Court Opinion

ID: 185207
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:29:03+00
Date Added: 2024-06-11T17:26:14.011639
License: Public Domain

United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

         Argued April 6, 2000       Decided June 6, 2000 

                           No. 98-1420

                 General Instrument Corporation, 
                            Petitioner

                                v.

              Federal Communications Commission and 
                    United States of America, 
                           Respondents

      National Cable Television Association, Inc., et al., 
                           Intervenors

                        Consolidated with 
           98-1423, 98-1576, 99-1204, 99-1312, 99-1313

            On Petitions for Review of Orders of the 
                Federal Communications Commission

     Theodore Whitehouse argued the cause for petitioners and 
supporting intervenor.  With him on the briefs were John L. 

McGrew, Glenn B. Manishin, Christy C. Kunin, Daniel L. 
Brenner, Neal M. Goldberg, Loretta P. Polk, Bruce D. Ryan, 
and Michelle W. Cohen.

     Roberta L. Cook, Counsel, Federal Communications Com-
mission, argued the cause for respondents.  Christopher J. 
Wright, General Counsel, Daniel M. Armstrong, Associate 
General Counsel, Lisa A. Burns, Counsel, Joel I. Klein, 
Assistant Attorney General, U.S. Department of Justice, Rob-
ert B. Nicholson and Robert J. Wiggers, Attorneys, were on 
the brief.  James M. Carr and Nancy L. Kiefer, Counsel, 
Federal Communications Commission, entered appearances.

     David Alan Nall argued the cause for intervenors.  With 
him on the brief were Jonathan Jacob Nadler, Jonathan D. 
Blake, Joe D. Edge, Mark F. Dever, Catherine M. Krupka, 
and Kevin S. DiLallo.  Benigno E. Bartolome, Jr. and John 
W. Pettit entered appearances.

     Before:  Silberman, Williams, and Sentelle, Circuit 
Judges.

     Opinion for the Court filed by Circuit Judge Silberman.

     Silberman, Circuit Judge:  Petitioners challenge an order 
of the Federal Communications Commission precluding cable 
television operators from offering "integrated" converter box-
es that perform both security and ancillary functions.  We 
think the Commission's ban on integrated devices is premised 
on a reasonable interpretation of section 629 of the Communi-
cations Act, and we deny the petitions.

                                I.

     This case concerns a piece of electronic equipment familiar 
to most American consumers:  the set-top cable or "convert-
er" box.  Converter boxes are the most common instrument 
("navigation device") that provides access to cable program-
ming or other multichannel video programming services.1  

__________
     1 "Multichannel video programming services" include not only 
cable programming but also other services that provide multiple 

The typical converter box performs an important security or 
"conditional access" function, containing embedded technolo-
gy that decodes or descrambles a digital or analog cable 
signal.2  It is this function that precludes a consumer from 
accessing tiers of cable programming not part of his subscrip-
tion package.  At the same time, converter boxes often 
perform other tasks--which we refer to for simplicity's sake 
as ancillary functions--unrelated to security.  For instance, 
converter boxes commonly include channel tuners and provide 
access to video programming guides.

     Converter boxes traditionally have been available to con-
sumers only by lease from cable operators, as part of a cable 
service package.  Section 629 of the Communications Act, 
passed by Congress as part of the Telecommunications Act of 
1996, sought to change this state of affairs.  The FCC was 
directed to take steps to make converter boxes (and other 
navigation devices) commercially available from sources other 
than cable operators.  Entitled "Competitive Availability of 
Navigation Devices," section 629 provides as follows:

     (a) Commercial consumer availability of equipment used 
     to access multichannel video programming distributors. 
     The Commission shall, in consultation with appropriate 
     industry standard-setting organizations, adopt regula-
     
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channels of video programming, such as direct broadcast satellite 
service.  See In re Implementation of Section 304 of the Telecom-
munications Act of 1996, Commercial Availability of Navigation 
Devices, 13 F.C.C.R. 14775, 14783 (1998).  Since the regulations at 
issue in this case apply primarily to cable operators, see id. at 
14800-801 (exempting satellite programming from separation re-
quirement), we use the generic term "cable programming" to refer 
to all multichannel video programming services covered by the 
contested regulations.

