Carriage of Digital Television Broadcast Signals: Amendment to the Commission's Rules, 36178-36192 [2012-14816]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 77, Number 117 (Monday, June 18, 2012)]
[Rules and Regulations]
[Pages 36178-36192]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14816]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 98-120; FCC 12-59]


Carriage of Digital Television Broadcast Signals: Amendment to 
the Commission's Rules

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this document, the Commission finds it in the public 
interest to allow the viewability rule to sunset as scheduled. The 
Commission reinterprets the statutory viewability requirement to permit 
cable operators to require the use of set-top equipment to view must-
carry signals, provided that such equipment is both available and 
affordable (or provided at no cost). The Commission establishes a 
transitional period of six months after expiration of the current rule 
during which hybrid systems will be required to continue to carry the 
signals of must-carry stations in analog format to all analog cable 
subscribers. The Commission also concludes that the small-system HD 
carriage exemption continues to serve the public interest and extends 
the existing exemption for three more years.

DATES: Effective June 18, 2012.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Steven Broeckaert, Steven.Broeckaert@fcc.gov, or 
Evan Baranoff, Evan.Baranoff@fcc.gov, of the Media Bureau, Policy 
Division, (202) 418-2120.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Fifth 
Report and Order, FCC 12-59, adopted on June 11, 2012, and released on 
June 12, 2012. The full text of this document is available 
electronically via ECFS at https://fjallfoss.fcc.gov/ecfs/or may be 
downloaded at https://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0612/FCC-12-59A1.doc. (Documents will be available 
electronically in ASCII, Word 97, and/or Adobe Acrobat.) The full text 
of this document is also available for public inspection and copying 
during regular business hours in the FCC Reference Center, Federal

[[Page 36179]]

Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 
20554. The complete text may be purchased from the Commission's copy 
contractor, 445 12th Street SW., Room CY-B402, Washington, DC 20554. 
Alternative formats are available for people with disabilities 
(Braille, large print, electronic files, audio format), by sending an 
email to fcc504@fcc.gov or calling the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

I. Introduction

    1. With this Fifth Report and Order (Fifth R&O) in the DTV cable 
carriage docket, we announce the sunset of the Commission's current 
``viewability'' rule, which mandates that cable operators with hybrid 
systems \1\ carry digital must-carry signals \2\ in an analog format 
for the benefit of analog-service customers. As explained below, we 
believe the statutory viewability requirement is best read to give the 
operator of a hybrid system greater flexibility in deciding how to 
comply with the viewability mandate. In particular, while such an 
operator may continue to carry a must-carry signal in a format that is 
capable of being viewed by analog-service customers without the use of 
additional equipment, rapid changes in the marketplace and technology--
in particular the widespread availability of small digital set-top 
boxes that cable operators are making available at low cost (or no 
cost) to analog customers of hybrid systems--provide alternative means 
by which must-carry television signals can be made viewable to all 
analog customers who are served by hybrid systems, as required by 
statute. Because a cable operator's exercise of this additional 
flexibility would involve operational changes that affect must-carry 
broadcast stations and viewers, we establish a six-month transitional 
period, until December 12, 2012, during which hybrid systems will 
continue to carry the signals of must-carry stations in analog format 
to all analog cable subscribers. In addition, we find it is in the 
public interest to extend for three more years the HD carriage 
exemption for eligible small cable system operators.
---------------------------------------------------------------------------

    \1\ A hybrid system is a cable system that offers both analog 
and digital cable service to its subscribers. By contrast, an 
analog-only system or all-digital system provides only analog or 
digital service, respectively.
    \2\ The ``must-carry'' provisions of the Communications Act 
entitle local television stations to have qualifying signals carried 
on cable systems in the same markets. Section 614(a) of the 
Communications Act provides that ``[e]ach cable operator shall 
carry, on the cable system of that operator, the signals of local 
commercial television stations and qualified low power stations as 
provided in this section.'' 47 U.S.C. 534(a). Section 615(a), 47 
U.S.C. 535(a), imposes a similar requirement to carry ``the 
signals'' of qualifying non-commercial television stations.
---------------------------------------------------------------------------

II. Viewability Requirement

A. Background

    2. Pursuant to section 614(b)(4)(B) of the Communications Act of 
1934, as amended (the ``Act''),\3\ the Commission initiated this 
proceeding in 1998 to address the responsibilities of cable television 
operators with respect to carriage of digital broadcast stations in 
light of the nation's transition to digital television.\4\ After 
Congress selected a date certain for the digital transition of full-
power broadcast television stations, the Commission, in 2007, adopted 
the Viewability Order which, among other things, established a rule to 
ensure that after the DTV transition, cable subscribers would continue 
to be able to view broadcast stations, as required by statute.\5\ The 
Commission was concerned that there would ``continue to be a large 
number of cable subscribers with legacy, analog-only television sets 
after the end of the DTV transition.'' \6\ In 2007, the Commission 
estimated that about 35 percent of all television homes, or 
approximately 40 million households, were analog-only cable 
subscribers.\7\ Although all cable systems were expected to eventually 
transition to all-digital systems, the Commission recognized that there 
may be two different types of cable systems in operation for some 
period of time after completion of the DTV transition.\8\ Some 
operators may choose to deliver programming in both digital and analog 
format (``hybrid systems''), i.e., in addition to a digital tier, the 
operator would offer an analog tier and continue to provide local 
television signals and, in some cases, a subset of cable channels, to 
analog receivers in a format that does not require additional 
equipment.\9\ Other operators may choose to operate or transition to 
all-digital systems, providing cable service in only digital 
format.\10\ Thus, in anticipation of the approaching end of the digital 
television transition and in light of the state of technology and the 
marketplace, the Commission adopted a rule providing cable operators of 
hybrid systems two options to comply with the statutory viewability 
requirement for must-carry broadcast television stations: (1) Carry the 
digital signal in analog format to all analog cable subscribers in 
addition to any digital version carried, or (2) transition to an all-
digital system and carry the signal only in digital format, provided 
that all subscribers have the necessary equipment to view the broadcast 
content.\11\
---------------------------------------------------------------------------

    \3\ 47 U.S.C. 534(b)(4)(B).
    \4\ Notice of Proposed Rulemaking, FCC 98-153, 63 FR 42330, at 
paras. 1-2, August 7, 1998. See also 47 U.S.C. 534(b)(4)(B) 
(directing the Commission to ``initiate a proceeding to establish 
any changes in signal carriage requirements of cable television 
systems necessary to ensure cable carriage of such broadcast signals 
of local commercial television stations which have been changed to 
conform with such modified standards'').
    \5\ See generally Viewability Order, FCC 07-170, 73 FR 6043, 
February 1, 2008; Third FNPRM, FCC 07-170, 73 FR 6099, February 1, 
2008.
    \6\ Id. at para. 1.
    \7\ Id. at n. 3.
    \8\ Id. at para. 20.
    \9\ Id.
    \10\ Id.
    \11\ 47 CFR 76.56(d)(3).
---------------------------------------------------------------------------

    3. The Commission did not make the viewability rule permanent. 
Instead, the Commission decided to have the rule remain in force for 
three years after the date of the digital transition, subject to review 
by the Commission during the last year of the three-year period.\12\ 
With respect to the viewability rule, the Commission stated that ``[i]n 
light of the numerous issues associated with the transition, it is 
important to retain flexibility as we deal with emerging concerns.'' 
\13\ The Commission explained that a three-year sunset ``provides the 
Commission with the opportunity after the transition to review these 
rules in light of the potential cost and service disruption to 
consumers, and the state of technology and the marketplace.'' \14\ The 
Commission identified certain factors it believed would be relevant to 
its later review, including digital cable penetration, cable deployment 
of digital set-top boxes with various levels of processing 
capabilities, and cable system capacity constraints.\15\
---------------------------------------------------------------------------

    \12\ Viewability Order, at para. 16.
    \13\ Id.
    \14\ Id.
    \15\ Id. at n. 39.
---------------------------------------------------------------------------

    4. The full-power digital television transition was successfully 
completed on June 12, 2009, after Congress chose to delay it from the 
originally scheduled conclusion on February 17, 2009. Accordingly, 
under the terms of the 2007 Viewability Order, absent Commission 
action, the viewability rule is scheduled to sunset on June 12, 
2012.\16\
---------------------------------------------------------------------------

    \16\ Id. at para. 16.
---------------------------------------------------------------------------

    5. On February 10, 2012, we initiated the Fourth Further Notice of 
Proposed Rulemaking (``Fourth FNPRM'') in this docket to determine 
whether it would be in the public interest to retain the viewability 
rule, given the current state

[[Page 36180]]

of technology and the marketplace.\17\ We received four comments, five 
reply comments, and numerous ex parte submissions in response to our 
Fourth FNPRM.\18\ In their comments, broadcasters support retention of 
the viewability rule, while cable operators urge us to let it 
expire.\19\
---------------------------------------------------------------------------

    \17\ Fourth FNPRM, FCC 12-18, 77 FR 9187, February 16, 2012.
    \18\ All of the filings made in this docket are available to the 
public both online via the Commission's Electronic Comment Filing 
System (``ECFS'') at https://www.fcc.gov/cgb/ecfs/ and during regular 
business hours in the FCC Reference Center, Federal Communications 
Commission, 445 12th Street SW., CY-A257, Washington, DC 20554.
    \19\ See, e.g., NAB comments at 3; NCTA comments at 5; TWC 
comments at 25.
---------------------------------------------------------------------------

B. Discussion

    6. Based on significant changes in the marketplace and technology 
that have occurred over the past five years, and our current 
understanding of the statutory viewability requirement as explained 
herein, we find it in the public interest to allow the viewability rule 
to sunset as scheduled, on June 12, 2012. Because we anticipate that 
our revised interpretation of the statutory viewability requirement 
will lead to the widespread deployment of small, affordable set-top 
boxes, we establish a transitional period of six months after 
expiration of the current rule--that is, until December 12, 2012--
during which hybrid systems will continue to carry the signals of must-
carry stations in analog format to all analog cable subscribers. This 
transitional period will give consumers, cable operators, and 
broadcasters that rely on must-carry access an opportunity to prepare 
for that deployment and to take other necessary steps resulting from 
changes in cable carriage.
1. Statutory Analysis
    7. Section 614(b)(7) of the Communications Act, which covers 
commercial stations, states that broadcast signals that are subject to 
mandatory carriage ``shall be viewable via cable on all television 
receivers of a subscriber which are connected to a cable system by a 
cable operator or for which a cable operator provides a connection.'' 
\20\ Similarly, section 615(h) for noncommercial stations states that 
``[s]ignals carried in fulfillment of the carriage obligations of a 
cable operator under this section shall be available to every 
subscriber as part of the cable system's lowest priced tier that 
includes the retransmission of local commercial television broadcast 
signals.'' \21\ In the 2007 Viewability Order, the Commission found 
that these statutory requirements ``plainly apply'' to cable carriage 
of digital broadcast signals, and, ``as a consequence, cable operators 
must ensure that all cable subscribers--including those with analog 
television sets--continue to be able to view all commercial and non-
commercial must-carry broadcast stations'' after the DTV 
transition.\22\ The Commission interpreted the viewability mandate to 
require that a cable operator ``ensure that the broadcast signals in 
question are actually viewable on their subscribers' receivers.'' \23\ 
The Commission rejected cable commenters' argument that the viewability 
mandate is satisfied when a cable operator transmits broadcast signals 
and offers to sell or lease a set-top box to their customers that will 
allow those signals to be viewed on their receivers.\24\ The Commission 
found that argument ``at odds with both the plain meaning of the 
statutory text as well as the structure of the provision,'' explaining 
that ``[t]o the extent that such subscribers do not have the necessary 
equipment, * * * the broadcast signals in question are not `viewable' 
on their receivers.'' \25\ To implement the viewability mandate, the 
Commission concluded that cable operators that choose to operate a 
hybrid system--i.e., operators that offer both analog and digital 
service tiers--were required to carry the must-carry stations' signals 
in analog format to their analog cable subscribers, while also ensuring 
the signals were viewable to digital subscribers.\26\
---------------------------------------------------------------------------

    \20\ 47 U.S.C. 534(b)(7).
    \21\ 47 U.S.C. 535(h). As the Commission observed in the 2007 
Viewability Order, although Sections 614(b)(7) and 615(h) use 
different language--(i.e., 614(b)(7) directs that signals shall be 
``viewable'' whereas 615(h) directs that signals shall be 
``available'')--the Commission consistently has treated them as 
imposing identical obligations. Viewability Order, at note 36. See 
also Analog Must Carry Order, FCC 93-144, 58 FR 17350, at para. 32, 
April 2, 1993 (noting that all must-carry signals must be available 
to all subscribers); see also 1996 OVS Order, FCC 96-249, 61 FR 
28698, at para. 162, June 5, 1996 (``Pursuant to section 614(b)(7) 
and 615(h), the operator of a cable system is required to ensure 
that signals carried in fulfillment of the must-carry requirements 
are provided to every subscriber of the system''). Cf. U.S. v. 
Taylor, 640 F.3d 255, 258 (7th Cir. 2011) (``It would be unrealistic 
to suppose that Congress never uses synonyms--that every word or 
phrase in a statute has a unique meaning, shared by no other word or 
phrase elsewhere in the vast federal code''). We note that no 
commenter has suggested that we impose different carriage 
obligations for commercial stations and noncommercial stations. But 
see Bright House Reply at 9-10, n. 12 (arguing the Commission erred 
in adopting an expansive reading of section 614(b)(7) and applying 
that reading to noncommercial stations governed by section 615(h)). 
For purposes of this proceeding, we will continue to treat 614(b)(7) 
and 615(h) as imposing identical obligations.
    \22\ Viewability Order, at para. 15.
    \23\ Id. at para. 22.
    \24\ Id. at para. 22.
    \25\ Id.
    \26\ Id. at para. 15. See also 47 CFR 76.56(d)(3).
---------------------------------------------------------------------------

