Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 /Rules and Regulations 38089

the private sector, result from this

action.

D. Submission to Congress and the

Comptroller General

The Congressional Review Act, 5

U.S.C. 801 et seq., as added by the Small

Business Regulatory Enforcement

Fairness Act of 1996, generally provides

that before a rule may take effect, the

agency promulgating the rule must

submit a rule report, which includes a

copy of the rule, to each House of

Congress and to the Comptroller General

of the United States. EPA will submit a

report containing this rule and other

required information to the U.S. Senate,

the U.S. House of Representatives, and

the Comptroller General of the United

States prior to publication of the rule in

the Federal Register. This rule is not a

‘‘major rule’’ as defined by 5 U.S.C.

804(2).

E. Petitions for Judicial Review

Under section 307(b)(1) of the Clean

Air Act, petitions for judicial review of

this action must be filed in the United

States Court of Appeals for the

appropriate circuit by September 14,

1998. Filing a petition for

reconsideration by the Administrator of

this final rule does not affect the finality

of this rule for the purposes of judicial

review nor does it extend the time

within which a petition for judicial

review may be filed, and shall not

postpone the effectiveness of such rule

or action. This action may not be

challenged later in proceedings to

enforce its requirements. (See section

307(b)(2).)

F. Approving SIP Revisions in Audit

Law States

Nothing in this action should be

construed as making any determination

or expressing any position regarding

Colorado’s audit privilege and penalty

immunity law (13–25–126.5, C.R.S.) or

its impact upon any approved provision

in the SIP, including the revision at

issue here. The action taken herein does

not express or imply any viewpoint on

the question of whether there are legal

deficiencies in this or any other Clean

Air Act program resulting from the

effect of Colorado’s audit privilege and

immunity law. A state audit privilege

and immunity law can affect only state

enforcement and cannot have any

impact on federal enforcement

authorities. EPA may at any time invoke

its authority under the Clean Air Act,

including, for example, sections 113,

167, 205, 211 or 213, to enforce the

requirements or prohibitions of the state

plan, independently of any state

enforcement effort. In addition, citizen

enforcement under section 304 of the

Clean Air Act is likewise unaffected by

a state audit privilege or immunity law.

List of Subjects in 40 CFR Part 52

Environmental protection, Air

pollution control, Carbon monoxide,

Intergovernmental relations, Reporting

and recordkeeping requirements.

Dated: July 6, 1998.

Patricia D. Hull,

Acting Regional Administrator,

Region VIII.

40 CFR part 52 is amended as follows:

PART 52—[AMENDED]

1. The authority citation for part 52

continues to read as follows:

Authority: 42 U.S.C. 7401 et seq.

Subpart G—Colorado

2. Section 52.348 is amended by

designating the existing text as

paragraph (a) and by adding paragraph

(b) to read as follows:

§ 52.348 Emission inventories.

* * * * *

(b) On September 16, 1997, the

Governor of Colorado submitted the

1993 Carbon Monoxide Periodic

Emission Inventories for Colorado

Springs, Denver, Fort Collins, and

Longmont as revisions to the Colorado

State Implementation Plan. These

inventories address carbon monoxide

emissions from stationary point, area,

non-road mobile, and on-road mobile

sources.

[FR Doc. 98–18862 Filed 7–14–98; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 76

[CS Docket No. 97–80; FCC 98–116]

Commercial Availability of Navigation

Devices

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: These rules provide for the

commercial availability of set top boxes

and other consumer equipment used to

receive video signals and other services.

The intended effect of these rules is to

expand opportunities for consumers to

purchase this equipment from sources

other than the service provider.

DATES: Effective upon approval by the

Office of Management and Budget

(‘‘OMB’’), but no sooner than August 14,

1998, except for § 76.1204, which shall

become effective July 1, 2000. When

approval is received, the Commission

will publish a document announcing

the effective date. Written comments by

the public on the modified information

collection requirements should be

submitted on or before September 14,

1998.

ADDRESSES: A copy of any comments on

the information collections contained

herein should be submitted to Judy

Boley, Federal Communications

Commission, Room 234, 1919 M Street,

NW, Washington, DC 20554, or via the

Internet to jboley@fcc.gov.

FOR FURTHER INFORMATION CONTACT:

Thomas Horan, Cable Services Bureau,

(202) 418–7200. For additional

information concerning the information

collections contained herein, contact

Judy Boley at 202–418–0214, or via the

Internet at jboley@fcc.gov.

PAPERWORK REDUCTION ACT: This Report

and Order has been analyzed with

respect to the Paperwork Reduction Act

of 1995 (the ‘‘1995 Act’’) and found to

impose new or modified information

collection requirements on the public.

The Commission, as part of its

continuing effort to reduce paperwork

burdens, invites the general public to

take this opportunity to comment on the

information collection requirements

contained in this Report and Order, as

required by the 1995 Act. Public

comments are due September 14, 1998.

Comments should address: (a) Whether

the proposed collection of information

is necessary for the proper performance

of the functions of the Commission,

including whether the information shall

have practical utility; (b) the accuracy of

the Commission’s burden estimates; (c)

ways to enhance the quality, utility, and

clarity of the information collected; and

(d) ways to minimize the burden of the

collection of information on the

respondents, including the use of

automated collection techniques or

other forms of information technology.

