provide subscribers with set top boxes capable of processing digital signals for display on analog televisions. It says it made that decision "because the content on the digital signal likely would have been identical to analog programming to which subscribers already had access." It believes this conclusion is not relevant to the post-transition era since subscribers with analog sets face the prospect of not being able to view mandatory carriage signals without a digital set top box.

Material Degradation
The Cable Act also requires cable operators to carry must carry signals "without material degradation." In an earlier order, the Commission determined that, in order to comply with this requirement, cable operators are required to ensure that consumers with DTV equipment (e.g., Digital-Cable-Ready sets or DTV-ready sets connected to an HDTV digital cable set-top box) are able to view the digital signal in its original format – e.g., in high definition ("HD") if delivered by the broadcaster in HD).

The Commission has proposed to revise this standard by moving from an objective to a subjective measure. Comment is sought on whether it should require that all primary video and program-related content bits transmitted by the broadcaster (the "content bits") be carried to avoid material degradation.

The Commission acknowledged that this proposal "is responsive to the Petitions for Reconsideration filed in this docket in which broadcasters requested that we require cable operators to carry 'the entire qualified digital bit stream of each station in the format in which the broadcaster originally transmitted it.'" Comment is sought on a number of related issues, including: 

• how to verify compliance; 
• costs of compliance;
• how cable operators are to distinguish between bits with content and so-called "null bits," and whether material degradation could result from failure to carry these empty bits; and
• whether there is a way to permit the use of improved compression, statistical multiplexing, rate shaping, or other techniques that would not result in prohibited material degradation.

Alternatively, the Commission seeks comment on whether the existing nondiscrimination requirement -- prohibiting cable operators from treating cable programming services more favorably than broadcast signals -- is a better objective test for material degradation.

The foregoing is merely a summary of the Second FNPRM. Please let us know if you have any questions or would like a copy of the Second FNPRM.

Please contact Mark Palchick (202/857-4411) or Howard Barr if you have any questions regarding this advisory.