Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of Navigation Devices; Compatibility Between Cable Systems and Consumer Electronics Equipment, 40263-40280 [2011-16869]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 76, Number 131 (Friday, July 8, 2011)]
[Rules and Regulations]
[Pages 40263-40280]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16869]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 15 and 76

[CS Docket No. 97-80; PP Docket No. 00-67; FCC 10-181]


Implementation of Section 304 of the Telecommunications Act of 
1996: Commercial Availability of Navigation Devices; Compatibility 
Between Cable Systems and Consumer Electronics Equipment

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, we adopt new rules designed to improve the 
operation of the CableCARD regime until a successor solution becomes 
effective. The Commission has not been fully successful in implementing 
the command of Section 629 of the Communications Act to ensure the 
commercial availability of navigation devices used by consumers to 
access the services of multichannel video programming distributors 
(``MVPDs''). The rules adopted in this order are intended to bolster 
support for retail CableCARD devices so that consumers may access cable 
services without leasing a set-top box from their cable operators.

DATES: Effective August 8, 2011, except for Sec. Sec.  76.1205(b)(1), 
76.1205(b)(1)(i), 76.1205(b)(2), 76.1205(b)(5), and 76.1602(b), which 
contain information collection requirements that have not been approved 
by OMB. The Federal Communications Commission will publish a document 
in the Federal Register announcing the effective date of Sec. Sec.  
76.1205(b)(1), 76.1205(b)(1)(i), 76.1205(b)(2), 76.1205(b)(5), and 
76.1602(b).
    The incorporation by reference of certain publications listed in 
this rule is approved by the Director of the Federal Register as of 
August 8, 2011.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Brendan Murray, Brendan.Murray@fcc.gov, of the 
Media Bureau, Policy Division, (202) 418-2120 or Alison Neplokh, 
Alison.Neplokh@fcc.gov, of the Media Bureau, (202) 418-1083.
    For additional information concerning the information collection 
requirements contained in this document, send an e-mail to PRA@fcc.gov 
or contact Cathy Williams on (202) 418-2918.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's (Third 
Report and Order and Order on Reconsideration), FCC 10-181, adopted and 
released on October 14, 2010. The full text of these documents is 
available for public inspection and copying during regular business 
hours in the FCC Reference Center, Federal Communications Commission, 
445 12th Street, SW., CY-A257, Washington, DC, 20554. These documents 
will also be available via ECFS (https://www.fcc.gov/cgb/ecfs/). 
(Documents will be available electronically in ASCII, Word 97, and/or 
Adobe Acrobat.) The complete text may be purchased from the 
Commission's copy contractor, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554. To request these documents in accessible formats 
(computer diskettes, large print, audio recording, and Braille), send 
an e-mail to fcc504@fcc.gov or call the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

Summary of the Report and Order and Order on Reconsideration

    1. In this Third Report and Order (``Order''), we remedy 
shortcomings in our CableCARD rules in order to improve consumers' 
experience with retail navigation devices (such as set-top boxes and 
digital cable-ready television sets) and CableCARDs, the security 
devices used in conjunction with navigation devices to perform the 
conditional access functions necessary to access cable services. We 
believe these rule changes are necessary to discharge our 
responsibility under the Act to assure the development of a retail 
market for devices that can navigate cable services. We seek to remove 
the disparity in consumer experience between those who choose to buy a 
retail device and those who lease the cable provider's set-top box, as 
the

[[Page 40264]]

disparity is impeding the development of a retail market for navigation 
devices. Specifically, we adopt rules today to (1) require cable 
operators to support the reception of switched digital video services 
on retail devices to ensure that subscribers are able to access the 
services for which they pay regardless of whether they lease or 
purchase their devices; (2) prohibit price discrimination against 
retail devices to support a competitive marketplace for retail devices; 
(3) require cable operators to allow self-installation of CableCARDs 
where device manufacturers offer device-specific installation 
instructions to make the installation experience for retail devices 
comparable to the experience for leased devices; (4) require cable 
operators to provide multi-stream CableCARDs by default to ensure that 
cable operators are providing their subscribers with current CableCARD 
technology; and (5) clarify that CableCARD device certification rules 
are limited to certain technical features to make it easier for device 
manufacturers to get their products to market. We also modify our rules 
to encourage home-networking by simplifying our set-top box output 
requirements. In addition, we adopt a rule to promote the cable 
industry's transition to all-digital networks by exempting all one-way 
set-top boxes without recording functionality from the integration ban. 
Each of the rule changes adopted in this item are intended to meet the 
goals of Section 629 by further developing a retail market for 
navigation devices. Finally, we consider nine petitions for 
reconsideration of prior decisions in CS Docket No. 97-80, PP Docket 
No. 00-67, and the enforcement proceedings captioned above regarding 
changes to device certification procedures, the Commission's content 
encoding and protection rules, and access to switched digital video. 
Together, the changes we adopt today should benefit consumers who wish 
to buy navigation devices while at the same time removing unnecessary 
regulatory obligations on cable operators.
    2. Background. In the Telecommunications Act of 1996, Congress 
added Section 629 to the Communications Act. That section directs the 
Commission to adopt regulations to assure the commercial availability 
of navigation devices used by consumers to access services from 
multichannel video programming distributors (``MVPDs''). Section 629 
covers ``equipment used by consumers to access multichannel video 
programming and other services offered over multichannel video 
programming systems.'' Congress, in enacting the section, pointed to 
the vigorous retail market for customer premises equipment used with 
the public switched-telephone network and sought to create a similarly 
vigorous market for devices used with MVPD services.
    3. In 1998, the Commission adopted the First Report and Order to 
implement Section 629. The order required MVPDs to make available a 
conditional access element separate from the basic navigation or host 
device, in order to permit unaffiliated manufacturers and retailers to 
manufacture and market host devices while allowing MVPDs to retain 
control over their system security. The technical details of this 
conditional access element were to be worked out in industry 
negotiations. In 2003, the Commission adopted, with certain 
modifications, standards on which the National Cable and 
Telecommunications Association (``NCTA'') and the Consumer Electronics 
Association (``CEA'') had agreed in a Memorandum of Understanding 
(``MOU''). The MOU prescribed the technical standards for one-way (from 
cable system to customer device) CableCARD compatibility. The CableCARD 
is a security device provided by an MVPD, which can be installed in a 
retail navigation device bought by a consumer in the retail market to 
allow the consumer's television to display MVPD-encrypted video 
programming. To ensure adequate support by MVPDs for CableCARDs, the 
Commission prohibited MVPDs from integrating the security function into 
set-top boxes they lease to consumers, thus forcing MVPDs to rely on 
CableCARDs as well. This ``integration ban'' was initially set to go 
into effect on January 1, 2005, but that date was later extended to 
July 1, 2007. Although the cable industry has challenged the lawfulness 
of the integration ban on three separate occasions, in each of those 
cases the DC Circuit denied those petitions.
    4. Unfortunately, the Commission's efforts to date have not 
developed a vigorous competitive market for retail navigation devices 
that connect to subscription video services. Most cable subscribers 
continue to use the traditional set-top boxes leased from their cable 
operator; only 1 percent of the total navigation devices deployed are 
purchased at retail. Although following adoption of the CableCARD rules 
some television manufacturers sold unidirectional digital cable-ready 
products (``UDCPs''), most manufacturers have abandoned the technology. 
Indeed, since July 1, 2007, cable operators have deployed more than 
22.75 million leased devices pre-equipped with CableCARDs, compared to 
only 531,000 CableCARDs installed in retail devices connected to their 
networks. Furthermore, while 605 UDCP models have been certified or 
verified for use with CableCARDs, only 37 of those certifications have 
occurred since the integration ban took effect in July 2007. This 
evidence indicates that many retail device manufacturers abandoned 
CableCARD before any substantial benefits of the integration ban could 
be realized.
    5. Not only were very few retail devices manufactured and 
subsequently purchased in the retail market, but an additional 
complication with the installation process further depressed the retail 
market. The cable-operator leased devices come pre-equipped with a 
CableCARD, so that no subscriber premises installation of the card is 
required. But this is not the case with devices purchased at retail. 
CableCARDs for use in retail devices must be installed in the home, and 
many cable operators require professional installation by the cable 
operator. Unfortunately, the record reflects poor performance with 
regard to subscriber premise installations of CableCARDs in retail 
devices. This could be a consequence of the fact that only 1 percent of 
the total navigation devices deployed are purchased at retail and 
require an actual CableCARD installation, which may have made it 
difficult to train the cable installers properly. It could also reflect 
either indifference or reluctance by cable operators to support 
navigation devices purchased at retail in competition with their own 
set-top boxes. Regardless of the cause, these serious installation 
problems further undermine the development of a retail market.
    6. A consumer using a unidirectional device cannot take advantage 
of two-way services offered by a cable operator. The Commission 
anticipated that the parties to the MOU would negotiate another 
agreement to achieve bidirectional compatibility, using either a 
software-based or hardware-based solution. Unlike one-way devices, 
which can only receive communication from cable headends, bidirectional 
devices can send requests to the cable headend, which enables those 
devices to receive services like cable operator-provided interactive 
programming guides, cable-operator provided video-on-demand and pay-
per-view, and other interactive programming services. When the 
Commission realized in June 2007 that negotiations were not leading to 
an agreement for bidirectional