OMB Approval Number: 3060–XXXX

(new collection).

Title: Commercial Availability of

Navigation Devices.

Type of Review: New collection.

Respondents: Businesses or other forprofit entities.

Number of Respondents: 200.

Estimated Time Per Response: 10

minutes to 40 hours.

Frequency of Response: On occasion.

Total Annual Burden to Respondents:

3,266 hours.

Total Annual Cost to Respondents:

$29,632.

Needs and Uses: The disclosure

requirements set forth in this
38090 Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 /Rules and Regulations

proceeding will ensure that consumers

can make informed decisions about the

purchase and proper installation of

navigation devices. The § 76.1207

petition process will give providers of

multichannel video programming and

equipment providers a forum in which

to request relief from regulations

adopted under this part for a limited

time, provided that there is an

appropriate showing that such a waiver

is necessary to assist the development or

introduction of a new or improved

multichannel video programming or

other service offered over multichannel

video programming systems,

technology, or products. The § 76.1208

petition process allows interested

parties to petition the Commission to

provide for a sunset of navigation

devices regulations. The semiannual

reports will be used by the Commission

to monitor the progress of key industry

entities of their efforts to assure the

commercial availability of navigation

devices.

SUPPLEMENTARY INFORMATION:

1. The Report and Order addresses the

issues raised in the Notice of Proposed

Rulemaking in CS Docket No. 97–80, 62

FR 10011 (March 5, 1997) (‘‘NPRM’’),

regarding the mandate expressed in

Section 629 of the Communications Act

(47 U.S.C. § 549) to ensure the

commercial availability of ‘‘navigation

devices,’’ the equipment used to access

video programming and other services

from multichannel video programming

systems.

2. Entities Covered by Section 629.

The Commission concludes that Section

629 is jurisdictionally broad in terms of

the multichannel video programming

systems to which it applies. The rules

adopted will be applied to multichannel

video programming distributors

(MVPDs) as defined by 47 U.S.C.

§ 522(13). Section 76.1200 of the rules

defines the entities to which the rules

apply. 47 U.S.C. § 573(c)(1) requires

exclusion of open video systems

operators from the requirements of

Section 629.

3. Equipment Covered. The language

of Section 629 indicates that Congress

sought to have the marketplace offer

consumers a choice over a broad range

of equipment. Section 629(a)

enumerates ‘‘converter boxes,

interactive communications equipment,

and other equipment used by consumers

to access multichannel video

programming and other services.’’

Section 629 neither exempts nor limits

any category of equipment used to

access multichannel video programming

or services offered over such systems

from its coverage. Equipment used to

access video programming and other

services offered over multichannel

video programming systems include

televisions, VCRs, cable set-top boxes,

personal computers, program guide

equipment and cable modems. Section

76.1200(c) of the rules defines the

equipment to which the rules apply.

4. Right to Attach. The rules provide

subscribers the right to attach any

compatible navigation device to an

MVPD system, regardless of its source,

subject to the proviso that the attached

equipment not cause harmful

interference, injury to the system or

compromise legitimate access control

mechanisms. The Commission’s rules

make clear to subscribers that an MVPD

is not the exclusive purveyor of

navigation devices for its system. In

addition to being directly restrained

from attaching navigation equipment,

consumers must also not be precluded

from the possibility of obtaining

equipment from commercial outlets by

virtue of contractual or other restrictions

on the availability of equipment that the

service provider might seek to directly

impose on suppliers of equipment.

Section 76.1202 enforces the right to

attach by precluding contractual or

other arrangements, other than those

involving equipment performing

conditional access or security functions,

that prevent navigation devices from

being made available to subscribers

from retailers, manufacturers, or other

vendors that are unaffiliated with such

service provider.

5. Information on Technical Interface

Specifications. The Commission will

require that MVPDs provide to the

requesting party the technical

information concerning interface

parameters necessary for a navigation

device to operate with the services

delivered by the MVPD’s system.

Section 76.1205 delineates these

requirements. The Commission will not

replicate the more complete interface

specification rules used in the telephone

context, but will monitor closely

industry progress on development of

standards for attaching equipment, as

well as MVPD compliance with the

network disclosure requirements.

6. Protection of Network Facilities.

The rules will allow MVPDs to restrict

the attachment or use of equipment to

their systems where electronic or

physical harm would be caused by the

attachment or operation of such

equipment. MVPDs must publish, and

provide to subscribers, standards and

descriptions of devices that may not be

used or attached to their systems

because of the potential for harm. These

requirements are contained in § 76.1203.

To the extent that there is a dispute

whether an MVPD’s equipment

restrictions are unreasonable, the

Commission’s petition procedures are

available.

7. Security and Theft of Service. No

Commission action in this proceeding

should be construed to authorize or

justify any use, manufacture, or

importation of equipment that would

violate Section 633 of the

Communications Act or any other

provision of law precluding the

unauthorized reception of MVPD

service. Similarly, nothing in this

proceeding should be construed as

diminishing an operator’s ability to seek

civil damages against parties involved

with navigation devices providing

unauthorized reception of services.