     2 Cable programming can be delivered by means of either 
analog or digital signals.  An analog system transmits and receives 
microwave signals in their original form;  a digital system, on the 
other hand, translates the original signal into a binary code, and 
decodes that signal upon receipt.  Because of the increased com-
plexity involved in digital signal delivery methods, digital program-
ming is far less susceptible to theft than analog programming.

     tions to assure the commercial availability, to consumers 
     of multichannel video programming ... of converter 
     boxes, interactive communications equipment, and other 
     equipment used by consumers to access multichannel 
     video programming ... from manufacturers, retailers, 
     and other vendors not affiliated with any multichannel 
     video programming distributor.  Such regulations shall 
     not prohibit any multichannel video programming distrib-
     utor from also offering converter boxes, interactive com-
     munications equipment, and other equipment used by 
     consumers to access multichannel video programming 
     ... if the system operator's charges to consumers for 
     such devices and equipment are separately stated and 
     not subsidized by charges for any such services.
     
     (b) Protection of system security.  The Commission shall 
     not prescribe regulations under subsection (a) of this 
     section which would jeopardize security of multichannel 
     video programming ..., or impede the legal rights of a 
     provider of such services to prevent theft of service.
     
47 U.S.C. s 549(a)-(b).

     The Commission issued a Notice of Proposed Rulemaking 
seeking comment on how best to implement section 629's 
requirements.3  It explicitly recognized that it was required 
to balance section 629(a)'s mandate for "commercial availabili-
ty" with section 629(b)'s prohibition against any Commission 
action that would "jeopardize" the security of cable program-
ming.  Any solution requiring devices containing conditional 
access functionality to be made widely available at retail 
certainly would exacerbate the problem of cable theft, already 
a $5 billion dollar drain on cable operators and their custom-
ers.  But the Commission offered a possible alternative that 
it thought might "assure commercial availability" of naviga-
tion devices without posing a major risk to cable security.  It 
noted that

__________
     3 See In re Implementation of Section 304 of the Telecommuni-
cations Act of 1996, Commercial Availability of Navigation De-
vices, 12 F.C.C.R. 5639 (1997) ("Notice of Proposed Rulemaking").

     [i]n theory, it would be possible to take a typical decoder 
     box and divide it into two separate parts.  One part 
     would contain the operational and functional components 
     such as the tuner, the remote control circuitry, the power 
     supply, and any other non-access control features.  A 
     second part would contain the access control features.  
     With an interface, it would be possible to have the first 
     part of the device available through retail outlets, and the 
     second part, containing the more sensitive access control 
     apparatus, available only from the service supplier.
     
In other words, the Commission suggested a separation of the 
traditional converter box into two parts (unbundling), permit-
ting a device providing ancillary functions to be available at 
retail while allowing cable operators to maintain exclusive 
control over conditional access functionality.

     After receiving comments, the FCC issued an order adopt-
ing this proposal.  See In re Section 304 of the Telecommuni-
cations Act of 1996, Commercial Availability of Navigation 
Devices, 13 F.C.C.R. 14775 (1998) ("Navigation Devices Or-
der").  Cable operators were directed to make available sepa-
rate security components or "modules" by July 1, 2000.  See 
47 C.F.R. s 76.1204(a)(1) & (e).  The Commission's notion 
was that these modules could then be "plugged in" to com-
mercially available equipment performing ancillary functions.  
It recognized that standardized digital and analog interfaces 
would be necessary to make the security modules uniformly 
compatible with retail equipment performing ancillary func-
tions.  After a lengthy discussion of technological alterna-
tives, the Commission, noting the "dangers of detailed gov-
ernment standard setting," left it to the cable industry and its 
national standard-setting organizations to develop the appro-
priate interfaces.

     The FCC did more than impose this separation require-
ment on cable operators.  The question remained concerning 
precisely what equipment cable operators would be allowed to 
provide.  In addition to mandating the "commercial availabili-
ty" of converter boxes, section 629(a) states that the Commis-
sion "shall not prohibit" cable operators from providing those 

devices.  Cable industry commenters asserted that operators 
should be able to offer the traditional "integrated" converter 
boxes that perform both conditional access and ancillary 
functions, so long as they make available a separate security 
module for use in combination with retail navigation devices.  
The Commission disagreed:

     We conclude that the continued ability [of cable provid-
     ers] to provide integrated equipment is likely to interfere 
     with the statutory mandate of commercial ability and 
     that the offering of integrated boxes should be phased 
     out.  We agree with those commenters who note that 
     integration is an obstacle to the functioning of a fully 
     competitive market for navigation devices by impeding 
     consumers from switching to devices that become avail-
     able through retail outlets.
     