[[Page 40265]]

compatibility between consumer electronics devices and cable systems, 
it released a Third Further Notice of Proposed Rulemaking, seeking 
comment on competing proposals for bidirectional compatibility and 
other related issues. In the wake of the Two-way FNPRM, the six largest 
cable operators and numerous consumer electronics manufacturers 
negotiated an agreement for bidirectional compatibility that continues 
to rely and builds on CableCARDs by using a middleware-based solution 
called ``tru2way.''
    7. The National Broadband Plan, released in March of this year, 
recommended changes in the CableCARD rules to provide benefits to 
consumers who use retail CableCARD devices without imposing unfair 
regulatory burdens on the cable industry. The plan suggested that these 
changes could serve as an interim solution that will benefit consumers 
while the Commission considers broader changes to develop a retail 
market for navigation devices. After considering those recommendations, 
on April 21, 2010 the Commission adopted a Fourth Further Notice of 
Proposed Rulemaking (``FNPRM'') seeking comment on proposed measures to 
remedy shortcomings in the existing CableCARD system. The Commission 
proposed five measures intended to remove the disparity between the 
treatment of consumers who choose to use a retail CableCARD-equipped 
video device and those who lease a cable provider's video navigation 
box. In the FNPRM, we sought comment on proposals to (1) Ensure that 
retail devices have comparable access to video programming that is 
prescheduled by the programming provider; (2) make CableCARD pricing 
and billing more transparent; (3) streamline CableCARD installations; 
(4) require cable operators to offer multi-stream CableCARDs; and (5) 
clarify certification requirements. In the FNPRM, we also proposed a 
rule change that would allow cable operators to substitute certain 
interfaces in lieu of the IEEE-1394 interface currently required on all 
high-definition set-top boxes, and proposed to define a baseline of 
functionality that such interfaces must meet. Finally, in order to 
encourage the cable industry's transition to digital technology, the 
Commission proposed an exemption to the integration ban for all one-way 
devices that do not have digital video recording capabilities.
    8. DISCUSSION. Reforming the CableCARD System. Based on the record 
before us, we conclude that modifications to our rules are necessary to 
improve the CableCARD regime and advance the retail market for cable 
navigation devices. We are sympathetic to concerns that we are adopting 
these rules while we consider a successor regime, but we must keep in 
mind that CableCARD is a realized technology--consumer electronics 
manufacturers can build to and are building to the standard today. 
Until a successor technology is actually available, the Commission must 
strive to make the existing CableCARD standard work by adopting 
inexpensive, easily implemented changes that will significantly improve 
the user experience for retail CableCARD devices. Therefore, in this 
order we adopt rule changes that will (1) require cable operators to 
provide retail devices with access to switched-digital channels; (2) 
require cable operators to provide greater transparency in their 
CableCARD charges; (3) require cable operators to allow subscribers to 
self-install CableCARDs and require cable operators to inform their 
subscribers about this option; (4) require cable operators to provide 
multi-stream CableCARDs by default, unless a subscriber explicitly 
requests a single-stream CableCARD; and (5) clarify the testing 
requirements for CableCARD devices. Based on our examination of the 
record in this proceeding, we believe that these changes will be 
inexpensive to implement and will eliminate or reduce the disparity in 
the consumer experience between leased devices and retail devices, 
which has dampened enthusiasm for retail devices.
    9. Switched Digital Video. Switched Digital Video (``SDV'') is a 
method of delivering linear programming that requires a set-top box to 
request specific channels from the cable head-end. SDV allows cable 
providers to offer their services more efficiently, as channels occupy 
capacity on the system only if subscribers are viewing or recording 
them. Unfortunately, this can affect one-way retail CableCARD devices 
adversely because one-way devices are not capable of requesting the 
switched channels, and therefore subscribers with retail devices are 
unable to access programming provided using SDV. Certain cable 
operators that have deployed SDV offer their subscribers free ``tuning 
adapters,'' which are repurposed set-top boxes that allow TiVo and Moxi 
retail set-top boxes and certain home-theater PCs to access switched 
digital content. These cable operators have provided the tuning 
adapters voluntarily, as the Commission's rules have not required cable 
operators to provide access to switched digital channels for one-way 
retail devices.
    10. In the FNPRM, the Commission sought comment on whether this 
voluntary solution provides adequate support for retail navigation 
devices. The Commission also sought comment on TiVo's proposal to use 
an IP backchannel to request switched digital channels. There was 
vigorous disagreement between commenters on this issue--certain 
commenters strongly supported maintaining the status quo, while others 
zealously advocated a rule that would require cable operators who use 
SDV to support retail devices through the use of an IP backchannel.
    11. Commenters who support maintaining the voluntary, market-based 
tuning adapter solution argue that SDV benefits consumers and that any 
changes to the status quo could stifle deployment of SDV and its 
associated benefits. They assert that the tuning adapter solution works 
adequately, and that there is no evidence that an IP backchannel would 
work better than the tuning adapter solution. They also argue that it 
does not make sense to require the industry to develop and deploy an IP 
backchannel solution, which could be costly and discourage deployment 
of SDV, particularly with the successor AllVid requirements on the 
horizon and the current availability of the cable industry's tru2way 
solution. They argue the additional development time and resources 
necessary to implement an IP backchannel would be better allocated to 
AllVid development. Certain commenters also assert that implementing a 
signaling backchannel over the public Internet would raise security and 
privacy concerns, including potential denial-of-service attacks, 
attacks that could provide unauthorized access to proprietary networks, 
and attacks that could result in theft of service and/or subscriber 
data. Therefore, these commenters argue, the tuning adapter solution 
that has developed in the marketplace is the most pragmatic, effective 
way to ensure that retail devices can access switched channels, and the 
Commission does not need to adopt rules.
    12. While several commenters assert that the tuning adapter 
solution works adequately, others argue that consumers will not 
purchase retail CableCARD devices unless they are certain that they 
will be able to access all of the programming to which they subscribe. 
Because the Commission's rules do not require operators to provide 
access by retail CableCARD devices to switched digital video channels, 
TiVo is concerned that cable operators could withdraw their current 
willingness to