8. Signal Leakage. When combined

with the 47 CFR 76 signal leakage

requirements, the 47 CFR 15 provisions

provide sufficient safeguards for signal

leakage and interference concerns for

retail navigation devices. The part 15

provisions include limitations on signal

leakage from electronic equipment and

also specify equipment authorization

procedures.

9. Rules for Equipment Providing

Conditional Access. As of July 1, 2000,

MVPDs covered by Section 629 who

wish to distribute devices using

integrated security may do so only if

they also make available security

modules separately. The device

supplied by the service provider must

be designed to connect to and function

with other navigation devices through

the use of a commonly used interface or

through an interface that conforms to

appropriate technical standards

promulgated by a national standards

organization. The rule requiring

separation of security functions does not

apply to MVPDs that support navigation

devices that are portable throughout the

continental United States, and are

available from retail outlets and other

vendors. There is an exception in the

rules (§ 76.1204(d)) for situations in

which where separation is not feasible.

This exception is intended, however, to

be a narrow exception to the general

rules to account for unusual types of

equipment.

10. The Commission is requiring the

eight multiple system operators that are

involved in the CableLabs/OpenCable

project to advise the Commission

semiannually—on January 7, 1999, July

7, 1999, January 7, 2000, and July 7,

2000—as to the progress of their efforts

and the efforts of CableLabs to assure

the commercial availability, to

consumers of equipment used to access

multichannel video programming and

other services offered over multichannel

video programming systems, from
Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 /Rules and Regulations 38091

manufacturers, retailers, and other

vendors not affiliated with any

multichannel video programming

distributor. The reports should detail

the progress being made toward meeting

the July 1, 2000 deadline. The

information should advise the

Commission of the status of any

standards or certification process and

any anticipated dates for approval.

11. The Commission’s rules permit

MVPDs to continue to provide

equipment on an integrated basis until

January 1, 2005, so long as modular

security components are also made

available. MVPDs may continue to sell

or lease boxes after this date provided

the boxes have a severable security

component rather than integrated

security. In the year 2000, once separate

security modules are available, the

Commission will assess the state of the

market to determine whether that time

frame is appropriate and will review the

mechanics of the phase out of integrated

boxes.

12. Affiliation. Affiliation is defined

based on common ownership or control

as defined in the notes accompanying

47 CFR 76.501.

13. Subsidies. Existing equipment rate

rules applicable to cable television

systems not facing effective competition

address Section 629(a)’s requirement

that charges to consumers for such

devices and equipment are separately

stated and not subsidized by charges for

any other service. While a cable

operator subject to rate regulation may

offer navigation devices necessary to

receive regulated services, it may do so

only within the parameters of 47 CFR

76.923. Section 76.923 sets forth the

rules for determining the rates for

equipment and installation used to

receive the basic service tier and states

that cable operators subject to rate

regulation are not permitted to charge

subscribers for equipment beyond actual

cost. The relevant rule is found in

§ 76.1206.

14. Waivers. A provider of

multichannel video programming and

other services offered over multichannel

video programming systems, or an

equipment provider, may petition the

Commission for a waiver. The

Commission may waive a regulation

adopted under Section 629 if such

service or equipment provider makes an

appropriate showing that such waiver is

necessary to assist the development or

introduction of a new or improved

multichannel video programming or

other service offered over multichannel

video programming systems,

technology, or products. The

Commission will apply the procedural

rules set forth in 47 CFR 76.7. The

relevant rule is contained in § 76.1207.

15. Sunset of Regulations. The

regulations adopted under this section

shall cease to apply when, as stated in

Section 629(e), the Commission

determines that (1) the market for

MVPDs is fully competitive; (2) the

market for converter boxes and

interactive communications equipment

used in conjunction with that service is

fully competitive; and (3) elimination of

the regulations would promote

competition and the public interest. An

interested party may petition the

Commission to determine that Section

629(e) has been satisfied. This rule is

found in § 76.1208.

16. Digital Television Compatibility.

In the context of this and other

proceedings, the issue of transmitting

digital television signals to consumers

has been raised. Since the record on this

issue in this proceeding is extremely

limited, and the matter may more

appropriately be addressed in another

proceeding, the Commission will defer

consideration here. The Commission

intends to monitor developments with

respect to the compatibility of set-top

boxes and digital televisions.

17. Electronic Program Guides. An

issue was raised in this proceeding,

regarding whether electronic program

guide equipment and guide services are

covered by the requirements of Section

629. Based on the plain language of

Section 629, it appears clear that the

equipment used to access such

electronic program guides is

‘‘equipment used by consumers to

access . . . services offered over

multichannel video programming

systems’’ and hence falls within the

requirements of Section 629. While the

Commission is committed to

encouraging the development of the

market for the provision of electronic

program guide services as part of its

broader goal of promoting consumer

choice, the record in this proceeding is

limited on this issue. Therefore, the

Commission cannot adequately address

at this time the extent of any obligation

of multichannel video programming

systems to make such services available

pursuant to Section 629 or otherwise.

The Commission will monitor

developments with respect to the

availability of electronic program guides

to determine whether any action is

appropriate in the future.