    8. After consideration of the statutory arguments raised by the 
parties to this proceeding, and upon further review of the statute, we 
find that the language of the Act is less definitive than our earlier 
decision suggested. Nothing in the language of the statute plainly 
prohibits cable operators from offering equipment to satisfy the 
viewability requirement, i.e., the statutory sections at issue do not 
state that a signal is not ``viewable'' if the consumer needs to use 
additional equipment. (We disagree with NAB's contention that the 
Fourth FNPRM did not ask for comment on the Commission's prior 
statutory analysis of the viewability requirement in section 614(b)(7) 
and that cable commenters, having failed to seek timely review or 
reconsideration of the 2007 Viewability Order, are barred from 
reopening the issue now.\27\ To the contrary, the Fourth FNPRM 
specifically asked for parties to include a statutory analysis with any 
proposals for changing the viewability rule.\28\ As requested in the 
Fourth FNPRM, cable operators provided a statutory analysis to support 
their alternative proposal for satisfying the viewability 
requirement.\29\)

[[Page 36181]]

Accordingly, we do not believe that section 614(b)(7) unambiguously 
requires that cable subscribers must be capable of viewing must-carry 
signals without the use of additional equipment. We instead conclude 
that ``viewable'' can reasonably be read to mean that the operator must 
make the broadcast signal available or accessible to its subscribers by 
an effective means, which may include offering the necessary equipment 
for sale or lease, either for free or at an affordable cost that does 
not substantially deter use of the equipment.\30\ We believe this 
interpretation is reasonable in light of marketplace changes that have 
occurred over the past five years. This reading ensures access to must-
carry stations as a practical matter--rather than just a theoretical 
option if the customer is willing to incur significant additional 
expense.\31\ It is consistent with both the ordinary meaning of the 
word ``viewable''--defined as ``capable of being seen or inspected'' 
\32\--and also prior interpretations of the Communications Act.\33\ 
Accordingly, we disagree with broadcasters' sweeping arguments that 
requiring any sort of equipment use at all by subscribers would be 
``contrary to the statute'' and ``flatly inconsistent'' with section 
614(b)(7).\34\ Indeed, even NAB suggested that a cable operator could 
satisfy the statutory viewability requirement by providing ``free 
equipment to subscribers that enables access to digital broadcast 
signals for a period of three years,'' which acknowledges that the 
statute is not as inflexible as NAB otherwise argued.\35\ We thus agree 
with cable commenters that the term ``viewable'' does not unambiguously 
require that must-carry stations must be capable of being seen without 
the use of additional equipment.\36\ In reaching this conclusion, we 
note that agencies may change their interpretation of an ambiguous 
statutory provision and that such a revised interpretation is entitled 
to deference.\37\
---------------------------------------------------------------------------

    \27\ See NAB Reply Comments at 2-3.
    \28\ See Fourth FNPRM, at para. 16 (``To the extent any parties 
find the current rule burdensome, we seek comment on proposals that 
will satisfy the statute in a less burdensome manner. Is any rule 
necessary to effectuate the statutory intent? If so, any proposals 
for an alternative rule to ensure the actual viewability of must-
carry signals should include specific proposed wording, as well as 
an analysis of how the proposal is consistent with the statute'').
    \29\ See, e.g., TWC Comments at 3-7. We also reject ION's claim 
that the Fourth FNPRM did not provide interested parties with an 
opportunity to comment on the DTA proposal nor ``consider[] 
alternative proposals that would result in eliminating the rule.'' 
ION Media Networks and Liberman Broadcasting Ex Parte (dated Jun. 1, 
2012) at 6-7. To the contrary, the Fourth FNPRM specifically sought 
comment on possible alternatives to the viewability rule. See Fourth 
FNPRM, at ] 16 (``we seek comment on any other proposals that would 
achieve the results necessary to assure the viewability of must 
carry signals through an approach different than that of our 
existing rule. To the extent any parties find the current rule 
burdensome, we seek comment on proposals that will satisfy the 
statute in a less burdensome manner.'') In response, cable 
commenters generally argued that offering to sell or lease equipment 
to consumers would satisfy the statute, and specifically argued that 
the availability of DTAs that provided analog customers access to 
digital must-carry signals made our rule obsolete. NCTA Comments at 
12 (``DTAs could be used to receive digital must-carry signals''). 
Indeed, the cable industry has argued the former point since 2007, 
so there is nothing new about an approach to satisfy the viewability 
requirement by offering to sell or lease equipment to cable 
customers. Thus, the public had ample notice and opportunity to 
respond during the comment cycle and to file ex parte responses to 
any alternative proposals suggested by commenters, as ION itself has 
done in this proceeding.
    \30\ See, e.g., TWC Comments at 4 (``A station plainly is 
capable of being viewed if it can be seen with the purchase or lease 
of equipment (such as a set-top box or digital terminal adapter)'').
    \31\ In 2001, we determined that section 614(b)(7) did not 
require cable operators to sell or lease set top boxes to 
subscribers that could not view digital broadcast signals on their 
analog television sets. See First Report and Order, FCC 01-22, 66 FR 
16533, at paras. 77-79, March 26, 2001; Further Notice of Proposed 
Rulemaking, FCC 01-22, 66 FR 16524, March 26, 2001. In 2001, the 
Commission's simulcast requirements were about to commence 
(requiring television broadcast licensees to simulcast a certain 
percentage of their analog channel's programming on their DTV 
channel), and the Commission decided that subscribers should not be 
forced to pay ``substantial additional costs'' for equipment that 
would serve only to convert to analog format digital programming 
that could be identical in content to the analog programming 
subscribers already could access directly through their analog 
televisions. Id. In that context, the Commission sought to avoid 
forcing upon customers ``substantial additional costs'' associated 
with receiving duplicative programming. Although made in a very 
different context, our decision today once again ensures that 
compliance with the viewability mandate does not impose 
``substantial additional costs'' on consumers.
    \32\ See Webster's Third New International Dictionary 2551 
(1993); see also TWC Comments at 4 (seeking this definition for 
``viewable'').
    \33\ See, e.g., Memorandum Opinion and Order, FCC 94-251, 59 FR 
62330, at para. 16, December 5, 1994 (``Where a cable operator 
chooses to provide subscribers with signals of must-carry stations 
through the use of converter boxes supplied by the cable operator, 
the converter boxes must be capable of passing through all of the 
signals entitled to carriage on the basic service tier of the cable 
system, not just some of them. In addition, any converter boxes 
provided for this purpose must be provided at rates in accordance 
with section 623(b)(3). Therefore, in a situation where the 
subscriber's converter is supplied by the cable operator, and is 
incapable of receiving all signals as required by section 614(b)(7), 
the cable operator must make provision for a converter which is 
capable of providing these signals.'' (emphasis added)).
    \34\ See NAB Ex Parte (dated April 13, 2012) at 1. See also ION 
Media Networks Ex Parte (dated Apr. 27, 2012) at 1; Affiliates 
Associations Ex Parte (dated May 9, 2012) at 1; FOX Affiliates 
Association Ex Parte (dated May 14, 2012) at 1 (arguing that ``the 
viewability rule is dictated by the plain meaning of [section 
614(b)(7)]'').
    \35\ See NAB Ex Parte (dated May 23, 2012) at 2-3; see also 
Consumers Union Ex Parte (dated June 5, 2012) at 1 (noting that if 
the Commission ``chooses to revise the [viewability] rule, it should 
require the availability of set-top boxes at no cost to the 
consumer.''). We note that in an ex parte dated June 8, 2012, NAB 
sought to ``withdraw'' its statement that cable operators may 
satisfy their viewability obligations through the use of DTAs. See 
NAB Ex Parte (dated June 8, 2012).
    \36\ See TWC Comments at 4.
    \37\ See, e.g., Chevron U.S.A., Inc. v. Natural Res. Def. 
Council, 467 U.S. 837, 863 (1984) (``The fact that the agency has 
from time to time changed its interpretation of the term `source' 
does not, as respondents argue, lead us to conclude that no 
deference should be accorded the agency's interpretation of the 
statute.''); see also FCC v. Fox Television Stations, Inc., 556 U.S. 
502, 515 (2009) (To be sure, the requirement that an agency provide 
reasoned explanation for its action would ordinarily demand that it 
display awareness that it is changing position * * *. But it need 
not demonstrate to a court's satisfaction that the reasons for the 
new policy are better than the reasons for the old one; it suffices 
that the new policy is permissible under the statute, that there are 
good reasons for it, and that the agency believes it to be better, 
which the conscious change of course adequately indicates.'')
---------------------------------------------------------------------------

    9. Broadcasters argue that allowing cable operators to satisfy the 
viewability requirement by requiring subscribers to purchase or lease 
equipment would ``make the second sentence [in] section 614(b)(7) 
surplusage, and remove any meaning from the word `additional' in the 
third sentence of section 614(b)(7).'' \38\ We disagree. The first 
sentence of section 614(b)(7) requires that each must carry signal 
``shall be provided to every subscriber to a cable system.'' \39\ As 
the Commission has explained, this provision requires that every class 
of subscriber must receive all must carry signals.\40\ Cable operators 
have complied with this requirement through the use of a basic service 
tier,\41\ i.e., a level of service to which subscription is required in 
order to be eligible for access to any other tier of service at 
additional charge.\42\ The second sentence of section 614(b)(7) is 
concerned with a subscriber's ability actually to ``view'' the must 
carry signals that have to be provided under the first sentence. The 
second and third sentences of section 614(b)(7) likewise are distinct 
mandates, as we observed in the 2007 Viewability Order.\43\ The second 
sentence covers ``all television receivers of a subscriber which are 
connected to a cable system by a cable operator or for which a cable 
operator provides a connection,'' whereas the third sentence covers the 
situation where a ``cable operator authorizes subscribers to install 
additional receiver connections, but does not provide the subscriber 
with such connections, or with the equipment and materials for such 
connections.'' \44\ Because of this difference, allowing cable 
operators to satisfy the viewability obligation of the second sentence 
either without the use of additional equipment or by making equipment 
available at no cost or an

[[Page 36182]]

affordable cost does not render the second sentence ``irrelevant'' or 
``surplusage'' in light of the third sentence, which requires 
operators, in a more limited situation, to offer to sell or lease 
converter boxes to subscribers at regulated rates. In short, our 
interpretation of the term ``viewable'' in the second sentence is 
different in scope and substance from the requirement set forth in the 
third sentence, which requires cable operators to offer or sell 
converter boxes to certain subscribers ``at rates in accordance with 
section 623(b)(3).'' \45\
---------------------------------------------------------------------------

    \38\ See NAB Ex Parte (dated May 4, 2012) Attachment at 2. 
Section 614(b)(7) provides:
    SIGNAL AVAILABILITY.--Signals carried in fulfillment of the 
requirement of this section shall be provided to every subscriber of 
a cable system. Such signals shall be viewable via cable on all 
television receivers of a subscriber which are connected to a cable 
system by a cable operator or for which a cable operator provides a 
connection. If a cable operator authorizes subscribers to install 
additional receiver connections, but does not provide the subscriber 
with such connections, or with the equipment and materials for such 
connections, the operator shall notify such subscribers of all 
broadcast stations carried on the cable system which cannot be 
viewed via cable without a converter box and shall offer to sell or 
lease such a converter box to such subscribers at rates in 
accordance with section 623(b)(3).
    47 U.S.C. 534(b)(7) (emphasis added).
    \39\ Id.
    \40\ See, e.g., Analog Must Carry Order, at para. 34 (declining 
request for a special exception for commercial subscribers (e.g., 
hotels and hospitals) that receive specially designed channel line-
up; finding the Act is clear in its application of 614(b)(7) to 
every subscriber of a cable system and that it grants no authority 
to exempt specific classes of cable subscribers from the carriage 
requirements).
    \41\ See 1996 OVS Order, at para. 163 (recognizing that cable 
operators have complied with the must carry rules through the use of 
a basic tier, but allowing OVS operators to comply with the must 
carry rules without necessarily using a basic tier, reasoning that 
OVS operators ``may discover alternate methods to ensure that 
subscribers receive all appropriate must carry channels'').
    \42\ 47 U.S.C. 543(b)(7)(A).
    \43\ See Viewability Order, at para. 22.
    \44\ 47 U.S.C. 534(b)(7).
    \45\ 47 U.S.C. 534(b)(7). We note that our new statutory 
interpretation (i.e., that a hybrid system cable operator may 
satisfy the viewability mandate by offering analog subscribers 
equipment for free or at an affordable cost) is being implemented 
pursuant to sections 614(b)(7) and 615(h) of the Act, not as a rate 
regulation prescribed under section 623(b)(3) of the Act. Although 
some requirements set forth in section 623(b) are lifted when an 
operator is deregulated, deregulation would not be an exemption from 
the carriage requirements of the statute. See Viewability Order, at 
para. 29.
---------------------------------------------------------------------------

