Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | MM Docket No. 00-39          |
|                                  | * |                              |
| Review of the Commission's       | ) |                              |
|                                  | * |                              |
| Rules and Policies               | * |                              |
|                                  |   |                              |
| Affecting the Conversion         | * |                              |
|                                  | * |                              |
| To Digital Television            | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
+----------------------------------+---+------------------------------+

**SECOND REPORT AND ORDER**

**AND**

**SECOND MEMORANDUM OPINION AND ORDER**

Adopted: August 8, 2002 Released: August 9, 2002

By the Commission: Chairman Powell, Commissioners Abernathy and Copps,
with

> Commissioner Martin dissenting and Chairman Powell, Commissioners
> Abernathy, Copps and Martin issuing statements

Table of Contents

Paragraph

I.
INTRODUCTION......................................................................................1

II\.
BACKGROUND.......................................................................................3

III\.
DISCUSSION...........................................................................................8

A. DTV Receiver Standards - DTV Reception Requirement
..............................8 B. Update of the DTV Transmission
Standard.................................................47

C. Other
Issues......................................................................................56

IV\. ADMINISTRATIVE
MATTERS..................................................................
68

V. ORDERING
CLAUSES...........................................................................\...71

Appendix A: Parties Submitting Comments, Reply Comments, Petitions, and
Responses

to Petitions

Appendix B: Rule Changes

Appendix C: Final Regulatory Flexibility Analysis

I. INTRODUCTION

1.  By this action, the Commission is resolving several issues raised in
    the *Report and Order and Further Notice of Proposed Rule Making*
    (*Report and Order/Further Notice*) in this proceeding with respect
    to broadcast digital television (DTV) receiving equipment and
    technical standards.[^1] First, we are amending our rules to require
    that new broadcast television receiving equipment include the
    capability to receive DTV signals. This requirement will be phased
    in over time to avoid imposing undue costs on manufacturers or
    consumers and to minimize any disruption of the TV receiver market.
    We are taking this action to ensure that: 1) consumers are provided
    the capability to receive broadcasters' digital TV signals just as
    they have been provided the capability to receive analog TV
    signals; 2) the intent of the 1962 All Channel Receiver Act (ACRA),
    as codified at Section 303(s) of the Communications Act of 1934, as
    amended,[^2] is fulfilled; and 3) the transition of the broadcast
    television service from analog to digital transmission technology
    can progress as smoothly and rapidly as possible towards the target
    completion date set forth in the Communications Act.

2.  We also are: 1) amending our rules to reference the most recent
    version of the Advanced Television System Committee's (ATSC) DTV
    standard and to include the ATSC's "Program System and Information
    Protocol" (PSIP) specification as a document that licensees may
    consult for guidance; 2) refraining at this time from adopting
    labeling requirements for TV receivers that are not able to receive
    any over-the-air broadcast signals; and 3) denying a petition for
    reconsideration requesting that we consider imposing minimum
    performance thresholds for DTV receivers if manufacturers do not
    promptly implement performance standards on their own. These
    actions, which address the remaining issues in our first review of
    the DTV transition, will provide necessary updates to our technical
    rules and remove uncertainties for broadcasters and equipment
    manufacturers. We also recognize the benefits for broadcasters and
    consumers of the service features offered by the ATSC PSIP
    specification and will address the possible adoption of this
    specification into the rules in the Notice of Proposed Rule Making
    in our forthcoming Second Review of our policies for the DTV
    transition.

II\. BACKGROUND

3.  In the *Fifth Report and Order* in the DTV proceeding, the
    Commission stated that it intended to conduct periodic reviews of
    the progress of the conversion to digital television and to make
    such mid-course corrections as were necessary to ensure the success
    of that conversion.[^3] We commenced this proceeding, the first
    periodic review, on March 6, 2000, with a *Notice of Proposed Rule
    Making* (*Notice*) that invited comment on a number of issues
    essential to resolve if the transition was to progress.[^4] These
    issues concerned station services areas, selection of post DTV
    channels, resolution of mutually exclusive DTV and DTV/NTSC
    applications, and several technical subjects.

4.  In the *Report and Order/Further Notice* resolving those issues, we
    also recognized that a number of the commenting parties, principally
    entities representing broadcast interests, had raised questions and
    concerns relating to DTV reception capability in television
    receivers.[^5] In response to these concerns, we proposed to require
    that new television receivers have the capability to demodulate and
    decode over-the-air DTV signals by a date certain. We sought comment
    on how to best implement such a requirement, including alternatives
    for phasing in DTV reception capability in a manner that would
    minimize costs for both manufacturers and consumers.

5.  In comments responding to the *Notice*, the ATSC indicated that its
    "ATSC DTV standard A/53," most of which was adopted by the
    Commission in 1996 as the U.S. broadcast DTV transmission standard,
    has been updated.[^6] The ATSC therefore requested that we revise
    the rules to reference the most recent version of the ATSC DTV
    Standard A/53. It further indicated that it has developed a PSIP
    specification for digital television (ATSC Doc. A/65) and asked that
    we require broadcasters to transmit PSIP information using the A/65
    specification. In the *Report and Order/Further Notice*, we
    indicated that an industry administered system is the best approach
    for managing the implementation of a PSIP system. However, we also
    recognized that the transport stream identifiers (TSIDs) used in the
    PSIP system must be unique to each individual television station and
    that there is a need to coordinate TSID assignments for stations in
    the border areas with our neighbors in Canada and Mexico. We
    therefore agreed that TSID assignments should be made part of the
    Commission\'s licensing process for broadcast television stations
    and stated that we would begin to incorporate this function into
    that process in the near future.

6.  We also observed that digital television receivers could be marketed
    without the capability to receive over-the-air broadcast signals and
    sought comment on whether we should require that any such products
    be labeled to inform consumers of this limitation on product
    functionality. Finally, in their Petition for Reconsideration of
    issues addressed in the *Report and Order/Further Notice*, the
    Association for Maximum Service Television, Inc., the National
    Association of Broadcasters, and the Association of Local Television
    Stations, Inc. (MSTV/NAB/ALTV), requested that we reconsider our
    decision denying their request that we establish minimum performance
    standards for DTV receivers.

7.  We received comments on the new proposals in the *Report and
    Order/Further Notice* from seven parties and replies to those
    comments from two parties. In addition, we received Petitions for
    Reconsideration concerning our proposal to require DTV reception in
    new TV receivers from three parties and replies/oppositions to those
    petitions from two parties. These parties are identified in Appendix
    A.

    III\. DISCUSSION

    A. DTV Receiver Standards -- DTV Reception Requirement

8.  In the *Report and Order/Further Notice*, we recognized the
    arguments of the NAB, the North American Broadcasters Association
    (NABA), and other parties that DTV receivers are not yet available
    in the market in large quantities, and certainly not in sufficient
    volume to support a rapid transition to an all-digital broadcast
    television service. We therefore requested comment on whether a
    requirement to include DTV reception capability (a DTV tuner) in new
    television sets could help to develop the production volumes needed
    to bring DTV prices down to where they are more attractive to
    consumers and thereby promote the more rapid development of high DTV
    set penetration. In particular, we sought comment on whether we
    should require that new TV receivers have the capability to
    demodulate and decode over-the-air DTV signals. We stated that under
    such a requirement, TV sets would have to provide useable picture
    and sound quality commensurate with their video display and audio
    capabilities when receiving any of the recognized ATSC video
    formats. We further stated that a DTV reception capability
    requirement would not necessitate full high definition television
    (HDTV) capability in TV sets. For example, a TV set that had only
    NTSC level display capabilities would only have to be able to
    demodulate and decode DTV signals and present them at a standard
    definition display level equivalent to its NTSC capabilities. We
    also expressed concern about the potential impact of a DTV tuner
    requirement on consumers, especially low-income consumers, and
    therefore sought comment on the initial projected costs of such a
    requirement and realistic estimates of its costs over time.

9.  We requested comment on how best to implement a DTV reception
    capability requirement, if we were to adopt one. Recognizing the
    lead time involved in product development, we acknowledged that
    consumer electronics manufacturers would need time to implement such
    a requirement. In this regard, we observed that the cost of DTV
    receiver components still is relatively high and that it would not
    be economically feasible at this point to include DTV capability in
    smaller screen receivers. We indicated that one approach for
    minimizing the impact of a DTV tuner requirement would be to phase
    it in over time to take advantage of the declining costs associated
    with increasing electronics manufacturing volumes. We noted that one
    such approach would be to apply the requirement initially only to
    receivers with large screen sizes, *e.g.*, 32 inches and above. We
    also stated that separate set-top DTV receivers could be included in
    meeting the reception capability requirements. We further requested
    comment on whether any DTV tuner requirements we might adopt should
    be based on percentages of the models marketed by each manufacturer,
    rather than units of production. Finally, we invited interested
    parties to submit other plans that would result in new TV receivers
    being equipped with DTV reception capability in a manner that would
    lead to rapid achievement of widespread penetration of DTV receivers
    in households.

10. MSTV/NAB/ALTV, Motorola and Paxson support adoption of a requirement
    for DTV reception capability in new TV receivers. For example,
    Paxson submits that DTV receivers are too expensive and too few for
    this nation to accomplish a timely transition to digital television
    and a return of analog spectrum.[^7] MSTV, NAB/ALTV argue that as
    consumers purchase more and more analog receivers, the goal of
    having digital television in 85% of households becomes more
    difficult to achieve. They state that no single television set
    manufacturer has an incentive to include DTV tuners in a majority of
    its sets for fear of a competitive cost disadvantage versus
    manufacturers who decline to make that investment. MSTV/NAB/ALTV
    argue that we should adopt a DTV tuner requirement that applies to
    all, or at least a substantial number of new television sets. They
    submit that as consumers purchase DTV reception-capable sets in the
    normal course of replacing their existing receivers, DTV penetration
    levels will then naturally increase.

11. With regard to the costs involved, MSTV/NAB/ALTV and Paxson contend
    that, because of economies of scale, concerns about increasing
    equipment costs to consumers have been exaggerated.[^8]
    MSTV/NAB/ALTV state that if we were to decide instead to adopt a
    size-based phase in approach, we should apply the DTV tuner
    requirement first to all new sets 30 inches and larger; in two years
    extend the requirement to sets 19 inches and larger; and two years
    later complete the phase in by extending the requirement to all sets
    13 inches and larger.[^9] They submit that if we were to choose the
    percentage of a manufacturer's production approach, we should
    initially require that 33% of a manufacturer's new television sets
    13 inches and larger have DTV reception capability and than increase
    that percentage to 67% in two years and 100% in four years.
    MSTV/NAB/ALTV believe that a plan that phased in the requirement too
    slowly would undermine the effective introduction of DTV sets,
    foster consumer uncertainty regarding the DTV transition, and delay
    the ultimate release of the analog TV spectrum. They also submit
    that while they would prefer that manufacturers meet a DTV tuner
    requirement by integrating tuners into receivers that include an
    audio/video display, they would not oppose allowing manufacturers to
    use separate set-top tuner to meet a DTV tuner requirement so long
    as the set-top DTV tuner is part of an indivisible DTV receiver
    package.[^10] Paxson, on the other hand, argues that including
    set-top DTV tuner in the measures for meeting a tuner requirement
    would not address the marketplace failure to produce integrated DTV
    receivers.[^11]

12. Motorola states that its new product development efforts demonstrate
    that DTV receivers and decoders can be integrated into television
    sets at a relatively low cost.[^12] Motorola submits that it has
    developed a modular design for DTV receiver/decoder product family
    that will allow manufacturers to rapidly convert an existing analog
    TV set into a hybrid analog/digital TV set at a price approximately
    \$200 over an equivalent NTSC receiver.[^13] Nonetheless, Motorola
    agrees with our initial concern that it would not be economically
    feasible at this time to require DTV capability in smaller screen TV
    sets, *i.e.*, sets with screens smaller than 27 inches. It states
    that the cost of today's DTV receive components would significantly
    inflate the cost of such sets. It states that for higher priced
    sets, however, the added cost would be commensurate with the premium
    that consumers expect to pay for a DTV set over an analog set.
    Motorola further indicates that if DTV tuners were included in a
    large percentage of all TV sets, economies of scale could reduce the
    retail cost differential between NTSC sets and standard
    definition/enhanced definition television (SDTV/EDTV) sets to
    approximately \$50 by 2006.[^14]

13. Subsequent to the formal comment and reply period in this
    proceeding, MSTV and NAB submitted a study by Arthur D. Little, Inc.
    (ADL Study) that developed estimates of the costs for the
    incremental materials needed to enable consumer television receivers
    to receive over-the-air DTV transmissions and the decline of those
    costs over time.[^15] The ADL Study also estimated the effect of
    those incremental costs on the retail prices of DTV sets and the
    production costs and retail prices for stand-alone set-top
    "transverters" that can receive DTV signals and convert them for
    display on analog TV receivers. The ADL Study examined three
    scenarios for DTV receiver implementation: 1) a baseline case, where
    DTV receiver introduction is driven solely by market forces; 2) a
    mandate case, where the government requires inclusion of a DTV
    receiver in all new TV sets sold after January 1, 2004; and 3) a
    phased mandate case, where the government would first require that
    high-end receivers include a DTV receiver and then extend the
    requirement to include lower-end models over time such that all new
    TV receivers sold in the year 2006 would have a DTV receiver. The
    DTV capable receivers considered under each of these scenarios would
    provide standard definition (SDTV) level quality of video service,
    with initial prices of from \$169 (high-end models) to \$180
    (low-end models) higher than comparable analog receivers.[^16] Based
    on its assessment of costs and expected rate of consumer acceptance
    of DTV (*i.e.*, that DTV will be accepted at the same rate as color
    television), the ADL Study finds that under the baseline case, DTV
    receiver penetration would reach only 8.5% by 2006, with the price
    of a DTV capable receiver about \$35-38 higher than a comparable
    analog set. Under the mandate case, DTV penetration would reach
    75.5% by 2006 and 85%+ by 2007, with the price of a DTV capable
    receiver about \$14-15 higher than a comparable analog set. Under
    the phased mandate case, the ADL Study predicts that DTV penetration
    would reach 65% by 2006 and 85% by 2007, with the price of a DTV
    capable receiver about \$15-16 more than a comparable analog set.
    With regard to transverters (it assumes these devices can also
    receive cable service), the ADL study estimates that a DTV capable
    set-top box would cost approximately \$380 in 2001, and by 2006
    would decline to \$218 under the baseline case and \$195 under the
    mandate case. Under the study's assumptions, the price of analog
    addressable set-top boxes would be about \$180. The ADL Study
    further concludes that the retail prices of DTV capable receivers
    could be dramatically lower in the initial years of production if
    manufacturers would adopt a "forward pricing" strategy.[^17]

14. In their comments, MSTV/NAB/ALTV and Paxson also submit that the
    ACRA authorizes the Commission to require that new TV sets have DTV
    tuning capability. They state that the ACRA language is plain and
    unambiguous: the Commission has the authority to require that any
    television set manufactured for sale in the United States "be
    capable of adequately receiving all frequencies allocated by the
    Commission to television broadcasting."[^18] They argue that the
    language of this section does not limit our authority to impose
    tuning requirements to only analog receivers.

15. CEA and Thomson Multimedia, Inc. (Thomson) oppose the adoption of a
    requirement for DTV reception capability in new TV receivers. CEA
    argues that a DTV tuner requirement would seriously impede the DTV
    transition through consumer reaction to the significantly higher
    prices of television sets that would result during the first few
    years.[^19] It submits that subsequent to the issuance of the
    *Report and Order/Further Notice*, a host of organizations
    representing consumers, senior citizens, farmers and rural residents
    have expressed their opposition to a DTV tuner mandate because of
    the costs such a requirement would impose upon their
    constituents.[^20] It argues that market incentives are much more
    efficient and should be relied upon to drive prices down and quality
    up. In this regard, CEA submits that since the adoption of the ATSC
    standard, manufacturers have introduced hundreds of DTV products and
    that annual growth in both unit and dollar sales for DTV products
    during the first four years on the market is projected to surpass
    that of computers, VCRs, CD players, and color TVs. It states that
    along with the growth in diversity of products and consumer sales,
    unit prices for DTV products have declined sharply.[^21] CEA states
    that any regulatory intervention to dictate to consumers the
    capabilities they can or cannot have in television sets would upset
    this vigorous and healthy market. It argues that a DTV tuner
    requirement would disrupt normal market incentives by forcing
    manufacturers to provide consumers with capabilities they do not
    want at prices they do not wish to pay. It submits that in response
    to such a requirement, manufacturers and retailers would develop and
    sell products that would meet the standards, but without any
    economic motivation beyond a strict compliance of the rule. CEA
    therefore argues that any economies of scale that could result from
    a manufacturing mandate would be distorted.