Final Regulatory Flexibility Analysis

18. As required by the Regulatory

Flexibility Act (RFA), an Initial

Regulatory Flexibility Analysis

(‘‘IRFA’’) was incorporated into the

NPRM in this proceeding. The

Commission sought written public

comment on the possible impact of the

proposed policies and rules on small

entities in the NPRM, including

comments on the IRFA. This Final

Regulatory Flexibility Analysis

(‘‘FRFA’’) in this Report and Order

conforms to the RFA.

19. Need for Action and Objectives of

the Rules. The 1996 Act added a new

Section 629 to the Communications Act

of 1934, as amended, that requires the

Commission to develop rules to assure

competitive availability of navigation

devices used in conjunction with

multichannel video programming

distributors (‘‘MVPD’’). The

Commission is promulgating these rules

in order to implement this provision of

Section 629. The statutory objective of

Section 629 is assure that navigation

devices used by consumers to access a

particular MVPD’s programming are

available to consumers from

manufactures, retailers and other

vendors not affiliated with that MVPD.

20. Summary of Significant Issues

Raised by the Public Comments in

Response to the IRFA. No comments

were filed specifically in response to the

IRFA. The Commission, however,

considered the economic impact on

small entities through consideration of

comments that pertain to issues of

concern to MVPDs. Commenters

cautioned that rules enacted to

implement the requirements of Section

629 must not jeopardize the system and

signal security of MVPDs and should

not mandate technical standards that

would interfere with innovation of

navigation devices or development of

new technologies. In the Report and

Order, the Commission notes concern

with system security and allows MVPDs

to restrict the attachment or use of

navigation equipment to their systems

where electronic or physical harm

would be caused by the attachment or

operation of such equipment. As for

signal security, the rules allow MVPDs

to disconnect service to subscribers

using a navigation device that assists in

the unauthorized reception of service.

The rules promulgated also note

concern for inhibiting innovation or

development of new technologies. The

Commission does not mandate

particular standards or require specific

action, but seeks to recognize accepted

industry standards that have evolved or

are evolving.

21. Description and Estimate of the

Number of Small Entities to Which the

Rules Will Apply. The RFA directs the

Commission to provide a description of

and, where feasible, an estimate of the

number of small entities that might be

affected by the rules here adopted. The
38092 Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 /Rules and Regulations

RFA defines the term ‘‘small entity’’ as

having the same meaning as the terms

‘‘small business,’’ ‘‘small organization,’’

and ‘‘small governmental jurisdiction.’’

In addition, the term ‘‘small business’’

has the same meaning as the term

‘‘small business concern’’ under the

Small Business Act. Under the Small

Business Act, a small business concern

is one which: (a) is independently

owned and operated; (b) is not

dominant in its field of operation; and

(c) satisfies any additional criteria

established by the SBA. The rules

adopted in this Report and Order will

affect cable systems, multipoint

multichannel distribution systems,

direct broadcast satellites, home satellite

dish manufacturers, satellite master

antenna television, local multipoint

distribution systems, small

manufacturers, electronic equipment

manufacturers, computer

manufacturers, and small retailers.

22. Small Multichannel Video

Programming Distributors (‘‘MVPD’’):

The SBA has developed a definition of

small entities for cable and other pay

television services, which includes all

such companies generating $11 million

or less in annual receipts. This

definition includes cable system

operators, closed circuit television

services, direct broadcast satellite

services, multipoint distribution

systems, satellite master antenna

systems and subscription television

services. According to the Bureau of the

Census, there are approximately 1,758

total cable and other pay television

services and 1,423 had less than $11

million in revenue. Below each service

is addressed to provide a more precise

estimate of small entities.

23. Cable Systems: The Commission

has developed, with SBA’s approval,

our own definition of a small cable

system operator for the purposes of rate

regulation. Under the Commission’s

rules, a ‘‘small cable company’’ is one

serving no more than 400,000

subscribers nationwide. Based on recent

information, the Commission estimates

that there were 1439 cable operators that

qualified as small cable companies at

the end of 1995. Since then, some of

those companies may have grown to

serve over 400,000 subscribers, and

others may have been involved in

transactions that caused them to be

combined with other cable operators.

Consequently, the Commission

estimates that there are fewer than 1439

small entity cable system operators that

may be affected by the decisions and

rules we are adopting. The Commission

concludes that only a small percentage

of these entities currently provide

qualifying ‘‘telecommunications

services’’ as required by the

Communications Act and, therefore,

estimate that the number of such

entities are significantly fewer than

noted.

24. The Communications Act also

contains a definition of a small cable

system operator, which is ‘‘a cable

operator that, directly or through an

affiliate, serves in the aggregate fewer

than 1% of all subscribers in the United

States and is not affiliated with any

entity or entities whose gross annual

revenues in the aggregate exceed

$250,000,000.’’ The Commission has

determined that there are 61,700,000

cable subscribers in the United States.

Therefore, the Commission found that

an operator serving fewer than 617,000

subscribers shall be deemed a small

operator, if its annual revenues, when

combined with the total annual

revenues of all of its affiliates, do not

exceed $250 million in the aggregate.