It accordingly required cable operators to cease providing 
new integrated cable boxes by January 1, 2005.  See 47 
C.F.R. s 76.1204(a)(1).  Cable operators could, however--like 
any retailer--provide a device performing only ancillary func-
tions, which could in turn be combined with the security 
module by the consumer.

     Commissioner Powell wrote a separate statement dissent-
ing in part.  While he agreed with the Commission's require-
ment that cable operators make available separate security 
modules with standard interfaces, he argued that the agency's 
decision barring them from producing integrated devices was 
unsound.  He thought that efficiencies might well accompany 
the integration of security and ancillary functions in a single 
device, and that the Commission's ban might "den[y] a cost 
effective choice for consumers."  "It is quite plausible to me," 
he explained, "that the 'impediment' to switching to retail 
may in fact be a consumer preference for distributor-supplied 
integrated boxes!  I see no reason to attempt to control 
consumer preferences."

     In response to requests for reconsideration from several 
commenters, the Commission modified some of the conclu-

sions it reached in the Navigation Devices Order.4  It de-
ferred indefinitely the July 2000 separation deadline for navi-
gation devices providing access to analog video programming.  
Finding a consensus among commenters that the cable indus-
try was rapidly moving from analog to digital programming, 
the FCC concluded that "the application of Section 629 to 
analog devices would result in unnecessary expenditures by 
[the cable industry] for a module that will soon be obsolete."  
However, it reaffirmed the separation deadline for digital 
devices and, importantly for the purposes of this case, it also 
applied the separation requirement to so-called "hybrid" con-
verter boxes capable of processing both analog and digital 
signals.  The agency, over the protestations of commenters in 
the cable industry, maintained its prohibition against inte-
grated navigation devices.  Commissioner Powell again voiced 
his objection to the integration ban in a brief dissenting 
statement.

     Several members of the cable industry now petition for 
review of the Navigation Devices Order and the Reconsidera-
tion Order.  Petitioners' primary argument is that the FCC 
exceeded its authority under section 629 by precluding cable 
operators from offering integrated converter boxes to their 
customers.  They do not challenge the Commission's separa-
tion requirement insofar as it applies to digital equipment.  
They do, however, object to the Commission's requirement 
that cable operators make available separate hybrid security 
modules.

                               II.

     Petitioners assert that the integration ban is squarely 
foreclosed by the second sentence of section 629(a), which 
states that the Commission's regulations "shall not prohibit 
any multichannel video programming distributor from also 
offering converter boxes, interactive communications equip-
ment, and other equipment used by consumers to access 

__________
     4 See In re Implementation of Section 304 of the Telecommuni-
cations Act of 1996, Commercial Availability of Navigation De-
vices, 14 F.C.C.R. 7596 (1999) ("Reconsideration Order").

multichannel video programming." (emphasis added).  While 
the term "converter box" is not defined in the 1996 Act, 
petitioners claim that the term at the very least includes 
those integrated devices that the Commission banned in the 
Navigation Devices Order.  They point out that the most 
common type of navigation device in existence at the time of 
the passage of the 1996 Act was the integrated converter box.  
The Commission stumbles over the first step of Chevron 
U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984), in petitioners' view, because the second 
sentence of section 629(a) clearly prohibits the Commission 
from enacting the integrated device ban.

     The attractive simplicity of petitioners' construction, as the 
Commission persuasively responds, dissolves upon close scru-
tiny.  For the term "converter box" also appears in the first 
sentence of section 629(a):  "The Commission shall enact 
regulations to assure the commercial availability of converter 
boxes...." (emphasis added).  If petitioners' interpretation is 
correct, the Commission is therefore equally compelled by the 
plain language of the statute to permit retailers to provide 
integrated navigation devices, see, e.g., Sullivan v. Stroop, 496
U.S. 478, 484 (1990) (noting presumption that "identical words 
used in different parts of the same act are intended to have 
the same meaning")--certainly an unacceptable result from 
petitioners' point of view.