    10. NAB further argues that allowing cable operators to satisfy the 
viewability requirement by providing equipment conflicts with the 
``signal quality'' provision set forth in Section 614(b)(4)(A), and in 
particular the requirement that ``the quality of signal processing and 
carriage provided by a cable system for the carriage of local 
commercial television stations will be no less than that provided by 
the system for carriage of any other type of signal.'' \46\ NAB argues 
that reliance on set-top equipment ``would allow cable operators to 
discriminate by, for example, offering non-broadcast programming in a 
viewable format but not local broadcast signals,'' or to provide some 
local signals to analog subscribers, but not others.\47\ It is not 
clear, however, that this provision applies here. Section 614(b)(4)(A) 
speaks specifically to the issue of ``nondegradation'' and ``technical 
specifications,'' and does not address the issue of viewability. In any 
event, even if that provision were to apply, it is not clear that 
carrying must-carry signals only in a digital format would violate the 
terms of 614(b)(4)(A). From a technical standpoint, a must-carry signal 
carried in standard definition (SD) arguably has the same ``quality of 
signal processing and carriage'' as a signal carried in analog format 
because both versions received at the headend should have the same 
resolution--480i--and thus there should be no perceivable difference 
between them.\48\ Moreover, there is no evidence in the record to 
suggest that cable operators intend to use digital compression or other 
bandwidth saving techniques to ``degrade'' must-carry signals in such a 
way as to affect the subscriber's viewing experience.
---------------------------------------------------------------------------

    \46\ 47 U.S.C. 534(b)(4)(A). See also NAB Ex Parte (dated May 4, 
2012) Attachment at 2.
    \47\ NAB Ex Parte (dated April 13, 2012) at 2.
    \48\ Fourth Report and Order, FCC 08-193, 73 FR 61742, at para. 
5, October 17, 2008.
---------------------------------------------------------------------------

    11. Based on the foregoing, we agree with cable commenters that the 
statutory viewability requirement is ambiguous, and reasonably can be 
read in a manner to permit cable operators to require the use of 
equipment to view must-carry signals--although we emphasize that such 
equipment must be both available and affordable (or provided at no 
cost). We here choose a reasonable interpretation of the statutory text 
that best effectuates the statutory purpose in light of current 
marketplace conditions.\49\ Moreover, the doctrine of constitutional 
avoidance \50\ counsels us to interpret the Act as not imposing a rigid 
analog-carriage requirement on cable operators, where the record 
establishes a reasonable, less burdensome alternative that meets the 
statutory objectives.\51\ Specifically, we are persuaded by cable 
commenters' argument that the dramatic changes in technology and the 
marketplace over the past five years render less certain the 
constitutional foundation for an inflexible rule compelling carriage of 
broadcast signals in both digital and analog formats.\52\ (NAB observes 
that compliance with the viewability rule remains voluntary as 
operators have the option to convert their systems to all-digital 
operation, and thereby obviate the need to comply with the rule's 
analog carriage requirement.\53\ Cable commenters, on the other hand, 
maintain that forcing operators to carry must-carry signals in analog 
format unduly hampers the efforts of cable operators to manage their 
own gradual transition to all-digital service in a manner that attracts 
customers to digital services while retaining value for those customers 
who still choose to rely only on analog service.\54\) The current 
record lacks evidence that infringing on cable operators' discretion by 
requiring both digital and analog carriage of the same broadcast 
stations is necessary to protect the viability of over-the-air 
broadcasting where an affordable set-top box option, that will achieve 
the same viewability, is readily available to customers. Nor is there 
evidence showing that allowing the viewability rule to sunset where the 
cable operator makes the digital signal available to its analog 
subscribers by offering the necessary equipment at an affordable cost 
will diminish the availability or quality of broadcast programming. (We 
are not persuaded by broadcasters' argument that allowing the rule to 
sunset will threaten the viability of local broadcasters because their 
analysis assumes that elimination of the viewability rule will 
automatically result in the broadcaster's signal being unavailable to 
all analog subscribers.\55\ Their analysis fails to take into account 
that those analog customers who value must-carry channels may opt for 
equipment made available by the cable operator to continue accessing 
must-carry channels and other programming offered by the cable operator 
in a digital format.) We thus find that the burden placed on cable 
operators by the viewability rule is not justified on the current 
record, which demonstrates that a less burdensome alternative is 
available. Based on our analyses of current technology and marketplace 
conditions,\56\ set forth in detail below,

[[Page 36183]]

we now find that the most reasonable interpretation of the statute is 
that an operator of a hybrid system may comply with the viewability 
mandate by carrying a must-carry signal in a format that is capable of 
being viewed by analog customers either without the use of additional 
equipment or alternatively with equipment made available by the cable 
operator at no cost or at an affordable cost that does not 
substantially deter use of the equipment.
---------------------------------------------------------------------------

    \49\ See, e.g., NCTA v. Brand X Internet Services, 545 U.S. 967, 
980 (2005) (``ambiguity in statutes within an agency's jurisdiction 
to administer are delegations of authority to the agency to fill the 
statutory gap in reasonable fashion'').
    \50\ See Frisby v. Schultz, 487 U.S. 474, 483 (1988) (it is a 
``well-established principle that statutes will be interpreted to 
avoid constitutional difficulties'').
    \51\ See TWC Comments at 7-8 (``particularly in light of 
significant First Amendment concerns presented by the Commission's 
viewability mandate, the Commission should allow that mandate to 
sunset as planned''); Bright House Reply at 9 (``The realities of 
today's video marketplace render obsolete any logical basis for 
burdening the First Amendment rights of cable operators and limiting 
the viewing options of cable customers by continuing to insist that 
hybrid cable systems not only carry must-carry signals, but carry 
them in analog''); but see NAB Reply Comments at 7-9; NAB Ex Parte 
(dated April 13, 2012) at 3-4 (``cable operators offer no evidence 
that the impact of the viewability rule on their First Amendment 
rights has materially changed since 2007; indeed, as more cable 
systems increase capacity or convert to digital, the actual impact 
of the rule will steadily decrease'').
    \52\ See, e.g., TWC Comments at 18.
    \53\ See NAB Ex Parte (dated April 13, 2012) at 4-5.
    \54\ See NCTA Ex Parte (dated April 5, 2012) at 2; see also 
Bright House Reply at 6 (a cable system's digital transition must 
continue at a pace that properly balances the needs of its 
subscribers with available spectrum and allowing the viewability 
rule to sunset would aid the cable industry's digital transition).
    \55\ See NAB Ex Parte (dated April 23, 2012) Attachment.
    \56\ See American Trucking Assns. v. Atchison, T. & S.F. Ry., 
386 U.S. 397, 416 (1967) (``Regulatory agencies do not establish 
rules of conduct to last forever; they are supposed, within the 
limits of the law and of fair and prudent administration, to adapt 
their rules and practices to the Nation's needs in a volatile, 
changing economy. They are neither required nor supposed to regulate 
the present and the future within the inflexible limits of 
yesterday''); American Civil Liberties Union v. FCC, 823 F.2d 1554, 
1565 (DC Cir. 1987) (FCC should ``carefully monitor the effects of 
its regulations [of cable television rates] and make adjustments 
where circumstances so require * * *. [W]e would not expect the 
Commission to adhere blindly to regulations that are cast in doubt 
by new developments or better understanding of the relevant 
facts''), cert. denied, 485 U.S. 959 (1988); Natural Resources 
Defense Council, Inc. v. Herrington, 768 F.2d 1355, 1408 (DC Cir. 
1985) (DOE efficiency standards for household appliances ``would be 
patently unreasonable'' if ``based on data half a decade old'').
---------------------------------------------------------------------------

2. Changes in Technology and the Marketplace
    12. Significant changes that have occurred in the marketplace and 
technology over the past five years confirm our determination that it 
is in the public interest to allow the 2007 viewability rule to sunset. 
At the time the rule was adopted, the Nation was preparing for the 
digital television transition, and a significant number of television 
viewers were unequipped to receive a digital signal.\57\ In 2007, about 
58 percent of television households subscribed to cable service and 46 
percent of these cable subscribers (40 million households) received 
analog service. Moreover, there was no low-functionality and/or low-
cost digital set-top box option available to ensure analog cable 
subscribers could access digital must-carry signals.\58\ Consequently, 
the Commission faced the very real possibility that a significant 
number of cable customers could lose access to must-carry channels if 
hybrid cable systems were permitted to carry such signals only in 
digital format. Based on the state of the marketplace in 2007, the rule 
requiring hybrid cable systems serving analog subscribers to carry 
must-carry stations in analog format was a reasonable measure to ensure 
that must-carry signals were ``viewable'' and ``available'' to all 
subscribers as required by statute.\59\
---------------------------------------------------------------------------

    \57\ See, e.g., Brighthouse Reply at 4 (``When the Commission 
adopted the Viewability Order, it was confronting the broadcast 
industry's DTV transition and the fear that this historic event 
would trigger major viewer disruption. In that context, the 
Commission chose--on a temporary basis -- to broadly apply cable's 
must-carry obligations so as to minimize the transitional impact on 
cable customers who were accustomed to receiving broadcast channels 
in analog. With that same transitional objective in mind, the cable 
industry acquiesced'').
    \58\ See 2010 CableCARD Order, FCC 10-181, 76 FR 40263, at 
paras. 49-50, July 8, 2011 (exempting for the first time HD DTAs 
from the Commission's integration ban; see 47 CFR 76.640(b)(4) and 
76.1204(a)(1)). In addition, we note that only about 25 percent of 
television households had HD television sets. The Nielsen Company, 
Nielsen Universe Estimates, Jan. 1, 2007-Jan. 1, 2011, ``Mkt 
Breaks''; National Media Related Universe Estimates, Feb. 2011, 
``Media UE Trends''; Television Audience Report, 2010-2011, at 4,  
https://www.nielsen.com/us/en/insights/reports-downloads/2011/television-audience-report-2010-2011.html (visited Mar. 23, 2012).
    \59\ See NCTA Reply at 4 (cable industry's commitment to comply 
with federal rules and to carry must-carry stations in analog format 
reflected a commitment the cable industry had previously made to 
Congress--``a commitment that also was expressly limited to three 
years'').
---------------------------------------------------------------------------

    13. The state of technology and the marketplace is significantly 
different now. About 50 percent of television households now subscribe 
to cable service (down from 58 percent in 2007), about 20 percent of 
these cable subscribers (about 12 million households) receive analog 
service (down from 40 million households in 2007), and the latter 
number is expected to drop to 16 percent (or fewer than 10 million 
households) by the end of 2012.\60\ We continue to expect most cable 
operators will eventually transition to all-digital systems.\61\
---------------------------------------------------------------------------

    \60\ See SNL Kagan, ``Video growth enjoys seasonal lift in Q1; 
service providers notch sub gains,'' (May 16, 2012) (``More than 80% 
of basic subs are now digital.''); SNL Kagan, ``SNL Kagan's 10-Year 
Cable TV Projections,'' (Jul. 28, 2011).
    \61\ Id. See also NCTA Ex Parte in MB Docket No. 11-169 (dated 
Feb. 7, 2012) at 4 (noting that ``in light of * * * pro-consumer 
benefits, cable operators have strong incentives to migrate rapidly 
to all-digital networks''); SNL Kagan, ``Cable's all-digital 
transition marches on without universal support,'' (Dec. 14, 2011) 
(stating that ``the U.S. cable industry's all-digital future is 
inevitable''). We note, for example, that BendBroadband and RCN have 
completed their transition to all-digital service, and Comcast and 
Cablevision are rapidly transitioning to all-digital service. See 
BendBroadband Comments in MB Docket No. 11-169 at 1-2; RCN Comments 
in MB Docket No. 11-169 at 2; Comcast Comments in MB Docket No. 11-
169 at 4; Cablevision Comments in MB Docket No. 11-169 at 13; SNL 
Kagan, ``Video growth enjoys seasonal lift in Q1; service providers 
notch sub gains,'' (May 16, 2012) (``Greater than 93% of Comcast 
basic subs and more than 97% of Cablevision basic subs are now 
digital. Cablevision intends to complete the conversion of its 
entire network to digital later this year.'').
---------------------------------------------------------------------------

    14. More importantly, unlike in 2007, low-functionality/low cost 
digital equipment is now readily available as an option to cable 
consumers.\62\ The cable industry has encouraged the development of 
small, low-cost set-top boxes, called ``Digital Transport Adapters'' 
(``DTAs''),\63\ to enable customers to view digital signals, without 
having to obtain full-featured digital set-top boxes.\64\ NCTA states 
that ``some cable operators * * * are already providing digital 
transport adapters (DTAs) to some or all of their customers at minimal 
or no cost.'' \65\ According to industry reports, about 27 million DTAs 
were already deployed by year-end 2011.\66\ In addition to DTAs, NCTA 
explains that ``[o]ther operators * * * are providing other types of 
affordable digital set-top boxes, with lesser capabilities and/or at 
substantially reduced prices for basic-only customers.'' \67\ Moreover, 
NCTA states