Based on available data, the

Commission finds that the number of

cable operators serving 617,000

subscribers or less totals 1450. Although

it seems certain that some of these cable

system operators are affiliated with

entities whose gross annual revenues

exceed $250,000,000, the Commission is

unable at this time to estimate with

greater precision the number of cable

system operators that would qualify as

small cable operators under the

definition in the Communications Act.

25. Multipoint Multichannel

Distribution Systems (‘‘MMDS’’): The

Commission refined its definition of

‘‘small entity’’ for the auction of MMDS

as an entity that together with its

affiliates has average gross annual

revenues that are not more than $40

million for the preceding three calendar

years. This definition of a small entity

in the context of MMDS auctions has

been approved by the SBA.

26. The Commission completed its

MMDS auction in March 1996 for

authorizations in 493 basic trading areas

(‘‘BTAs’’). Of 67 winning bidders, 61

qualified as small entities. Five bidders

indicated that they were minorityowned and four winners indicated that

they were women-owned businesses.

MMDS is an especially competitive

service, with approximately 1573

previously authorized and proposed

MMDS facilities. Information available

to us indicates that no MMDS facility

generates revenue in excess of $11

million annually. The Commission

concludes that, for purposes of this

FRFA, there are approximately 1634

small MMDS providers as defined by

the SBA and the Commission’s auction

rules.

27. ITFS: There are presently 2032

ITFS licensees. All but 100 of these

licenses are held by educational

institutions. Educational institutions are

included in the definition of a small

business. However, the Commission

does not collect annual revenue data for

ITFS licensees and is not able to

ascertain how many of the 100 noneducational licensees would be

categorized as small under the SBA

definition. No commenters address

these non-educational licensees.

Accordingly, the Commission concludes

that at least 1932 licensees are small

businesses.

28. Direct Broadcast Satellite (‘‘DBS’’):

Because DBS provides subscription

services, DBS falls within the SBA

definition of cable and other pay

television services (SIC 4841). As of

December 1996, there were eight DBS

licensees. However, the Commission

does not collect annual revenue data for

DBS and, therefore, is unable to

ascertain the number of small DBS

licensees that could be affected by these

proposed rules. Although DBS service

requires a great investment of capital for

operation, in the NPRM, the

Commission acknowledged that there

are several new entrants in this field

that may not yet have generated $11

million in annual receipts, and therefore

may be categorized as a small business,

if independently owned and operated.

Since the publication of the NPRM,

however, more information has become

available. In light of the 1997 gross

revenue figures for the various DBS

operators, the Commission concludes

that no DBS operator qualifies as a small

entity.

29. Home Satellite Dish (‘‘HSD’’): The

market for HSD service is difficult to

quantify. Indeed, the service itself bears

little resemblance to other MVPDs. HSD

owners have access to more than 500

channels of programming placed on Cband satellites by programmers for

receipt and distribution by MVPDs, of

which 350 channels are scrambled and

approximately 150 are unscrambled.

HSD owners can watch unscrambled

channels without paying a subscription

fee. To receive scrambled channels,

however, an HSD owner must purchase

an integrated receiver-decoder from an

equipment dealer and pay a

subscription fee to an HSD

programming packager. Thus, HSD

users include: (1) Viewers who

subscribe to a packaged programming

service, which affords them access to

most of the same programming provided

to subscribers of other MVPDs; (2)

viewers who receive only

nonsubscription programming; and (3)

viewers who receive satellite
Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 /Rules and Regulations 38093

programming services illegally without

subscribing.

30. According to the most recently

available information, there are

approximately 20 to 25 program

packagers nationwide offering packages

of scrambled programming to retail

consumers. These program packagers

provide subscriptions to approximately

2,184,470 subscribers nationwide. This

is an average of about 77,163 subscribers

per program packager. This is

substantially smaller than the 400,000

subscribers used in the Commission’s

definition of a small multiple system

operator (‘‘MSO’’).

31. Satellite Master Antenna

Television (‘‘SMATVs’’): Industry

sources estimate that approximately

5200 SMATV operators were providing

service as of December 1995. Other

estimates indicate that SMATV

operators serve approximately 1.162

million residential subscribers as of

June 30, 1997. The ten largest SMATV

operators together pass 848,450 units.

Assuming that these SMATV operators

serve 50% of the units passed, the ten

largest SMATV operators serve

approximately 40% of the total number

of SMATV subscribers. Because these

operators are not rate regulated, they are

not required to file financial data with

the Commission. Furthermore, the

Commission is not aware of any

privately published financial

information regarding these operators.

Based on the estimated number of

operators and the estimated number of

units served by the largest ten SMATVs,

the Commission concludes that a

substantial number of SMATV operators

qualify as small entities.

32. Local Multipoint Distribution

System (‘‘LMDS’’): Unlike the above pay

television services, LMDS technology

and spectrum allocation will allow

licensees to provide wireless telephony,

data, and/or video services. A LMDS

provider is not limited in the number of

potential applications that will be

available for this service. Therefore, the

definition of a small LMDS entity may

be applicable to both cable and other

pay television (SIC 4841) and/or

radiotelephone communications

companies (SIC 4812). The SBA

approved definition for cable and other

pay services that qualify as a small

business is defined above. A small

radiotelephone entity is one with 1500

employees or fewer. However, for the

purposes of this Report and Order on

navigation devices, the Commission

includes only an estimate of LMDS

video service providers.