16. CEA states that even with an aggressive cost reduction curve, the
    electronics package needed to receive, decode, and display digital
    television services will still command a \$200 per unit cost premium
    over the required analog circuitry for the foreseeable future.[^22]
    It submits that rather than purchase sets that cost more than they
    wish to pay, consumers will simply put off the purchase of new sets
    as they wait for an eventual price decline, which will disrupt the
    normal demand curve and deflate sales volumes and market
    expectations. CEA states that for sets with display screens of 21"
    to 27", a required DTV tuner would result in a price increase of 67%
    to 85% for most sets and that such an increase would have a serious
    effect on demand. CEA indicates that for the 40% of sets sold today
    that are 20" or less, including a DTV tuner would double or triple
    their retail price. It further argues that likewise phased in
    requirements that initially focused on larger screen sizes would
    either be ineffective or severely affect consumer costs. In an *ex
    parte* letter submitted August 2, 2002, Thomson states that the
    manufacturer's cost of DTV reception/decoding capability today is
    approximately \$250 and that this cost would decrease to
    approximately \$75-80 by 2006 and \$60 by 2007-2008. It further
    submits that the final cost to the consumer would typically include
    a markup of approximately 25%.

17. In its reply comments, Thomson argues that MSTV/NAB/ALTV's claim
    that a DTV tuner requirement would drive manufacturing costs down
    through economies is overly broad and simplistic.[^23] It submits
    that economies of scale are reached only over time and that such
    economies are the product of long periods of cost reductions and
    technological advances. It notes that when Congress mandated
    UHF-reception capability in all TV sets, the added cost was
    minimized by the fact that UHF reception did not require the
    introduction of a new technology, but rather simply an extension of
    the tuning range and some basic performance requirements. It states
    that DTV reception, on the other hand, is an entirely new technology
    involving many more components and chips than adding UHF reception
    or, for that matter, V-chip or closed captioning capability. Thomson
    also points out that there are other issues affecting DTV receivers
    such as copy protection and DTV compatibility with cable services
    that are not yet resolved. Thomson states that while economies of
    scale will develop and DTV receiver prices will fall, how fast that
    will happen will depend on: 1) the availability of a great quantity
    of unique, high quality programming; 2) final agreement on standards
    for compatibility between consumer DTV receivers and cable service;
    and 3) adoption of DTV copy protection systems. In an *ex parte*
    letter submitted August 1, 2002, Thomson states that it now supports
    a voluntary plan for a phased integration of DTV reception
    capability into all TV sets that is based on a phase in plan that
    was suggested by the Commission's Chairman in a letter of April 4,
    2002 to Senator Ernest F. Hollings and Congressman W.J. "Billy"
    Tauzin.[^24] The plan suggested by Thomson would provide for
    inclusion of DTV reception capability in all new TV sets, beginning
    with the largest sets and ultimately reaching sets with screen sizes
    smaller than 35" by 2007 or 2008. Thomson submits that its plan
    would allow DTV technology to mature and reach acceptable cost
    premiums for the consumer.

18. CEA also argues that we should reject arguments that continued
    production of analog-only sets will expand the embedded base of NTSC
    equipment and thus create an obstacle to public acceptance of
    DTV.[^25] It submits that when consumers become attracted in numbers
    to DTV programming and this consumer demand and continued technical
    improvements and innovation further reduce prices for DTV set-top
    converter boxes, those analog sets can make the transition to
    display units for DTV reception as a matter of consumer choice. The
    Florida Action Network (FCAN) and the Massachusetts Consumers\'
    Coalition (MCC), representatives of consumer interests, oppose a
    requiring DTV in new TV sets. These organizations are concerned
    about costs to consumers, particularly those with low-incomes such
    as the elderly, immigrants, agricultural laborers and poor rural
    families, students, and minorities. FCAN argues that any requirement
    that raises costs to consumers would result in the
    disenfranchisement of consumers. It states that once DTV programming
    becomes widely available, it will draw consumers and there will be a
    move toward acceptance of DTV as the national standard. MCC submits
    that consumers will seek out new televisions with DTV reception
    capability if they know that extensive program delivery facilities
    are available.

19. In an *ex parte* letter of August 1, 2002, CEA, through its attorney
    David R. Siddall, submitted a paper prepared by the Analysis
    Group/Economics (AGE Comments) commenting on the ADL Study submitted
    by MSTV/NAB/ALTV.[^26] The AGE Comments concludes that the ADL Study
    has substantial shortcomings that seriously undermine its
    projections, such that the impact of a DTV tuner mandate on
    television sales, prices to consumers, and manufacturing costs would
    be greater and last longer than suggested by the ADL Study's
    projections.[^27] Specifically, the AGE Comments contend that the
    ADL Study underestimated the costs to television manufacturers of
    integrating a DTV tuner into TV sets. It compares the ADL Study to
    estimates by Thomson of \$200-295 per set (although in its recent
    *ex parte* letter above, Thomson indicates that the incremental
    price of an integrated DTV tuner would be about \$75 by
    2007-2008).[^28] The AGE Comments further state that the ADL Study
    ignored the decline in television sales that would accompany an
    increase in their price due to a tuner requirement and that the ADL
    Study's projections overstate the time required for costs to decline
    as a result of sales because sales are overstated. Finally, the AGE
    Comments argue that the ADL Study inappropriately assumes that
    television manufacturers can fully and instantaneously incorporate
    the cost-saving benefits of experience/sales-driven efficiency gains
    from as much as 25-fold increases in annual sales volume.

20. CEA and Thomson also argue that the Commission lacks the authority
    to require that television receivers be capable of adequately
    receiving digital broadcast signals.[^29] CEA and Thomson argue that
    the tools of statutory construction, particularly legislative
    history and purpose, demonstrate that Congress did not intend for
    the ACRA to apply in the broad manner that the Commission concludes
    it does in the *Report and Order/Further Notice*. In this regard,
    they state that, as indicated in the Senate Commerce Committee
    Report on the ACRA (Senate Report), Congress enacted the ACRA for
    the sole purpose of ensuring the viability of UHF broadcasting by
    requiring that all television receivers include the capability to
    receive all VHF and UHF channels. [^30] CEA argues that the purpose
    and legislative history of the ACRA are clear that "all frequencies"
    does not and could not include digital signals. Thomson points out
    that the Senate Report does not touch on the reception of digital
    signals. CEA and Thomson also argue that as indicated in the House
    Interstate and Foreign Commerce Committee Report (House Report)
    accompanying the legislation, Congress explicitly considered but
    rejected broader language that would have provided the Commission
    with authority to set "minimum performance standards."[^31]

21. Thomson further contends that the Commission itself has expressly
    recognized the limitations of its authority under the ACRA. In
    particular, it points to a decision by the Commission in the
    mid-1980s on a request by Sanyo Manufacturing Corporation for waiver
    of the all-channel receiver requirements (Sanyo waiver) that a video
    display device for personal computers, video tape recorders, TV
    games and other devices fell outside the scope the ACRA. (This video
    display device responded to signals on channels 3 and 4 only).
    Thomson notes that in that decision, the Commission indicated that
    the signal sources used by the video display device were products of
    technologies that did not exist at the time that the statute was
    enacted and stressed that the concern of Congress in enacting the
    ACRA was to remedy a situation where the UHF television allocations
    were progressively being rendered less useful because fewer and
    fewer television sets could receive anything but VHF signals.[^32]
    Thomson argues that the digital tuner of today did not exist in 1962
    and that a television receiver that is manufactured without the
    capability of receiving DTV signals does not pose any threat to UHF
    reception and thus falls outside the scope of the ACRA.[^33] CEA
    further asserts that the Commission itself has twice declined to
    mandate the manufacture of television receivers that are capable of
    receiving both NTSC and DTV signals, citing the lack of a mandate
    under the ACRA.[^34] It notes that in the *Third Report and Order
    and Third Further Notice of Proposed Rule Making* in the DTV
    proceeding, the Commission stated that "the All Channel Receiver Act
    does not mandate the manufacture of dual-mode (DTV and NTSC)
    receivers."[^35]

22. In an *ex parte* submission filed after the formal comment and reply
    period in this proceeding, CEA submitted a White Paper further
    explaining its position that the Commission lacks statutory
    authority to require that television sets contain digital
    tuners.[^36] In this White Paper, CEA argues that the phrase "all
    frequencies" as used in the ACRA does not encompass digital
    transmissions since, at the time the ACRA was enacted in 1962,
    digital technology did not yet exist.[^37] CEA additionally
    maintains that by its terms, the ACRA addresses only the reception
    of all frequencies, and "television receivers comply with this
    requirement" even if they do not display all broadcasts on these
    frequencies.[^38] CEA seems to suggest that the ACRA does not
    require receivers to respond and decode all broadcast transmissions
    offered by all technologies, but rather only analog transmissions in
    the VHF and UHF frequency bands.[^39] CEA further argues that the
    omission of particular language referencing "new video technology"
    in section 330(a) of the Communications Act,[^40] as compared to the
    inclusion of such language in sections 330(b)[^41] and 330(c),[^42]
    means that the Commission's authority does not extend to digital
    technology under the ACRA.

23. *Decision*. In addressing this issue, we consider DTV receivers to
    be a necessary element of broadcast television service in the same
    way that analog TV receivers have been a necessary element of that
    service.[^43] Although analog receivers are today still the dominant
    means by which viewers receive over-the-air broadcast television
    service, that dominance will change as we progress through the
    transition. And, of course, at the end of the transition, when DTV
    operation fully replaces analog operation, all TV sets will have to
    be able to receive DTV signals in order to receive over-the-air
    service.

24. With regard to our authority in this area, the language of the ACRA
    is clear in providing the Commission with the "authority to require"
    that television sets "be capable of adequately receiving all
    frequencies" allocated by the Commission for "television
    broadcasting. [^44] Contrary to the position of CEA and Thomson, the
    authority provided under the ACRA applies to all devices used to
    receive broadcast television service, not just those used to receive
    analog signals. As NAB observes, the language of the ACRA does not
    limit our authority to impose tuning requirements to service
    provided using any specific transmission method. In fact, there is
    no mention at all of the technology used for transmission of
    television service in the ACRA or its legislative history, and in
    fact the language of the ACRA is crafted neutrally in this regard.
    Inasmuch as the Commission has allocated channels for television
    broadcasting provided with DTV technology, the ACRA authority
    empowers the Commission to adopt requirements that television
    receivers be able to receive the DTV service provided on those
    channels.

25. We also observe that the legislative history of the ACRA is not
    inconsistent with our action to require DTV reception capability in
    TV receivers. Inasmuch as DTV stations are assigned to VHF and UHF
    channels, rules requiring TV receivers to be able to receive all DTV
    channels are consistent with the intent of Congress in enacting the
    ACRA, *i.e.*, to provide the Commission with the authority to
    require that television receivers be equipped at the time of
    manufacture to receive all television channels in the allocated
    television broadcast bands (which at the time of passage were found
    in both the VHF and UHF bands).[^45] Nothing in either a plain
    language reading of the ACRA or the legislative history suggests
    that the ACRA would no longer apply if the Commission were to change
    the transmission technology used for television service.

26. More broadly, in 1962, when the ACRA was enacted, Congress's focus
    was on the UHF/VHF aspect of the general issue of ensuring that TVs
    would receive all allocated channels -- the specific problem at that
    time was the lack of TV sets that could receive UHF channels. While
    Congress discussed the need for a statutory remedy in that context,
    it crafted the statutory language more generally -- to address
    analogous situations that might arise in the future. If Congress'
    intent had been to limit the Commission's power only to the extent
    of permitting receiver standards that would require the reception of
    UHF signals, then presumably it could have crafted the language of
    the ACRA much more narrowly.

27. In fact, the situation we face now with regard to reception of DTV
    channels is analogous to the UHF issue with which Congress was
    grappling when it promulgated the general language of Section
    303(s). According to the legislative history, the Senate Committee
    recognized the existence in 1962 of a \"vicious cycle\" that had
    been \"strangling\" the development of UHF television, that is the
    \"refusal by the public to buy UHF sets until there are UHF stations
    offering attractive programs, and the inability of UHF broadcasters
    to provide good programming in the absence of an audience which will
    attract advertisers and networks.\"[^46] The Senate Committee
    determined that it was necessary to break this cycle and that to do
    so \"must be done by striking at the root cause of the problem --
    namely, the lack of television receivers capable of receiving UHF
    signals.\"[^47] Here, the Commission is faced with a similar problem
    -- that is, the reluctance of the public to buy DTV receivers until
    there are DTV stations offering attractive DTV programs, and the
    lack of incentive of for broadcasters to provide good attractive DTV
    programming in the absence of an audience which will attract
    advertisers. As Congress and the Commission found in the UHF
    context, requiring the manufacture of DTV receivers will address the
    root cause of the problem, namely the lack of television receivers
    capable of receiving DTV signals.

28. While Congress did not intend for the authority granted by ACRA to
    be exercised in an unfettered manner, its concern was that the
    Commission would place requirements on manufacturers that went
    beyond those necessary to ensure adequate service from UHF channels.
    Thus, the statutory language uses the term "adequate" and rejected
    language that might be construed to require something more.[^48] In
    this case, the issue is only whether DTV signals can be adequately
    received.

29. We reject CEA's argument that the statutory phrase "all frequencies"
    does not encompass digital transmissions since, at the time the ACRA
    was enacted in 1962, digital technology did not yet exist.[^49] As
    the federal courts have recognized, "statutes are not confined in
    application to contemporary instances and their principles are to be
    extended to embrace new factual situations and new technological
    developments."[^50] Like its analog VHF and UHF counterparts, DTV
    service also operates on a "frequency" and thus is encompassed
    within the provisions of the ACRA. Likewise, to the extent CEA
    construes the ACRA as requiring television receivers to receive all
    frequencies, but not to display broadcasts on those frequencies, we
    believe such a narrow reading would defeat the statute's very
    purpose. The ACRA was intended to ensure that the viewing public has
    access to receivers which are capable of receiving all broadcast
    signals. Thus, to suggest that the statutory requirements are
    somehow satisfied simply where a receiver picks up the frequency but
    is incapable of displaying the signal in a viewable format strikes
    us as an absurd reading of the ACRA. Indeed, as we have noted
    previously, the legislative history indicates that the word
    "adequately" was added to the ACRA (*i.e.*, "be capable of
    *adequately* receiving all frequencies") to ensure that all
    receivers would be constructed with equipment sufficient to permit
    "satisfactory and *usable* reception."[^51]

30. Furthermore, we are not persuaded by CEA's argument that the
    omission of particular language referencing "new video technology"
    in Section 330(a) of the Communications Act,[^52] as compared to the
    inclusion of such language in Sections 330(b)[^53] and 330(c),[^54]
    means that the Commission's authority does not extend to digital
    technology under the ACRA.[^55] CEA relies on the general principle
    of statutory construction that Congress acts intentionally in the
    disparate inclusion or exclusion of language in the same
    statute.[^56] While this may be accurate as a general proposition,
    here the absence of the particular language in section 330(a) does
    not compel the interpretation urged by CEA.[^57] The three sections
    at issue were enacted as part of entirely different Acts, separated
    by a significant time period. Subsection 330(a) was enacted in 1962
    as part of the ACRA, approximately 28 years prior to the 1990
    enactment of subsection 330(b) (enacted as part of the Television
    Decoder Circuitry Act of 1990), and approximately 34 years prior to
    the 1996 enactment of subsection 330(c) (enacted as part of the
    Telecommunications Act of 1996).[^58] The legislative histories of
    the provisions offer no suggestion that any such limitation on
    section 303(s) was intended by the inclusion of the "new video
    technology" language in subsections 330(b) and (c), or by the
    omission of the "new video technology" language in subsection
    330(a). Moreover, even if one were to accept CEA's view that the
    disparity between paragraph (a) and paragraphs (b) and (c) were
    intentional, that disparity would not prevent the Commission from
    applying paragraph (a) to DTV. Subsections (b) and (c) impose a
    mandate upon the Commission -- "the Commission shall take such
    action as the Commission determines appropriate to ensure that
    \[closed captioning and blocking, respectively\] continues to be
    available to consumers." The absence of a similar mandate to update
    its ACRA regulation as technology changes cannot reasonably be read
    to preclude the Commission from doing so. We thus reject CEA's
    argument.