[[Page 36184]]

that ``the eight largest incumbent cable operators'' have committed to 
``make available to analog-only households, upon request, low-cost set-
top devices capable of displaying basic service tier signals on analog 
television sets.'' \68\ Therefore, we expect that DTAs, or similar 
devices, will be made broadly available on cable systems throughout the 
country.\69\ The low cost set-top box offers reflected in our record 
will satisfy our new interpretation of the viewability requirement, 
permitting a cable operator to make the must-carry signals available by 
offering analog customers the necessary digital equipment at an 
affordable cost.\70\ Specifically, the record reflects that Comcast, 
for a period of time after migrating a system to all-digital, typically 
offers two or three free DTAs to customers at no cost, and charges less 
than $2 for additional boxes.\71\ Similarly, Time Warner Cable states 
that in transitioning one of its systems to digital it has offered 
subscribers ``one or more'' DTAs free of charge for the first two years 
and 99 cents per month thereafter.\72\ In addition, Bright House states 
that it offers set-top boxes to basic service tier subscribers for $1 a 
month.\73\ We find that this range of charges for DTAs and set-top 
boxes--i.e., free or a monthly fee of no more than $2--would satisfy 
the requirement for affordable equipment because the minimal additional 
cost, if any, is unlikely to discourage use of this equipment.\74\ 
Materially higher leasing fees, however, could deter subscriber 
willingness to order the equipment needed to ensure viewability on a 
hybrid cable system. \75\ Accordingly, such fees would not meet the 
statutory viewability requirement as we interpret it.\76\
---------------------------------------------------------------------------

    \62\ We note that the number of television households with HD 
television sets has increased to about 64 percent for the 2010-2011 
TV season (up from 25 percent in 2007). See The Nielsen Company, 
Nielsen Universe Estimates, Jan. 1, 2007-Jan. 1, 2011, ``Mkt 
Breaks''; National Media Related Universe Estimates, Feb. 2011, 
``Media UE Trends''; Television Audience Report, 2010-2011, at 4,  
https://www.nielsen.com/us/en/insights/reports-downloads/2011/television-audience-report-2010-2011.html (visited Mar. 23, 2012). 
We also note that analog cable subscribers with digital TV sets with 
QAM tuners will be able to continue to view must-carry signals in 
digital without attaching additional equipment. Most television 
sets, consumer electronics devices, and leased set-top boxes have 
included QAM tuners since at least 2007, meaning that those devices 
are capable of tuning unencrypted digital cable service. See BST 
Encryption NPRM, FCC 11-153, 76 FR 66666, at paras. 4-6, October 27, 
2011. In the pending BST Encryption NPRM, the Commission sought 
comment on whether to retain the basic service tier encryption 
prohibition for all-digital cable systems; the Commission did not 
propose to allow encryption of basic service tier signals on hybrid 
systems, which are at issue here. Id. at para. 9. See also Bright 
House Reply at 5 (explaining that many cable customers who have not 
yet subscribed to a digital service tier are able to directly access 
unencrypted digital signals included in their cable system's basic 
service tier through their television sets purchased within the last 
five years).
    \63\ DTAs are simple one-way digital-to-analog set-top boxes 
that can provide cable consumers with access to the basic service 
tier and the expanded basic service tier. These devices are small 
enough to be attached to the back of a television set. See, e.g., 
``The Comcast Digital Transport Adapter'' at https://www.bocsco.com/comcast_dta.php (BOCS Web site visited May 3, 2012) (link contained 
in NCTA Comments at 13); ``All About Digital Adapters'' at https://customer.comcast.com/help-and-support/cable-tv/digital-adapter/ 
(Comcast Web site visited May 3, 2012); Jeff Baumgartner, ``Digital 
Transport Adapters (DTAs),'' Light Reading (Jul. 15, 2009), 
available at https://www.lightreading.com/document.asp?doc_id=179245 
(visited May 3, 2012). See also Cisco Systems, Inc. Ex Parte (dated 
May 23, 2012) Attachments.
    \64\ See NCTA Comments at 12. See also TWC Ex Parte (dated May 
7, 2012) at 1 (in connection with one of its system's all-digital 
transition, the cable operator offered its subscribers the use of 
one or more DTAs at no charge for two years, as an alternative to 
leasing full-featured set-top boxes or purchasing CableCARD-equipped 
retail devices, and offered subscribers the opportunity to lease one 
or more DTAs for 99[cent] per month after the initial free offer 
expires).
    \65\ NCTA Ex Parte (dated April 26, 2012) at 2.
    \66\ See SNL Kagan, ``Cable set-top forecast: Industry's move to 
IP video impacts projections,'' (Sept. 16, 2011).
    \67\ NCTA Ex Parte (dated April 26, 2012) at 2. See also ACA Ex 
Parte (dated Jun. 4, 2012) at 3 (stating that ``ACA members who 
operate hybrid analog/digital systems make available for lease 
digital set-top boxes that permit digital-only signals to be viewed 
on analog television sets, and analog-only cable customers that are 
served by these hybrid systems can commonly obtain boxes from their 
providers at low cost'').
    \68\ NCTA Ex Parte (dated May 17, 2012) at 2 (noting that the 
eight largest cable operators ``collectively serve more than 70 
percent of all analog-only cable customers'').
    \69\ We understand that DTAs are widely available to cable 
systems using Motorola technology and, according to TWC, ``Cisco 
does make DTAs available for use with Cisco headend equipment.'' See 
TWC Ex Parte (dated May 7, 2012) at 2 (noting, however, that ``TWC 
to date has not deployed DTAs in a Cisco cable system''). See also 
Cisco Systems, Inc. Ex Parte (dated May 23, 2012) at 1 (stating it 
has ``produced and markets Digital Transport Adaptors for use in 
conjunction with multichannel video programming distribution 
systems'').
    \70\ Our ruling today is not inconsistent with section 629 of 
the Act, which was enacted to ensure the commercial availability of 
navigation devices. 47 U.S.C. 549. We expect many cable operators 
will offer DTAs to analog subscribers to fulfill the viewability 
mandate. Therefore, we do not expect that these low-cost limited 
functionality devices will have an effect on the development of a 
commercial market for navigation devices. See, e.g., 2010 CableCARD 
Order, at para. 49 (exempting limited capability HD set-top boxes 
from the integration ban); Cable One Waiver, FCC 09-45, at para. 13 
(rel. May 28, 2009). As noted previously, for purposes of the retail 
market, consumers prefer advanced two-way devices capable of 
receiving the electronic programming guide, video on demand, and 
other interactive features, which are not made available by DTAs. 
See Cable One Waiver, at paras. 13-14. Nevertheless, to the extent 
such advanced two-way boxes are offered below the cost reasonably 
allocable to such box, we remind operators of their obligations to 
offer a comparable discount to CableCARD customers on the same 
service plan. 47 CFR 76.1205(b)(5)(ii)(B)(2).
    \71\ See NCTA Ex Parte (dated Feb. 21, 2012) in MB Docket No. 
11-169 at 4; New Jersey Division of Rate Counsel Comments in MB 
Docket No. 11-169 at 6. See also, e.g., SNL Kagan, ``All-digital 
migration drives set-top outlook,'' (Sept. 22, 2009); Jeff 
Baumgartner, ``Comcast Seeds Digital Shift With Free Boxes,'' Light 
Reading (Nov. 4, 2008), available at https://www.lightreading.com/document.asp?doc_id=167256&site=lr_cable (visited May 3, 2012); 
Jeff Baumgartner, ``Comcast Starts to Kiss Analog TV Goodbye,'' 
Light Reading (Jan. 6, 2012), available at https://www.lightreading.com/document.asp?doc_id=216104&site=lr_cable 
(visited May 3, 2012).
    \72\ TWC Ex Parte (dated May 7, 2012) at 1.
    \73\ Bright House Ex Parte (dated May 14, 2012) at 1.
    \74\ We note that, to the extent a cable operator of a hybrid 
system elects to cease down-converting a must-carry signal and 
instead chooses to provide analog customers the necessary digital 
equipment to view such signal, such equipment must continue to meet 
the affordability requirements described herein until the operator 
completes its transition to all-digital service.
    \75\ Concerns in the record about the cost of equipment appear 
to assume costs comparable to those ordinarily charged for full-
function boxes, while our affordability requirement ensures that if 
equipment is used to provide viewability, that equipment will be 
available at a nominal cost or no charge. See, e.g., National Black 
Religious Broadcasters, Lieberman Broadcasting Inc., Una Vez Mas, 
ION Media Networks, NRJ TV LLC (collectively ``Must-Carry 
Broadcasters'') Joint Ex Parte (dated Jun. 9, 2012) at 4, n.6.
    \76\ We note that, to the extent such equipment is subject to 
rate regulation, operators must also comply with those requirements. 
See 47 U.S.C. 543(b)(3); 47 CFR 76.923.
---------------------------------------------------------------------------

3. Effect on Must-Carry Stations, Cable Operators, and Consumers
    15. We are not persuaded by the broadcasters' analysis that 
allowing the current viewability rule to expire on schedule will 
threaten the viability of must-carry stations.\77\ According to the 
broadcasters, approximately 12.6 million households receive only analog 
cable service, representing approximately 11 percent of all U.S. 
television households, and removing that percentage of a station's 
audience ``could well have a profound impact on affected stations.'' 
\78\ As NCTA points out, however, the broadcasters' analysis overstates 
the impact on such stations because it assumes that elimination of the 
rule will automatically result in the broadcaster's signal being 
unavailable to all analog subscribers.\79\ To the contrary, our new 
statutory interpretation--which hinges on a cable operator making 
equipment available at no cost or an

[[Page 36185]]

affordable cost \80\--will ensure that subscribers on hybrid systems 
may continue to access these signals at little or no additional 
expense.\81\ As cable commenters explain, a must-carry signal carried 
only in digital format would still be included in the basic service 
tier; analog cable subscribers would not be required to subscribe to an 
enhanced tier of service to view the digital version of a must-carry 
channel.\82\ We also expect this issue to diminish over time given that 
the number of analog cable subscribers is expected to continue to 
decrease as more cable customers choose to upgrade to full digital 
service and as more hybrid cable systems complete their transition to 
all-digital systems.\83\
---------------------------------------------------------------------------