33. An auction for licenses to operate

LMDS systems was recently completed

by the Commission. The vast majority of

the LMDS license auction winners were

small businesses under the SBA’s

definition of cable and pay television

(SIC 4841). The Commission adopted a

small business definition for entities

bidding for LMDS licenses as an entity

that, together with affiliates and

controlling principles, has average gross

revenues not exceeding $40 million for

each of the three preceding years. The

Commission has not yet received

approval by the SBA for this definition.

34. There is only one company,

CellularVision, that is currently

providing LMDS video services. In the

IRFA, the Commission assumed that

CellularVision was a small business

under both the SBA definition and our

auction rules. No commenters addressed

the tentative conclusions reached in the

NPRM. Accordingly, the Commission

affirms the tentative conclusion that a

majority of the potential LMDS

licensees will be small entities, as that

term is defined by the SBA.

35. Small Manufacturers: The SBA

has developed definitions of small

entity for manufacturers of household

audio and video equipment (SIC 3651)

and for radio and television

broadcasting and communications

equipment (SIC 3663). In each case, the

definition includes all such companies

employing 750 or fewer employees.

36. Electronic Equipment

Manufacturers: The Commission has not

developed a definition of small entities

applicable to manufacturers of

electronic equipment, and therefore,

will use the SBA definition of

manufacturers of Radio and Television

Broadcasting and Communications

Equipment. According to the SBA’s

regulations, a TV equipment

manufacturer must have 750 or fewer

employees in order to qualify as a small

business concern. Census Bureau data

indicates that there are 858 U.S. firms

that manufacture radio and television

broadcasting and communications

equipment, and that 778 of these firms

have fewer than 750 employees and

would be classified as small entities.

The Census Bureau category is very

broad, and specific figures are not

available as to how many of these firms

are exclusive manufacturers of

television equipment or how many are

independently owned and operated.

The Commission concludes that there

are approximately 778 small

manufacturers of radio and television

equipment.

37. Electronic Household/Consumer

Equipment: The Commission has not

developed a definition of small entities

applicable to manufacturers of

electronic equipment used by

consumers, as compared to industrial

use by television licensees and related

businesses, and therefore will utilize the

SBA definition applicable to

manufacturers of Household Audio and

Visual Equipment. According to the

SBA’s regulations, a household audio

and visual equipment manufacturer

must have 750 or fewer employees in

order to qualify as a small business

concern. Census Bureau data indicates

that there are 410 U.S. firms that

manufacture radio and television

broadcasting and communications

equipment, and that 386 of these firms

have fewer than 500 employees and

would be classified as small entities.

The remaining 24 firms have 500 or

more employees; however, the

Commission is unable to determine how

many of those have fewer than 750

employees and therefore, also qualify as

small entities under the SBA definition.

Furthermore, the Census Bureau

category is very broad, and specific

figures are not available as to how many

of these firms are exclusive

manufacturers of television equipment

for consumers or how many are

independently owned and operated.

The Commission concludes that there

are approximately 386 small

manufacturers of television equipment

for consumer/household use.

38. Computer Manufacturers: The

Commission has not developed a

definition of small entities applicable to

computer manufacturers, and therefore

will use the SBA definition of Electronic

Computers. According to SBA

regulations, a computer manufacturer

must have 1,000 or fewer employees in

order to qualify as a small entity. Census

Bureau data indicates that there are 716

firms that manufacture computers and

of those, 659 have fewer than 500

employees and qualify as small entities.

The remaining 57 firms have 500 or

more employees; however, the

Commission is unable to determine how

many of those have fewer than 1,000

employees and therefore also qualify as

small entities under the SBA definition.

The Commission concludes that there

are approximately 659 small computer

manufacturers.

39. Small Retailers: The Commission

has not developed a definition of small

entities applicable to navigation retail

devices, and therefore will utilize the

SBA definition. The 1992 Bureau of the

Census data indicates: there were 9,663

U.S. firms classified as Radio, TV &

electronic stores (SIC 5731), and that

9,385 of these firms had $4.999 million

or less in annual receipts and 9,473 of

these firms had $7.499 million or less in

annual receipts. Consequently, the

Commission concludes that there are

approximately 9,663 small entities that
38094 Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 /Rules and Regulations

produce and distribute radio, television,

and electronic equipment that may be

affected by the decisions in the Report

and Order.

40. Description of Reporting,

Recordkeeping and Other Compliance

Requirements. This analysis examines

the costs and administrative burdens

associated with our rules and

requirements. The rules adopted require

MVPDs to make available, upon request,

technical information concerning

interface parameters. The Commission

believes, however, that this requirement

would not necessitate any additional

professional, engineering, or customer

service skills beyond those already

utilized in the ordinary course of

business by MVPDs.