31. CEA and Thomson's reference to the Commission's 1984 decision on the
    Sanyo waiver ignores the fact that the video display device in that
    case was not intended for use as a receiver of broadcast television
    signals. Rather, the Sanyo device was intended to be used to display
    the signals of video game devices that provided their output signals
    in the NTSC analog TV format on the frequencies of TV channels 3 or
    4.[^59] Thus, the Commission at that time concluded that Sanyo's
    video display device fell outside the scope of the ACRA. In any
    event, our authority to require TV sets to adequately receive all of
    the frequencies allocated for TV service is discretionary \-- the
    ACRA allows the Commission to make determinations as to whether and
    how to apply such requirements as appropriate.

32. As CEA observes, the Commission previously has not chosen to apply
    requirements for television receivers to include DTV tuning
    capabilities. We believe that this approach was appropriate in the
    early stages of the transition. Before broadcast stations began the
    widespread conversion to digital transmission, it was reasonable to
    allow consumer electronics manufacturers opportunity to develop
    appropriate products and to introduce them to the market gradually.

33. Now, however, given the current state of the transition and
    considering the current availability of equipment that can receive
    DTV signals over-the-air, we conclude that insufficient progress is
    being made towards bringing to market the equipment consumers need
    to receive broadcasters DTV signals over-the-air. This necessary
    change in receiver product capabilities is not yet occurring to any
    meaningful degree, and the lack of DTV receiver capability is
    delaying the transition and may seriously impede the transition in
    the future. We are now well into the DTV transition and almost two
    years beyond the concerns with the initial DTV receivers that led
    the Commission to review and then reaffirm the DTV transmission
    standard.[^60] Manufacturers have thus had sufficient time to
    develop the necessary components to provide for DTV tuning and
    indeed such components are now available from multiple sources. In
    order for the transition to move forward as quickly and smoothly as
    possible, receivers with DTV capability need to be on the market in
    quantity and at reasonable prices. We note in this regard, a study
    submitted by NAB pursuant to the Commission's year 2001 "Annual
    Assessment of the Status of Competition in the Market for the
    Delivery of Video Programming" indicated that 81 million television
    sets in the U.S., or more than 30 percent of the 267 million total,
    receive programming directly from free, over-the-air TV
    stations.[^61]

34. While broadcasters have progressed in their implementation of DTV
    such that almost a third of all stations are now transmitting DTV
    service, and DTV services reach more than 86% of the nation, the
    number of consumers with DTV capable receivers is still very
    low.[^62] Data on market research reported by CEA indicates that in
    the year 2001, sales of set-top DTV receivers and receivers with an
    integrated DTV tuner were only 128,845 units and 70,295 units
    respectively. This contrasts sharply with information from the same
    market research showing that sales of DTV-ready receivers, *i.e.*
    receivers that can display DTV programming but do not have the
    capability to tune over-the-air DTV signals or decode them for
    display, exceeded 1.3 million units in 2001. CEA's market research
    report also indicates that sales of all digital television products,
    including set-top DTV tuner units and receivers with an integrated
    DTV tuner, are continuing to increase. We believe the overall level
    of DTV equipment sales provides a strong indication that consumers
    are interested in higher quality video and DTV service. However,
    they are not yet routinely being provided with the capabilities
    needed to receive those services over-the-air from broadcast
    television stations.

35. Moreover, we do not see a trend developing that will rapidly provide
    U.S. households with the ability to receive DTV signals and bring
    the DTV transition to completion. The approximately 200,000 TV
    households with over-the-air DTV capability in the year 2001 was
    less than 16% of the number of DTV-ready receivers and only .2% of
    the 105,444,330 total U.S. households reported by Nielsen Media
    Research for that year.[^63] We further observe that the April,
    2002, "DTV Guide" published by the Consumer Electronics Association
    reports that there are 17 models of set-top DTV tuners and 23 models
    of television receivers with integrated DTV tuners currently on the
    market. This compares with 351 models of HDTV monitors and 33 models
    of enhanced definition monitors.[^64] The DTV Guide also shows that
    only seven manufacturers are currently marketing receivers with
    integrated DTV tuners, while 42 manufacturers are producing HDTV
    and/or EDTV monitors. In addition, the price of set-top DTV tuners
    is still generally \$500 or more. The low numbers and high prices of
    DTV-capable receivers that are on the market are simply not
    consistent with achieving an expeditious completion of the DTV
    transition. CEA's suggestion that these consumers be required to
    purchase a set-top converter box in order to receive DTV broadcast
    signals would be a more expensive option than an integrated tuner
    and is a solution that many consumers would find unattractive.
    Finally, we are concerned that continued marketing of analog-only
    sets can only serve to delay the transition further. Consistent with
    the DTV transition plan that Congress established in Section 309(j)
    of the Communications Act of 1934, and pursuant to our authority
    under the ACRA, our objective in establishing a DTV tuner
    requirement is therefore to ensure that television receivers with
    screen sizes 13" or larger and other television receiving equipment,
    such as VCRs and DVD players/recorders, manufactured or imported
    after a specified date be able to receive over-the-air DTV signals.

36. We are not persuaded that we should delay application of a DTV tuner
    requirement until there is final resolution of the outstanding
    controversies over copy protection and standards for DTV "plug and
    play" cable compatibility. We do not believe that those issues need
    to be resolved before we can make progress on DTV broadcast
    reception capability. Nevertheless, we do believe these issues are
    important and we are taking steps to resolve them. Concurrently with
    adoption of this Order, we are adopting a Notice of Proposed
    Rulemaking regarding a copy protection system for digital broadcast
    television.[^65] With regard to cable compatibility - i.e.,
    consumers\' ability to watch digital programming over their cable
    system - we note that where cable subscribers use a set-top box
    capable of adequately passing through the digital content, they can
    watch high definition and other digital programming over their cable
    service today. Such set-top boxes, however, are not yet
    widely-deployed, though are in commercial production and the top ten
    cable operators in the country (representing more than 85% of
    subscribers nationwide) have committed to deploying them in the
    future in response to Chairman Powell\'s voluntary plan for
    accelerating the DTV transition.[^66]

37. Nevertheless, we agree that development of \"plug and play\" cable
    compatibility is one of the key remaining goals for the DTV
    transition for those cable subscribers who do not have set top boxes
    available or do not want to use a set-top box. The Commission will
    address this issue in a forth coming Second Report and Order in the
    proceeding on Commercial Availability of Navigation Devices, CS
    Docket No. 97-80.

38. In considering how to implement the DTV tuner requirement, we remain
    attentive to the concerns we discussed in the *Report and
    Order/Further Notice* regarding the impact it could have on
    manufacturers, consumers and the television receiver market in
    general. As CEA Motorola and Thomson indicate, we understand that
    including DTV tuners in new TV sets may affect set prices, and that
    initially it will not be economically practical to include DTV
    tuners in sets with smaller screens. We also are aware that
    manufacturers will need lead time to redesign their products and
    marketing plans to comply with this new requirement. We believe it
    is important that the DTV tuner introduction plan we adopt allow for
    these concerns in order to minimize their impact.

39. We continue to believe that a plan that phases in a DTV tuner
    requirement for new TV receiving equipment similar to the approach
    presented in the *Report and Order/Further Notice* will provide the
    best means for rapidly providing consumers with the means to receive
    the DTV signals that are now being transmitted by broadcasters while
    minimizing the impact of this requirement on equipment manufacturers
    and consumers. In this regard, the plan we are adopting reflects and
    accounts for the following: 1) including DTV reception capability in
    new television receivers will require the redesign of product
    lines, 2) the cost of including that capability in receivers will
    initially result in a cost premium of approximately \$200 per unit,
    and 3) prices are declining and will decline even faster as
    economies of scale are achieved with increasing volumes of
    production and production efficiencies are introduced over time. We
    are choosing an approach that will require that a party responsible
    for television receiving equipment ("responsible party") under our
    rules, generally the manufacturer or importer, include DTV tuners in
    a certain percentage of that party's entire production or
    importation of receivers in specific categories.[^67] We believe
    this approach will better serve to ensure that a large volume of DTV
    tuner-equipped receivers are provided to the market than an approach
    that would require compliance based on a certain percentage of a
    responsible party's models in specific categories.

40. Under the phase in plan we are adopting, responsible parties will be
    required to equip new television receiving equipment that is shipped
    in interstate commerce or manufactured in the United States and for
    which they are responsible with the capability to tune and decode
    over-the-air DTV signals on all of the channels allocated for
    broadcast television service in accordance with the following
    schedule:

    Receivers with screen sizes 36" and above \-- 50% of a responsible
    party's units must include DTV tuners effective July 1, 2004; 100%
    of such units must include DTV tuners effective July 1, 2005;

    Receivers with screen sizes 25" to 35" \-- 50% of a responsible
    party's units must include DTV tuners effective July 1, 2005; 100%
    of such units must include DTV tuners effective July 1, 2006;

    Receivers with screen sizes 13" to 24" \-- 100% of all such units
    must include DTV tuners effective July 1, 2007;

    TV Interface Devices (videocassette recorders (VCRs), digital
    versatile disk (DVD) players/recorders, etc.) that receive broadcast
    television signals \-- 100% of all such units must include DTV
    tuners effective July 1, 2007.

    For purposes of this implementation schedule, screen sizes are to be
    measured diagonally across the picture viewing area. In developing
    this schedule, we observe that there are differences in screen
    shapes between the traditional 4:3 aspect ratio and the more
    rectangular 16:9 DTV aspect ratio.[^68] A 13" diagonal screen in the
    16:9 aspect ratio is considerably smaller in appearance than a 13"
    diagonal screen in the 4:3 aspect ratio. To allow for these
    differences in establishing the minimum receiver screen size that
    will trigger application of the DTV tuner requirements, we will
    specify the minimum screen size to which the tuner requirement apply
    as the vertical measurement of a 13" diagonal 4:3 screen, which is
    7.8 inches. Thus, the rules will specify that the DTV tuner
    requirement does not apply to units with integrated tuners/displays
    that have screens measuring less than 7.8" vertically. This approach
    is the same as that which the Commission adopted in applying the
    requirements for inclusion of closed captioning capability in DTV
    receivers in ET Docket No. 99-254. We will also allow responsible
    parties to include combinations of DTV monitors and set-top DTV
    tuners in meeting the required percentages of units with a DTV tuner
    if such combinations are marketed together with a single price. We
    see no reason to mandate that the ability to receive and view DTV
    signals be provided through a receiver with integrated tuning and
    display features. Where set-top boxes and DTV monitors are sold as a
    combination, the screen size of the DTV monitor will determine the
    receiver size category towards which the combination may be counted.

41. The phase in schedule we are adopting is intended to provide time
    for manufacturers and importers to prepare for and develop economies
    of scale in producing receivers with DTV reception capability. The
    initial requirement will apply only to sets with the largest
    displays- those with screen sizes 36" or larger. As CEA notes, such
    sets are the smallest segment of the television receiver market and
    are also the most expensive.[^69] The incremental cost of a DTV
    tuner in these sets will be relatively small portion of their price
    and therefore more acceptable to consumers. Indeed, as one consumer
    electronics manufacturer noted in a recent letter to the Commission,
    the price for these large-screen sets have been declining at a rate
    of approximately \$100 to \$800 per year. [^70] Thus, any
    incremental cost increase attributable to a tuner requirement may be
    partially or completely offset by these general price declines. In
    addition, as most of the television receivers with integrated DTV
    tuners that are on the market today are models in this category, the
    impact of beginning with receivers in this group will be especially
    low for those manufacturers who already produce such receivers. The
    intermediate increases in proportions of receivers will gradually
    apply the tuner requirement to greater numbers of receivers as
    manufacturers develop efficiencies in production. Given that
    Congress has specified December 1, 2006, as the target completion
    date for the end of the transition, we believe that new television
    receivers manufactured or imported should include a DTV broadcast
    tuner before that date or as close to that date as economically
    feasible. In the case of the smallest and least expensive sets to
    which this requirement will apply (sets with screen sizes of 13" to
    24"), we will not require compliance until July 1, 2007 -- slightly
    beyond the target date for the end of the transition -- to ensure
    that the cost impact can be as low as possible. We believe the five
    year phase-in period will be sufficient for manufacturers to be able
    to incorporate a DTV tuner into all of these television receiver
    products, such that the final phase can be completed with minimum
    impact. To further minimize the burden on manufacturers, we have
    scheduled the implementation dates for the various categories of
    receivers to correspond to the July 1 date each year when consumer
    electronics manufacturers traditionally introduce new products.[^71]

42. We also believe that the five year period we are providing for
    responsible parties to include a DTV tuner in all receivers is
    sufficient to allow them to develop the efficiencies and economies
    of scale necessary to include such capability at reasonable prices
    that will be attractive to consumers. In this regard, we note that
    Zenith predicts that by that time the cost of producing a digital
    receiver can be about the same as an analog tuner.[^72] Motorola
    submits that, using its modular design, the retail price
    differential between a receiver with DTV tuning capability and a
    model that tuned only analog NTSC signals would be \$50 by 2006 if
    DTV tuners were added to a large percentage of all sets. Thomson,
    using its estimates of manufacturer's costs plus a 25% markup,
    predicts that the incremental effect on receiver prices would be
    about \$75 by 2007-2008. The ADL study estimates that the retail
    price differential would be only \$16 by 2006 under a phased mandate
    approach. The estimates of all of these sources of tuner costs, and
    of CEA as well, begin from a price differential for a receiver with
    DTV tuning capability of around \$200 or slightly less in 2002.
    Although we recognize that there is some variability in these
    forecasts, we see no reason to expect that the actual costs of DTV
    tuners will exceed these ranges.[^73] We agree that there may be
    some methodological shortcomings in the ADL study that could have an
    impact on its cost estimates under certain scenarios. However, the
    estimates of receiver price increases from the consumer electronics
    manufacturers give us confidence that the potential price increases
    under our phase in plan are within an acceptable range.[^74]

43. Given these findings, we do not agree with CEA's unsupported
    assertion that a DTV tuner requirement will lead large numbers of
    consumers to put off purchases of new TV sets or that it will force
    manufacturers to produce products without any motivation beyond a
    strict interpretation of the rule. The strong and growing sales of
    DTV ready receivers provide clear indication that consumers are
    interested in higher quality television service. The DTV tuner
    requirement will aid this market trend by providing certainty to
    manufacturers about the introduction of a necessary product feature.
    While we recognize Thomson's argument that adding of DTV tuners to
    sets is more complex than adding other features such a UHF tuners,
    V-chips, and closed captioning receivers, it has been six years
    since the DTV transmission system was adopted in 1996 and during
    that time numerous parties have developed the necessary components
    for DTV tuners. We therefore conclude that the plan we are adopting
    will not result in disruption of the TV receiver market or undue
    burden on either consumers or consumer electronics manufacturers.

44. To the contrary, today's decision will ensure a smoother transition
    by limiting consumer confusion and conforming the emerging DTV
    marketplace to consumer expectations. It has now been almost forty
    years since ACRA's enactment. During that time, every broadcast
    television receiver sold in the U.S. has had the ability to receive
    every frequency assigned to broadcast television, despite the fact
    that a growing number of TV households subscribe to a multichannel
    video service and thus may only need a set that tunes to channel 3
    or 4. Nevertheless, consumers generally still expect the television
    they purchase to be able to receive over-the-air broadcast signals.
    The tuner requirement we adopt today is a mechanism for continuing
    to meet those expectations as broadcasting transitions from analog
    to digital. In addition, unless cable and DBS carriage of digital
    broadcast signals increases significantly, a digital tuner may be
    the only access an MVPD household has to many digital broadcast
    services during the transition.  Most cable and DBS systems
    currently are carrying few, if any, digital broadcast signals.  As
    long as carriage of digital broadcast signals remains voluntary
    during the transition, a tuner requirement would at least provide
    MVPD consumers access to the digital broadcast signals in their
    market.