     Petitioners gamely insist that the parallel language in the 
first and second sentences of 629(a) is not fatal to their 
argument.  They do not dispute that Congress meant to use 
the term "converter box" consistently in the statute.  They 
acknowledge that, if section 629(a) were to be applied in 
isolation, the Commission would be obliged to permit both 
cable providers and retailers to provide integrated navigation 
devices.  Their construction is saved from that concededly 
unacceptable outcome according to them, because another 
section, section 629(b), limits section 629(a), precluding the 
Commission from implementing the statute's commercial 
availability requirement in a manner that "jeopardizes" the 
security of cable programming.  Since permitting retailers to 
offer integrated devices would undoubtedly "jeopardize" secu-

rity, petitioners reason, the Commission must prohibit them 
from doing so--but this limitation does not alter the clear 
command in the second section of section 629(a).

     Petitioners offer a plausible construction, but it is some-
what strained.  They reach their result only by reading 
section 629(b) not merely to "limit" section 629(a), but to 
disrupt the textual symmetry of its language.  We have 
before us two constructions then, both of which interpret 
section 629(b)'s mandate as "limiting" section 629(a) in a not 
obvious manner.  The FCC's interpretation maintains consis-
tency between the provision's two sentences by adopting a 
narrow definition of "converter box."  Petitioners take the 
opposite approach, holding to the more typical definition of 
"converter box" in one sentence of section 629(a) at the price 
of the same term meaning something entirely different in the 
other.  Under Chevron, we are obliged to accept the Commis-
sion's interpretation which is easily a permissible one.

     We move on to petitioners' alternative (but related) statuto-
ry theory:  that section 629(b)'s prohibition of regulations 
"which would jeopardize security of multichannel video pro-
gramming" precludes the Commission's integration ban (em-
phasis added).  It is argued that evidence in the record 
indicates that "embedded security currently contained in inte-
grated equipment is a more secure method of protecting 
intellectual property than is separated security."  Petitioners 
contend that this evidence, combined with a rather liberal 
definition of the word "jeopardize" as meaning any increase 
in security risk, should lead us ineluctably to the conclusion 
that the Commission's prohibition of integrated devices is 
unlawful.

     We think petitioners' premise that any Commission action 
that (even slightly) increases security risk "jeopardizes" cable 
programming is wrong.  To place something in "jeopardy" 
means to subject it to serious or significant danger.  See 
Webster's Third New International Dictionary (1981) (defin-
ing "jeopardize" as "to expose to danger (as of imminent loss, 
defeat, or serious harm):  Imperil").  In any event, we do not 
see how the Commission's decision to ban integrated convert-

er boxes in and of itself poses any threat to system security.  
Petitioners point to evidence purportedly showing that the 
separation of security functions increases the risk of cable 
theft.  But petitioners do not challenge the Commission's 
separation requirement--at least with respect to digital navi-
gation devices.5  Regardless of our disposition of the Commis-
sion's integration ban, would-be cable thieves will be able to 
request separate security modules from their cable operators.  
Petitioners' failure to explain how the Commission's bar on 
integration would in and of itself threaten the security of 
digital cable systems is fatal to their section 629(b) statutory 
argument.  In sum, we think petitioners' statutory objections 
to the Commission's ban on integrated digital and hybrid 
navigation devices, while well-presented by counsel, are insuf-
ficient to clear the formidable hurdle of Chevron deference.6

     Petitioners at oral argument sought to slide from their 
statutory claim to an argument that the Commission's eco-
nomic policy decision to ban the sale of integrated devices was 
unsound--essentially to echo Commissioner Powell's thought-
ful position.  The Commission concluded that integration 

__________
     5 Petitioners do challenge the separate security requirement 
insofar as it applies to the analog programming delivery function of 
"hybrid" navigation devices.  We treat this argument infra.

     6 We reject petitioners' rather labored contention that section 
629(d)(1), which states that "[d]eterminations made or regulations 
prescribed with respect to commercial availability ... before the 
[date of the Telecommunications Act of 1996] shall fulfill the re-
quirements of this section," prohibits the Commission's ban on 
integrated navigation devices.  While we doubt that section 
629(d)(1) proscribes the Commission from altering commercial avail-
ability determinations made prior to the 1996 Act, that provision is 
not even implicated in this case since the earlier Commission 
"determination" relied on by petitioners became final after the 1996 
Act was enacted.  See Order on Reconsideration, In re Implemen-
tation of Section 17 of the Cable Television Consumer Protection 
and Competition Act of 1992, Compatibility Between Cable Systems 
and Consumer Electronics Equipment, 11 F.C.C.R. 4121 (1996) 
(issued on April 10, 1996, after 1996 Act's effective date) ("Compata-
bility Order").