41. Steps Taken to Minimize

Significant Economic Impact On Small

Entities and Significant Alternatives

Considered. The Commission believes

that the rules, implemented to assure

commercial availability of navigation

devices, will have the positive result of

opening up to small retailers the market

to sell or lease navigation devices to

MVPD subscribers. Section 629 includes

provisions which may lessen

compliance impact on small entities

affected by the rules adopted in this

Report and Order. Section 629(c)

specifies that the Commission shall

waive the regulations developed to

implement Section 629 when necessary

for an MVPD to develop new or

improved services offered over its

system. Second, Section 629(e) requires

the Commission to sunset the rules

adopted in the Report and Order once

a determination is made that (1) the

market for MVPDs is fully competitive;

(2) the market for convertor boxes and

interactive communications equipment

used in conjunction with that service is

fully competitive; and (3) elimination of

the regulations would promote

competition and the public interest. The

rules also consider situations and offer

relief where the commercial availability

of navigation devices performing

conditional access functions could

adversely impact an MVPD. An MVPD

is not subject to the rules requiring the

commercial availability of navigation

devices if: (1) it is not reasonably

feasible to separate conditional access

functions from other functions; or (2) it

is not reasonably feasible to prevent the

unauthorized reception of service by

subscribers using navigation devices

obtained from other sources.

42. In the NPRM, the Commission

asked for comment as to other means for

achieving a competitive market for

navigation devices. Commenters suggest

means which would lead to more

governmental involvement in the

equipment design process and the retail

marketplace. For instance, some

commenters advocate that the

Commission require MVPDs to license

proprietary design specifications to

manufacturers of navigation devices.

The Commission has determined that

allowing for technical innovation and

flexible design standards would be the

best means of meeting Section 629’s

statutory mandate of maximizing

consumer choice in consumer

electronics equipment. The Commission

noted the ongoing activities of several

industry organizations to develop open

equipment standards. Accordingly, the

Commission has adopted a regulatory

regime to implement Section 629’s

requirements that causes minimum

intrusion into the commercial

marketplace.

43. It is ordered that, pursuant to

authority found in Sections 4(i), 303(r),

and 629 of the Communications Act of

1934, as amended, 47 U.S.C. §§ 154(i),

303(r), and 549, the Commission’s rules

are hereby amended as set forth below.

44. It is further ordered that the rules

as amended shall become effective upon

approval by OMB, but no sooner than

August 14, 1998, except for § 76.1204,

which shall become effective July 1,

2000.

45. It is further ordered that TeleCommunications, Inc., Time Warner

Cable, Jones Intercable, U S WEST

Media Group, Marcus Cable, Advance/

Newhouse Communications, Cox

Communications, and Comcast

Corporation Shall file reports on January

7, 1999, July 7, 1999, January 7, 2000,

and July 7, 2000 detailing the progress

of their efforts and the efforts of

CableLabs to assure the commercial

availability, to consumers of equipment

used to access multichannel video

programming and other services offered

over multichannel video programming

systems, from manufacturers, retailers,

and other vendors not affiliated with

any multichannel video programming

distributor.

46. It is further ordered that the

Commission’s Office of Public Affairs,

Reference Operations Division, shall

send a copy of this Report and Order,

including the Final Regulatory

Flexibility Analysis, to the Chief

Counsel for Advocacy of the Small

Business Administration.

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

Part 76 of title 47 of the Code of

Federal Regulations is amended as

follows:

PART 76—MULTICHANNEL VIDEO

AND CABLE TELEVISION SERVICE

1. The authority citation for part 76 is

revised to read as follows:

Authority: 47 U.S.C. 151, 152, 153, 154,

301, 302, 303, 303a, 307, 308, 309, 312, 315,

317, 325, 503, 521, 522, 531, 532, 533, 534,

535, 536, 537, 543, 544, 544a, 545, 548, 549,

552, 554, 556, 558, 560, 561, 571, 572, 573.

2. Subpart P is added to read as

follows:

Subpart P—Competitive Availability of

Navigation Devices

§ 76.1200 Definitions.

As used in this subpart:

(a) Multichannel video programming

system. A distribution system that

makes available for purchase, by

customers or subscribers, multiple

channels of video programming other

than an open video system as defined by

§ 76.1500(a). Such systems include, but

are not limited to, cable television

systems, multichannel multipoint

distribution systems, direct broadcast

satellite systems, other systems for

providing direct-to-home multichannel

video programming via satellite, and

satellite master antenna systems.

(b) Multichannel video programming

distributor. A person such as, but not

limited to, a cable operator, a

multichannel multipoint distribution

service, a direct broadcast satellite

service, or a television receive-only

satellite program distributor, who owns

or operates a multichannel video

programming system.

(c) Navigation devices. Devices such

as converter boxes, interactive

communications equipment, and other

equipment used by consumers to access

multichannel video programming and

other services offered over multichannel

video programming systems.

(d) Affiliate. A person or entity that

(directly or indirectly) owns or controls,

is owned or controlled by, or is under

common ownership or control with,

another person, as defined in the notes

accompanying § 76.501.

(e) Conditional access. The

mechanisms that provide for selective

access and denial of specific services

and make use of signal security that can

prevent a signal from being received

except by authorized users.
Federal Register / Vol. 63, No. 135 /Wednesday, July 15, 1998 /Rules and Regulations 38095

§ 76.1201 Rights of subscribers to use or

attach navigation devices.