45. Consistent with the intent of Congress that we not use our authority
    under the ACRA to set broad standards for television receivers, we
    believe that the rules implementing the DTV tuner requirements
    should avoid imposing new performance standards on DTV except as
    necessary to ensure that receivers can adequately tune DTV signals
    on all of the television channels. We also believe that in crafting
    the specific provisions of this requirement it is important to allow
    manufacturers and importers to maintain broad discretion in
    determining the specific features and performance capabilities of
    their DTV receiving equipment. We understand that manufacturers and
    importers will need to develop DTV receiver products for a wide
    range of different user needs. In this regard, we are adopting our
    proposal to require only that television receivers provide useable
    picture and sound commensurate with their video and audio
    capabilities when receiving digital television signals. This minimum
    service capability requirement will allow manufacturers to produce a
    full range of products, from low-end units with only standard
    definition video capability to full feature devices that can display
    HDTV and provide access to data and other special services a
    television station might offer.

46. The only other specific requirements we are adopting under our DTV
    reception capability plan are those necessary to ensure that
    television sets be able to adequately receive DTV signals on all of
    the channels allocated to television service. The requirements that
    we currently apply to ensure that analog television receivers are
    able to adequately receive all of TV channels are set forth in
    Section 15.117 of the rules.[^75] We find that the generic portions
    of the all-channel reception provisions of Section 15.117 that are
    not specific to analog receivers, specifically, paragraphs (a)-(e)
    of that section, also are appropriate for DTV tuning capabilities.
    These provisions require that a television: 1) be able to adequately
    receive all television channels, 2) provide approximately the same
    degree of tuning accuracy and ease for VHF and UHF channels; 3) have
    UHF tuning controls and channel readout indicators that are
    comparable in size, location, accessibility and legibility to VHF
    controls and readout indicators; 4) if any equipment and controls to
    simplify, expedite, or perfect, the reception of signals that are
    provided to tune VHF channels, must also provided to tune UHF
    channels; and 5) if an antenna is affixed to its VHF terminals or a
    VHF antenna is provided with the set but not affixed, shall also
    have an antenna designed to receive all UHF channels affixed to its
    UHF terminals or be provided with a UHF antenna, as appropriate.
    These provisions were implemented pursuant to the authority provided
    by the ACRA and are intended to ensure that television sets provide
    adequate reception of all stations, regardless of which portion of
    the TV spectrum, *i.e.*, UHF or VHF, in which they operate.[^76]
    They are not dependent on the technology used to transmit television
    signals and are as appropriate and applicable for DTV sets as they
    are for analog sets.[^77] Accordingly, we will apply paragraphs
    (a)-(e) of Section 15.117 to DTV receivers. As we determined in the
    *Report and Order/Further Notice* and are affirming elsewhere
    herein, we see no need for technical performance standards for DTV
    receivers at this time.[^78]

    B. Update of the DTV Transmission Standard

47. *The DTV Transmission Standard*. In comments responding to the
    *Notice of Proposed Rule Making* (*Notice*) in this proceeding, ATSC
    indicated that it has made a number of changes to its "ATSC Digital
    Television Standard (A/53)," since 1996, when that standard was
    adopted by the Commission as the standard for terrestrial DTV
    broadcast service.[^79] ATSC indicated that these changes include
    removing constraints associated with the "program paradigm,"
    updating references to the underlying MPEG standards, replacing
    references to obsolete ATSC standards for Electronic Program Guide
    and System Information with a reference to the subsequently
    developed "ATSC Program and System Information Protocol (PSIP)
    Standard, A/65,"[^80] and requiring a signal to identify
    colorimetry. It further noted that it was considering an increase in
    the maximum allowable audio bit rate. ATSC requests that we revise
    the rules to reference the latest version of the ATSC DTV Standard
    A/53.[^81] We sought comment on whether we should revise our rules
    to include reference the latest version of the standard as requested
    by ATSC.

48. In its comments, ATSC urges that we revise our rules to reference
    the new version of the DTV standard. It submits that all of the
    modifications in the new version have been made only after careful
    consideration and deliberation within the technical committees of
    the ATSC and so reflect the inputs and viewpoints of all interested
    parties in all segments of the industry. It states that the changes
    to A/53 (which is now designated as A/53B) were developed through an
    industry consensus in the affected areas and implemented by the
    industry on a voluntary basis. ATSC indicates that the standard now
    also includes the latest change in the maximum bit rate. It further
    submits that there are other minor changes that are currently being
    considered by the technical committees of the ATSC and that it
    expects additional modifications and clarifications will be agreed
    upon as the digital transition progresses. It therefore asks that
    we: 1) recognize the likelihood of further changes over time; 2)
    reaffirm our intention to give great weight to proposed changes that
    reflect the kind of broad industry consensus developed through
    ATSC's standards-making procedures; and 3) establish streamlined
    rule making procedures for considering changes in the rules to
    reflect anticipated changes in the ATSC DTV standard. In a recent
    *ex parte* discussion with our staff, ATSC indicated that the
    current version of the standard is "ATSC DTV Standard A/53B, August
    7, 2001."

49. CEA, MSTV/NAB/ALTV and Thomson state that they fully support
    updating all references in the rules to the current version of the
    ATSC DTV Standard. Motorola opposes updating the rules to reflect
    the new version of the ATSC standard on the basis that the standard
    is still fluctuating. It states that while it supports the existing
    voluntary ATSC standards and ongoing standards development work of
    the ATSC, including current activity that may lead to further
    changes in document A/53, it sees no compelling need for an update
    at the this time.

50. We find that it is desirable and appropriate to revise the rules to
    update our DTV rules to specify the August 7, 2001, version of ATSC
    DTV Standard A/53B in place of the September 16, 1995, version
    originally adopted. Updating the rules to reflect improvements in
    the standard will benefit both the public and broadcasters by
    allowing broadcasters to make technical improvements in their
    service that will enhance the quality of DTV services they provide.
    As ATSC and others point out, the revisions in the new version of
    the ATSC DTV Standard were developed through careful consideration
    and deliberation within the technical committees of the ATSC and
    thus reflect a consensus agreement based on the inputs and
    viewpoints of all interested parties in all segments of the
    industry. Although we recognize Motorola's concern that the standard
    remain fixed until final revisions are made, the changes reflected
    in the new version presented by ATSC are improvements that will not
    adversely affect the operation of any of the DTV receivers currently
    on the market or owned by consumers.

51. We also acknowledge the likelihood that there will be further
    improvements made to the DTV standards over time and indeed,
    encourage ATSC and other interested parties to continue their work
    and efforts in these areas. In this regard, we reaffirm our
    intention to give significant weight to proposed changes that
    reflect the kind of broad industry consensus developed through
    ATSC's standards-making procedures. While it will be necessary to
    conduct rule making activity to incorporate such changes in the
    rules, we nonetheless will endeavor to pursue such rule making as
    quickly as possible, either through our periodic review of the DTV
    transition or through separate proceedings as may be appropriate.
    Accordingly, we are revising Section 73.682(d) of the rules to
    specify ATSC Doc A/53B (ATSC Digital Television Standard, 7 Aug 01),
    except for Section 5.1.2 ("Compression format constraints") of Annex
    A ("Video Systems Characteristics") and the phrase "see Table 3" in
    Section 5.1.1 Table 2 and Section 5.1.2 Table 4. These exceptions
    are as provided in the current Section 73.682(d) and were set forth
    in the Commission's decision adopting the ATSC standards for DTV
    service in *Fourth Report and Order* in the DTV proceeding.[^82]

52. *The Program System and Information Protocol Standard*. As noted
    above, in its comments responding to the *Notice*, ATSC also
    requested that we require use of the ATSC PSIP Standard as part of
    the DTV transmission standard. The ATSC PSIP specification provides
    for the transmission of system information and program guide data
    for broadcast DTV stations, enabling the identification of service
    channels and digital bit streams, and allowing receivers to generate
    electronic program guides. Through the program guide function, it
    also provides for selection through the program guide function of
    the type and language of closed captioning to be viewed, and for the
    transmission of program ratings information to allow parents to use
    V-chip technology. ATSC further requested Commission action to
    assure that: 1) "major channel numbers" in the PSIP are used
    properly; 2) the assignment of transport stream identifier (TSID)
    parameters is properly administered; and 3) DTV closed captioning
    and content advisory information conforms with the PSIP
    Standard.[^83]

53. In responding to these requests in the *Report and Order/Further
    Notice*, we stated that we believe that an industry approach is
    generally the most appropriate means for managing the implementation
    of a PSIP system. However, we recognized that the TSIDs must be
    unique to each individual television station and that there is a
    need to coordinate TSID assignments for stations in the border areas
    with our neighbors in Canada and Mexico. We therefore agreed that
    TSID assignments should be made part of our process for broadcast
    television stations and stated that we will begin the process to
    incorporate this function into that process in the near future. We
    further indicated that until negotiations with Canada and Mexico on
    the DTV matter are complete and we have modified our licensing
    process and records management systems, we would continue to rely on
    the industry to make TSID assignments.

54. CEA and Thomson support adoption of the ATSC PSIP specification,
    arguing that this system is essential to the proper operation of
    receivers. [^84] CEA indicates that PSIP is the portion of the DTV
    bitstream that enables receivers to identify, locate, and process
    the various types of content being broadcast, including video, audio
    (in multiple languages), closed captions, content advisory (V-chip)
    information, ancillary data, etc. It submits that adoption of PSIP
    is therefore needed to facilitate consumers using their television
    receivers to readily and easily identify the free over-the-air
    programming carried by broadcasters on multiple streams, to activate
    use of V-chip functionality, and to enable use of the closed
    captioning functionality. It argues that to the extent that our
    action on PSIP is limited to identification of TSID numbering, that
    action is not sufficient to enable tuning of digital channels,
    including especially multiple program streams carried by the same
    digital signal (multicasting). It states that to accomplish this,
    the tables and descriptors defined in the PSIP standard also must be
    transmitted. CEA further indicates that a recent survey conducted by
    NAB of the 161 stations that were on the air in November of 2000,
    showed that less than half (46.3%) of those responding were
    transmitting PSIP information. It therefore argues that PSIP cannot
    be optional and it must be required. It submits that if PSIP
    information is not transmitted, different television sets may very
    well assign different numbering to various multiple streams and
    thereby engender consumer confusion and frustration. CEA states that
    while it believes that we should adopt the PSIP standard in its
    entirety in order to maximize the benefits to the public of DTV, we
    should at a minimum require broadcasters to transmit the System
    Information component of PSIP. Specifically, it states that we
    should require transmission of the Master Guide Table (MGT), System
    Time Table (STT), Virtual Channel Table (VCT), and Service Location
    Descriptor at all times and transmission of the Content Advisory and
    Caption Service Descriptors when a program is rated or captioned. In
    their "Opposition to Petitions for Reconsideration" of the *Report
    and Order/Further Notice*, MSTV/NAB/ALTV submit that they agree that
    the Commission should adopt the PSIP specification in its
    entirety.[^85]

55. We recognize the benefits for broadcasters and consumers of the
    service features offered by the ATSC PSIP specification. We do not,
    however, have sufficient information at this time to make a
    determination as to whether there are reasons that would warrant
    that we should include the PSIP specification in our rules and, if
    so, the service obligations that would also attach to its use. In
    view of the broadcast and consumer electronics industries' support
    for incorporation of this specification in the rules, we therefore
    will address the possible adoption of the ATSC PSIP specification
    into the rules in the Notice of Proposed Rule Making in our
    forthcoming Second Review of our policies for the DTV transition. In
    the interim, we will continue to support and encourage the voluntary
    use of the PSIP specification by broadcasters and cable operators
    and its inclusion in consumer electronics equipment. We also will
    include a reference to the ATSC PSIP Standard in Section 73.682(d)
    of the rules as a document that licensees may consult for guidance.

    C. Other Issues

56. *Receiver Labeling*. In the *Report and Order/Further Notice*, we
    observed that digital television receivers, *i.e.* devices with
    integrated displays as opposed to set-top receiving devices that do
    not include displays, could be marketed that do not have the
    capability to receive over-the-air broadcast signals. For example,
    receivers intended only for use in receiving digital cable or direct
    broadcast satellite service might not include the capability to tune
    over-the-air broadcast television signals. We indicated that while
    we are not aware that any such receivers are being marketed at this
    time, such devices would be permissible under our rules.[^86] We
    stated that if manufacturers chose to produce receivers that could
    be used with digital cable systems but could not receive digital
    broadcast signals, we believed that consumers should be so notified
    prior to purchase. We therefore sought comment on whether any
    manufacturers are producing or plan to produce digital television
    receivers that can receive digital cable transmissions, but are
    incapable of receiving digital broadcast signals over-the-air. We
    also sought comment on whether we should require any digital
    television receivers that cannot receive over-the-air digital
    broadcast signals to carry a label informing consumers of this
    limitation on the receivers\' functionality.

57. MSTV/NAB/ALTV agree with our assessment that consumers will continue
    to expect that broadcast digital television receivers will be able
    to receive over-the-air DTV broadcast signals. They state that the
    expectation that a television set will receive over-the-air signals
    is so universally held and deeply ingrained that consumers must be
    made aware if this expectation will not be met. MSTV/NAB/ALTV
    therefore submit that we should require that manufacturers label DTV
    sets that are not capable of receiving over-the-air DTV signals.
    They state that to the extent that the Commission already has
    defined labels for DTV receivers marketed as "cable ready" or "cable
    compatible," we should adapt those labels as follows:

    Digital Cable \[or DBS\] Ready \[1,2,or 3\] Only

    Will Not Receive

    Over-The-Air Broadcast Signals

    They state that these labels would be strictly factual and would not
    make any value judgment about the lack of over-the-air reception
    capability.

58. CEA, Motorola and Thomson oppose a labeling requirement for
    television receivers that are not equipped to receive over-the-air
    broadcast TV signals, arguing that voluntary industry labeling can
    adequately address concerns regarding information on DTV set
    capabilities and that no further government regulation is
    necessary.[^87] CEA submits that, at present, it is not aware of any
    commercially available digital cable receivers, *i.e.*, navigation
    devices, on the market, as important issues of compatibility and
    conditions for interconnection, such as copy protection
    requirements, remain unresolved. It submits that when such products
    do become available, a labeling requirement will be unnecessary
    because consumers are quite capable of distinguishing among the
    broad categories of video reception, such as broadcast, cable and
    satellite. CEA further states that manufacturers and retailers have
    no incentive to mislead consumers about the relative capabilities of
    various video products, but do possess powerful incentives to inform
    consumers accurately about such products so as to ensure customer
    satisfaction, avoid returns of sales, and make sales of
    complementary products. CEA and Thomson also point out that settling
    on the exact phrasing of such a label and its applicability could be
    very difficult to resolve.

59. Upon reviewing the record on this issue, we will not, at this time,
    require television receivers that cannot receive over-the-air
    digital broadcast signals to carry a label informing consumers of
    this limitation. At this point, we do not know when -- or if -- such
    products will become commercially available or how they will be
    marketed. We will continue to monitor the state of the marketplace
    and will take additional steps if necessary to protect consumers'
    interests.

60. *DTV Receiver Performance Standards*. In the *Report and
    Order/Further Notice*, we denied a request by parties representing
    broadcast television interests that we establish minimum performance
    standards for DTV receivers. In making this decision, we reiterated
    the position we took on this issue in the DTV proceeding, namely
    that we believe competitive market forces will ensure that DTV
    receivers perform adequately.[^88] We noted that receiver
    performance involves trade-offs among many different factors and
    that manufacturers are generally in the best position to determine
    how these trade-offs should best be made to meet consumer demand. We
    also observed that TV receiver manufacturers, driven by market
    forces, are continuing to make significant improvements in their
    products, particularly in the area of indoor reception and multipath
    signal handling capabilities. In this regard, we agreed with parties
    representing TV receiver manufacturers that the effect of setting
    DTV receiver standards at this point would be to stifle innovation
    and limit performance to current capabilities. We further observed
    that, as acknowledged by those pressing for DTV receiver standards,
    more work is needed before it would even be possible to make
    specific proposals for such standards. In addition, we noted that
    further enhancements to the 8-VSB modulation standard are being
    developed through the ATSC process. We did indicate, however, that
    we would continue to monitor receiver issues throughout the
    transition and would take appropriate action on receiver standards
    if necessary.