    \77\ See NAB Ex Parte (dated April 23, 2012) Attachment 
(providing an economic analysis on the impact of reduced cable 
carriage on must-carry stations). See also NAB Ex Parte (dated April 
23, 2012) Attachment at 3 (if a must-carry station ``were to lose 
access to a number of cable households through the elimination of 
the viewability rule, its revenue would certainly decrease''); NAB 
Ex Parte (dated April 13, 2012) at 2-3 (if the viewability rule were 
allowed to sunset, ``there is a significant potential for must carry 
stations to lose audience share'' and to the extent a must carry 
station's financial viability is harmed, it ``would harm not only 
the cable subscribers that can no longer view must carry stations, 
but potentially all of those stations' viewers''). Several must-
carry broadcasters filed ex parte letters to support NAB's analysis. 
See, e.g., Liberman Broadcasting, Inc. (``Liberman'') Ex Parte 
(dated Apr. 26, 2012); National Religious Broadcasters Ex Parte 
(dated Apr. 26, 2012); ION Media Networks (``ION'') Ex Parte (dated 
Apr. 27, 2012); Una Vez Mas, LP Ex Parte (dated Apr. 27, 2012); 
Francis Wilkinson (Costa De Oro Media, LLC) Ex Parte (dated Apr. 30, 
2012); Sunbelt Multimedia Co., Ex Parte (dated May 1, 2012); WTVA, 
Inc. Ex Parte (dated May 2, 2012); Named State Broadcaster 
Associations Ex Parte (dated May 3, 2012); Mapale LLC Ex Parte 
(dated May 7, 2012); The ABC Television Affiliates Association, the 
CBS Television Network Affiliates Association, and the NBC 
Television Affiliates (the ``Affiliates Associations'') (dated May 
9, 2012); The Ohio Association of Broadcasters (OAB), the Virginia 
Association of Broadcasters (VAB), and the North Carolina 
Association of Broadcasters (NCAB) Ex Parte (dated May 9, 2012); 
Daystar Television Network (DTN) Ex Parte (dated May 11, 2012); FOX 
Affiliates Association Ex Parte (dated May 14, 2012); Christian 
Television Network Ex Parte (dated May 22, 2012); Trinity Christian 
Center of Santa Ana, Inc. d/b/a Trinity Broadcasting Network (TBN) 
Ex Parte (dated May 24, 2012). ; Regional News Network (WRNN-TV) Ex 
Parte (dated May 25, 2012); Bert Ellis Ex Parte (dated Jun. 4, 
2012); Entravision Holdings, LLC Ex Parte (dated Jun. 4, 2012); KVMD 
Licensee Co., L.L.C. Ex Parte (dated Jun. 4, 2012); NRJ TV LLC 
(``NRJ'') Ex Parte (dated Jun. 4, 2012); Rancho Palos Verdes 
Broadcasters, Inc. (RPVB) Ex Parte (dated Jun. 4, 2012); Northwest 
Broadcasting Inc. Ex Parte (dated Jun. 5, 2012); Ramar 
Communications, Inc. Ex Parte (dated Jun. 5, 2012); OTA Broadcasting 
Ex Parte (dated Jun. 6, 2012); Must-Carry Broadcasters Joint Ex 
Parte (dated Jun. 9, 2012).
    \78\ See also NAB Ex Parte (dated April 23, 2012) Attachment at 
2. In addition, Affiliate Associations argue that if the viewability 
rule was allowed to sunset, stations electing retransmission consent 
could also ``face audience and revenue losses because many 
retransmission consent agreements reference the requirements of the 
viewability rule. If the rule were to go away, cable operators 
likely would insist that they have no obligation to ensure 
retransmission consent signals are available to all subscribers.'' 
See Affiliates Associations Ex Parte (dated May 9, 2012) at 2; FOX 
Affiliates Association Ex Parte (dated May 14, 2012) at 2. We do not 
find this argument to be persuasive or to provide a basis for 
extending the viewability rule. As we have said before certain local 
broadcast station programming is ``highly valued by consumers'' and 
``carriage of local television broadcast station signals is critical 
to MVPD offerings.'' Memorandum Opinion and Order, FCC 03-330, para. 
202 (rel. Jan. 14, 2004). Given cable subscribers' demand for access 
to retransmission consent stations, we do not expect our approach to 
the viewability requirement for must-carry stations to significantly 
impact carriage of broadcast stations that elect to negotiate terms 
for retransmission consent rather than invoking their statutory 
must-carry rights.
    \79\ See NCTA Ex Parte (dated April 26, 2012) at 2.
    \80\ We are not persuaded by broadcasters' argument that 
equipment use here should be banned for the same reason the ``A/B 
switch'' solution was rejected in the early 1990s. See ION and 
Liberman Joint Ex Parte (dated Jun. 1, 2012) at 6. An ``A/B switch'' 
is a method of manually toggling between cable and broadcast 
programming to allow cable subscribers to watch broadcast 
programming not carried on cable. The ``A/B switch'' solution was 
rejected because of numerous technical problems associated with the 
device and considerable evidence (including two empirical studies) 
showing a lack of consumer acceptance of the switch. See Turner 
Broad. Sys., Inc. v. FCC, 520 U.S. 180, 219-21 (1997). We are 
presented with a very different situation here. First, while the 
``A/B switch'' required subscribers to access must-carry stations 
over-the-air, in the situation here must-carry stations will 
continue to be carried on the digital tier of the cable system. 
There will be no manual toggling involved to access must-carry 
stations. Rather, the available DTA (or similar equipment) will 
provide subscribers equivalent access to all cable programming, 
including must-carry stations. In addition, the record lacks any 
suggestion of technical problems associated with the use of DTAs or 
low-cost set-top boxes. Likewise, there is no evidence of any 
problem with customer acceptance. As indicated above, for example, 
approximately 27 million DTAs had been deployed by year-end 2011.
    \81\ We note that subscribers served by analog-only systems 
would not be impacted by the sunset of the viewability rule because 
those systems would be required to continue to carry must-carry 
channels in analog format. See 47 CFR 76.56. According to NCTA, more 
than half a million cable customers are served by analog-only 
systems as of year-end 2011. See NCTA Ex Parte (dated April 26, 
2012) at 2, n.7.
    \82\  Id. at 2. See also TWC Ex Parte (dated May 7, 2012) at 2 
(explaining that the rates TWC charges for the basic service tier do 
not vary depending on whether the subscriber accesses an analog or 
digital version of services carried on that tier).
    \83\ See SNL Kagan, ``SNL Kagan's 10-Year Cable TV 
Projections,'' (Jul. 28, 2011). SNL Kagan projects that the 
percentage of cable subscribers subscribing to digital cable service 
will reach about 84 percent by year-end 2012, 88 percent by year-end 
2013, 91 percent by year-end 2014, and 93 percent by year-end 2015. 
Id. See also NCTA Ex Parte dated April 26, 2012, at 2-3 (noting that 
the number of digital households increased from 54% to 78% during 
the four years between 2007 and 2011, and that the percentage of 
digital households had further increased by December 2011 to 79.4%; 
and stating that ``there is no reason to believe that the steady 
decline in the number of analog-only households will not 
continue'').
---------------------------------------------------------------------------

    16. The record further reflects that eliminating the rule will 
result in significant benefits to cable operators in meeting the 
increasing demands of the large majority of their customers, i.e., 
those subscribing to digital services.\84\ NCTA explains that ``cable 
operators face capacity demands from an increasing proliferation of HD 
programming services as well as from broadband video services'' and 
need flexibility to ``serve the needs of all their customers while 
transitioning from analog to digital service.'' \85\ NCTA explains that 
there are currently more than 183 HD cable networks (including basic, 
premium, and regional sports channels), up from only 22 in September 
2007 when the Commission adopted the viewability rule.\86\ According to 
staff review of the 2011 Annual Cable Operator Report data and the 2010 
Cable Price Survey data, more than 96 percent of cable systems carry at 
least one must-carry station, and, on average, each system carries more 
than seven must-carry stations.\87\ Each must-carry station carried in 
analog occupies 6 MHz of bandwidth that the cable operator could 
otherwise use for 10-12 standard definition (``SD'') digital streams, 
2-3 HD video streams, or significant broadband capacity.\88\ Thus, as 
cable commenters explain, elimination of the viewability rule will 
provide operators the needed flexibility to meet fast-changing consumer 
demands for HD cable services and high-speed broadband services.\89\
---------------------------------------------------------------------------

    \84\ See, e.g., Bright House Reply at 5-6 (arguing that the 
viewability rule inefficiently consumes ``precious cable capacity 
that could be better deployed for enhanced broadband services'' with 
``little to no offsetting public benefit'').
    \85\ NCTA Reply at 5; Bright House Reply at 4 (``[a]nalog 
carriage of each and every must carry station imposes a heavy burden 
on capacity-strained cable systems''). See also Bright House Reply 
at 6 (``Data-usage by the average Internet user has increased a 
thousand-fold in the last decade. Over the next three years, this 
trend will continue and even accelerate, and cable operators will 
need flexibility to meet fast-changing consumer demands''). 
Broadcasters do not dispute that carriage of analog signals take up 
more bandwidth than digital signals, but respond that a cable 
operator could avoid the bandwidth issue by transitioning its hybrid 
system to an all-digital system. NAB Comments at 5 (``As cable 
systems convert, whatever burden the Viewability Rule might have 
imposed will disappear.'').
    \86\ NCTA Comments at 13.
    \87\ See Fourth FNPRM, at para. 10, n.36. In the Fourth FNPRM, 
we estimated that almost 40 percent of all broadcast stations 
elected or defaulted to must-carry rather than electing 
retransmission consent. Id.
    \88\ See, e.g., SNL Kagan, ``All-digital footprints make gains 
amid uneven commitment by operators,'' (Dec. 13, 2010) (noting 
potentially significant efficiencies from reclaiming analog 
channels); Communications Technology, ``QAM Modulator: Tactics at 
the Edge,'' (Aug. 24, 2009) available at https://www.cable360.net/ct/news/ctreports/QAM-Modulator-Tactics-at-the-Edge_37234.html 
(visited May 7, 2012). See also Bright House Reply at 6-7 
(``Requiring a cable operator to carry a single must-carry channel 
in analog consumes the same cable spectrum as a dozen standard 
digital services. This lopsided loss of programming (which will only 
grow more extreme as new compression advancements are implemented) 
is clearly contrary to the best interests of the vast majority of 
cable customers, who can already view must carry programming in 
digital'').
    \89\ See, e.g., NCTA Comments at 15 (stating that ``greatly 
increased demand for capacity to accommodate HD cable services and 
broadband video services has made it imperative for cable operators 
to use their capacity efficiently.''); NCTA Reply at 5 (explaining 
that the rule impedes consumer demands for ``an increasing 
proliferation of HD programming services as well as from broadband 
video services''); Bright House Reply at 6 (explaining that data-
usage by the average Internet user has increased a thousand-fold in 
the last decade and over the next three years this trend will 
continue and even accelerate).
---------------------------------------------------------------------------

4. Six-Month Transition Period
    17. To facilitate a smooth transition, we adopt, for a six-month 
transition period following the sunset of our viewability rule,\90\ an 
interim requirement that operators of hybrid cable systems must 
continue to carry the signals of must-carry stations in analog format 
to all analog cable subscribers. Critical to our decision to allow the 
viewability rule to sunset is the availability of affordable set-top 
boxes to affected cable subscribers. A six-month transition period will 
provide cable operators an opportunity to acquire an adequate supply of 
equipment for subscribers impacted by any carriage change.\91\ It will 
also provide time for

[[Page 36186]]

cable operators to comply with our existing rules requiring 
notification to broadcasters and customers about any planned change in 
carriage or service and the operator's equipment offerings, as well as 
allow consumers sufficient time to make any necessary arrangements.\92\ 
As part of the cable operators' required notification to their 
subscribers of any carriage changes, the cable operators have committed 
to inform affected subscribers that equipment is required to continue 
viewing the must-carry signal and how to obtain that equipment.\93\ We 
believe informing consumers about equipment is a critical part of a 
hybrid operator's viewability obligations in these circumstances and 
thus rely upon this commitment in rendering our decision today. 
Similarly, we rely upon the cable operators' commitment to give 
broadcasters a minimum of 90 days notice before undertaking any 
carriage changes.\94\ We believe that such advance notice will provide 
repositioned must-carry stations sufficient time to communicate with 
their viewers. Advance notice about planned carriage changes will allow 
must-carry stations to notify their viewers--through on-air messages, 
Web site postings, mailings or other forms of communications of their 
choosing--about the planned change in carriage, and about the viewers' 
options to ensure continued access to the station's programming.\95\ We 
believe effective consumer outreach, particularly during the six-month 
transition period, will greatly minimize the impact that sunset of our 
viewability rule may have on consumers and must-carry stations.
---------------------------------------------------------------------------

    \90\ I.e., December 12, 2012.
    \91\ See TWC Ex Parte (dated May 7, 2012) at 2 (confirming that 
``TWC to date has not deployed DTAs in a Cisco cable system, but TWC 
understands that Cisco does make DTAs available for use with Cisco 
headend equipment''). See also Baja Broadband Operating Company, 
LLC, Request for Waiver of Sec.  76.1204(a)(1) of the Commission's 
Rules, CSR-8357-Z, DA No. 12-899 (rel. Jun. 7, 2012) (noting that HD 
DTAs are expected to be available to the small cable operator by 
October 2012). Contrary to the broadcasters' suggestion, the Baja 
waiver grant does not suggest an issue with the availability of DTAs 
in general. See NAB Ex Parte (dated Jun. 8, 2012) at 2, n.5; Must-
Carry Broadcasters Ex Parte (dated Jun. 9, 2012) at 4. First, the 
Bureau Order pertains to a small cable operator's short term need 
for HD DTAs. The Bureau Order does not address the availability of 
SD DTAs, which would also be sufficient for purposes of accessing 
the signals of must-carry stations carried in digital format. See 
NCTA Ex Parte (dated Jun. 11, 2012) at 2 (``Analog customers 
typically use standard-definition DTAs to access digital cable 
services on their analog TVs. There is no shortage of such DTAs in 
the marketplace. In fact, cable operators have deployed tens of 
millions of such DTAs to date, and these DTAs are in plentiful 
supply from a variety of vendors. The types of DTAs referenced in 
the Baja Broadband Waiver Order--HD DTAs--are just now coming to 
market and are expected to become more widely available in coming 
months.''). Second, the Bureau Order observes that the HD DTAs are 
expected to be available in October 2012 (i.e., within seven months 
of the waiver request date of March 9, 2012), a time frame 
consistent with the six-month transition period that we adopt today. 
Thus, the transition period should afford small operators the time 
needed to acquire any necessary equipment, including HD DTAs. 
Moreover, we expect that our Order today will provide an incentive 
for DTA manufacturers to ramp up production. Third, we reiterate 
that cable operators must have an adequate supply of affordable 
boxes to offer their customers in order to satisfy the statutory 
viewability requirement. To the extent that DTAs or low cost set-top 
boxes are not otherwise available to a particular hybrid cable 
operator, that operator could not terminate analog carriage of the 
must-carry stations.
    \92\ See 47 CFR 76.1601 (requiring cable operators to ``provide 
written notice to any broadcast television station at least 30 days 
prior to either deleting from carriage or repositioning that 
station. Such notification shall also be provided to subscribers of 
the cable system.''); 47 CFR 76.1603(b) (requiring cable operators 
(i) to notify customers of any changes in rates, programming 
services or channel positions ``as soon as possible in writing''; 
(ii) to give customers notice at least 30 days in advance of such 
changes if the change is within the control of the cable operator; 
and (iii) to notify subscribers 30 days in advance of any 
significant changes in other information listed in Sec.  76.1602); 
47 CFR 76.1602(b) (listing customer service-general information to 
include (1) products and services offered and (2) prices and options 
for programming services and conditions of subscription to 
programming and other services). See also NCTA Ex Parte (dated May 
17, 2012) at 2 (stating that the eight largest incumbent cable 
operators have committed to ``make available to analog-only 
households, upon request, low-cost set-top devices capable of 
displaying basic service tier signals on analog television sets'' 
and to ``provide ample notice to affected subscribers of these set-
top box offers''); TWC Ex Parte (dated May 7, 2012) at 2 (``where 
TWC chooses to cease analog transmission of one or more must-carry 
stations in a hybrid digital/analog cable system, it will provide 
advance notice regarding available equipment that will enable 
subscribers with direct connections to analog television sets to 
continue viewing such broadcast signals''); Bright House Ex Parte 
(dated May 14, 2012) at 1; NCTA Ex Parte (dated May 17, 2012) at 2; 
TWC Ex Parte (dated May 7, 2012) at 2 (committing to providing 
advance notice when terminating analog carriage).
    \93\ See NCTA Ex Parte (dated May 17, 2012) at 2 (stating that 
the eight largest incumbent cable operators will ``provide ample 
notice to affected subscribers'' of the availability of low-cost 
set-top devices capable of displaying basic service tier signals on 
analog television set); ACA Ex Parte (dated Jun. 11, 2012) at 1 
(stating similar commitment by ACA's 14 largest members serving more 
than 50% of all subscribers served by ACA membership).
    \94\ See NCTA Ex Parte (dated Jun 8, 2012) at 2 (stating that 
where the eight largest incumbent cable operators wish to stop 
carrying the analog version of a must-carry station's signal, such 
cable systems will provide notice to the affected must-carry station 
at least 90 days in advance of the carriage change); ACA Ex Parte 
(dated Jun. 11, 2012) at 1-2 (stating similar commitment by ACA's 14 
largest members serving more than 50% of all subscribers served by 
ACA membership).
    \95\ Id.
---------------------------------------------------------------------------