No multichannel video programming

distributor shall prevent the connection

or use of navigation devices to or with

its multichannel video programming

system, except in those circumstances

where electronic or physical harm

would be caused by the attachment or

operation of such devices or such

devices may be used to assist or are

intended or designed to assist in the

unauthorized receipt of service.

§ 76.1202 Availability of navigation

devices.

No multichannel video programming

distributor shall by contract, agreement,

patent right, intellectual property right

or otherwise prevent navigation devices

that do not perform conditional access

or security functions from being made

available to subscribers from retailers,

manufacturers, or other vendors that are

unaffiliated with such owner or

operator, subject to § 76.1209.

§ 76.1203 Incidence of harm.

A multichannel video programming

distributor may restrict the attachment

or use of navigation devices with its

system in those circumstances where

electronic or physical harm would be

caused by the attachment or operation

of such devices or such devices that

assist or are intended or designed to

assist in the unauthorized receipt of

service. Such restrictions may be

accomplished by publishing and

providing to subscribers standards and

descriptions of devices that may not be

used with or attached to its system.

Such standards shall foreclose the

attachment or use only of such devices

as raise reasonable and legitimate

concerns of electronic or physical harm

or theft of service. In any situation

where theft of service or harm occurs or

is likely to occur, service may be

discontinued.

§ 76.1204 Availability of equipment

performing conditional access or security

functions.

(a)(1) A multichannel video

programming distributor that utilizes

navigation devices to perform

conditional access functions shall make

available equipment that incorporates

only the conditional access functions of

such devices. Commencing on January

1, 2005, no multichannel video

programming distributor subject to this

section shall place in service new

navigation devices for sale, lease, or use

that perform both conditional access

and other functions in a single

integrated device.

(2) The foregoing requirement shall

not apply to a multichannel video

programming distributor that supports

the active use by subscribers of

navigation devices that: (i) operate

throughout the continental United

States, and (ii) are available from retail

outlets and other vendors throughout

the United States that are not affiliated

with the owner or operator of the

multichannel video programming

system.

(b) Conditional access function

equipment made available pursuant to

paragraph (a)(1) of this section shall be

designed to connect to and function

with other navigation devices available

through the use of a commonly used

interface or an interface that conforms to

appropriate technical standards

promulgated by a national standards

organization.

(c) No multichannel video

programming distributor shall by

contract, agreement, patent, intellectual

property right or otherwise preclude the

addition of features or functions to the

equipment made available pursuant to

this section that are not designed,

intended or function to defeat the

conditional access controls of such

devices or to provide unauthorized

access to service.

(d) Notwithstanding the foregoing,

navigation devices need not be made

available pursuant to this section where:

(1) It is not reasonably feasible to

prevent such devices from being used

for the unauthorized reception of

service; or

(2) It is not reasonably feasible to

separate conditional access from other

functions without jeopardizing security.

(e) The requirements of this section

shall become applicable on July 1, 2000.

§ 76.1205 Availability of interface

information.

Technical information concerning

interface parameters that are needed to

permit navigation devices to operate

with multichannel video programming

systems shall be provided by the system

operator upon request in a timely

manner.

§ 76.1206 Equipment sale or lease charge

subsidy prohibition.

Multichannel video programming

distributors offering navigation devices

subject to the provisions of § 76.923 for

sale or lease directly to subscribers,

shall adhere to the standards reflected

therein relating to rates for equipment

and installation and shall separately

state the charges to consumers for such

services and equipment.

§ 76.1207 Waivers.

The Commission may waive a

regulation adopted under this subpart

for a limited time, upon an appropriate

showing by a provider of multichannel

video programming and other services

offered over multichannel video

programming systems, or an equipment

provider that such a waiver is necessary

to assist the development or

introduction of a new or improved

multichannel video programming or

other service offered over multichannel

video programming systems,

technology, or products. Such waiver

requests should be made pursuant to

§ 76.7. Such a waiver shall be effective

for all service providers and products in

the category in which the waiver is

granted.

§ 76.1208 Sunset of regulations.

The regulations adopted under this

subpart shall cease to apply when the

Commission determines that (1) the

market for multichannel video

distributors is fully competitive; (2) the

market for converter boxes, and

interactive communications equipment,

used in conjunction with that service is

fully competitive; and (3) elimination of

the regulations would promote

competition and the public interest.

Any interested party may petition the

Commission for such a determination.

§ 76.1209 Theft of service.

Nothing in this subpart shall be

construed to authorize or justify any

use, manufacture, or importation of

equipment that would violate 47 U.S.C.

553 or any other provision of law

intended to preclude the unauthorized

reception of multichannel video

programming service.

§ 76.1210 Effect on other rules.

Nothing in this subpart affects

§ 64.702(d) of the Commission’s

regulations or other Commission

regulations governing interconnection

and competitive provision of customer

premises equipment used in connection

with basic common carrier

communications services.

[FR Doc. 98–18838 Filed 7–14–98; 8:45 am]

BILLING CODE 6712–01–P