[[Page 40266]]

provide tuning adapters at no additional charge to the customer. 
Furthermore, a number of cable subscribers indicate that they have 
trouble obtaining tuning adapters that work. These commenters argue 
that the most effective way to provide retail CableCARD devices with 
access to switched-digital channels is through the use of an IP 
backchannel. They assert that the IP-backchannel solution would solve 
problems that consumers experience with tuning adapters because it 
would not require additional, potentially unreliable, customer-premises 
hardware. Furthermore, they argue, the tuning adapter takes up space, 
is not energy efficient, and limits the ability to use all of the 
tuners on multi-tuner devices, thereby limiting the ability of multi-
tuner devices to record more than two channels at once. TiVo also 
expresses concern that cable operators are misinforming subscribers 
that certain channels are not available on retail devices. Finally, 
TiVo and CEA assert that the IP backchannel solution would be less 
expensive than tuning adapters in the long run.
    13. We conclude that we should mandate SDV support for retail 
devices without specifying the technology that cable operators must use 
to ensure such compatibility. SDV is an innovative technology with a 
number of benefits, and we do not wish to discourage its deployment. 
The record is replete, however, with comments from consumers who have 
had negative experiences using tuning adapters to access switched 
digital channels on their retail CableCARD devices. Both of the 
proposed solutions have significant benefits and drawbacks, and the 
Commission believes that with appropriate direction, cable operators 
will find the most efficient means of effectively supporting SDV. For 
example, the Commission recognizes that the economics of deploying an 
IP backchannel solution are different between those operators who have 
already or will soon deploy SDV, and those operators who will deploy 
the next generation of SDV hardware. The Commission does not wish to 
foreclose the possibility of an IP backchannel for those operators to 
whom it will add de minimis costs as the result of being included in 
future headend equipment. Conversely, for those operators who currently 
use SDV and have significant deployments of tuning adapters, the cost 
to retrofit TiVo's IP backchannel proposal may be prohibitive. Further, 
the Commission does not presume that these are the only two means of 
supporting SDV, and expect that some operators may choose other 
options, such as in-home IP signaling, that provide additional benefits 
to consumers. We do not foreclose any of these options so long as 
appropriate documentation is available to enable UDCPs to access SDV 
channels.
    14. Subscribers must be able to use the devices they purchase at 
retail to access all of the linear channels that comprise the cable 
package they purchase. Providing retail navigation devices and leased 
navigation devices with equivalent access to linear programming at an 
equivalent service price is essential to a retail market for navigation 
devices. We also want to avoid making deployment of SDV unnecessarily 
costly. While use of IP-backchannel would not require consumers to 
purchase additional equipment, we recognize that mandating this 
approach could be costly for some cable operators. Moreover, we note 
that operators currently provide tuning adapters at no charge to 
consumers. Accordingly, pursuant to our authority under Section 629 of 
the Communications Act, we require cable operators to ensure that cable 
subscribers who use retail CableCARD navigation devices have 
satisfactory access to all linear channels, but we will not mandate a 
specific method by which cable operators must provide such access. We 
believe that this rule change will address the security concerns raised 
about the IP-backchannel proposal, as our rule will not require a cable 
operator to adopt an approach that it believes is insecure. To address 
the problems with tuning adapters identified by commenters, the 
satisfactory access standard will require cable operators to ensure 
that retail devices are able to tune at least as many switched digital 
channels as that operator's most sophisticated operator-supplied set-
top box or four simultaneous channels, whichever is greater. Further, 
the satisfactory access standard will require the ability to tune and 
maintain the desired channel as long as it is being watched or 
recorded, and to do so reliably. Furthermore, we prohibit cable 
operators from presenting their customers with misleading information 
regarding retail devices' ability to tune switched digital channels. We 
adopt these requirements pursuant to Section 629 because we conclude 
that SDV support for retail devices is necessary to assure a retail 
market for navigation devices. We will continue to monitor the 
development of SDV and the access afforded to cable customers who use, 
or wish to use, retail navigation devices. If we find that customers 
who want to use retail set-top boxes do not have satisfactory and 
equivalent access to all of the linear channels that comprise the cable 
package to which they subscribe, we will revisit our decision here.
    15. CableCARD Pricing and Billing. In the FNPRM, the Commission 
sought comment on a proposal to require cable operators to list the fee 
for their CableCARDs as a line item on subscribers' bills separate from 
their host devices. The Commission proposed this rule change as a means 
to inform customers about retail navigation device options and to 
enable them to compare the price of a retail device to the price for 
leasing a set-top box from their cable operator. The proposed rule also 
was intended to ensure that the price that subscribers pay for 
CableCARDs in retail devices is the same as the price that subscribers 
pay for CableCARDs that are affixed to leased devices. Proponents of 
the Commission's proposed rule suggest that separate billing will 
facilitate fair choice and promote competition, as a viable retail 
market depends on transparency, while opponents argue that such billing 
would be difficult and expensive to implement, with no benefit to 
subscribers. Proponents of the rule assert that Section 629 requires 
separate billing and prohibits cross-subsidization. Opponents of the 
rule point to Section 629(f), which states that ``Nothing in this 
section shall be construed as expanding'' the Commission's authority 
under the Communications Act. Those commenters assert that the proposed 
rule would be an expansion of the Commission's authority under the 
statutory rate provision, Section 623, which allows cable operators to 
aggregate their equipment costs and charge a standard average rate 
across their footprints.
    16. Public Knowledge argues that the proposed rule does not go far 
enough. Public Knowledge suggests that in addition to requiring cable 
operators to separate the monthly fee for a CableCARD from the set-top 
box on a subscriber's bill, the Commission should also require cable 
operators to provide each subscriber with the aggregate amount the 
subscriber has spent on set-top box lease fees. Additionally, Public 
Knowledge argues that cable operators should be required to notify 
subscribers about the retail options that are available to them. In a 
similar vein, Montgomery County, Maryland suggests that the Commission 
allow state legislatures to adopt legislation that would require cable 
operators to sell the devices that they lease to ensure that consumers 
have