61. In its Petition for Reconsideration, MSTV/NAB/ALTV asks that we
    reconsider our decision not to impose minimum performance thresholds
    for DTV receivers if manufacturers do not promptly implement
    performance standards on their own.[^89] They contend that mandatory
    receiver performance standards are needed to protect consumers and
    provide a realistic opportunity for the public to experience DTV
    services. MSTV/NAB/ALTV argues that their in-depth study of 8-VSB
    receiver performance includes data that contradicts our assessment
    that market forces are driving manufacturers to achieve adequate
    performance levels in their sets.[^90] They argue that the data from
    their study indicates that while receiver improvements are being
    made, progress is slow and inadequate. They further argue that we
    provided no support for our position that performance thresholds
    would stifle innovation and limit performance to current
    capabilities, noting, for example, that after the Commission imposed
    UHF noise figure thresholds for analog TV receivers in 1962,
    receiver noise figure performance continued to improve substantially
    beyond those requirements.[^91] Finally, MSTV/NAB/ALTV argue that we
    provided no support for our position that more work was needed
    before it would be possible to formulate specific proposals for
    performance thresholds.

62. MSTV/NAB/ALTV argue that we should adopt the same minimum levels of
    performance for DTV receivers with respect to receiver noise
    figures, carrier-to-noise ratios, and co-channel/adjacent
    channel/taboo channel desired-to-undesired (D/U) ratios that were
    assumed when creating the coverage and interference figures used in
    developing the DTV Table of Allotments.[^92] They state that these
    thresholds would ensure a minimum level of receiver quality and
    would not dictate to manufacturers how they are to be met. They are
    concerned that unless DTV receivers are capable of operating at the
    performance levels used in the Commission's DTV planning factors,
    the coverage and interference predictions developed in the DTV
    proceeding will not accurately reflect the service available to
    American viewers. MSTV/NAB/ALTV submit that adopting these
    thresholds as receiver performance standards would be the first step
    in remedying many of the performance shortfalls experienced by DTV
    viewers. They further argue that multipath immunity thresholds are
    necessary and that we should commit to adopting such standards once
    MSTV/NAB/ALTV has completed them.

63. CEA submits that we were correct in our decision in the *First
    Report and Order* declining to adopt mandatory minimum DTV receiver
    performance standards.[^93] It argues that such standards are not
    necessary as a matter of policy and that we do not have authority to
    impose them on manufacturers in any event. CEA submits that the DTV
    equipment market is thriving, consumer purchases of DTV equipment
    are increasing almost exponentially, and that this progress will
    only be compounded now that the DTV transmission standards debate
    has been resolved. It states that receivers produced in the
    competitive consumer electronics marketplace almost constantly are
    being redesigned and improved. It argues that if minimum performance
    standards were imposed, what was intended to be a "floor" on
    performance would in effect become a "ceiling," to the detriment of
    consumers.[^94] CEA submits that if left to compete, manufacturers
    will have the incentive to "raise the bar" on receiver performance.
    It points to a recently released study by the ATSC Task Force on RF
    System Performance that states that "... more recently designed
    receivers demonstrate *significant* \[emphasis in original\]
    improvements in multipath tolerance compared to first-generation
    receivers" and that improvements have been made in other areas of
    receiver design including the RF front end, the automatic gain
    control (AGC) and other tracking loops.[^95] It further notes our
    Office of Engineering and Technology's field study of DTV receiver
    performance (OET DTV Receiver Study) indicates that there are
    statistically significant differences in performance between
    first-generation and third-generation receivers.[^96]

64. We believe that competitive forces are generally the best approach
    for ensuring that DTV receivers perform adequately. This position is
    consistent with our longstanding approach to authorization of radio
    services in which we generally define service areas, operating
    limits for transmitters, and interference protection criteria and
    then allow manufacturers to design and market receiving equipment to
    operate within the specified operating environment. This approach
    permits the marketing of receiving equipment that meets a broad
    range of consumer needs in terms of price, quality, performance, and
    features. In order to maximize the opportunity for development of a
    variety of products that meet these needs, we believe it is best to
    limit our intervention in the receiver market to instances where
    there are clear problems of performance or capability that could
    affect the successful operation of an important service. Such was
    the case with the UHF tuner requirements and the associated noise
    figure standards for UHF tuners that the Commission adopted under
    the ACRA. More recently, we addressed the issue of multipath
    performance in DTV receivers. In each of these cases, we limited our
    involvement to the minimum necessary to address specific receiver
    performance deficiencies.

65. We see no apparent problems in the performance of the current
    generation of DTV receivers that would warrant further intervention
    on our part at this time. As shown by the results of the OET DTV
    Receiver Study, the third generation DTV receivers provided
    unimpaired service at 97% of the locations tested with an antenna
    30' high and 85% of the locations tested with an antenna 7'
    high.[^97] We also observe that the TV service model does not assume
    service at all locations within a station's predicted service area,
    recognizing that terrain, structures and foliage will affect
    propagation. For example, at the Grade B contour (the edge of a
    station's service area) service is expected at only 50% of the
    locations 90% of the time (F(50,90)) and at the Grade A contour
    (closer in towards the transmitter) service is expected at only 70%
    of the locations 90% of the time F(70,90)).[^98] The OET study
    results, which were taken over a number of sites randomly selected,
    appear well within the performance expectations for DTV service with
    respect to noise and equalizer performance. We further observe that
    the OET DTV Receiver Study found that the DTV receivers tested
    performed considerably better in comparison to the NTSC receiver
    that was tested simultaneously at the at the same sites. The NTSC
    receiver provided an acceptable picture at 66% of the test locations
    with the 30' antenna and 27% of the locations with the 7' antenna.
    We also note CEA's comment that the broadcast industry's 8-VSB/COFDM
    Project found that "\[n\]early half of all indoor reception failures
    in the MSTV/NAB tests were due simply to insufficient signal
    strength."[^99] While these field measures did not provide specific
    information on receivers' ability to perform in the presence of
    signals on adjacent channels and taboo channels, *i.e.* channels
    more than plus or minus one channels away from the channel on which
    a station is operating, there were both DTV and NTSC signals at
    significant levels on adjacent and taboo channels during all of
    these field testing efforts. Again, the high levels of successful
    reception observed in the testing appear to indicate that DTV
    receivers perform acceptably.

66. We do, however, recognize the interests of broadcasters in seeking
    to improve the performance of DTV receivers generally in order to
    maximize the ability of all consumers in a station's service area to
    actually be able to receive service. In this regard, we encourage
    them to continue to work with consumer electronics manufacturers to
    further improve the performance levels of DTV receivers. Receiver
    manufacturers are continuing their work in this area and so there is
    opportunity for broadcasters to participate in that process. One
    aspect of broadcasters' involvement could be to determine whether
    voluntary industry receiver performance standards are needed and if
    so, to develop such standards.

67. While the DTV planning factors suggested by MSTV/NAB/ALTV reflect
    the industry and Commission's view of what could be considered
    typical DTV receiver performance and might serve as a starting place
    for discussions with consumer electronics manufacturers, there are
    other considerations such as price and a consumer's location within
    a station's service area that might not make those performance
    specifications ideal for all receivers. Again, we believe these
    matters are best left to the industries to resolve. Accordingly, we
    are denying MSTV/NAB/ALTV's request that we act to impose minimum
    performance thresholds for DTV receivers if manufacturers do not
    promptly implement performance standards on their own.

IV\. ADMINISTRATIVE MATTERS

68. *Paperwork Reduction Act Analysis*. This Second Report and Report
    and Order and Second Memorandum Opinion and Order has been analyzed
    with respect to the Paperwork Reduction Act of 1995, and found to
    impose no new or modified reporting and recordkeeping requirements
    or burdens on the public.

69. *Accessibility*. Accessible formats (computer diskettes, large
    print, audio recording and Braille) are available to persons with
    disabilities by contacting Brian Millin, of the Consumer &
    Governmental Affairs Bureau, at (202)418-7426, TTY (202) 418-7365,
    or at [bmillin@fcc.gov]{.underline}.

70. *Final Regulatory Flexibility Analysis*. As required by the
    Regulatory Flexibility Act (RFA),[^100] the Commission has prepared
    a Final Regulatory Flexibility Analysis (FRFA) of the possible
    impact on small entities of the rules adopted in this Second Report
    and Order and Second Memorandum Opinion and Order.[^101] The FRFA is
    set forth in Appendix C.

71. *Additional Information*. For additional information on this
    proceeding, please contact Alan Stillwell of the Office of
    Engineering and Technology at (202) 418-2470.

    V. ORDERING CLAUSES

72. Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in Sections 1, 2(a), 4(i),7, and 303 of the Communications Act of
    1934 as amended, 47 U.S.C. §§ 1, 2(a), 4(i), 7 and 303, Part 73 of
    the Commission's rules, 47 C.F.R. Part 73, IS AMENDED as set forth
    in Appendix B of this Second Report and Order and Second Memorandum
    Opinion and Order.

73. IT IS FURTHER ORDERED that the Petition for Clarification and
    Reconsideration filed by the Consumer Electronics Association, the
    Petition for Partial Reconsideration filed by Thomson Multimedia,
    Inc., and Petition for Reconsideration filed by the Association for
    Maximum Service Television, Inc, the National Association of
    Broadcasters, and the Association of Local Television Stations
    regarding issues in the *Report and Order and Further Notice of
    Proposed Rule Making* in this proceeding ARE DENIED.

74. IT IS FURTHER ORDERED that, pursuant to the Contract with America
    Advancement Act of 1996, the rule amendments set forth in Appendix A
    SHALL BE EFFECTIVE sixty days after publication in the Federal
    Register.

75. IT IS FURTHER ORDERED that the Commission's Consumer and
    Governmental Affairs Bureau, Reference Information Center, SHALL
    SEND a copy of this Second Report and Order and Second Memorandum
    Opinion and Order, including the Final Regulatory Flexibility
    Analysis, to the Chief Counsel for Advocacy of the Small Business
    Administration.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Marlene H. Dortch
>
> Secretary

**APPENDIX A**

**PARTIES SUBMITTING COMMENTS, RELY COMMENTS, PETITIONS AND RESPONSES TO
PETITIONS**

[Commenting Parties]{.underline}

1\. Advanced Television Systems Committee

2\. The Association for Maximum Service Television, Inc., the National
Association of

Broadcasters, and the Association for Local Television Stations, Inc.
(filing jointly)

3\. The Consumer Electronics Association

4\. Florida Consumer Action Network

5\. Massachusetts Consumers' Coalition

6\. Motorola, Inc.

7\. Paxson Communications Corporation

[Replying Parties]{.underline}

1\. The Association for Maximum Service Television, Inc., the National
Association of

Broadcasters and the Association for Local Television Stations, Inc.
(filing jointly)

2\. Thomson Multimedia, Inc.

[Petition for Reconsideration]{.underline}

1\. The Association for Maximum Service Television, Inc., the National
Association of

Broadcasters, and the Association for Local Television Stations, Inc.
(filing jointly)

2\. The Consumer Electronics Association ("Petition for Clarification
and Reconsideration")

3\. Thomson Multimedia, Inc. (titled "Petition for Partial
Reconsideration)

[Responses to Petition for Reconsideration]{.underline}

1\. The Association for Maximum Service Television, Inc., the National
Association of

Broadcasters, and the Association for Local Television Stations, Inc.
(filing jointly, "Opposition to Petition for Reconsideration")

2\. The Consumer Electronics Association ("Opposition .... to the
Petition for Reconsideration filed By MSTV/NAB/ALTV")

**APPENDIX B**

**RULE CHANGES**

Part 15 of Title 47 of the Code of Federal Regulations is amended as
follows:

1\. The authority citation for Part 15 continues to read as follows:

Authority: 47 U.S.C. 154, 303, 303, 304, 307, and 554A.

2\. Section 15.117 of the rules is amended by revising paragraph (a),
adding new paragraphs (h) and (i) and re-designating the existing
paragraph (h) as paragraph (j) to read as follows:

§ 15.117 TV broadcast receivers.

\(a\) All TV broadcast receivers shipped in interstate commerce or
imported into the United States, for sale or resale to the public, shall
comply with the provisions of this section, except that paragraphs (f)
and (g) shall not apply to the features of such sets that provide for
reception of digital television signals. The reference in this section
to TV broadcast receivers also includes devices, such as TV interface
devices and set-top devices that are intended to provide audio-video
signals to a video monitor, that incorporate the tuner portion of a TV
broadcast receiver and that are equipped with an antenna or antenna
terminals that can be used for off-the-air reception of TV broadcast
signals, as authorized under part 73 of this chapter.

\*\*\*\*\*

\(h\) Digital television reception capability. TV broadcast receivers
are required only to provide useable picture and sound commensurate with
their video and audio capabilities when receiving digital television
signals.

\(i\) Digital television reception capability implementation schedule.
(1) Responsible parties, as defined in Section 2.909 of this chapter,
are required to equip new TV broadcast receivers that are shipped in
interstate commerce or imported from any foreign country into the United
States and for which they are responsible to comply with the provisions
of this section in accordance with the following schedule:

-   Receivers with screen sizes 36" and above- 50% of all of a
    responsible party's units must include DTV tuners effective July 1,
    2004; 100% of such units must include DTV tuners effective July 1,
    2005

-   Receivers with screen sizes 25" to 36"- 50% of all of a responsible
    party's units must include DTV tuners effective July 1, 2005; 100%
    of such units must include DTV tuners effective July 1, 2006

-   Receivers with screen sizes 13" to 24"- 100% of all such units must
    include DTV tuners effective July 1, 2007

-   Other devices (videocassette recorders (VCRs), digital video disk
    and digital versatile disk (DVD) players/recorders, etc.) that
    receive television signals- 100% of all such units must include DTV
    tuners effective July 1, 2007.

    \(2\) For purposes of this implementation schedule, screen sizes are
    to be measured diagonally across the picture viewing area. The
    requirement for equipping new TV broadcast receivers with DTV
    reception capability does not apply to units with integrated
    tuners/displays that have screen sizes measuring less than 7.8
    inches vertically, *i.e.*, the vertical measurement of a screen in
    the 4:3 aspect ratio that measures 13" diagonally across the picture
    viewing area.

    \(3\) Responsible parties may include combinations of DTV monitors
    and set-top DTV tuners in meeting the required percentages of units
    with a DTV tuner if such combinations are marketed together with a
    single price.

    \(j\) \*\*\*

    Part 73 of Title 47 of the Code of Federal Regulations is amended as
    follows:

    3\. The authority citation for Part 73 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, 334, 336

    4\. Section 73.682, paragraph (d) is amended by revising it to read
    as follows:

    § 73.682 TV transmission standards.

    \* \* \* \* \*

    \(d\) *Digital broadcast television transmission standard*.
    Transmission of digital broadcast television (DTV) signals shall
    comply with the standards for such transmissions set for in Advanced
    Television Systems Committee (ATSC) Doc. A/52 ("ATSC Standard Audio
    Compression (AC-3), 20 Dec '95") and ATSC Doc. A/53B ("ATSC Digital
    Television Standard, 7 Aug '01, except for Section 5.1.2
    ("Compression format constraints") of Annex A ("Video Systems
    Characteristics") and the phrase "see Table 3" in Section 5.1.1
    Table 2 and Section 5.1.2 Table 4. Although not incorporated herein
    by reference, licensees may also consult ATSC Doc. A/54 (Guide to
    Use of the ATSC Digital Television Standard, 4 Oct '95") and ATSC
    Doc. A/65 (Program System and Information Protocol (PSIP) Standard,
    23 Dec '97) for guidance. This incorporation by reference was
    approved by the Director of the Federal Register in accordance with
    5 U.S.C.(a) and 1 CFR part 51. Copies may be inspected at the
    Federal Communications Commission, 445 12^th^ St., SW, Washington,
    DC 20554 or at the Office of the Federal Register, 800 N. Capitol
    St., NW, Washington, DC. Copies of ATSC A/52, A/53, A/53, and A/65
    can be obtained from the Commission's contract copier or from the
    Advanced Television Systems Committee, 1750 K St., NW, Washington,
    DC 20006. They are also available in their entirety on the Internet
    at http//:www.atsc.org.