    18. We remind cable operators that the sunset of our viewability 
rule does not otherwise affect the must-carry requirements of Sec.  
76.56 of our rules.\96\ Cable operators providing digital cable service 
must continue to carry local broadcast stations electing mandatory 
carriage, including in HD format when broadcast in such format, and 
cable operators providing only analog cable service (no digital 
service) must continue to carry local broadcast stations electing 
mandatory carriage in analog format.\97\ By allowing our current 
viewability rule to sunset, however, we provide hybrid cable system 
operators the flexibility to best meet the needs of their subscribers 
during their move to an all-digital system. Under our more flexible 
statutory interpretation, operators of hybrid systems may choose to 
comply with the statutory viewability mandate by continuing to down-
convert digital must-carry stations to analog format in addition to 
carrying those stations in digital SD and/or HD format if that best 
suits their individual business plans. Alternatively, after December 
12, 2012, an operator of a hybrid system may choose to satisfy the 
viewability mandate by making must-carry signals available to analog 
subscribers by offering the necessary equipment for sale or lease, 
either for free or at an affordable cost that does not substantially 
deter use of the equipment.\98\ Additionally, sunset of the current 
viewability rule allows hybrid cable system operators the flexibility 
to benefit from future marketplace and technology developments through 
possible methods of compliance not contemplated on the record now 
before us. We emphasize that, while we allow our viewability rule to 
sunset, the statutory viewability requirement remains in effect. 
Therefore, a must-carry station may file a complaint pursuant to Sec.  
76.61 of our rules if it believes a cable operator has failed to meet 
its statutory carriage obligations.\99\ In addition, we will consider 
informal consumer complaints when evaluating compliance with the 
statutory viewability requirement.\100\ If we receive a significant 
number of well-founded consumer complaints that an operator is not 
effectively making affordable set-top boxes available to customers in 
lieu of analog carriage of a channel, one of the possible remedies 
would be to require the operator to resume analog carriage of the 
channel.\101\
---------------------------------------------------------------------------

    \96\ 47 CFR 76.56.
    \97\ See id.
    \98\ See para. 14, supra.
    \99\ See 47 CFR 76.61. As mentioned above, critical to our 
decision to allow the viewability rule to sunset is the availability 
of affordable set-top boxes to affected cable subscribers.
    \100\ Consumers may file a complaint electronically using the 
Commission's online complaint form, Form 2000e--Media (General) 
Complaint, available at https://esupport.fcc.gov/complaints.htm. 
Consumers may also file complaints by fax to 1-866-418-0232 or by 
letter mailed to Federal Communications Commission, Consumer & 
Governmental Affairs Bureau, Consumer Inquiries & Complaints 
Division, 445 12th Street, SW., Washington, DC 20554. Consumers who 
want assistance filing their complaint may contact the Commission's 
Consumer Call Center by calling 1-888-CALL-FCC (1-888-225-5322) 
(voice) or 1-888-TELL-FCC (1-888-835-5322) (tty). There is no fee 
for filing a consumer complaint.
    \101\ We recognize that resolving whether an analog carriage 
remedy is appropriate could in some cases raise issues that would 
appropriately be considered by the full Commission in the first 
instance.
---------------------------------------------------------------------------

III. HD Carriage Exemption

A. Background

    19. The Act requires that cable operators carry broadcast signals 
``without material degradation.'' \102\ In

[[Page 36187]]

the context of the carriage of digital signals, the Commission has 
interpreted this requirement to contain two parts: First, cable 
operators may not discriminate in their carriage between broadcast and 
non-broadcast signals, and, second, HD broadcast signals must be 
carried to viewers in HD.\103\ In response to concerns from small cable 
operators about cost and technical capacity, the Fourth Report & Order 
afforded a temporary exemption from the HD carriage requirement for 
certain small systems.\104\ Specifically, the Commission exempted small 
cable systems with 2,500 or fewer subscribers that are not affiliated 
with a cable operator serving more than 10 percent of all MVPD 
subscribers, and those with an activated channel capacity of 552 MHz or 
less. The exemption from the material degradation rules allows such 
systems to carry broadcast signals in standard definition (SD) digital 
and/or analog format, even if the signals are broadcast in HD, as long 
as all subscribers can receive and view the signal.\105\ The Commission 
provided that the exemption would expire three years after the 
conclusion of the DTV transition, but said it would consider whether to 
extend the exemption in the final year.\106\ The Fourth FNPRM undertook 
this review and tentatively concluded to extend the existing exemption 
for three more years, given small cable systems' apparent widespread 
reliance on it.\107\ In response to the Fourth FNPRM, cable commenters 
support extension of the HD carriage exemption, while broadcasters 
suggest that the exemption should not apply if a system carries any 
signal in HD.\108\
---------------------------------------------------------------------------

    \102\ See 47 U.S.C. 534(b)(4)(A) (``The signals of local 
commercial television stations that a cable operator carries shall 
be carried without material degradation. The Commission shall adopt 
carriage standards to ensure that, to the extent technically 
feasible, the quality of signal processing and carriage provided by 
a cable system for the carriage of local commercial television 
stations will be no less than that provided by the system for 
carriage of any other type of signal.'') and section 535(g)(2) (``A 
cable operator shall provide each qualified local noncommercial 
educational television station whose signal is carried in accordance 
with this section with bandwidth and technical capacity equivalent 
to that provided to commercial television broadcast stations carried 
on the cable system and shall carry the signal of each qualified 
local noncommercial educational television station without material 
degradation.'').
    \103\ Viewability Order, at para. 7; see also 47 CFR 76.62.
    \104\ See generally Fourth Report & Order.
    \105\ Fourth Report & Order, at para. 5. We note that our rules 
do not require cable operators, irrespective of system size, to 
carry an SD digital version of a broadcast station's signal, in 
addition to the analog version, to satisfy the material degradation 
requirement. This is because both an SD digital version and an 
analog version of the digital broadcast signal received at the 
headend should have the same resolution--480i--and thus there should 
be no perceivable difference between the two versions of the signal. 
Id.
    \106\ Id. at 13622, para. 11 (stating that ``a three-year sunset 
provides the Commission with the opportunity after the transition to 
review these rules in light of the potential cost and service 
disruption to consumers, and the state of technology and the 
marketplace'').
    \107\ Fourth FNPRM, at para. 3. Based on the 2010 data from the 
Annual Cable Operator Report (FCC Form 325), the Fourth FNPRM 
indicated that many small systems were relying on the exemption. 
Fourth FNPRM, at para. 20; see also Fourth FNPRM at Appendix B 
(discussing our analysis of FCC Form 325 data).
    \108\ See, e.g., NAB comments at 8; NCTA comments at 29; ACA 
comments at 18-19.
---------------------------------------------------------------------------

B. Discussion

    20. We find that the small-system HD carriage exemption continues 
to serve the public interest and adopt our tentative conclusion to 
extend the exemption for three more years.\109\ The record shows that a 
significant number of small systems with financial or channel capacity 
constraints continue to rely on the HD carriage exemption and require 
additional time to come into compliance in a cost-effective way.\110\ 
For example, ACA reports that at least 52 of its members, representing 
more than 385 small systems, still rely on the exemption.\111\
---------------------------------------------------------------------------

    \109\ We note that we are not changing the existing exemption in 
any way and this includes retaining our existing definition of small 
systems that are eligible for this exemption.
    \110\ See, e.g., ACA Comments at 4-6; NCTA Comments at 22.
    \111\ See ACA comments at 5; ACA reply at 7-8 (``Of these 385 
small systems, 45 rely on the exemption because they have less than 
553 MHz of capacity; 106 systems rely on it because they have fewer 
than 2,501 subscribers; and 234 systems rely on the exemption 
because they have both less than 553 MHz of capacity and fewer than 
2,501 subscribers. These numbers only include the respondents to 
ACA's survey, and the total number of ACA members and the total 
number of their systems that are currently utilizing the HD carriage 
exemption is likely higher.'').
---------------------------------------------------------------------------

    21. We find that the same financial and capacity constraints that 
faced small cable operators when we initially adopted this exemption 
continue to exist today. For example, cable commenters persuaded the 
Commission in 2008 that, without an exemption from the material 
degradation rules, ``small systems [would] be forced to absorb or 
impose significant and unsustainable price increases, or in some 
instances to shut down altogether.'' \112\ This is because some small 
systems did not have the technical capability or system capacity to 
carry high definition digital signals, and in some cases had so few 
subscribers that per-subscriber costs to upgrade to that capacity would 
be so high as to make it not worthwhile to continue operating the 
system.\113\ The record shows that the challenges facing small systems 
have not diminished since the Commission adopted the exemption and that 
requiring small systems to comply with the HD carriage requirement 
would result in these systems dropping existing channels or shutting 
down.\114\ Thus, as ACA points out, the result for subscribers of these 
systems could include ``increased rates, loss of desired channels, loss 
of not only video service, but the potential for broadband Internet 
access, and the loss of the benefits that flow from competition.'' 
\115\ NCTA explains that eliminating the HD exemption would also impede 
small operators' ``ability to offer new services like video-on-demand, 
deploy broadband, or introduce enhanced new speed tiers of broadband to 
more rural, smaller market customers.'' \116\ ACA maintains that, for 
most capacity-constrained small systems, the unused channel capacity 
available has actually decreased over the past three years.\117\ In 
addition, ACA reports that, for most financially-constrained small 
systems, operation costs have increased more than revenues over the 
last three years, leaving these systems without the financial resources 
to purchase the necessary equipment to upgrade service.\118\ Notably, 
these small systems often serve rural and smaller market consumers, 
making the potential loss of such service particularly troubling.\119\ 
As noted in the Fourth Report & Order, the loss of a small cable system 
could mean the effective loss of all MVPD service for some 
customers.\120\ Moreover, in some areas, due to poor over-the-air 
reception, the loss of a small cable system could mean the loss of any 
access to some or all broadcast signals as well. Accordingly, we find 
that the exemption remains necessary to protect the viability of small 
systems and their service to rural and smaller market consumers.\121\
---------------------------------------------------------------------------

    \112\ National Cable & Telecommunications Association Comments 
at 12 (March 3, 2008).
    \113\ Fourth Report & Order, at paras. 6-7.
    \114\ See, e.g., ACA Reply at 3.
    \115\ Id. at 5-6.
    \116\ NCTA Comments at 27.
    \117\ ACA Comments at 7.
    \118\ ACA Comments at 11.
    \119\ NCTA Comments at 23.
    \120\ Fourth Report & Order, at para. 7.
    \121\ ACA and NCTA also sought a permanent exemption from the HD 
carriage obligation to cable systems that offer all of their 
programming in analog only. ACA Comments at 17-18; NCTA Comments at 
28-29. We received little in the record on this issue, and need not 
resolve it here. To the extent these systems are small systems as 
defined in this Order, of course, they are exempted for three years 
from the HD carriage obligation.
---------------------------------------------------------------------------