[[Page 40267]]

more options to purchase navigation devices.
    17. Opponents of the Commission's proposed billing rule assert that 
a separate billing requirement would only serve to confuse consumers 
and lead them to believe that their cable operators have added an extra 
fee to their bills. They also assert that this rule would arbitrarily 
burden subscribers who lease separated security devices as opposed to 
those who do not because currently all subscribers pay the same lease 
fee for a set-top box regardless of whether it has separated security. 
They argue that implementation of the billing rule would be costly for 
cable operators, as their billing systems are not designed to separate 
the cost of a CableCARD from the cost of the set-top box. NCTA and 
Arris assert that the availability of this information will not affect 
the retail market because the cost of CableCARDs has no effect on the 
retail market for set-top boxes.
    18. Despite their opposition to the proposed rule as written, NCTA 
and others are not opposed to the purposes behind the rule, which are 
to treat retail and leased devices equivalently and encourage pricing 
transparency. As a compromise, NCTA has proposed that cable operators 
notify subscribers of the cost of CableCARDs on the operators' Web 
sites and yearly rate card notices. NCTA asserts that its proposal 
would serve the same purpose as the Commission's proposed rule without 
imposing expensive and confusing billing burdens on cable operators.
    19. We conclude that NCTA's compromise solution will inform 
consumers about CableCARD costs and retail options adequately without 
imposing unnecessary burdens on cable operators. Therefore, we adopt a 
requirement that cable operators prominently list the fee for their 
CableCARDs as a line item on their Web sites (readily accessible to all 
members of the public) and annual rate cards separate from their host 
devices, and provide such information orally or in writing at a 
subscriber's request. These CableCARD lease fees must be uniform across 
a cable system regardless of whether the CableCARD is used in a leased 
set-top box or a navigation device purchased at retail. We are not 
convinced that NCTA's solution will ensure that cable operators are not 
subsidizing the costs of leased set-top boxes with service fees. 
Accordingly, we also adopt a rule that requires cable operators to 
reduce the price of packages that include set-top box rentals by the 
cost of a set-top box rental for customers who use retail devices, and 
prohibits cable operators from assessing service fees on consumer-owned 
devices that are not imposed on leased devices. These price reductions 
must reflect the portion of the package price that is reasonably 
allocable to the device lease fee. In the event that an interested 
party (including a consumer, local franchise authority, or device 
manufacturer) alleges a violation of this ``reasonably allocable'' 
standard, the Commission will consider in its evaluation whether the 
allocation is consistent with one or more of the following factors: (i) 
an allocation determination approved by a local, state, or Federal 
government entity; (ii) the monthly lease fee as stated on the cable 
system rate card for the navigation device when offered by the cable 
operator separately from a bundled offer; and (iii) the actual cost of 
the navigation device amortized over a period of no more than 60 
months. These rule changes are well within our statutory authority 
under Section 629. Section 629 gives the Commission broad power to 
adopt regulations to assure the commercial availability of navigation 
devices and states that multichannel video programming distributors may 
lease their own devices, as long as ``the system operator's charges to 
consumers for such devices and equipment are separately stated and not 
subsidized by charges'' for multichannel video programming service. 
These minor rule changes will serve to ensure that cable operators are 
not subsidizing the costs of their set-top boxes via service charges 
and will serve to allow consumers to compare the costs involved in 
choosing between purchasing or leasing a navigation device. This 
prohibition on subsidies and increased transparency is vital to the 
continued development of a retail navigation device market, as it will 
allow subscribers to make informed economic decisions about whether 
they should purchase a navigation device at retail.
    20. CableCARD Installations. In the FNPRM, the Commission expressed 
concern that CableCARD installation costs and policies may differ 
unjustifiably between retail devices and leased boxes. To address this 
situation, the Commission proposed requiring cable operators to allow 
subscribers to install CableCARDs in retail devices themselves if the 
cable operator allows its subscribers to self-install leased set-top 
boxes. Furthermore, the Commission proposed a rule with regard to 
professional installations that would require technicians to arrive 
with at least the number of CableCARDs requested by the customer.
    21. Commenters who support adopting the proposed installation rule 
argue that individual users are more than capable of installing their 
own CableCARDs. According to these commenters, the installation 
consists of inserting a CableCARD and calling in to the cable operator 
to report a series of numbers that appear on an activation screen, 
which subscribers could easily do with basic instruction. 
Unfortunately, despite the apparent simplicity of installation, these 
individual subscribers comment that not all cable technicians are 
properly trained to install CableCARDs and they do not always arrive 
with functional CableCARDs; therefore it often takes several days and 
multiple installation appointments to get functional CableCARDs 
installed. According to TiVo, ``the premise of `plug and play' was that 
a subscriber should be able to buy a device from a retailer, plug it 
into her cable connection, and have it work without the cable 
operator's intervention;'' therefore, TiVo argues, until individual 
subscribers have the option to self-install their own CableCARDs, 
subscribers will not be able to purchase devices that are truly ``plug 
and play.''
    22. NCTA and CEA advocate a modification to the proposed rule that 
would require cable operators to allow self-installation of CableCARDs 
on any device for which the manufacturer provides detailed, step-by-
step installation instructions. Several major cable operators, 
including Charter and Comcast, support the self-installation option so 
long as adequate installation instructions are provided by the 
manufacturer. Likewise, manufacturers such as Panasonic support the 
provision of Web-based installation walkthroughs as one means of 
fulfilling the goal of making step-by-step instructions available to 
consumers seeking to self-install CableCARDs. The few cable operator 
proponents do, however, request a four- to six-month phase-in period 
before this rule takes effect, during which time they will develop and 
implement necessary internal procedures and training that reflect the 
new policy.
    23. Commenters including CEA/CERC and Panasonic suggest that cable 
operators should be required to permit retail outlets to sell 
CableCARDs and to assist in the installation at the point of sale. 
Commenters from the cable industry were not necessarily opposed to this 
option, but they did note that allowing retail stores to install 
CableCARDs at the point of sale would introduce certain business, 
technical, and operational hurdles, such as identifying the encryption 
technology that a cable operator uses in the specific subscriber's 
geographic location.