would "impede[ ] consumers from switching to devices that 
become available through retail outlets," Navigation Devices 
Order, 13 F.C.C.R. at 14803.  This statement does not in and 
of itself tell us very much, without further explanation as to 
why consumers would be "impeded."  Consumers might have 
chosen not to purchase retail devices for perfectly sensible 
economic reasons--because, for instance, there are efficiency 
gains captured in the manufacture of an integrated box that 
lead it to cost less than the combined cost of a separate 
security module and a retail device, or because consumers 
view as too high the transaction costs of seeking a separate 
ancillary device at retail.  If this is the case, the integration 
ban does nothing more than deny the most cost-effective 
product choice to consumers--an ironic outcome for an order 
implementing "one of the most pro-consumer, pro-competitive 
provisions of the Telecom Act."  Id. at 14844 (separate state-
ment of Commissioner Ness).  Perhaps there are benefits 
that will flow to consumers from the integration ban,7 but the 
Commission did not clearly spell them out.  If it had, and if 
we nevertheless thought Commissioner Powell had the better 
argument, we would not on that basis alone be justified in 
reversing the Commission's economic judgment.  See City of 
Los Angeles v. United States Dep't of Transp., 165 F.3d 972, 
977 (D.C. Cir. 1999) ("In reviewing the Department's order, 
we do not sit as a panel of referees on a professional 
economics journal, but as a panel of generalist judges obliged 
to defer to a reasonable judgment by an agency acting 
pursuant to congressionally delegated authority.").

     We need not decide this question, however, since petition-
ers did not assert in their briefs that the Commission's 
integration ban was arbitrary and capricious.  At oral argu-
ment, counsel responded to this omission by noting that they 

__________
     7 Or perhaps, somewhat paradoxically, it is the lack of these 
benefits that makes the ban necessary.  The statute requires 
"commercial availability," but does not condition that availability on 
an improvement in consumer welfare.  So even if it were merely the 
transaction costs that "impeded" consumers from buying devices at 
retail, the Commission might be authorized to take affirmative steps 
to create a retail market.

did make a Chevron argument in their opening brief, and 
although it was phrased in Chevron step one terms, it neces-
sarily implied a step two argument as well, and a step two 
Chevron argument is close enough to an arbitrary and capri-
cious claim.  Even granting petitioners' point that its statuto-
ry argument allows us to consider whether the statute, if 
ambiguous, was reasonably interpreted (Chevron step two), 
their problem is that that argument was put entirely in terms 
of statutory interpretation.  At no point in their opening brief 
did petitioners contend that, even assuming the statute did 
not foreclose the Commission's policy, it was nevertheless 
unreasonable.  To be sure, we have recognized that an arbi-
trary and capricious claim and a Chevron step two argument 
overlap, and because of that we have not been sticky as to 
whether an argument in the area of overlap is characterized 
as a Chevron step two claim or as an arbitrary and capricious 
challenge.  Whether a statute is unreasonably interpreted is 
close analytically to the issue whether an agency's actions 
under a statute are unreasonable.  See National Ass'n. of 
Regulatory Util. Comm'rs v. ICC, 41 F.3d 721, 726 (D.C. Cir. 
1994).  But here the contention petitioners pressed at oral 
argument is outside the area of overlap:  they challenge the 
Commission's assumptions about market behavior for reasons 
wholly independent of the statutory arguments made in their 
opening brief.  This is not a case of a mere mischaracteriza-
tion of an argument, but rather of a party raising an entirely 
new argument--the reasonableness of the Commission's eco-
nomic judgment--in its reply brief.  Since petitioners' initial 
brief did not in our view properly put the Commission on 
notice that its economic reasoning was being challenged, we 
do not think it appropriate to consider the arbitrary and 
capricious challenge.  See, e.g., McBride v. Merrell Dow and 
Pharmaceuticals, Inc., 800 F.2d 1208, 1210-11 (D.C. Cir. 
1986).

                               III.