    22. This exemption will sunset on June 12, 2015, unless the 
Commission takes action to extend it in light of the potential cost and 
service disruption to consumers and the state of technology and the 
market at that time. We note that this exemption is not intended to be 
permanent and that its purpose is to provide small systems with 
additional time to upgrade and, where necessary, expand their systems 
to come into full

[[Page 36188]]

compliance with the material degradation provisions of the carriage 
rules by carrying HD versions of all HD broadcast signals without 
having to make relatively large expenditures over a short period of 
time.
    23. We decline, at this time, to further restrict the exemption for 
small systems by eliminating it for systems that carry any signal in 
HD, as suggested by NAB.\122\ The Commission has already crafted the 
exemption quite narrowly to excuse only a limited number of systems 
with particularly limited channel capacity or low subscribership.\123\ 
We agree with ACA that a small system's ability to offer some HD 
service does not refute an argument that it may be significantly 
burdensome to offer additional HD service.\124\ Further, we do not want 
to create a disincentive for these systems to take incremental steps 
toward offering more HD programming to their subscribers by using the 
carriage of any HD signals as a threshold for applying the HD must-
carry requirement to small cable systems.\125\ Although we understand 
NAB's concern that small systems could possibly misuse the exemption of 
the HD carriage requirement to unfairly discriminate against must-carry 
HD signals in favor of other HD signals,\126\ broadcasters have not 
presented any evidence to suggest that this is, or ever has been, an 
issue. Moreover, to the extent that cable operators utilizing the 
exemption do start to carry a wide range of HD channels, broadcasters 
are free to bring such evidence to the Commission's attention, and we 
will then be able to evaluate whether the exemption's contours should 
be adjusted.
---------------------------------------------------------------------------

    \122\ See NAB Comments at 8.
    \123\ See ACA Comments at 16 (exemption ``is limited to only the 
smallest and most at-risk systems'').
    \124\ ACA Reply at 6.
    \125\ See ACA Reply at 7.
    \126\ NAB Comments at 8 (``Congress intended by [Section 
614(b)(4)(A) of the Act] to make sure that cable systems did not 
provide technically advantageous carriage to favored signals, and 
provide lower quality carriage to others, particularly local 
television signals.).
---------------------------------------------------------------------------

IV. Conclusion

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

V. Procedural Matters

A. Final Regulatory Flexibility Act Analysis

    25. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA'') \127\ an Initial Regulatory Flexibility Analysis 
(``IRFA'') was incorporated in the Fourth FNPRM in this 
proceeding.\128\ The Commission sought written public comment on the 
proposals in the Fourth FNPRM, including comment on the IRFA. The 
Commission received no comments on the IRFA. This present Final 
Regulatory Flexibility Analysis (``FRFA'') conforms to the RFA.\129\
---------------------------------------------------------------------------

    \127\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996 (``SBREFA''), Public Law 104-121, Title II, 110 Stat. 847 
(1996). The SBREFA was enacted as Title II of the Contract With 
America Advancement Act of 1996 (``CWAAA'').
    \128\ See, generally, Fourth FNPRM.
    \129\ See 5 U.S.C. 604.
---------------------------------------------------------------------------

1. Need for, and Objectives of, the Fifth Report & Order
    26. Viewability Requirement. Sections 614(b)(7) and 615(h) of the 
Communications Act require cable operators to ensure that commercial 
and non-commercial must-carry broadcast stations are ``viewable'' or 
``available'' to all cable subscribers. 47 U.S.C. 534(b)(7), 535(h). In 
the 2007 Viewability Order, in anticipation of the approaching end of 
the digital television transition and in light of the state of 
technology and the marketplace, the Commission adopted a rule providing 
cable operators operating hybrid systems (i.e., cable systems that 
provide both digital and analog cable service) two options to comply 
with the statutory viewability requirement: (1) Carry the digital 
signal in analog format to all analog cable subscribers in addition to 
any digital version carried, or (2) transition to an all-digital system 
and carry the signal only in digital format, provided that all 
subscribers have the necessary equipment to view the broadcast content. 
Thus, the ``viewability'' rule required cable operators with hybrid 
systems to carry digital must-carry signals in both digital and analog 
format. The Commission, however, decided that the rule would remain in 
force for three years after the date of the digital transition, subject 
to review by the Commission during the last year of the three-year 
period. The Commission explained that a three-year sunset ``provides 
the Commission with the opportunity after the transition to review 
these rules in light of the potential cost and service disruption to 
consumers, and the state of technology and the marketplace.'' 
Therefore, absent Commission action, the viewability rule is scheduled 
to sunset on June 12, 2012. The Fourth FNPRM considered whether to 
retain the viewability rule or allow it to sunset, given the current 
state of technology and the marketplace.
    27. The Fifth Report and Order finds it in the public interest to 
allow the viewability rule to sunset as scheduled, on June 12, 2012. 
The Fifth Report and Order determines that the statutory term 
``viewable'' is an ambiguous term. It then chooses a reasonable 
interpretation of the statutory text that best effectuates the 
statutory purpose in light of current marketplace conditions and 
technology developments that have occurred over the past five years 
(e.g., 80% of cable customers now subscribe to digital cable service 
and the widespread availability of small digital set-top boxes that 
cable operators are making available at low cost (or no cost) to analog 
customers of hybrid systems). The Fifth Report and Order reinterprets 
the statutory viewability requirement to permit cable operators to 
require the use of set-top equipment to view must-carry signals, 
provided that such equipment is both available and affordable (or 
provided at no cost). Therefore, until it completes its transition to 
all-digital service, a hybrid system operator may comply with the 
statutory viewability requirement in two ways. The operator can carry a 
must-carry signal in a format that is capable of being viewed by analog 
customers either (1) without the use of additional equipment or (2) 
alternatively with equipment made available by the cable operator at no 
cost or at an affordable cost that does not substantially deter use of 
the equipment. The Fifth Report and Order establishes a transitional 
period of six months after expiration of the current rule--that is, 
until December 12, 2012--during which hybrid systems will be required 
to continue to carry the signals of must-carry stations in analog 
format to all analog cable subscribers. This post-sunset transitional 
period will give consumers, cable operators, and broadcasters that rely 
on must-carry access an opportunity to prepare for the widespread 
deployment of small, affordable set-top boxes and to take other 
necessary steps resulting from changes in cable carriage.
    28. HD Carriage Exemption. Sections 614(b)(4)(A) of the 
Communications Act requires that cable operators carry broadcast 
signals ``without material degradation.'' Accordingly, at the same time 
the Commission adopted the viewability rule, it adopted a related

[[Page 36189]]

rule prohibiting material degradation of broadcast signals when carried 
by cable systems. The rule requires that any signal broadcast in HD be 
carried by cable operators in HD. In response to concerns from small 
cable operators about cost and technical capacity, the 2008 Fourth 
Report & Order afforded a temporary exemption from this HD carriage 
requirement (``HD carriage exemption'') for certain small systems. 
Specifically, the Commission exempted small cable systems with 2,500 or 
fewer subscribers that are not affiliated with a cable operator serving 
more than 10 percent of all MVPD subscribers, and those with an 
activated channel capacity of 552 MHz or less. The exemption from the 
material degradation rules allows such systems to carry broadcast 
signals in standard definition (SD) digital and/or analog format, even 
if the signals are broadcast in HD, as long as all subscribers can 
receive and view the signal. The Commission, however, decided that the 
HD carriage exemption would remain in force for three years after the 
date of the digital transition, subject to review by the Commission 
during the last year of the three-year period. Therefore, absent 
Commission action, the HD carriage exemption is scheduled to sunset on 
June 12, 2012. The Fourth FNPRM considered whether to retain the HD 
carriage exemption or allow it to expire.
    29. The Fifth Report and Order concludes that the small-system HD 
carriage exemption continues to serve the public interest and adopts 
the Fourth FNPRM's tentative conclusion to extend the existing 
exemption for three more years. The Fifth Report and Order finds that a 
significant number of small systems with financial or channel capacity 
constraints continue to rely on the HD carriage exemption and require 
additional time to come into compliance with the material degradation 
rules in a cost-effective way. Accordingly, the HD carriage exemption 
will sunset on June 12, 2015, unless the Commission takes action to 
extend it in light of the potential cost and service disruption to 
consumers and the state of technology and the market at that time.
2. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA
    30. The Commission did not receive any comments in response to the 
IRFA.
3. Description and Estimate of the Number of Small Entities To Which 
Rules Will Apply
    31. The RFA directs the Commission to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by the rules adopted.\130\ The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction'' \131\ In addition, the term ``small business'' has the 
same meaning as the term ``small business concern'' under the Small 
Business Act.\132\ A ``small business concern'' is one which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
Small Business Administration (SBA).\133\ The final rules adopted 
herein affect small television broadcast stations and small cable 
operators. A description of these small entities, as well as an 
estimate of the number of such small entities, is provided below.
---------------------------------------------------------------------------

    \130\ 5 U.S.C. 603(b)(3).
    \131\ 5 U.S.C. 601(b).
    \132\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small-business concern'' in the Small Business Act, 15 U.S.C. 
632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency, after consultation with 
the Office of Advocacy of the Small Business Administration and 
after opportunity for public comment, establishes one or more 
definitions of such term which are appropriate to the activities of 
the agency and publishes such definition(s) in the Federal 
Register.''
    \133\ 15 U.S.C. 632.
---------------------------------------------------------------------------

    32. Television Broadcasting. The SBA defines a television 
broadcasting station as a small business if such station has no more 
than $14.0 million in annual receipts.\134\ Business concerns included 
in this industry are those ``primarily engaged in broadcasting images 
together with sound.'' \135\ The Commission has estimated the number of 
licensed commercial television stations to be 1,387.\136\ According to 
Commission staff review of the BIA Kelsey Inc. Media Access Pro 
Television Database (BIA) as of January 31, 2011, 1,006 (or about 78 
percent) of an estimated 1,298 commercial television stations \137\ in 
the United States have revenues of $14 million or less and, thus, 
qualify as small entities under the SBA definition. The Commission has 
estimated the number of licensed noncommercial educational (``NCE'') 
television stations to be 396.\138\ We note, however, that, in 
assessing whether a business concern qualifies as small under the above 
definition, business (control) affiliations \139\ must be included. Our 
estimate, therefore, likely overstates the number of small entities 
that might be affected by our action, because the revenue figure on 
which it is based does not include or aggregate revenues from 
affiliated companies. The Commission does not compile and otherwise 
does not have access to information on the revenue of NCE stations that 
would permit it to determine how many such stations would qualify as 
small entities.
---------------------------------------------------------------------------

    \134\  See 13 CFR 121.201, NAICS Code 515120 (2007).
    \135\ Id. This category description continues, ``These 
establishments operate television broadcasting studios and 
facilities for the programming and transmission of programs to the 
public. These establishments also produce or transmit visual 
programming to affiliated broadcast television stations, which in 
turn broadcast the programs to the public on a predetermined 
schedule. Programming may originate in their own studios, from an 
affiliated network, or from external sources.'' Separate census 
categories pertain to businesses primarily engaged in producing 
programming. See Motion Picture and Video Production, NAICS code 
512110; Motion Picture and Video Distribution, NAICS Code 512120; 
Teleproduction and Other Post-Production Services, NAICS Code 
512191; and Other Motion Picture and Video Industries, NAICS Code 
512199.
    \136\ See News Release, ``Broadcast Station Totals as of March 
31, 2012,'' 2012 WL 1243354 (F.C.C.) (dated Apr. 12, 2012) 
(``Broadcast Station Totals''); also available at https://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0412/DOC-313533A1.pdf.
    \137\ We recognize that this total differs slightly from that 
contained in Broadcast Station Totals, supra, note 11; however, we 
are using BIA's estimate for purposes of this revenue comparison.
    \138\ See Broadcast Station Totals, supra, note 11.
    \139\ ``[Business concerns] are affiliates of each other when 
one concern controls or has the power to control the other or a 
third party or parties controls or has to power to control both.'' 
13 CFR 121.103(a)(1).
---------------------------------------------------------------------------

    33. In addition, an element of the definition of ``small business'' 
is that the entity not be dominant in its field of operation. We are 
unable at this time to define or quantify the criteria that would 
establish whether a specific television station is dominant in its 
field of operation. Accordingly, the estimate of small businesses to 
which rules may apply do not exclude any television station from the 
definition of a small business on this basis and are therefore over-
inclusive to that extent. Also, as noted, an additional element of the 
definition of ``small business'' is that the entity must be 
independently owned and operated. We note that it is difficult at times 
to assess these criteria in the context of media entities and our 
estimates of small businesses to which they apply may be over-inclusive 
to this extent.
    34. Cable and Other Program Distribution. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined as follows: 
``This industry comprises establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using

[[Page 36190]]

wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies.'' \140\ The 
SBA has developed a small business size standard for this category, 
which is: all such firms having 1,500 or fewer employees.\141\ 
According to Census Bureau data for 2007, there were a total of 955 
firms in the subcategory of Cable and Other Program Distribution that 
operated for the entire year.\142\ Of this total, 939 firms had 
employment of 999 or fewer employees, and 16 firms had employment of 
1,000 employees or more.\143\ Thus, under this size standard, the 
Commission believes that a majority of firms operating in this industry 
can be considered small.
---------------------------------------------------------------------------