[[Page 40268]]

Therefore, they suggest that the Commission encourage industry 
negotiations to explore this option, but they oppose adoption of a rule 
that mandates retail installation. TiVo, however, supports this 
proposal as one of the few means of fulfilling the true purpose of the 
CableCARD requirement, which is to encourage a competitive market for 
retail devices that can be purchased, taken home, and installed without 
the cable operator's intervention.
    24. In addition to its other proposals, CEA seeks better 
enforcement of the CableCARD rules, including the new proposed 
installation rule. CEA suggests that empowering local franchising 
authorities to enforce the CableCARD rules would encourage cable 
operators to comply with the rules.
    25. Time Warner Cable and Verizon assert that cable operators are 
best equipped to determine whether customers should be allowed to 
install their own CableCARDs. They argue that the CableCARD 
installation process is not straightforward, that consumers may not be 
equipped to install such equipment, and that the installations are not 
overly expensive. Verizon further argues that customers have shown no 
real demand to perform self-installation. Similarly, Cox submits that 
the low number of interested consumers does not justify development of 
costly support mechanisms for those who wish to self-install, unless 
the customer support burden shifts entirely to retail device 
manufacturers. Verizon also expresses skepticism that the Commission 
has authority to adopt such a rule.
    26. We conclude that the best means of assuring the development of 
a retail market for navigation devices is to require cable operators to 
allow subscribers to self-install CableCARDs. We believe cable 
operators should have time to train staff and develop more robust 
customer support infrastructures and procedures, and provide nine 
months to comply for any operators that allow subscribers on any of 
their systems to self-install any cable modems or leased set-top boxes. 
We are not persuaded by arguments that cable operators could not 
support activation of retail CableCARD devices within this reasonable 
transition period. However, we are concerned that a cable operator that 
does not permit self-installation of any equipment that attaches to its 
network may not have the customer support infrastructures in place to 
handle self-installations and may need a longer transition period. 
Therefore, we will allow cable operators that do not have any self-
installation support in place twelve months to phase in this self-
installation requirement. We also require cable operators to inform 
their subscribers about the self-installation option when they request 
CableCARDs.
    27. With respect to professional installations, we adopt our 
proposed rule requiring technicians to arrive with at least the number 
of CableCARDs requested by the customer. We require cable operators to 
make good faith efforts to ensure that all CableCARDs delivered to 
customers or brought to professional installation appointments are in 
good working condition and compatible with their customers' devices, 
and to allow subscribers to request CableCARDs using the same methods 
that subscribers can use to request leased set-top boxes. These rules 
are intended to solve the complaints in the record that professional 
CableCARD installations often require multiple appointments. We believe 
that requiring cable technicians to have CableCARDs in good working 
condition on hand when they are requested and allowing subscribers to 
self-install CableCARDs will decrease the number of required 
appointments dramatically. To address Time Warner Cable and Verizon's 
concerns that subscribers may not be properly equipped to self-install 
a CableCARD, our self-installation rule will apply only where device 
manufacturers or vendors provide detailed, device-specific instructions 
on how to install a CableCARD and the manufacturer's or vendor's toll-
free telephone number within the packaging of the device and on the 
manufacturer's or vendor's Web site. At this time we will not adopt a 
rule requiring retail installation of CableCARDs; however, since 
devices will now contain instructions from manufacturers or vendors on 
self-installation and because such an action will decrease the burden 
on the cable providers, we encourage cable operators and consumer 
electronics retailers to reach agreement through continued private 
negotiations to achieve this type of consumer-friendly retail option.
    28. In addition to empowering cable subscribers to install 
CableCARDs, we will also make it easier for consumers to file 
complaints relating to cable customer premises equipment (including 
CableCARDs, tuning adapters, and set-top boxes) with the Commission by 
adding a specific reference to CableCARDs and other customer premises 
equipment to the process for filing complaints on our Web site. If a 
cable operator chooses to provide satisfactory access to SDV channels 
for retail devices by means of customer-premises equipment such as a 
tuning adapter, this process will encompass complaints relating to such 
equipment as well as complaints relating to CableCARDs. We will 
strictly enforce our navigation device rules in order to ensure proper 
support for CableCARD devices. We conclude that this streamlined 
complaint process makes CEA's suggestion that the Commission provide 
local franchising authorities with the authority to enforce the 
CableCARD rules unnecessary, and will allow for more consistent 
enforcement of our CableCARD rules nationwide. In addition, we will 
develop new consumer education materials specifically discussing the 
availability of cable boxes at retail as an alternative to leasing a 
cable box from the cable operator. Within the next few weeks, these 
materials will be available on our Web site and will be provided by our 
call center to those customers who lack Web access.
    29. The changes we adopt herein will improve the consumer 
experience substantially, as cable subscribers will no longer have to 
schedule multiple installation appointments for CableCARD 
installations. Furthermore, these rule changes will place only a de 
minimis burden on cable operators, because the device manufacturer's or 
vendor's self-installation instructions will include the manufacturer's 
or vendor's toll-free telephone number directing customer questions to 
the manufacturer or vendor and not to the cable operator. We disagree 
with Verizon's assertion that the Commission does not have the 
authority to adopt such a rule, as we believe that this rule falls 
squarely within our authority under Section 629. The need to schedule 
multiple installation appointments unquestionably is an impediment to 
realizing a competitive retail market for navigation devices, and the 
record is replete with comments from frustrated consumers who have had 
to schedule multiple appointments with technicians due to CableCARD 
installation problems. We believe that Congress's intent in adopting 
Section 629 was to ensure that cable operators treat retail navigation 
devices in the same manner that they treat leased navigation devices. 
Accordingly, we believe that we have clear statutory authority under 
Section 629 to adopt this self-installation rule.
    30. Multi-stream CableCARDs. A Multi-stream CableCARD is a single 
CableCARD that is capable of decrypting multiple channels, thereby 
allowing consumers to record one channel while simultaneously watching 
another channel. Original CableCARDs were only capable of decrypting a 
single

