The Federal Communications Commission (FCC) has granted TiVo, Inc.’s unopposed request for a waiver of the FCC’s rules insofar as they would require TiVo to include analog tuners in their DVRs. The grant of the waiver clears the way for TiVo, which previously was granted a similar waiver for its “Premier Elite” product line, to more broadly manufacture and sell all-digital DVRs. The FCC conditioned the waiver on TiVo’s commitment to clearly state on consumer and retail education materials that the devices do not receive analog over-the-air broadcast signals and/or analog cable channels (as appropriate).

Background. Pursuant to legislation first enacted in 1962 (the “All Channel Receiver Act”), the FCC has long maintained rules requiring that television receivers be capable of receiving all channels allocated to the television broadcast service. In addition, Section 624A of the Communications Act directs the FCC to adopt regulations to assure compatibility between consumer electronics devices and cable systems in order to promote the creation of a retail market for innovative “cable-ready” devices. The rules adopted pursuant to this statutory directive include the requirement that devices labeled as “cable ready” be capable of tuning analog channels up to channel 125.

With the transition of over-the-air, full-power broadcasting from analog to digital, and with the FCC having set a deadline of September 1, 2015 for all other television broadcasters (e.g., low power stations) to cease analog transmissions, the need for analog tuning capability is diminishing. According to TiVo, including analog tuners in its devices adds between $100 and $150 to their cost. This puts TiVo at a competitive disadvantage vis-à-vis set-top boxes leased by multichannel video programming distributors, which are not required to include analog tuners. In addition, devices with both analog and digital tuning capability consume more power than digital-only devices.

Decision. As an initial matter, the FCC noted that despite some earlier statements by the agency suggesting that its rules did not require a digital television receiver to receive analog signals, there was sufficient ambiguity in the law for it to proceed as if a waiver was required. The FCC then concluded that there was good cause to grant TiVo the requested waiver. First, the FCC found that waiving the analog tuning requirements would have de minimis impact on consumers because the television sets to which TiVo devices are connected still are required to have analog tuners and the TiVo remote control allows consumers to easily switch between their TV set and the TiVo device. The FCC noted that the petition was unopposed, even by the low power stations that are the only television stations that might be impacted by the waiver at this point. The FCC also cited the “regulatory parity” that granting the waiver would give TiVo devices and MVPD-leased devices that are not required to have analog tuners (and thus can be manufactured at a lower cost). Noting that the rules in question were adopted before the invention of the DVR, the FCC found that the retail availability of an energy-efficient, less expensive all-digital DVR is likely to appeal to consumers who would otherwise lease set-top boxes from their cable operators. As such, the waiver was found to promote the goals of Section 624A.

In granting the waiver, the FCC pointed out that some cable systems continue to carry channels solely in analog. Accordingly, the FCC concluded that TiVo should be required to continue the consumer education campaign that it undertook as a condition of the earlier waiver granted for its Premier Elite line of products. The elements of this consumer education campaign include: (1) providing retailers with an in-store product information data sheet and product-specific training; (2) marketing primarily to consumers who receive the services that TiVo can access; (3) developing clear and easily understood point-of-sale disclosures that inform consumers that the product may not work if they move or change service providers; and (4) offering free 30 day return or exchange if the customer purchased the device with the mistaken belief it receives analog services.

Finally, the FCC once again (this time in a footnote) expressed an expansive view of the D.C. Circuit’s decision in EchoStar Satellite, L.L.C. v. FCC earlier this year. In that case, which primarily revolved around the validity of the FCC’s copy protection “encoding rules,” the court broadly vacated not only those rules, but other elements of the FCC’s “plug and play” regime. While TiVo had sought a waiver of certain of those rules, the FCC noted that the rules in question (which require all unidirectional digital cable products to be capable of tuning NTSC channels transmitted in the clear; outline the tests and standards that unidirectional cable products must satisfy; and require manufacturers and retailers of unidirectional digital cable products to inform consumers that the device is capable of receiving analog basic cable programming) were part of the order that was vacated in the EchoStar case. Consequently, the FCC held that TiVo’s request for a waiver of those particular rules was moot.