Last year, the FCC released its Third Report and Order concerning the DTV Transition in which the agency established new requirements for video/cable providers with respect to carriage of digital broadcasters after February 17, 2009.  On September 4, 2008, the Commission released a Fourth Report and Order in this proceeding which clarifies some of these rules and grants exemptions for certain small systems.  This e-Lert provides a summary and analysis of these rules and exemptions.

Carriage Requirements Established in the Third Report and Order

In its Third Report and Order, the FCC established two major requirements specifying how video/cable operators are to carry digital broadcast signals to subscribers that have analog TV sets after the DTV transition date.  These requirements are the "viewability" requirements and requirements pertaining to carriage of high definition television (HD).  The requirements apply only in the context of Must Carry broadcast stations; however, JSI believes that broadcasters electing to negotiate retransmission consent agreements will likely demand at least the same treatment in their agreement negotiations.

Under the viewability requirements, operators must choose to either downconvert the digital signal to analog format or carry the signal only in digital format, provided that all subscribers have the necessary equipment to view the broadcast content.  Under either option, the video/cable operator is responsible for cost.  These new requirements will remain in effect until February 2012, and will be extended past that date if the FCC deems necessary.  In establishing requirements for the carriage of HD, the FCC reaffirmed a previous decision in which it ruled that "a broadcast signal delivered in HD must be carried in HD."

Clarification of Carriage Requirements

In its Fourth Report and Order, the FCC clarified those video/cable operators that opt to downconvert the analog signal need not carry a Standard Definition (SD) signal in both analog and digital formats if all subscribers are able to view the Must Carry channel in the format provided.  If, however, there are digital subscribers who are not able to view the downconverted analog channel, the video/cable operator must provide both the SD digital and analog signals, or take other actions so that all subscribers can view the channel.  In other words, for video/cable systems that choose the option of downconverting the analog signal, the SD channel must be shown in two channel slots if all subscribers cannot view the analog version of the signal.

Exemptions for Small Video Cable Operators

In its Third Report and Order, the FCC found that for small hybrid analog-digital systems carriage of the digital signals, in addition to carriage of the same signals in analog, would likely strain capacity.  In recognition of this, the FCC ruled that operators of systems with an activated channel capacity of 552 MHz or less that do not have the capacity to carry the additional digital Must Carry stations may seek a waiver.

Subsequent to that Order, several associations representing rural interests made filings and conducted ex parte meetings with FCC staff urging that small video/cable systems be exempted from the requirement to carry the HD versions of broadcast signals rather than having to go through a waiver process.  In response to these efforts, the FCC in its Fourth Report and Order granted an exemption to all video/cable systems that have an activated channel capacity of 552 MHz or less from the requirement to carry HD versions of broadcast signals.  The FCC also exempted all systems that have 2,500 or fewer subscribers that are not affiliated with a large cable operator from the HD carriage requirement.  The FCC noted that it will review these exemptions between February 18, 2011, and February 17, 2012, to determine if they should extend past February 17, 2012.

Additionally, in its Fourth Report and Order, the FCC ruled that video/cable systems that do not fall under either of these categories and that have 5,000 or fewer subscribers can take advantage of an expedited waiver review process.  This expedited process involves shortened comment and reply periods and requires the FCC to act upon the waiver request no later than 30 days after it is received by the Commission.

If you have questions about how the FCC's DTV Transition rules will impact the operations of your video/cable system, would like assistance in preparing or filing a waiver request, or would like JSI to assist you with this matter in any way, please contact Chuck Richoz (crichoz@jsitel.com) in JSI's Maryland office, at 301-459-7590.