     There remain petitioners' arguments directed to the Com-
mission's requirement that cable operators provide separate 
security modules.  As mentioned above, the Commission ex-

empted analog-only devices from this requirement in its 
Reconsideration Order, and petitioners do not contest the 
Commission's separation requirement with respect to digital 
navigation devices.  Petitioners' objections, then, concern 
only the application of the separation mandate to a rather 
narrow class of navigation devices:  "hybrid" converter boxes 
capable of processing both analog and digital signals.

     The first of these arguments, to which petitioners devote 
much effort, is that the separation requirement violates the 
"Eshoo Amendment," Congress's 1996 modification to section 
624a of the Communications Act.  See 47 U.S.C. s 544a.  
Section 624a, passed by Congress in 1992, directed the Com-
mission to take steps to facilitate the compatibility of cable 
systems with consumer equipment, such as televisions and 
VCRs.  The Eshoo Amendment, apparently animated by 
concerns that the FCC was using its power under section 
624a to impose technology-forcing technical standards on the 
cable industry, required the Commission to "ensure that any 
standards or regulations developed under the authority of 
this section to ensure compatibility between televisions, video 
cassette recorders, and cable systems do not affect features, 
functions, protocols, and other product and service options."  
See 47 U.S.C. s 544a(c)(2)(D).  Petitioners argue that the 
Commission's requirement that cable providers provide a 
hybrid security module constitutes a de facto mandate that 
the industry adopt a particular protocol, the EIA-105 Deco-
der Interface, that violates the "letter and spirit" of the 
Eshoo Amendment.  Indeed, they inform us, it was a concern 
about the Commission's adoption of that very interface in an 
earlier proceeding that prompted Congress to pass the Eshoo 
Amendment in the first place.  Cf. Compatability Order at 
4127.

     Even granting the dubious proposition that the Commission 
has mandated the cable industry's use of the Decoder Inter-
face in the proceeding under review,8 petitioners' argument is 

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     8 The Commission insists, quite plausibly, that it has done no 
such thing.  Its regulations make no reference to the Decoder 
Interface nor to any other particular protocol;  to the contrary, they 

foreclosed by the text of the provision on which it relies.  
For, as the quoted language above demonstrates, the Eshoo 
Amendment applies only to regulations promulgated under 
section 624a's equipment compatibility provisions;  its limita-
tions simply do not extend to the Commission's actions in this 
proceeding which were pursuant to section 629's independent 
grant of regulatory authority.  Nor do we find the legislative 
history inconsistent with that precise textual analysis of the 
statute.  Although Representative Eshoo by letter to the 
Commission sought to support petitioners' interpretation, that 
"legislative future" is of almost no value, see United States ex 
rel. Long v. SCS Bus. & Technical Inst., 173 F.3d 870, 878-79 
(D.C. Cir. 1999), modified, 173 F.3d 890 (D.C. Cir. 1999), and, 
in any event, contradicts her statements at the time of the 
bill's passage, see H.R. Rep. No. 204, 104th Cong., 1st Sess. at 
215 (1995) (Additional Views of Rep. Eshoo) ("[M]y amend-
ment does not affect section 203 [of] H.R. 1555, which assures 
that 'set-top' boxes will be made available to consumers 
through retail stores.").

     We also are unpersuaded by petitioners' contention that the 
Commission's application of the separation requirement to the 
analog security components of hybrid devices impermissibly 
"jeopardizes" cable security in violation of section 629(b).  As 
the Commission properly observed in its Reconsideration 
Order, see 14 F.C.C.R. at 7605, if the analog separation 
requirement will violate section 629(b) in every case, without 
regard to specific evidence of security risks, and if commer-
cial provision of integrated boxes in fact creates excessive 
security risks, then the very mandate of commercial availabil-
ity itself violates section 629(b)--which is another way of 
saying that section 629 violates section 629, at least with 
respect to those navigation devices accessing the dominant 
category of cable programming at the time of the 1996 Act's 

__________
require only the industry's development of a "commonly used 
interface or an interface that conforms to appropriate technical 
standards promulgated by a national standards organization."  47 
C.F.R. s 76.1204(b).

passage.  We certainly understand the Commission's reluc-
tance to conclude that section 629(b) requires this result.