    **APPENDIX C**

    **FINAL REGULATORY FLEXIBILITY ANALYSIS**

As required by the Regulatory Flexibility Act (RFA),[^102] an Initial
Regulatory Flexibility Analysis (IRFA) was incorporated in the *Report
and Order and Further Notice of Proposed Rule Making* in MM Docket No.
00-39 (*Report and Order/Further Notice*)."[^103] The Commission sought
written public comment on several issues concerning the transition to
digital television (DTV), including comment on the IRFA. This Final
Regulatory Flexibility Analysis (FRFA) conforms to the RFA.[^104]

**A.** **Need for, and Objectives of, the Report and Order:**

Beginning in 1987, the Commission undertook to bring the most up-to-date
technology to broadcast television. That resulted in several Commission
decisions including those adopting a digital television (DTV) standard,
DTV service rules, and a Table of DTV Allotments. The Table of DTV
Allotments provides each existing television broadcaster with a second
channel on which to operate a DTV station for the transition period
after which one of its channels will revert to the government for use in
other services. The transition deadline established by Congress is
December 31, 2006. The Commission is permitted to extend that deadline
on a market-by market basis if more than 15 percent of viewers will be
left without service from 1) a digital television receiver; 2) an analog
television receiver equipped with a digital/analog converter; or 3) a
multi-channel video provider that carries local broadcast stations. The
Commission has determined that a requirement to include DTV reception
capability in new television sets is necessary due to the lack of
progress by the market in including DTV reception capability in new
television receivers. In particular, the Commission is concerned that
continued marketing of analog-only TV sets can only serve to delay the
transition. In order for the DTV transition to move forward towards the
year 2006 target completion date established by Congress, or thereafter
as close to that date as possible, receivers with DTV capability need to
be on the market in quantity and at reasonable prices very soon.

Since it was adopted by the Commission in 1996, the DTV transmission
standard has been updated by its developers to include new features and
to improve several aspects of its performance. The rules need to be
revised to allow television stations to implement these new features and
improvements.

**B. Summary of Significant Issues Raised by Public Comments in Response
to the IRFA:**

No comments were filed in response to the IRFA.

**C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply:**

The RFA directs agencies to provide a description of, and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted.[^105] The RFA defines the
term "small entity" as having the same meaning as the terms "small
business," "small organization," and "small governmental
jurisdiction.[^106] In addition, the term "small business" has the same
meaning as the term "small business concern" under section 3 of the
Small Business Act.[^107] 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
SBA.[^108]

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 \[SBA\] 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." A "small organization" is generally "any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field."[^109] Nationwide, as of 1992, there were
approximately 275,801 small organizations.[^110] "Small governmental
jurisdiction" generally means "governments of cities, counties, towns,
townships, villages, school districts, or special districts with a
population of less than 50,000."[^111] As of 1992, there were
approximately 85,006 local governments in the United States.[^112] This
number includes 38,978 counties, cities, and towns; of these, 37,566, or
96 percent, have populations of fewer than 50,000.[^113] The Census
Bureau estimates that this ratio is approximately accurate for all
governmental entities. Thus, of the 85,006 governmental entities, we
estimate that 81,600 (91 percent) are small entities.

Rules adopted in this proceeding will apply to manufacturers of
television transmitting and receiving equipment and to television
stations. The SBA has established a small business size standard for
Radio and Television Broadcasting and Wireless Communications Equipment
Manufacturing. Under this standard, business firms are considered small
if they have 750 or fewer employees.[^114] Census data for 1997 indicate
that, for that year, there were a total of 1,215 establishments[^115] in
this category.[^116] Of those, there were 1150 that had employment under
500, and an additional 37 that had employment of 500 to 999. The
percentage of broadcast equipment manufacturers to others in this
category is approximately 22%,[^117] so we estimate that the number of
broadcast equipment manufacturers with employment under 500 was actually
closer to 253, with an additional 8 establishments having employment of
between 500 and 999. Television manufacturers alone (*i.e*., without
radio) accounted for yet smaller numbers. Given the above, we estimate
that the great majority of television broadcasting equipment
manufacturers are small.

The SBA has also established a small business size standard for Audio
and Video Manufacturing, which includes the manufacturing of television
sets. Under this standard, business firms are considered small if they
have 750 or fewer employees.[^118] Census data for 1997 indicate that,
for that year, there were a total of 554 establishments in this
category.[^119] Of those, there were 542 that had employment under 500,
and an additional 9 that had employment of 500 to 999.[^120] The
percentage of television set manufacturers to others in this category is
approximately 6.3%,\[FN H\] so we estimate that the number of broadcast
equipment manufacturers with employment under 500 was actually closer to
34, with an additional zero or one establishment having employment of
between 500 and 999. Given the above, we estimate that virtually all
television set manufacturers are small.

The SBA defines small television broadcasting stations as television
broadcasting stations with \$10.5 million or less in annual
receipts.[^121] According to Commission staff review of the BIA
Publications, Inc., Master Access Television Analyzer Database, fewer
than 800 commercial TV broadcast stations (65%) subject to our proposal
have revenues of less than \$10.5 million dollars. We note, however,
that under SBA's definition, revenues of affiliates that are not
television stations should be aggregated with the television station
revenues in determining whether a concern is small. Therefore, our
estimate may overstate the number of small entities since the revenue
figure on which it is based does not include or aggregate revenues from
non-television affiliated companies. It would appear that there will be
no more than 800 entities affected.

## D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements:

The actions taken in the Second Report and Order and Second Memorandum
Opinion and Order impose no reporting or recordkeeping requirements on
television broadcast stations, large or small, or on manufacturers of
television transmitting or receiving equipment, large or small. The only
compliance burden adopted in this Second Report and Order and Second
Memorandum Opinion and Order is the requirement that new television
receivers be capable of tuning over-the-air DTV signals, which is
described in Section E, *infra*.[^122]

E.  **Steps Taken to Minimize Significant Impact on Small Entities, and
    Significant Alternatives Considered:**

The RFA requires an agency to describe any significant alternatives that
it has considered in reaching its proposed 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.[^123]

The Commission recognizes that requiring DTV reception capability in new
television receivers that action will pose new burdens on consumer
electronics manufacturers, especially in the initial period when
production volumes are relatively low. It further recognizes that the
cost considerations associated with DTV reception capability are such
that it would not be economically feasible at this point in time to
include DTV capability in smaller screen receivers. However, as
production increases, the price and size of the components needed for
DTV reception will decline substantially, so that the incremental cost
of including that capability in TV receivers will eventually become low.

The plan for implementing the DTV tuner requirement adopted in the
Second Report and Order and Second Memorandum Opinion and Order is
designed to be as simple and inexpensive to manufacturers as possible,
including any small entities. This plan will minimize the impact on
receiver manufacturers by phasing the requirement in over time. By
applying the requirement first to large screen receivers, some models of
which now already include an integrated DTV tuner, the plan will provide
time for manufacturers to develop the economic efficiencies needed to
produce TV sets with DTV tuners at lower cost. Over time the percentage
of units that will have to have DTV reception capability will increase
and the requirement would also be extended to smaller screen units in
the same incremental manner. To minimize the impact on costs to
manufacturers, receivers will only be required to have the capability to
receive and decode over-the-air DTV signals. Thus, TV sets subject to
the requirement will only have to provide useable picture and sound
commensurate with their video and sound capabilities when receiving any
of the recognized ATSC video formats; there is no requirement for full
HDTV capability.

While extending the phase in period beyond July 1, 2007,[^124] would
have provided additional time for manufacturers to develop cost
reductions, the Commission found that imposing the requirement on all
receivers by this date was necessary in order to be consistent with the
statutory specification of this date as the target for completing the
DTV transition. The Commission also chose not to adopt an alternative
that would have based the measure of compliance on the percentage of
models that a manufacturer produces with DTV tuners. The plan adopted
bases the measure of compliance on a manufacturer's total production of
TV receivers. However, the Commission did allow manufacturers to include
set-top DTV tuners marketed together with a DTV-ready receiver in the
number of units that count towards meeting this requirement.

The Commission's action to update the DTV transmission standard to
reflect the most recent version that has been issued by the Advanced
Television Systems Committee is expected to have no adverse on any small
entity. In this regard, the changes in the most recent version are all
backwards compatible with the specifications of the version of the
standard that was previously adopted and thereby with the capabilities
of existing DTV transmission and receiving equipment.

As noted, we received comments asking, *inter alia*, that requirements
we adopt be phased in more quickly,[^125] and we chose instead to adopt
the phase in schedule described. We believe that rejecting the
alternative of a quicker transition will assist those manufacturers that
are also small entities.

**F. Report to Congress**

The Commission shall send a copy of the Second Report and Order and
Second Memorandum Opinion and Order in MM Docket No. 00-39, including
this FRFA, in a report to be sent to Congress pursuant to the
Congressional Review Act, *see* 5 U.S.C. § 801(a)(1)(A). In addition,
the Commission shall send a copy of the Second Report and Order and
Second Memorandum Opinion and Order in MM Docket No. 00-39, including
the FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the
Second Report and Order and Second Memorandum Opinion and Order in MM
Docket No. 00-39 and FRFA (or summaries thereof) will also be published
in the Federal Register. *See* 5 U.S.C. § 604(b).

**[SEPARATE STATEMENT OF CHAIRMAN MICHAEL K. POWELL]{.underline}**

*In the Matter of Review of the Commission's Rules and Policies
Affecting the Conversion to Digital Television -- MM Docket No. 00-39*

Every year, 25 million analog sets are sold in this country, their
purchasers blissfully unaware that their new sets come with a
government-mandated expiration date. Someday, analog broadcasting will
cease. When that time comes, consumers will expect their television sets
to go on working in the digital world just as they do today. This
includes the ability to receive broadcast signals. Indeed, the
expectation that TV sets receive broadcast signals is so ingrained that
consumers simply assume this functionality is incorporated into their
television set. That is what today's *Order* is all about.

There are approximately 81 million television sets in the U.S. (over 30%
of the total) that are not connected to any subscription video service
and rely solely on free, over-the-air broadcasting. Of those sets that
rely on over-the-air service, about 46.5 million are in broadcast-only
homes and 34.5 million are in homes that subscribe to a multichannel
video programming service. Thus, over-the-air tuners affect tens of
millions of consumers.

The Consumer Electronics Association ("CEA" or "Trade Association") has
been vehemently opposed to phasing in DTV tuners in television sets. The
Trade Association argues that those who want to watch over-the-air
digital broadcasting should be required to purchase an external set-top
box. This would be a far more expensive proposition for consumers, given
that these boxes currently cost about \$500. It is incredible that CEA
supports an alternative that would cost consumers 150% more than CEA's
own cost projections for the DTV tuner (\$500 for the set tot box vs.
\$200 for the tuner). If the Trade Association's concern about the cost
of integrated tuners is sincere, one wonders why they would suggest a
solution that would cost consumers more than twice as much. Moreover,
this is the same group that insists in other contexts \-- e.g., the need
for "plug and play" sets -- that consumers do not want a set-top box and
will not tolerate such an inconvenience. It is odd that they can be so
solicitous of consumer expectations in one context and so tone deaf to
them here.

Furthermore, CEA's claim that a tuner requirement would be an
unreasonable burden on television manufacturers is refuted by the
willingness of Thomson and Zenith to voluntarily incorporate DTV tuners
on a phased-in basis. In fact, Thomson is the leading television and
digital satellite receiver manufacturer in the United States selling
each year more than 4 million televisions and 2 million digital
satellite receivers. It strains credulity to believe that either of
these companies would voluntarily agree to a course of action likely to
result in the consequences suggested by the Trade Association. I applaud
Zenith and Thomson for their commitment to the DTV transition.

We recognize that a DTV tuner will initially add costs, but CEA's
exclusive focus on this incremental cost ignores the critical
functionality the tuner adds to the TV set. This *Order* simply gives
consumers what they receive today when they buy a box with pictures that
claims to be a TV set. The tuner is what makes *that* box a television
set. A true TV may cost a small amount more than a monitor, but the
consumer is getting much more capability. Imagine tuning in to an
emergency broadcast of an impending hurricane on an HDTV monitor. What
is that worth to consumers?

Furthermore, we are confident that economies and efficiencies of scale
will drive these costs down. Historical trends demonstrate this fact,
which CEA inexplicably ignores. Ironically, CEA, in its opposition to
the 1962 All Channel Receiver Act, claimed the UHF requirement would
increase the cost of television sets by 14%. In fact, set prices
actually *declined* following passage of the legislation.

Price sensitivity led us to phase in the tuner requirement over a five
year period. Initially it will only apply to the largest sets, where the
price impact would be the lowest. In fact, the prices of these large
sets have been declining at a rate of \$100 to \$800 per year, so the
additional cost of the DTV tuner may be partially or completely offset
by the general price decline. Most projections are within a general
range, from "about the same as an analog tuner" by the time a
requirement would apply to small-screen TVs (Zenith), to \$16 by 2006
(Arthur D. Little), to \$50 by 2006 (Motorola), to \$75 by 2007-2008
(Thomson). CEA, by contrast, declares that DTV tuners will retain a
\$200 premium "for the foreseeable future." Although a precise estimate
of future cost is difficult, it is not difficult to discern which
projections are within a zone of reasonableness and which is hyperbole.

Ultimately, the DTV transition will shift into high gear when three
factors come together: (1) a critical mass of compelling digital
content; (2) distribution of that content to consumers; and (3)
reception equipment in consumers' hands. We have been working on these
issues through our voluntary call to action and through Commission
proceedings such as the broadcast copy protection *NPRM* we initiate
today. Today's decision promotes the availability of reception
equipment, without which the first two factors are meaningless. We
readily admit that there are additional steps to take, such as the
development of "plug and play" sets for those cable subscribers who do
not want to use a set-top box. But simply because there is more work to
be done does not mean that we should defer the progress we can make
today.

In the end, we have to make a judgment about what is in consumers' best
interest; not in a vacuum, not in a hypothetical marketplace, but in the
real world. The All Channel Receiver Act and the DTV transition are
national commitments in which the FCC must play a prominent role. I
support today's action.

[SEPARATE STATEMENT OF]{.underline}

[COMMISSIONER KATHLEEN Q. ABERNATHY]{.underline}

*Re: Review of the Commission's Rules and Policies Affecting the
Conversion to Digital Television, MM Docket No. 00-39 (adopted August 8,
2002)*

Today's decision is a difficult balancing act between the need to
continue to promote the DTV transition and a desire to protect consumers
from excessive price increases for television sets. In addition, our
decision involves significant regulatory intervention in the
marketplace, something that I generally do not advocate because it can
distort competition and drive up prices for consumers. Nevertheless, I
support this decision for the following reasons: 1) the transition from
analog to digital television is statutorily mandated and is not driven
by market forces; 2) without the mass availability of television sets
that can receive over-the air digital signals the transition remains
stalled; 3) the phase-out of analog only television sets from the market
gives consumers access to digital broadcast signals during the
transition and protects consumers from disruption of service at the end
of the transition; and 4) consumers necessarily will face additional
costs as a result of the transition and it is our job to mitigate those
costs to the extent possible.

The transition to digital has never been a marketplace transition, but
one mandated by Congress. Congress set a target date of December 31,
2006 for the return of the spectrum used by broadcasters for their
analog channel, unless 85% of homes in a market cannot receive local
digital broadcast television signals. Until such time, the spectrum that
is currently used for analog channels cannot be made available for
public safety and other wireless uses. Yet, I don't believe we will
reach 85% of homes if analog only sets continue to be introduced into
the market and television sets that can receive over-the-air digital
signals are not widely available. Fewer than 16% of the DTV ready
receivers sold in 2001 had the capability to receive over-the-air
digital signals (through a set-top box or an integrated tuner). This
represents only 0.2% of television households. There also has been
little support from the consumer electronics industry as a whole for a
voluntary inclusion of DTV tuners in television sets. Thus, market
forces alone are not providing consumers with access to digital signals
and it is therefore appropriate and indeed necessary at this time for
the Commission to step in.