[[Page 40269]]

stream, therefore requiring devices with multiple tuners, such as most 
digital video recorders, to include two CableCARD slots. With the 
release of the Multi-stream CableCARD Interface Specification in 2005, 
device manufacturers obtained the ability to receive up to six program 
streams though a single CableCARD. Multi-stream CableCARDs, now called 
M-Cards, can also be used by older devices that had been designed for 
single-stream CableCARDs. Operators began deploying M-Cards shortly 
after the adoption of the Multi-stream CableCARD Interface 
Specification, and today retail devices often require them. In the 
FNPRM, the Commission proposed requiring cable operators to offer M-
Cards upon request, to reduce the equipment fees paid by subscribers by 
enabling them to use only one CableCARD per device rather than two or 
more.
    31. Commenters were generally supportive of the proposed rule, 
though numerous commenters suggested the Commission require the 
provisioning of M-Cards by default, rather than on request. TiVo, 
Public Knowledge, and CEA all explicitly suggested this approach. Arris 
and Tivo note that all leased set-top boxes include M-Cards, and that 
newer retail devices require M-Cards to function properly. They further 
claim that the record demonstrates that retail devices are left to use 
recycled single-stream cards that may not work, while leased set-top 
boxes are outfitted with new, functioning M-Cards. NCTA also states 
they do not object to requiring cable operators to provide an M-Card to 
any subscriber who requests one, though they assert that certain 
devices work better with single-stream CableCARDs, and therefore cable 
operators should also have the discretion to deploy them to their 
subscribers.
    32. Only Verizon and John Staurulakis, Inc. assert that the 
Commission should not require cable operators to deploy M-Cards. They 
assert that such a requirement would be costly and unnecessary because 
so few subscribers actually use CableCARDs. Verizon further states that 
the marketplace is already working to increase the availability of M-
Cards for those few subscribers. Comcast goes further, stating that M-
Cards have been widely used since 2007, and cable operators have 
sufficient supplies of multi-stream CableCARDs to meet customer demand 
for them. NCTA also suggests that the Commission adopt the multi-stream 
CableCARD rules, which would test for compatibility between UDCPs and 
M-Cards, that NCTA and the CE industry proposed in 2006.
    33. We conclude that the best step we can take in this regard to 
assure the development of a retail market for navigation devices is to 
require cable operators to provide multi-stream CableCARDs by default, 
unless a subscriber expressly requests a single-stream CableCARD. All 
new devices require multi-stream CableCARDs, and multi-stream 
CableCARDs have been standard equipment since 2007. Therefore, 
requiring cable operators to provide multi-stream CableCARDs by default 
will conform more closely to the concept of common reliance, provide 
improved customer experience, and impose little, if any, costs on the 
industry, as our examination of the record indicates that CableCARD 
manufacturers are no longer making single stream CableCARDs to sell to 
cable operators. We also adopt the multi-stream CableCARD rules that 
NCTA and the CE industry proposed in 2006, as they are necessary to 
update our rules to conform with the current state of CableCARD testing 
procedures.
    34. CableCARD Device Certification. In the FNPRM, the Commission 
proposed a rule change intended to streamline the process of CableCARD 
device certification. The proposed rule would prohibit CableLabs or 
other qualified testing facilities from refusing to certify 
Unidirectional Digital Cable Products for any reason other than a 
failure to comply with a device conformance checklist referenced in the 
Commission's rules. The Commission proposed the rule change based on 
complaints regarding the cost, complexity, and restrictiveness of 
device certification. The Commission also committed to ``consider any 
other proposed solution to streamline the CableCARD certification 
process to facilitate the introduction of retail navigation devices.''
    35. Comments regarding CableCARD device certification indicate that 
the proposed rule would simply codify the CableCARD certification 
process as it exists today. No commenter opposes the proposed rule, 
although certain commenters argue that the proposed rule would not do 
enough to protect device manufacturers. In addition, certain commenters 
argue that the proposed device certification rule is not rigorous 
enough to assure a competitive device market. Specifically, CEA and 
Public Knowledge each encourage the Commission to extend the device 
certification rule to apply to CableCARD-compatible computers and 
computer peripheral devices and to limit the terms that CableLabs may 
dictate in licensing agreements. They assert that these steps will 
allow start-up companies like SageTV to develop their devices, and that 
the proposed rule will not be effective without this extension. Indeed, 
NCTA and MPAA acknowledge that the Commission's proposed rule would 
have no effect on the SageTV certification problems that the Commission 
highlighted in the FNPRM.
    36. In a similar vein, IPCO and Nagravision encourage the 
Commission to streamline the certification process for the CableCARD 
separated security modules, as the Commission does not have a rule that 
prescribes a certification process for the CableCARD itself. They 
assert that CableLabs has delayed certification of competitive 
separated security modules, which limits the companies' ability to 
develop affordable whole-system solutions to sell to cable operators. 
They reason that, if device manufacturers can manufacture and test 
their own CableCARDs in conjunction with their retail devices, they 
will be able to develop products more rapidly.
    37. We conclude that the best step we can take in this regard to 
carry out our statutory mandate under Section 629 is to (i) modify our 
rules to reflect updated testing procedures, and (ii) adopt the 
proposed rule that prohibits CableLabs or other qualified testing 
facilities from refusing to certify UDCPs for any reason other than a 
failure to comply with the conformance checklists referenced in our 
current rules. These rule changes should encourage navigation device 
manufacturers to build competitive devices by eliminating unnecessary 
delays and costs associated with device testing, while continuing to 
recognize the importance of protecting cable networks and service. 
Based on the comments we have received about the certification process, 
we believe that these rule changes do little more than codify the 
certification process as it exists today. These changes require UDCP 
manufacturers and qualified test facilities to proceed in accordance 
with Uni-Dir-ATP-I02-040225: ``Uni-Directional Receiving Device 
Acceptance Test Plan,'' M-UDCP-PICS-I04-080225, and TP-ATP-M-UDCP-I05-
20080304. The Director of the Federal Register approves this 
incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. You may obtain a copy from Cable Television Laboratories, 
Inc., 858 Coal Creek Circle, Louisville, Colorado 80027, 
www.cablelabs.com/opencable/udcp, (303) 661-9100. You may inspect a 
copy at the Federal Communications Commission, 445 12th St., SW., 
Reference Information Center,