     Moreover, while petitioners proffer ample evidence--evi-
dence uncontested by the Commission, see Reconsideration 
Order, 14 F.C.C.R. at 7605-that analog navigation devices are 
more vulnerable to attacks by cable thieves than are their 
digital counterparts, it does not necessarily follow that pack-
aging that security hardware in a separate module, as op-
posed to as an embedded part of an integrated converter box, 
"jeopardizes" analog security.  After all, in both situations 
the security components themselves remain under the pro-
prietary control of the cable operator.  Petitioners do point to 
comments in the record explaining how the existence of a 
standardized industrywide common analog interface would 
increase the risk of theft by "restrict[ing] the development of 
security improvements" or by "necessarily reveal[ing] infor-
mation about the proprietary technology used to provide 
security."  Telecommunications Industry Association Petition 
for Reconsideration at 4-5;  Comments of Ameritech New 
Media at 4.  Conclusory statements like these are, however, 
insufficient to establish that the Commission's separation 
requirement would "jeopardize" the cable security of opera-
tors providing hybrid service--a standard which, as we dis-
cussed above, requires a showing of a substantial, as opposed 
to slight, risk of harm.

     Petitioners bring one final argument against the FCC's 
application of the separation requirement to hybrid navigation 
devices.  As noted above, the Commission had originally 
required all cable operators, including those offering analog 
programming service, to offer a separate security module.  
See Navigation Devices Order, 13 F.C.C.R. at 14793.  Con-
vinced by comments that analog programming was rapidly 
becoming obsolete, the Commission reversed itself on rehear-
ing, and indefinitely deferred the separation requirement with 
respect to analog-only navigation devices.  It did not, howev-
er, extend this exemption to hybrid devices, which are capable 
of processing both analog and digital signals.  See Reconsid-
eration Order, 14 F.C.C.R. at 7603;  47 C.F.R. s 76.1204(f).  

Petitioners argue that it was arbitrary and capricious for the 
FCC to treat analog-only and hybrid devices differently.

     This claim is based on petitioners' contention that "the 
same factors that the Commission identified as supporting the 
exemption of analog-only devices ... apply with equal force 
to the analog security component of 'hybrid' devices."  But 
this is an overstatement.  The Commission did not abandon 
its separation mandate for analog-only devices out of concerns 
over the security problems inhering in an analog security 
interface.  See Reconsideration Order at 7601-03.  Nor did 
the Commission base its determination on the research and 
development costs of a common analog interface per se.  
Instead, the agency did not think it worthwhile for the 
industry to construct a separate analog security module (not 
merely an interface) that "will soon be obsolete" because of 
the industry's transition from analog to digital programming.  
Id. at 7602.  The competitive access mandate of section 629(a) 
would be more sensibly satisfied, the Commission reasoned, 
by focusing the industry (and the FCC) on the equipment 
capable of processing digital signals.  See id. at 7602-03.

     Equipment, that is to say, like hybrid navigation devices.  
The Commission found that, unlike analog-only equipment,

     hybrid devices could interfere with competition in the 
     digital marketplace.  If hybrid devices were included in 
     the deferral, it is more likely that subscribers would lack 
     incentives to look to the marketplace for a digital naviga-
     tion device if their equipment choice to receive all ser-
     vices was either to lease a box from the [cable operator], 
     or to purchase a digital box at retail and obtain a 
     separate analog box and a digital security module.
     
Id. at 7603.  In other words, the Commission thought that, 
because of their ability to access digital programming, hybrid 
devices would likely find a market in the future--a distinction 
that explains the Commission's differential treatment of ana-
log-only and hybrid devices.  Petitioners respond that the 
Commission offers inadequate evidence to support this as-
sumption about the hybrid navigation devices market.  While 

the Commission's order is hardly a model of comprehensive-
ness on this point, we disagree that its conclusion is unsup-
ported by the record.  A coalition of electronic retailers that 
supported the Commission's decision to exempt analog-only 
devices argued that many cable systems will be hybrid "for 
the foreseeable future," and thus should be not exempt from 
the separation requirement.  Written Ex Parte Presentation 
of Circuit City et al.  Moreover, the Commission's concern 
about hybrid devices "interfering with competition in the 
digital market" appears well-grounded in common sense.  As 
intervenors observe, the ability to offer an integrated "hy-
brid" box capable of accessing digital programming might 
encourage cable operators to incorporate outdated analog 
functionality into their navigation devices in order to avoid 
the digital separation requirement.  We therefore reject peti-
tioners' final challenge to the Commission's separation re-
quirement for hybrid navigation devices.

                            *  *  *  *

     For the foregoing reasons, the petitions for review are

                                                          Denied.