Moreover, consumers expect to receive over-the-air signals on the
television sets that they purchase -- whether it is the receipt of
digital signals during the transition, or the receipt of any broadcast
signal after the transition is over. Adopting a tuner requirement will
ensure that consumer expectations are met and will limit the number of
new sets being purchased today that will become obsolete at the end of
the transition. Despite the increasing proliferation of cable television
and direct broadcast satellite service, a significant number of American
households continue to rely on over-the-air transmissions as their sole
source of television programming. Even households subscribing to a MVPD
frequently rely on over-the-air transmissions on one or more of their
receivers. In fact, over 30% of television sets in the U.S. (81 million)
are not connected to any MVPD service and receive all broadcast signals
over-the-air. Furthermore, unless cable and DBS carriage of digital
broadcast signals increases significantly, a digital tuner may be the
only access an MVPD household has to many digital broadcast services
during the transition.

I recognize that consumers necessarily will face additional costs as a
result of the transition and it is our job to mitigate those costs to
the extent possible. I believe that the five year phase in approach
adopted by the Commission today will mitigate such concerns and drive
down the costs of digital television equipment more quickly. The
incremental costs in the larger sets at the earlier stages will make up
a relatively small portion of the price of the set. Market efficiencies
will drive the price of tuners down so that by the time tuners are
required for smaller television sets, the costs will have greatly
decreased. Furthermore, the price of digital television sets has been
declining steadily (according to one consumer electronics manufacturer,
at a rate of approximately \$100 to \$800 per year for the large screen
sets), which could offset any increased costs associated with inclusion
of a DTV tuner. Imposing a tuner mandate also will ensure that consumer
electronic manufacturers can compete on a level playing field such that
the cost structure will be the same for all, and the increased volumes
will drive down the costs for the benefit of all.

Today, we are taking a step forward in the digital transition, but it is
one of many steps that must be taken. The Commission also has been
considering copyright, "plug and play" cable compatibility, and
must-carry issues. I do not believe, however, that we should be at a
standstill until all these issues are resolved at once. Such inaction
now will only serve to delay the transition, rather than act as a
catalyst for advancing the transition. I also am pleased that we will
address inclusion of PSIP as a mandatory part of the standard in the
next DTV periodic review. I am particularly concerned about whether PSIP
is necessary for the use of V-chip technology and I look forward to
continuing the dialogue on this issue.

**[SEPARATE STATEMENT OF COMMISSIONER MICHAEL J. COPPS]{.underline}**

*Re: In the Matter of Review of the Commission's Rules and Policies
Affecting the Conversion To Digital Television, MB Docket No.00-39*

This second item of the day reiterates the commitment of this Commission
to accelerate the country's transition to digital television. I support
the item because I believe it is a necessary step toward realizing our
statutory obligations with regard to DTV.

Let me say at the outset that I am altogether aware of the concern that
has been expressed over the initial impact a DTV tuner requirement could
have on consumer prices. Far from turning a blind eye to valid consumer
concerns by supporting this item, I believe that the action that we take
today will make DTV sets affordable for all consumers more quickly than
would be possible without today's Commission action. History indicates,
and some of the major manufacturers agree, that the costs of
incorporating DTV tuners into televisions set should fall fairly rapidly
as **all** sets include these tuners. In addition, the five year
phase-in schedule does not require the smallest and least expensive sets
to include tuners until 2007, by which time the cost of this technology
will no doubt be dramatically reduced. So the phased-in requirement we
adopt today, rather than increasing the costs of sets, should
significantly reduce the costs of DTV technology, which we hope and
expect will ameliorate what might otherwise be significant consumer
"sticker shock." Additionally, those of us who purchase new sets between
now and 2007 won't have to go out right after 2007, when these
relatively new receivers are still performing well, and buy another set
in order to receive digital programming. That would be sticker shock,
too.

There is no question that DTV is the wave of the future: Congress has
mandated the return of analog spectrum and the transition to digital
broadcasting; this Commission and its Chairman are committed to moving
the transition forward; and there are already some 400 stations across
the country broadcasting digital signals. But the high price and
scarcity of DTV-capable receivers that are on the market now are not
consistent with realizing the Congressional goal of transitioning to
digital television at such time as 85% of homes have digital reception
capability. Each time a consumer purchases an analog-only set, we move
further from reaching that 85% and further away from the Congressional
objective.

The acknowledgement by some manufacturers that a DTV tuner phase-in
requirement such as the one established in the Order is reasonable and
doable is a great boon to our efforts here. In addition, the rolling
phase-in requirement provides manufacturers with the flexibility to
reach the goal post on a faster schedule. Although manufacturers will
not be **required** to fully complete the phase-in until 2007, there is
nothing to prevent them from taking advantage of manufacturing,
technological, or other advances that might arise over the course of the
schedule that would allow manufacturers to incorporate DTV tuners into
more sets sooner.

The bottom line is that we must get the DTV transition back on track. I
believe this *Order* is a good step in the right direction.

Finally, I wish to emphasize that this *Order* is by no means the end of
the process. With some 70% of U.S. households subscribing to cable
television services, we must quickly address cable compatibility issues
for the digital transition to succeed. Ideally a solution on those
issues would track the time-frames established in today's *Order*.
Consumers deserve, and must have, that kind of certainty. I understand
that, from a technical standpoint, this may be a bit farther from
resolution than the digital broadcast tuner. But I hope the players can
speed up their progress on the cable compatibility issues, and I look
forward to working with my colleagues, the industry, and all interested
stakeholders to resolve.

**[DISSENTING STATEMENT OF COMMISSIONER KEVIN J. MARTIN]{.underline}**

*Re: Review of the Commission's Rules and Policies Affecting the
Conversion To Digital Television, Second Report and Order and Second
Memorandum Opinion and Order, MM Docket No. 00-39, Adopted August 8,
2002*

First, I commend the Chairman for bringing this tough issue to a vote.
As I have said previously, I believe it is extremely important for the
Commission to resolve outstanding DTV-related issues quickly so that
affected industries and consumers know the rules of the road. While I
believe the costs of this isolated proposal outweigh the benefits, as I
explain below, I appreciate that with every DTV-related decision this
Commission makes, we further clarify those rules of the road. Indeed, I
would have gone farther. I firmly believe that such clarity is what is
needed to spur the digital transition, and I encourage the Commission to
continue to actively resolve outstanding issues.

Generally, I prefer market-based forces to government regulation, and I
am particularly cautious when regulation imposes a cost to consumers or
requires consumers to purchase a product they may not use. In such
situations, I believe the better course of action usually is to refrain
from regulation and instead to provide consumers with a choice. If
government intervention is necessary, however, I believe it must be
clear that the benefits outweigh the costs.

Currently, consumers can choose whether to spend the extra money to
purchase a television that includes a digital tuner. This Order sets out
deadlines by when television manufacturers *must* include digital
tuners, so that all but the smallest televisions will be able to receive
digital broadcast signals "over the air." Today, however, few consumers
receive their video programming only through over the air broadcasting.
Instead, the vast majority of consumers receive broadcast programming
through their cable or satellite provider. Even as the transition to
digital is made, these consumers will probably prefer to continue to
receive their video programming through cable or satellite. Thus, taking
action on digital broadcast tuners alone, as we do to today, confers a
real benefit only on the relatively small percentage of consumers
(approximately fifteen percent) who do not rely on cable or satellite
for broadcast reception. The costs, however, will be borne by every
consumer who buys a television. I therefore fear that the costs of this
requirement, as an isolated action, exceed the benefits, and I am not
persuaded that it is the right step.

On the other hand, if we were to resolve the digital cable and broadcast
tuner issues together, we would create a significantly greater benefit
for consumers with relatively little additional cost. It is my
understanding that manufacturers can integrate digital broadcast and
cable reception capabilities, thereby incorporating these functions into
televisions for approximately the same cost as the digital broadcast
tuner alone. The value of being able to view digital programming,
however, would accrue not just to consumers who rely on over-the-air
broadcast, but to the approximately 70 percent of consumers who access
their programming (including broadcast) via cable. Indeed, many of those
consumers would have additional savings as they would no longer need to
rent a set-top or "converter" box. Thus, if we were to ensure equipment
functionality and interoperability for all digital cable systems by
requiring the cable industry to adopt a single standard, then
manufacturers could build "digital cable ready" sets that also
incorporate broadcast tuners. This action would impose approximately the
same cost on consumers as the Order does today, yet would enable
significantly more consumers to receive more digital programming. And if
we were also to resolve outstanding cable carriage issues, we could
further increase the amount of digital broadcast programming these
consumers could access.

I nevertheless am hopeful that, in addition to concluding this
proceeding today, we will resolve outstanding issues relating to cable
carriage and cable compatibility in the very near future. I believe that
such steps will facilitate and accelerate this country's transition to
digital television.

[^1]: *Report and Order and Further Notice of Proposed Rule Making* in
    MM Docket No. 00-39, 16 FCC Rcd 5946 (2001). In the *Memorandum
    Opinion and Order* (*MO&O*) in this proceeding, we indicated that
    the proceeding was terminated. However, therein we also indicated
    that the *Report and Order/Further Notice* in this proceeding raised
    several major technical issues that were not resolved in the *MO&O*
    and that would be resolved in a separate Report and Order. *See*
    *Memorandum Opinion and Order* in MM Docket No. 00-39, 16 FCC Rcd
    20594 (2001), para. 2. Accordingly, we are correcting the
    inadvertent closing of this proceeding in the *MO&*O and are
    addressing the outstanding technical issues in this docket herein.

[^2]: All Channel Receiver Act of 1962, P.L. No. 87-529, 76 Stat. 150
    (codified at 47 U.S.C. 303(s)).

[^3]: *Fifth Report and Order* in MM Docket No. 87-268, 12 FCC Rcd 12809
    (1997) ¶ 41.

[^4]: *Notice of Proposed Rule Making* in MM Docket No. 00-39, 15 FCC
    Rcd 4257 (2000).

[^5]: *Report and Order/Further Notice* ¶¶ 103-110. In the subsequent
    *MO&*O the Commission addressed petitions for reconsideration of the
    service rules issues addressed in the *Report and Order/Further
    Notice*.

[^6]: *See* *Fourth Report and Order* in MM Docket No. 87-268, 11 FCC
    Rcd 17771 (1996); *see also* *Report and Order/Further Notice* ¶¶
    57-61.

[^7]: MSTV/NAB/ALTV comments at 1-2; Paxson comments at 7-8.

[^8]: MSTV/NAB/ALTV comments at 5.

[^9]: Id. at 6-7.

[^10]: Id. at 7-8.

[^11]: Paxson comments at 9.

[^12]: Motorola comments at 3.

[^13]: Motorola submits that its "M-DTV" module will enable standard
    definition TV (SDTV) sets using a 480 line interlaced NTSC display
    (480i) to decode any of the 18 ATSC video formats and convert them
    to 480i at 4:3 or 16:9 aspect ratio. It states that this module will
    also decode and convert Dolby AC-3 audio data to stereo audio for
    presentation to the internal audio system normally used for analog
    TV or output digital audio data for 5.1 channel decoding by an
    external audio decoder. Motorola further states that its M-DTV
    module will enable low-cost Enhanced Definition TV (EDTV) sets using
    a 480 line progressive scan display (480p). Motorola comments at 4.

[^14]: Motorola comments at 5.

[^15]: "Assessment of the Impact of DTV on the Cost of Consumer
    Television Receivers," Arthur D. Little, Inc., Cambridge,
    Massachusetts, September 10, 2001, submitted by the National
    Association of Broadcasters.

[^16]: The ADL Study indicates that the difference in price increase
    between low-end and high-end TV sets is due to: 1) the incremental
    costs of adding a DTV tuner to high-end models are typically about
    the half of the costs of adding a DTV tuner to low-end models
    because high-end sets already include some internal digital signal
    processing and memory components to support features such as
    picture-in-picture, line doubling resolution enhancement, etc.; 2)
    high-end models normally have a higher manufacturer price mark-up
    and higher retail profit margin. The study states that these
    differences translate to an incremental retail price increase to add
    a DTV receiver to a high-end set that is approximately 94% of the
    retail price to add a DTV receiver to a low-end model.

[^17]: "Forward pricing" is a strategy whereby manufacturers set a
    retail price lower than the manufacturing cost in anticipation of
    future cost reductions to stimulate sales.

[^18]: MSTV/NAB/ALTV comments at 9; Paxson comments at 2. *See also*, 47
    U.S.C. § 303(s).

[^19]: CEA comments at *i* and 2; Thomson reply comments at 1.

[^20]: CEA comments at 4.

[^21]: In its comments, CEA submits that fully integrated, wide-screen
    television sets with full HDTV display capabilities are now
    available at prices under \$3,000 and that this is more than a 50%
    price reduction since their introduction. It further indicates that
    for large screen projection televisions, consumers can now purchase
    DTV tuners and display units in approximately the same price range
    that existed for analog products several years ago. It submits that
    consumer purchases of HDTV monitors have moved from early adopters
    to the mainstream viewing public largely through the desire to view
    high quality digital content available on DVD recordings and
    satellite transmissions. CEA indicates that despite the relatively
    lower demand for over-the-air DTV broadcast receivers that it
    believes is due to lack of programming, a broad variety of DTV
    tuners and set-top converter boxes are now available at prices well
    below \$1,000 and approaching half that amount. It states that
    receivers with integrated DTV tuner/decoders (DTV tuner/decoder and
    display in the same unit) are also available.

[^22]: CEA comments at 9-10 and *i*.

[^23]: Thomson reply comments at 7-8.

[^24]: *See* Letter from FCC Chairman Michael K. Powell dated April 4,
    2002 to Senator Ernest F. Hollings and Congressman W.J. "Billy"
    Tauzin, re: Digital Television Plan.

[^25]: CEA comments at 12.

[^26]: *See* *ex parte* letter of August 1, 2002, by David R. Siddall,
    submitting "Comments of Coleman D. Bazelon and T. Christopher Borek
    Relating to Arthur D. Little, Inc.'s Assessment of the Impact of DTV
    on the Cost of Consumer Television Receivers," Analysis
    Group/Economics.

[^27]: AGE Comments at 1.

[^28]: This price increase is computed from the \$60 increase in
    manufacturer's cost plus \$15 for a 25% retail markup.

[^29]: CEA Petition for Clarification and Reconsideration at 3; Thomson
    Petition for Partial Reconsideration at 3.

[^30]: Senate Commerce Committee Report, S. Rep. No. 87-1526, 2d Sess.
    (1962), *reprinted in* 1962 U.S.C.A.A.N. Vol. 1, 1873.

[^31]: H.R. Rep. No. 87-1559 at 1 (1962). CEA Petition for Clarification
    and Reconsideration at 7; Thomson Petition for Partial
    Reconsideration at 5.

[^32]: *Sanyo Manufacturing Corp.*, 58 R.R.2d 719 (1985) (decision on
    reconsideration of *Sanyo Manufacturing Corp.*, 56 R.R.2d 681
    (1984).

[^33]: Thomson Petition for Partial Reconsideration at 6.

[^34]: CEA cites statements by the Commission's in the *Fifth Report
    and* Order in the DTV proceeding that refer to statements in the
    *Memorandum Opinion and Order/Third Report and Order/Third Further
    Notice of Proposed Rule Making* (MO&O/*Third Report and Order/Third
    Further Notice)* in that proceeding. *See* *Fifth Report and Order*,
    MM Docket No. 87-268, 12 FCC Rcd 12809 (1997) (citing *Memorandum
    Opinion and Order/Third Report and Order/* *Third Further Notice of
    Proposed Rule Making*, MM Docket No. 87-268, 7 FCC Rcd 6924 (1992).
    CEA comments at 13.

[^35]: *See MO&O/Third Report and Order/Third Further Notice* ¶¶ 81.

[^36]: Consumer Electronics Association White Paper regarding Digital
    Television Tuner Requirement, dated July 23, 2002 ("CEA White
    Paper").

[^37]: CEA White Paper, at 2-3.

[^38]: CEA White Paper, at 2.

[^39]: CEA White Paper, at 2-3.

[^40]: 47 U.S.C. § 330(a) (prohibiting the shipment of equipment
    described in section 303(s) of the Act that does not comply with
    applicable regulatory requirements).

[^41]: 47 U.S.C. § 330(b) (prohibiting the shipment of equipment
    described in 303(u) of the Act (closed captioning) that does not
    comply with regulatory requirements).