    \140\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers'' (partial definition), https://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \141\ 13 CFR 121.201, NAICS code 517110 (2007).
    \142\ U.S. Census Bureau, 2007 Economic Census, Subject Series: 
Information, Table 5, Employment Size of Firms for the United 
States: 2007, NAICS code 5171102 (located at https://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en).
    \143\ See id.
---------------------------------------------------------------------------

    35. Cable Companies and Systems (Rate Regulation Standard). The 
Commission has also developed its own small business size standards, 
for the purpose of cable rate regulation. Under the Commission's rules, 
a ``small cable company'' is one serving 400,000 or fewer subscribers, 
nationwide.\144\ Industry data indicate that, of 1,076 cable operators 
nationwide, all but 11 are small under this size standard.\145\ In 
addition, under the Commission's rules, a ``small system'' is a cable 
system serving 15,000 or fewer subscribers.\146\ Industry data indicate 
that, of 6,635 systems nationwide, 5,802 systems have under 10,000 
subscribers, and an additional 302 systems have 10,000-19,999 
subscribers.\147\ Thus, under this second size standard, the Commission 
believes that most cable systems are small.
---------------------------------------------------------------------------

    \144\ 47 CFR 76.901(e). The Commission determined that this size 
standard equates approximately to a size standard of $100 million or 
less in annual revenues. Sixth Report and Order and Eleventh Order 
on Reconsideration, FCC 95-196, 60 FR 35854, July 12, 1995.
    \145\ These data are derived from: R.R. Bowker, Broadcasting & 
Cable Yearbook 2006, ``Top 25 Cable/Satellite Operators,'' pages A-8 
and C-2 (data current as of June 30, 2005); Warren Communications 
News, Television & Cable Factbook 2006, ``Ownership of Cable Systems 
in the United States,'' pages D-1805 to D-1857.
    \146\ 47 CFR 76.901(c).
    \147\ Warren Communications News, Television & Cable Factbook 
2008, ``U.S. Cable Systems by Subscriber Size,'' page F-2 (data 
current as of Oct. 2007). The data do not include 851 systems for 
which classifying data were not available.
---------------------------------------------------------------------------

    36. Cable System Operators. The Act also contains a size standard 
for small cable system operators, which is ``a cable operator that, 
directly or through an affiliate, serves in the aggregate fewer than 1 
percent of all subscribers in the United States and is not affiliated 
with any entity or entities whose gross annual revenues in the 
aggregate exceed $250,000,000.'' \148\ The Commission has determined 
that an operator serving fewer than 677,000 subscribers shall be deemed 
a small operator, if its annual revenues, when combined with the total 
annual revenues of all its affiliates, do not exceed $250 million in 
the aggregate.\149\ Industry data indicate that, of 1,076 cable 
operators nationwide, all but 10 are small under this size 
standard.\150\ We note that the Commission neither requests nor 
collects information on whether cable system operators are affiliated 
with entities whose gross annual revenues exceed $250 million,\151\ and 
therefore we are unable to estimate more accurately the number of cable 
system operators that would qualify as small under this size standard.
---------------------------------------------------------------------------

    \148\ 47 U.S.C. 543(m)(2); see also 47 CFR 76.901(f) and nn.1-3.
    \149\ 47 CFR 76.901(f); see FCC Announces New Subscriber Count 
for the Definition of Small Cable Operator, Public Notice, DA 01-158 
(CSB, rel. Jan. 24, 2001).
    \150\ These data are derived from R.R. Bowker, Broadcasting & 
Cable Yearbook 2006, ``Top 25 Cable/Satellite Operators,'' pages A-8 
and C-2 (data current as of June 30, 2005); Warren Communications 
News, Television & Cable Factbook 2006, ``Ownership of Cable Systems 
in the United States,'' pages D-1805 to D-1857.
    \151\ The Commission does receive such information on a case-by-
case basis if a cable operator appeals a local franchise authority's 
finding that the operator does not qualify as a small cable operator 
pursuant to Sec.  76.901(f) of the Commission's rules.
---------------------------------------------------------------------------

    37. Open Video Services. Open Video Service (OVS) systems provide 
subscription services.\152\ The open video system (``OVS'') framework 
was established in 1996, and is one of four statutorily recognized 
options for the provision of video programming services by local 
exchange carriers.\153\ The OVS framework provides opportunities for 
the distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services,\154\ OVS falls 
within the SBA small business size standard covering cable services, 
which is ``Wired Telecommunications Carriers.'' \155\ The SBA has 
developed a small business size standard for this category, which is: 
all such firms having 1,500 or fewer employees. According to Census 
Bureau data for 2007, there were a total of 3,188 firms in this 
previous category that operated for the entire year.\156\ Of this 
total, 3,144 firms had employment of 999 or fewer employees, and 44 
firms had employment of 1,000 employees or more.\157\ Thus, under this 
size standard, most cable systems are small. In addition, we note that 
the Commission has certified some OVS operators, with some now 
providing service.\158\ Broadband service providers (``BSPs'') are 
currently the only significant holders of OVS certifications or local 
OVS franchises.\159\ The Commission does not have financial or 
employment information regarding the entities authorized to provide 
OVS, some of which may not yet be operational. Thus, again, at least 
some of the OVS operators may qualify as small entities.
---------------------------------------------------------------------------

    \152\ See 47 U.S.C. 573.
    \153\ 47 U.S.C. 571(a)(3) through (4).
    \154\ See 47 U.S.C. 573.
    \155\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers''; https://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \156\ U.S. Census Bureau, 2007 Economic Census, Subject Series: 
Information, Table 5, Employment Size of Firms for the United 
States: 2007, NAICS code 5171102 (issued Nov. 2010).
    \157\ See id.
    \158\ A list of OVS certifications may be found at https://www.fcc.gov/mb/ovs/csovscer.html.
    \159\ See Thirteenth Annual Cable Competition Report, FCC 07-
206, at para. 135 (rel. Jan. 16, 2009). BSPs are newer firms that 
are building state-of-the-art, facilities-based networks to provide 
video, voice, and data services over a single network.
---------------------------------------------------------------------------

4. Description of Reporting, Record Keeping, and Other Compliance 
Requirements for Small Entities
    38. This Fifth Report & Order does not impose any reporting, record 
keeping, or other compliance requirements.
5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    39. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives (among others): (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.\160\
---------------------------------------------------------------------------

    \160\ 5 U.S.C. 603(c)(1) through (c)(4).
---------------------------------------------------------------------------

    40. Viewability Requirement. In this Fifth Report & Order, the 
Commission

[[Page 36191]]

allows the viewability rule to expire, subject to a six-month post-
sunset transition period (as described above in Section A of this 
FRFA), and revises its interpretation of the statutory viewability 
requirement to afford greater flexibility to cable operators, including 
small operators, for complying with the statute. Specifically, whereas 
hybrid cable operators were previously required to carry both the 
digital and analog versions of a must-carry broadcast station, hybrid 
operators may, instead, comply with the statute by carrying only the 
digital format and making set-top equipment available to their analog 
cable customers, at no cost or at an affordable cost that does not 
substantially deter use of the equipment, that will enable such 
customers to view the digital format. As a result, small hybrid cable 
system operators will have a choice for complying with the statutory 
viewability requirement. In addition, we do not believe the expiration 
of the viewability rule will have a significant impact on small 
broadcasters. We believe our new statutory interpretation of the 
viewability requirement--which hinges on a cable operator making 
equipment available at no cost or an affordable cost--will ensure that 
subscribers on hybrid systems may continue to access these signals at 
little or no additional expense, thereby mitigating any adverse impact 
on broadcasters. We note that a must-carry signal carried only in 
digital format will still be included in the basic service tier; analog 
cable subscribers would not be required to subscribe to an enhanced 
tier of service to view the digital version of a must-carry channel. We 
also expect this issue to diminish over time given that the number of 
analog cable subscribers is expected to continue to decrease as more 
cable customers choose to upgrade to full digital service and as more 
hybrid cable systems complete their transition to all-digital systems.
    41. HD Carriage Exemption. The HD carriage exemption provides 
temporary regulatory relief to small cable systems with 2,500 or fewer 
subscribers that are not affiliated with a cable operator serving more 
than 10 percent of all MVPD subscribers, and those with an activated 
channel capacity of 552 MHz or less). This Fifth Report & Order extends 
this exemption for three more years. As noted in the IRFA, the HD 
carriage exemption does not impose a negative economic impact on any 
small cable operator, and, indeed, provides a positive economic impact 
to any operator of a system that chooses to take advantage of the 
exemption. In addition, the exemption does not impose any significant 
burdens on small television stations.
6. Report to Congress
    42. The Commission will send a copy of this Fifth Report & Order, 
including this FRFA, in a report to be sent to Congress pursuant to the 
SBREFA.\161\ In addition, the Commission will send a copy of this Fifth 
Report & Order, including the FRFA, to the Chief Counsel for Advocacy 
of the SBA. A copy of this Fifth Report & Order and the FRFA (or 
summaries thereof) will also be published in the Federal Register.\162\
---------------------------------------------------------------------------

    \161\ See id. section 801(a)(1)(A).
    \162\  See id. section 604(b).
---------------------------------------------------------------------------

B. Final Paperwork Reduction Act of 1995 Analysis

    43. This Report and Order has been analyzed with respect to the 
Paperwork Reduction Act of 1995 (``PRA''),\163\ and does not contain 
any new or modified information collection requirements. In addition, 
therefore, it does not contain any new or modified ``information 
collection burden for small business concerns with fewer than 25 
employees,'' pursuant to the Small Business Paperwork Relief Act of 
2002.\164\
---------------------------------------------------------------------------

    \163\ The Paperwork Reduction Act of 1995 (``PRA''), Pub. L. No. 
104-13, 109 Stat 163 (1995) (codified in Chapter 35 of title 44 
U.S.C.).
    \164\ The Small Business Paperwork Relief Act of 2002 
(``SBPRA''), Public Law 107-198, 116 Stat 729 (2002) (codified in 
Chapter 35 of title 44 U.S.C.); see 44 U.S.C. 3506(c)(4).
---------------------------------------------------------------------------

C. Congressional Review Act

    44. The Commission will send a copy of this Report and Order in a 
report to be sent to Congress and the Government Accountability Office, 
pursuant to the Congressional Review Act.\165\
---------------------------------------------------------------------------

    \165\ See 5 U.S.C. 801(a)(1)(A).
---------------------------------------------------------------------------

D. Additional Information

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

Ordering Clauses

    46. Accordingly, it is ordered that pursuant to sections 4, 303, 
614, and 615 of the Communications Act of 1934, as amended, 47 U.S.C. 
154, 303, 534, and 535, the Fifth Report and Order is adopted, and the 
Commission's rules are hereby amended by removing Sec.  76.56(d)(3) 
through (d)(5), as set forth in the final rule changes in Appendix B of 
the Fifth Report and Order.
    47. It is further ordered that, pursuant to 5 U.S.C. 553(d)(3) and 
47 CFR 1.427(b), the Fifth Report and Order and the attached rule 
amendment shall be effective immediately upon publication in the 
Federal Register.\166\
---------------------------------------------------------------------------

    \166\ See 5 U.S.C. 553(d)(3) (``The required publication or 
service of a substantive rule shall be made not less than 30 days 
before its effective date, except * * * as otherwise provided by the 
agency for good cause found and published with the rule.''); see 
also 47 CFR 1.103(a), 1.427(b). Section 76.56(d)(5) provides that 
the viewability requirements set forth in Sec.  76.56(d)(3) will 
expire three years from the date on which all full-power television 
stations cease broadcasting analog signals (June 12, 2012) unless 
the Commission extends the requirement. See 47 CFR 76.56(d)(5). The 
HD exemption for small cable operators will expire on June 12, 2012, 
unless the Commission extends the exemption. We thus find good cause 
to make these rule changes effective upon publication in the Federal 
Register. The sunset of the viewability requirement is contemplated 
in the original rule. The transition period adopted herein will 
preserve the status quo for six months, and not impose any new 
requirements on any entity. Similarly, extension of the HD exemption 
provides relief to small cable systems and will not impose any new 
requirements on any entity. Accordingly, no entity will be harmed as 
a result of our decision to make these rule changes effective upon 
publication in the Federal Register.
---------------------------------------------------------------------------

    48. It is further ordered that, pursuant to the Congressional 
Review Act, 5 U.S.C. 801(a)(1)(A), the Commission will send a copy of 
the Fifth Report and Order in a report to Congress and the General 
Accounting Office.
    49. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, will send a 
copy of the Fifth Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 76

    Cable television.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 76 as follows:

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

0
1. The authority citation for part 76 continues to read as follows:

    Authority:  47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 
303a, 307, 308, 309, 312, 315, 317, 325, 339, 340, 341, 503, 521, 
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 
552, 554, 556, 558, 560, 561, 571, 572, 573.

[[Page 36192]]

Sec.  76.56  [Amended]

0
2. In Sec.  76.56, remove paragraphs (d)(3) through (d)(5).

[FR Doc. 2012-14816 Filed 6-15-12; 8:45 am]
BILLING CODE 6712-01-P