[[Page 40270]]

Room CY-A257, Washington, DC 20554, (202) 418-0270 or at the National 
Archives and Records Administration (NARA). For information of the 
availability of this material at NARA, call 202-741-6030, or go to: 
https://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    38. Comments reflect that while the certification process is 
costly, CableLabs's device testing is conducted in a professional 
manner and is important to ensure that CableCARD devices work properly. 
CEA claims generally, however, that certain CableCARD licensing terms 
may go beyond what is allowed under Sections 76.1201 and 76.1204 of our 
rules. They assert that these licensing terms limit innovation. To the 
extent that any interested party has concerns that an aspect of the 
CableCard licensing regime violates Sections 76.1201 through 76.1204 of 
the Commission's rules, that party may allege a specific violation of 
the Commission's rules pursuant to Section 76.7 of our rules.
    39. We decline to adopt IPCO and Nagravision's proposal to extend 
certification rules to the CableCARD security modules by dictating the 
specific testing procedures that CableLabs must use to certify 
CableCARD security modules. CableCARDs are an important part of 
protecting signal theft and protecting cable networks. Section 629(b) 
prohibits the Commission from adopting regulations that would 
jeopardize the security of cable systems or interfere with a cable 
operator's right to prevent theft of service. Therefore, we believe 
that it would be prudent to defer to CableLabs's policies on certifying 
whether the CableCARDs themselves, which are the lynchpins of the 
conditional access scheme, are robust enough to protect cable systems 
and prevent theft of service.
    40. Interface Requirements. The Commission's rules require cable 
operators to include an IEEE 1394 interface on all high-definition set-
top boxes that they acquire for distribution to customers. IEEE 1394, 
also known as Firewire, is an external serial data connection that 
allows for audio and video data transfers. The Commission adopted a 
requirement from the MOU to provide an IEEE 1394 interface on all high-
definition set-top boxes as a means of enabling a market for devices 
which interact with the operator-supplied set-top box. In the FNPRM, 
the Commission proposed to give cable operators greater flexibility in 
deciding which type of interface to include on the set-top boxes that 
they lease. Set-top box manufacturers and cable operators suggested 
that alternative interfaces could perform the same functions and have 
wider consumer adoption than the IEEE 1394 interface. The Commission 
also proposed to clarify that operators must enable bi-directional 
communication over these interfaces. The proposed clarification would 
require the interfaces to be able to receive remote-control commands 
from a connected device and deliver video in any industry-standard 
format to ensure that video made available over these interfaces can be 
received and displayed by devices manufactured by unaffiliated 
manufacturers (i.e., manufacturers not owned by or under license of the 
leased set-top box vendor or cable operator) and sold at retail. The 
record generally supported replacing the IEEE 1394 interface 
requirement with a rule that would instead require cable operators to 
include an IP-based connection on all high-definition set-top boxes 
that they acquire for distribution to customers. The commenters also 
agreed that the Commission does not need to define the physical 
interface (e.g., IEEE 1394, Ethernet, Wi-Fi, or MoCA) used to transfer 
the IP data. With respect to functionality, commenters disagreed on 
whether the Commission should set a baseline for functionality of that 
interface.
    41. Certain commenters suggested that the Commission should adopt 
baseline standards to define a ``functional'' IP connection on a set-
top box. Various industry associations have developed suites of 
standards that include functionality we might rely on. For example, 
Panasonic suggested that the Commission require that the IP connection 
pass through ``OpenCable Host Thin Chassis Device'' remote commands. 
OpenCable, branded for consumers as tru2way, was developed by 
CableLabs, is a set of standards defining a common interface for 
supporting interactive cable services. As the full implementation, 
branded for consumers as tru2way, has seen limited adoption in retail 
devices, the Host Thin Chassis Device standard was developed to provide 
reduced costs while simultaneously enabling two-way communication with 
CableCARDs. Among the component parts of the Host Thin Chassis Device 
standard are specifications for passing remote control commands entered 
with the TV remote control through to the set-top box.
    42. CEA and the Digital Living Network Alliance (``DLNA'') each 
suggest that the Commission require that devices follow the DLNA 
guidelines. DLNA standards have been or are being developed to enable 
widespread network-based connectivity for a wide variety of devices, 
from handheld viewers to media servers. This focus on broad 
interoperability has resulted in standards which permit the addition or 
subtraction of various functional components, including remote control 
commands and content formats. Three consumers suggested that the 
Commission require that the interfaces pass through closed captioning 
data. The 1394 Trade Association and Texas Instruments commented that 
each leased set-top box should be required to play back any video that 
is sent to it over an IEEE 1394 interface.
    43. Comcast, Verizon, and NCTA each argue that defining 
``functional'' would put a large burden on cable operators. They assert 
that standards organizations are still working to define standards for 
functionality over IP-based connections, and that cable operators could 
not comply with a functionality requirement in the near future. They 
assure the Commission that the market will determine the specific type 
of functionality that consumers desire, and therefore urge the 
Commission not to lock operators into a certain defined set of 
functions, lest the Commission make the same mistakes it made with 
regard to the IEEE 1394 interface requirement.
    44. We conclude that the best step we can take in this regard to 
fulfill our statutory mandate under Section 629 is to modify our 
interface rule to require cable operators to include an IP-based 
interface on all two-way high-definition set-top boxes that they 
acquire for distribution to customers without specifying a physical 
interface. IP has overwhelming marketplace support and serves the same 
purpose that our IEEE 1394 connection requirement was intended to 
serve. We agree with commenters that the method of physical transport 
(e.g., Ethernet, Wi-Fi, MoCA, or IP implemented over IEEE 1394) is not 
relevant in this situation, as we predict based on our examination of 
the record in this proceeding that consumers will use network adapters 
to choose the physical transport method that they prefer for networking 
their devices, in furtherance of the goals of Section 629.
    45. Contrary to Comcast, Verizon and NCTA's assertions, we believe 
that it is important to define a baseline of functionality to ensure 
that consumers who network their devices and device manufacturers can 
rely on networked devices' ability to communicate with leased set-top 
boxes. However, as with the physical interface itself, we find that it 
is appropriate, at this time, to refrain from specifying the exact 
manner in