[^42]: 47 U.S.C. § 330(c) (prohibiting the shipment of equipment
    described in 303(x) of the Act (v-chip) that does not comply with
    regulatory requirements).

[^43]: The discussion herein pertains only to broadcast television
    receivers as defined in Section 15.(3)(w), *i.e.*, those intended
    for reception of service on the television channels authorized for
    service under Part 73 of the rules. See 47 C.F.R. 15(3)(w). The
    requirements adopted in this action do not apply to devices such as
    cable and satellite service receivers that are not designed to
    receive broadcast TV signals over-the-air.

[^44]: The ACRA states that the Commission shall "\[h\]ave authority to
    require that apparatus designed to receive television pictures
    broadcast simultaneously with sound be capable of adequately
    receiving all frequencies allocated by the Commission to television
    broadcasting \...." 47 U.S.C. 303(s).

[^45]: Senate Report, 1873. Even accepting *arguendo* CEA and Thomson's
    position that Congress did not intend the ACRA to give the
    Commission broad authority to set standards for television receiver
    performance and capabilities, other than mandating UHF/VHF receive
    capability, a requirement that new TV sets be capable of receiving
    DTV signals on all of the channels the Commission has allocated for
    television service is fully consistent with their narrow view of our
    authority, namely, that of establishing requirements to ensure that
    television receivers include the capability to adequately receive
    all UHF and VHF channels.^?^ (CEA Petition for Clarification and
    Reconsideration at p. 6; Thomson Petition for Partial
    Reconsideration at p. 4.) Inasmuch as DTV stations are assigned to
    UHF and VHF channels, in the absence of such requirements mandating
    UHF/VHF reception capability for DTV, consumers would not
    necessarily be able to receive all UHF and VHF channels on every
    marketed television set. For example, it would be allowable to
    market DTV sets that could only receive signals on VHF channels, or,
    given that the great majority of DTV operations during the
    transition are on UHF channels, to market sets that could only
    receive DTV signals on UHF channels. Nothing in the ACRA or its
    legislative history indicates that Congress intended such a result.

[^46]: *See* 1962 U.S.C.C.A.N. at 1876.

[^47]: *Id*.

[^48]: In *Electronic Industries Association Consumer Electronics Group
    v. FCC*, 636 F/2d 973 (D.C. Cir. 1988), the court rejected a
    decision by the Commission mandating certain performance standards
    for television tuners on such grounds -- *i.e.*, that the prescribed
    standards weren't currently attainable and that the Commission had
    mandated specific levels of performance that went beyond that which
    would ensure adequate reception.

[^49]: CEA White Paper, at 2-3.

[^50]: *Smith v. Pan Air Corp.*, 684 F.2d 1102, 1113 (5^th^ Cir. 1982).

[^51]: Senate Report, 1879-1880 (emphasis added). *See also, In the
    Matter of Amendment of Part 15 of the Rules and Regulations with
    Regards to All-Channel Television Broadcast Receivers*, Report and
    Order, 21 FCC 2d 245 ¶6 (1970). *See* *EIA vs. FCC*, 636 F.2d 689,
    695-96 (D.C. Cir. 1980).

[^52]: 47 U.S.C. § 330(a) (prohibiting the shipment of equipment
    described in section 303(s) of the Act that does not comply with
    applicable regulatory requirements).

[^53]: 47 U.S.C. § 330(b) (prohibiting the shipment of equipment
    described in 303(u) of the Act (closed captioning) that does not
    comply with regulatory requirements).

[^54]: 47 U.S.C. § 330(c) (prohibiting the shipment of equipment
    described in 303(x) of the Act (v-chip) that does not comply with
    regulatory requirements).

[^55]: Section 330 deals with the prohibition against shipment of
    certain television receivers. Subsections 330(b) (which covers
    closed captioning devices) and 330(c)(4) (which covers v-chip
    capabilities) contain a requirement that "\[a\]s new video
    technology is developed, the Commission shall take such action as
    the Commission determines appropriate" to ensure such services
    continue to be available to consumers. 47 U.S.C. §§ 330(b), (c)(4).
    By contrast, subsection 330(a), which covers equipment covered under
    the ACRA, does not contain any such provision.

[^56]: CEA White Paper, at 3 (*citing U.S. v. Juvenile No.1*, 118 F.3d
    298 (5^th^ Cir. 1997), *cert. denied*, 522 U.S. 976 and *cert.
    denied*, 522 U.S. 988 (1997)).

[^57]: *See generally, City of Columbus v. Ours Garage and Wrecker
    Service, Inc.*, \-- U.S. \--, 122 S.Ct. 2226 (2002) (refusing to
    apply presumption that the presence of a phrase in one provision and
    its absence in another reveals Congress' design, where there is
    otherwise no clear indication that Congress intended such a result).

[^58]: *See, U.S. v. Price*, 361, U.S. 304, 313 (1960) (views of a
    subsequent Congress form a hazardous basis for inferring the intent
    of an earlier one).

[^59]: Video game devices typically provide output signals in the NTSC
    format on the frequencies of channels 3 and 4 so that they can be
    viewed on regular TV receivers. The output is switchable between
    channels these two channels so that the user can select a channel
    that is not in use by a TV station in his/her local area.

[^60]: *See* *Report and Order/Further Notice*, ¶¶ 88-92.

[^61]: *See* Comments of the National Association of Broadcasters, *In
    the Matter of Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming*, CS Docket 01-129,
    filed Aug. 3, 2001. In that filing, NAB also indicated that the 81
    million sets includes 46.5 million sets in broadcast-only homes and
    34.5 million sets in households that subscribe to an MVPD. Its study
    further found that broadcast-only homes are more likely to be lower
    income and thus less able to afford a subscription service.

[^62]: Edward O. Fritts, President and CEO, National Association of
    Broadcasters, "Broadcasters Moving Forward on DTV," remarks to the
    Advanced Television Systems Committee Annual Membership Meeting,
    May 15, 2002.

[^63]: "U.S. TV Household Estimates," Nielsen Media Research, January
    2002.

[^64]: "DTV Guide," a supplement to "TWICE" (This Week In Consumer
    Electronics), Consumer Electronics Association, April 2002. HDTV
    monitors are capable of displaying HDTV programs (vertical
    resolution 720 lines or higher, 33.75 kHz@60 Hz or greater scanning
    frequency) provided through an external DTV tuner/decoder; enhanced
    definition are capable of displaying programming at enhanced
    resolution levels (such as vertical resolution 480p, 480i, and in
    some cases 720p or 1080i, 31.5 kHz or higher scanning frequency).

[^65]: *See* *Notice of Proposed Rule Making* in MM Docket No. 02-230,
    *Digital Broadcast Copy Protection*, released August 9, 2002, FCC
    02-231.

[^66]: *See* letter of May 1, 2002 from Robert Sachs, President and CEO
    of the National Cable Television Association to FCC Chairman Michael
    K. Powell.

[^67]: *See* 47 C.F.R. 2.909. Under Section 2.209, the party responsible
    for equipment such as television receivers that are subject to our
    "verification" equipment authorization procedure is the manufacturer
    or, in the case of imported equipment, the importer. If subsequent
    to manufacture and importation, the equipment is modified by any
    party not working under the authority of the responsible party, the
    party performing the modification becomes the new responsible party.

[^68]: The aspect ratio of a display screen is the ratio of its width to
    its height.

[^69]: CEA comments at 11.

[^70]: *See Letter from Richard M. Lewis, Senior Vice President, Zenith
    Electronics Corp. to FCC Chairman Michael* Powell, dated July 12,
    2002 at 1 ("Zenith letter").

[^71]: For example, in its *ex* parte letter of August 2, 2002, Thomson
    states that new DTV models and features historically been announced
    by manufacturers in July of every year, with actual retail
    availability coming in September. Thomson further states that not
    unlike the standard 18-month cycle required for the introduction of
    virtually all new CE products, this New Product Introduction cycle
    is adhered to by most CE manufacturers.

[^72]: Zenith letter at 1.

[^73]: CEA's assertion that a DTV tuner mandate would increase costs by
    \$200 for the foreseeable future is unsupported.

[^74]: We further note that in its comments at footnote 6, Motorola
    indicates that consumers would pay an average premium of 22% for DTV
    reception capability.

[^75]: 47 C.F.R. § 15.117.

[^76]: The requirements of Section 15.117 of the rules were originally
    adopted by the Commission in 1963 and have been amended numerous
    times over the years to reflect improvements in technology. *See*
    *Report and Order* in Docket No. 18433, 18 R.R.2d 1577 (1970).

[^77]: 47 C.F.R. § 15.117(a)-(e) and (h). Paragraphs (f) and (g) of
    Section 15.117 of the rules specify performance standards for the
    UHF portion of an analog TV receiver and therefore are not
    appropriate for DTV receivers. 47 C.F.R. §§ 15.117(f) and (g).

[^78]: *Report and Order/Further Notice* ¶¶ 93-96.

[^79]: *See* *Notice of Proposed Rule Making* in MM Docket No. 00-39, 15
    FCC Rcd 5257 (2000). The version currently specified in Section
    73.682(d) of the rules, 47 C.F.R. 73.682(d), is dated September 16,
    1995. Section 73.682(d) also specifies that DTV transmissions are
    not required to comply with portions of the ATSC DTV Standard that
    make reference to 18 specific mandatory video formats, defined in
    terms of, *e.g.*, screen aspect ratios, frame rates and type of
    scanning.

[^80]: *See* "Program and System Information for Broadcast and Cable,"
    Advanced Television Systems Committee, Doc. A/65, December 23, 1997.
    This document is available on the Internet at www.atsc.org.

[^81]: Use of the ATSC PSIP standard (A/65) is addressed in the
    following section herein.

[^82]: *See* *Fourth Report and Order* in MM Docket No. 87-268, 11 FCC
    Rcd 17771 (1996).

[^83]: "Major channel number" is part of the DTV bit stream specified in
    the PSIP standard and used to identify the terrestrial broadcast
    station (or cable or satellite source) providing the DTV program(s).
    Where a station is transmitting multiple programs, it uses "minor
    channel numbers" to distinguish among them. Within each television
    market, each programming source (terrestrial DTV broadcast stations
    as well as cable or satellite DTV channels) must have a unique
    "major channel number" so DTV receivers can be tuned to the desired
    stations and programs. In addition, the PSIP standard uses a "TSID"
    to uniquely identify transport streams, again to allow DTV receivers
    to tune between programs arriving from different sources.

[^84]: CEA Petition at 12-14.

[^85]: MSTV/NAB/ALTV "Opposition to Petitions for Reconsideration" at 2.

[^86]: The all-channel reception provisions of Section 15.117(b) of the
    rules, and indeed the ACRA authority underlying those provisions,
    would not apply to receivers that did not have any capability for
    receiving broadcast signals over-the-air. *See* 47 CFR § 15.117(b).

[^87]: CEA comments at 15-16; Motorola comments at 6.

[^88]: *See* *Memorandum Opinion and Order on Reconsideration of the
    Sixth Report and Order* in MM Docket No. 87-268, *supra*, at
    7486-87.

[^89]: MSTV/NAB/ALTV Petition at 10 and *i*.

[^90]: MSTV/NAB/ALTV Petition at 12. *See also*, VSB/COFDM Project
    "Investigation of VSB Improvements," December 2000, at 2.

[^91]: *See* *First Report and Order* in Docket No. 14760 (the All
    Channel Receiver Act proceeding), 27 Fed. Reg. 11698 (November 28,
    1962).

[^92]: MSTV/NAB/ALTV Petition at 11. *See also*, S*ixth Report and
    Order* in MM Docket No. 87-268, 12 FCC Rcd 14588 (1997), at Appendix
    A. As noted by NAB, the DTV Table of Allotments was developed based
    on assumptions that DTV receivers would typically exhibit the
    following performance levels: noise figures (N~B~) of 10 dB for high
    VHF and 7 dB for UHF; a carrier-to-noise ratio of =15.19 dB; a
    DTV-into-DTV co-channel D/U signal ratio of +15.27 dB; a lower
    DTV-into-DTV adjacent channel D/U signal ratio of --41.98 dB and an
    upper DTV-into-DTV adjacent channel D/U ratio 43.17 dB; and
    DTV-into-DTV taboo channel D/U signal ratios specified in Appendix A
    of the *Sixth Report and Order*.

[^93]: CEA opposition at 2.

[^94]: Id. at 9.

[^95]: Id. at 10. *See also*, "Performance Assessment of the ATSC
    Transmission System, Equipment and Future Directions Report of the
    VSB Ad Hoc Group to the ATSC Task Force on the RF System
    Performance," VSB Ad Hoc Group to the ATSC Task Force on the RF
    System Performance (2001) (VSB Performance Report).

[^96]: CEA opposition at 10. *See also*, "A Study of ATSC (8-VSB) DTV
    Coverage in Washington, D.C. and Generational Changes in DTV
    Receiver Performance," project TRB-00-01, Interim Report, FCC Office
    of Engineering and Technology, April 9, 2001.

[^97]: The TV service model assumes reception with an outdoor antenna
    mounted 30' high. *See* 47 C.F.R. § 73.686(b)(2).

[^98]: The F(50,90) standard is used for both analog and digital TV
    service; the F(70,90) level is used principally with analog service,
    but is nonetheless relevant also to DTV service for comparison
    purposes. *See* 47 C.F.R. 73.622(e) and 73.683.

[^99]: CEA opposition at 10, citing the VSB Performance Report ¶
    6.2.2.2.

[^100]: 5 U.S.C. § 601 *et seq*.

[^101]: 5 U.S.C. § 604.

[^102]: S*ee* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq.*,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    the CWAAA is the Small Business Regulatory Enforcement Fairness Act
    of 1996 (SBREFA).

[^103]: *Report and Order and Further Notice of Proposed Rule Making* in
    MM Docket No. 00-39, 16 FCC Rcd 5946 (2001).

[^104]: *See* 5 U.S.C. § 604.

[^105]: 5 U.S.C. § 603(b)(3).

[^106]: *Id.* § 601(6).

[^107]: *Id.* § 601(3).

[^108]: 15 U.S.C. § 632.

[^109]: 5 U.S.C. § 601(4).

[^110]: 1992 Economic Census, U.S. Bureau of the Census, Table 6
    (special tabulation of data under contract to Office of Advocacy of
    the U.S. Small Business Administration).

[^111]: 5 U.S.C. § 601(5).

[^112]: U.S. Dept. of Commerce, Bureau of the Census, "1992 Census of
    Governments."

[^113]: *Id*.

[^114]: 13 C.F.R. § 121.201, NAICS code 334220.

[^115]: The number of \"establishments\" is a less helpful indicator of
    small business prevalence in this context than would be the number
    of \"firms\" or \"companies,\" because the latter take into account
    the concept of common ownership or control. Any single physical
    location for an entity is an establishment, even though that
    location may be owned by a different establishment. Thus, the
    numbers given may reflect inflated numbers of businesses in this
    category, including the numbers of small businesses. In this
    category, the census breaks-out data for firms or companies only to
    give the total number of such entities for 1997, which was 1,089.

[^116]: U.S. Census Bureau, 1997 Economic Census, Industry Series:
    Manufacturing, \"Industry Statistics by Employment Size,\" Table 4,
    NAICS code 334220 (issued Aug. 1999).

[^117]: *Id*. Table 5, \"Industry Statistics by Industry and Primary
    Product Class Specialization: 1997.\"

[^118]: 13 C.F.R. § 121.201, NAICS code 334310.

[^119]: U.S. Census Bureau, 1997 Economic Census, Industry Series:
    Manufacturing, \"Industry Statistics by Employment Size: 1997,\"
    Table 4, NAICS code 334310 (issued Aug. 1999). In this category, the
    census breaks-out data for firms or companies only to give the total
    number of such entities for 1997, which was 524.

[^120]: *Id.* Table 5, \"Industry Statistics by Industry and Primary
    Product Class Specialization: 1997.\"

[^121]: 13 C.F.R. § 121.201 (NACIS Code 513120).

[^122]: *See also* para. 42, *supra*, describing receiver cost/price
    increases.

[^123]: 5 U.S.C. § 603(c).

[^124]: *See* para. 40, *supra*, describing the implementation schedule
    for the DTV tuner requirement.

[^125]: *See* paras. 11 and 13, *supra*.