On November 28, 2012, the FCC’s Media Bureau issued an order clarifying the requirement that cable operators leasing high-definition (“HD”) set-top boxes with recording functionality comply with “an open industry standard” for an IP-based home networking output. The Bureau also reminded content owners and distributors of their obligation to make cable service available through the specified output and of the rule prohibiting cable operators from limiting the programming that goes out over this output (with the exception of certain new release movies). Finally, the Bureau extended the current deadline for complying with the IP-based output requirement from December 1, 2012 until June 2, 2014 (with a further extension until September 2, 2014 for “small cable companies”).

Background. In 2010, as part of its ongoing effort to promote equipment compatibility and foster the development of a retail market for navigation devices, the FCC adopted a series of amendments to its technical rules for digital cable systems. One such amendment, codified as Section 76.640(b)(4)(iii), requires two-way HD set-tops to comply with “an open industry standard” that provides for “service discovery, video transport, and remote control command pass-through…for home networking.” The FCC set a deadline of December 1, 2012 for cable operators to comply with this requirement.

In July of this year, TiVo filed a petition with the FCC seeking clarification of what “an open industry standard” means in the context of the output rule. TiVo also requested a waiver of the December 1, 2012 deadline whereby cable operators deploying TiVo boxes would be excused from complying with the rule until 12 months after other cable operators have deployed at least 100,000 compliant devices manufactured by Cisco and an equal number of compliant devices manufactured by Motorola.

In response to TiVo’s petition, CEA and other equipment interests urged the Commission to clarify the “open industry standard” element of the rule by mandating a single technical standard with which all cable operators must comply. NCTA and others argued that the FCC previously elected not to specify a particular interface and should interpret the rule as continuing to allow the development of multiple interfaces based on an open industry standards-setting process. In addition, several parties asked the FCC to adopt an industry-wide 18 month extension of the compliance deadline in lieu of the company-specific waiver sought by TiVo. Finally, several commenters raised additional issues that indirectly related to TiVo’s clarification request. For example, Mediacom requested that the FCC to use the opportunity presented by the TiVo waiver petition to clarify that video programmers may not contractually constrain the ability of cable subscribers to obtain or use lawful devices or applications in connection with their MVPD service, including equipment or applications used by subscribers for personal recording or home networking.

Decision. The Media Bureau first addressed TiVo’s request for clarification of the term “an open industry standard” as used in the context of the IP output rule. The Bureau rejected the argument that it should establish a single industry standard. Rather, the Bureau interpreted the rule as requiring only that the standard (or standards) be adopted by means of an open industry standards-setting process. The Bureau stated that the elements of an open industry standards-setting process include (i) openness; (ii) balance of interest; (iii) due process; (iv) an appeals process; and (v) consensus. The Bureau then found that the processes that the Digital Living Network Alliance (“DLNA”) uses to develop and adopt home networking specifications satisfy these elements. Thus, the home networking solution that DLNA is working on now (a successor to the current “DLNA Premium Video Profile”) will meet the output requirement of the Section 76.640(b)(4)(iii) so long as it supports the required features of recordable high-definition video, closed captioning data, service discovery, video transport, and remote control command pass-through. In addition, the Bureau acknowledged that other IP-based home networking solutions may exist or be developed and that cable operators selecting another solution may seek a separate declaratory ruling as to whether such solution is compliant with the Commission’s rules.

The Bureau decided not to address certain other issues raised in comments filed in response to TiVo’s petition. In particular, the Bureau found that it was neither necessary nor appropriate for it to discuss requests by CEA that the Commission’s rules be interpreted as (i) requiring support for a networked device’s own integrated program guide and (ii) prohibiting proprietary overlays, requirements, or limitations imposed by cable operators. The Bureau also noted that it was not prepared to address “in depth” Mediacom’s request for a declaration that programmers may not contractually limit consumers’ ability to obtain or use lawful devices and applications. However, the Bureau issued a reminder to content providers and distributors that the Commission’s rules require cable service to be available through the specified output and that the existing rule on selectable output control prohibits cable operators from limiting the programming that goes out over this output (with the exception of certain new release movies).

Finally, the Bureau acknowledged that its 2010 prediction that a standard output protocol would be finalized in advance of the rule’s December 1, 2012 effective date was overoptimistic. As a result, the Bureau concluded that a waiver extending that deadline for all cable operators (not just those using TiVo devices) is appropriate. Based on its assumption that the new DLNA standard will be approved in early 2013, and its further assumption that 18 months is a reasonable period of time for industry to complete, approve and implement the standard, the Bureau adopted an across-the-board extension of the compliance deadline (until June 2, 2014). Moreover, responding to concerns expressed by ACA on behalf of smaller cable operators (who often are “last in line” to obtain new devices), the Bureau added three months (until September 2, 2014) to the compliance deadline for entities meeting the definition of a “small cable company” (i.e., a company that serves a total of 400,000 or fewer subscribers over one or more cable systems).