[[Page 40271]]

which this baseline of functionality is to be implemented. Accordingly, 
we modify our rules to require that the IP-based connection deliver the 
video in a recordable format (e.g., MPEG-2, MPEG-4, h.264), and pass 
through closed captioning data in a standard format. We also believe 
more advanced functionalities are necessary to provide a foundation for 
a retail market of navigation devices that are connected to leased set-
top boxes with limited capabilities. Those functionalities include 
service discovery, video transport, and remote control command pass-
through standards for home networking. While these functionalities may 
exist in some form today, there is considerable work ongoing in 
industry standard bodies to provide those functionalities in a manner 
designed for IP-based and home network solutions. We, therefore, do not 
mandate that these additional functionalities be supported by cable 
operators immediately. We do, however, wish to ensure that consumers 
benefit from these additional functionalities in a timely manner, and 
require operators to provide these additional functionalities by 
December 1, 2012, but do not mandate a particular means by which these 
functionalities are to be provided.
    46. Promoting Cable's Digital Transition. The integration ban, 
which went into effect in 2007, is designed to support the market for 
retail navigation devices by creating an incentive for cable operators 
to fully support CableCARDs, drive costs down through economies of 
scale, and encourage cable operators to strive to improve and maintain 
the CableCARD system. In the FNPRM, the Commission proposed to allow 
operators to place into service new one-way navigation devices 
(including devices capable of processing a high-definition signal) that 
perform both conditional access and other functions in a single 
integrated device provided that the devices do not perform recording 
functions. The integration ban raises the cost of set-top boxes for 
cable operators, which discourages operators from transitioning their 
systems to all-digital. Transitioning to an all-digital cable system 
allows operators to make more efficient use of spectrum capacity, 
allowing the operators to dedicate more of their spectrum to broadband 
and other services. The impetus for this proposed rule change was to 
remove economic barriers that discourage cable operators from 
transitioning their systems to all-digital.
    47. The rule proposed in the FNPRM would still require operators to 
offer CableCARDs to any subscribers who request them and to commonly 
rely on CableCARDs for any digital video recorder and bidirectional 
devices that they offer for lease or sale. In limiting the proposed 
rule's applicability to devices with less functionality, the Commission 
attempted to balance the goal of easing the financial burdens 
associated with transitioning to digital cable systems with the 
benefits that stem from common reliance. The Commission also sought 
comment on whether the potential effect on the retail market supports 
limiting any relief to smaller cable systems with activated capacity of 
552 MHz or less. Some commenters additionally suggested that the 
integration ban should be eliminated entirely.
    48. Exempting Limited Capability High Definition Set-Top Boxes. 
NCTA, ACA, Comcast, and Time Warner support the proposed rule and 
suggest that it will not impact the limited retail market for 
navigation devices that currently exists. Motorola adds that HD 
capability is commonplace rather than advanced and, therefore, the 
proposed rule would have no effect on the retail market for navigation 
devices, as the competitive devices available at retail have advanced 
functionality such as Internet connectivity and recording capability. 
Finally, proponents of the rule change assert that it will allow cable 
operators to deploy less expensive set-top boxes which will ease 
consumers' financial burden when cable operators transition to digital 
systems. BBT suggests that, for the sake of regulatory certainty, the 
Commission should not take a piecemeal approach in applying the 
integration ban suggesting that the Commission either abandon the 
integration ban altogether or not at all.
    49. Public Knowledge and CEA argue that the proposed rule would 
undermine the goals of common reliance. They assert that the proposed 
rule would limit cable operators' incentives to support CableCARDs, and 
that the current state of CableCARD support suggests that cable 
operators need more, not fewer, incentives to support CableCARDs. They 
assert also that the Commission still does not have reliable data 
regarding the cost of relying on CableCARDs or the economic effect 
CableCARD exemptions have on the retail market. CEA and Public 
Knowledge argue that, without such data, the Commission cannot 
accurately balance the public interest benefits of the integration ban 
against the benefit of an exemption.
    50. Based on our examination of the record, we will adopt the 
limited exemption to the integration ban proposed in the FNPRM. As the 
Commission explained in 2005, common reliance ensures that cable 
operators have incentives to make their services as accessible as 
possible to CableCARD devices. We find that even if cable operators are 
allowed to deploy integrated one-way devices they will still have 
incentives to ensure that CableCARD devices are able to receive their 
services because all two-way, digital video recorder (``DVR'') and 
Internet-connected devices deployed by cable operators will still be 
subject to the integration ban. Furthermore, as NCTA highlights, cable 
operators have deployed more than 40 times as many CableCARDs in their 
own separated security devices than in devices purchased at retail, and 
we believe that the former devices will remain in service for years to 
come. We conclude that this decision will not undermine the goal of 
common reliance, as we believe that the majority of operator-leased 
devices will continue to commonly rely on CableCARDs, and therefore 
cable operators will continue to have adequate incentives to support 
CableCARDs in retail devices. Allowing operators to deploy one-way 
devices with integrated security will help lower the costs of set-top 
box rentals to subscribers and allow operators to dedicate more of 
their spectrum to broadband without undermining the effectiveness of 
the integration ban. In this vein, while we recognize that the 
inclusion of an IP-based home-networking connection would provide 
additional functionality, we believe that the costs to consumers of 
imposing the interface requirement would outweigh the potential 
benefits. For these reasons, we exempt one-way set-top boxes from the 
Commission's integration ban and, correspondingly, our interface 
requirements.
    51. Limiting the Proposed Exemption to Small Systems. We decline to 
put any limitation on the size or capacity of the systems to which the 
modified rule applies. While no commenter supports adopting an 
exemption limited to small cable operators as its preferred course of 
action, Public Knowledge, which encourages the Commission not to adopt 
any exemption to the integration ban, alternatively suggests that the 
Commission limit t