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FCC Levies More SDV-Related Fines

Jeff Baumgartner
10/16/2008
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The Federal Communications Commission (FCC) has hit Time Warner Cable Inc. (NYSE: TWC) and Cox Communications Inc. for fines totaling $60,000 over allegations that they "willfully" prevented some unidirectional CableCARD-based devices from accessing channels that were moved to a switched digital video (SDV) tier, and for failing to provide those devices with the appropriate "virtual channel tables."

The FCC this week issued fines of $20,000 each for alleged violations by the Cox system in Fairfax County, Va.; and for Time Warner Cable's systems in Kauai and Oahu, Hawaii. The Commission is also requiring the operators to refund affected customers based on when the MSOs deployed SDV in those systems. The FCC noted it can fine operators up to $32,000 for each violation or each day of a continuing violation, up to a statutory maximum of $325,000 for any single continuing violation.

In August, the FCC slapped Time Warner Cable's Oceanic division in Hawaii with a $7,500 fine, claiming the MSO failed to give the local franchise authorities adequate notice that some channels were being moved to a switched tier. (See FCC Dings TWC Over SDV .) Now it appears that the FCC is targeting MSOs on a system-by-system basis and expanding into new infraction territory.

The FCC holds that Cox and Time Warner Cable customers that use one-way CableCARD products, which include some digital TVs and standalone TiVo Inc. (Nasdaq: TIVO) digital video recorders, could not access channels that were moved to the switched tier -- not without renting a new digital set-top box.

For Cox, this applied to a Latino programming tier and 14 linear channels. Cox countered that only a small number of customers using CableCARDs in one-way devices would be affected, and that it had offered them interactive set-tops at little or no incremental cost.

According to FCC documents, Time Warner Cable admitted moving 62 linear channels to the SDV platform in the Oahu and Kauai systems. For CableCARD customers affected, the operator said it tried offering set-top boxes at the same price as the customers' CableCARDs for two years from the date of the SDV deployment.

The Commission didn't buy either argument.

The cable industry, meanwhile, hopes the introduction of the tuning adapter will solve these problems. Comcast Corp. (Nasdaq: CMCSA, CMCSK) recently began offering the devices to customers in Cherry Hill, N.J. (See Comcast Tunes Up SDV Tuning Adapters and CableLabs Stamps SDV Tuning Adapters .)

New TVs and set-tops based on the tru2way platform available through retail should be able to access channels in an operator's switched tier, but those products are just now starting to show up. (See Denver, Chicago First to Get Tru2way TVs.)

Table setting
As for the alleged virtual channel table infractions, the FCC cites that cable operators are required to let unidirectional digital cable products (UDCPs) find scrambled programming services. The virtual table, the FCC continues, "acts as a legend for the UDCP," enabling the one-way device to put these programs onto the channels where the subscriber expects to see them, even if the programs aren't viewable.

According to the FCC, Cox acknowledged that it's sending CableCARD UDCP customers a virtual channel table that covers only the scrambled programming services viewable on their one-way devices. Cox countered that it left off two-way services to avoid confusion, because UDCPs can't view those programs.

Both Cox and Time Warner Cable issued statements that they disagree with the rulings and will defend their use of SDV. As for Cox's Northern Virginia deployment, the MSO said the technology has enabled it to introduce more than 50 new channels, including 24 in hi-def.

— Jeff Baumgartner, Site Editor, Cable Digital News

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Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Sabre
12/5/2012 | 3:29:16 PM
re: FCC Levies More SDV-Related Fines
It is strange (and petty, as you put it) that the FCC went ahead and posted these so-called notices of apparent liability knowing that the cable industry has created a solution to this problem with the tuning adapter...so the faster Cisco and Moto produce them the better. Based on that, it would seem that TWC and Cox would be on solid footing if they try to fight it. At least the development of the tuning adapter shows that they are aware of this issue and are trying to remedy it. JeffB
fgoldstein
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fgoldstein,
User Rank: Light Sabre
12/5/2012 | 3:29:20 PM
re: FCC Levies More SDV-Related Fines
Lessee, first the FCC goes crazy making everybody use CableCard, even though doing so raised the price of cable boxes rather substantially and it was clear that they weren't a perfect substitute. Now they attack MSOs who try to use new technology to offer more services. No surprise here that old CableCard doesn't handle it, so what's the real beef? No must-carry was moved to SDV.

It looks to me more like petty harassment of the cable industry by a crazed chairman K-Mart, who has an obvious personal animus against them. His time at the FCC is almost up and he's apparently bucking for a new job with one of the mega-ILECs. Pander now, get paid later. So while it's quite possible that this ruling will be overturned, it won't be on his watch.
Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Sabre
12/5/2012 | 3:29:20 PM
re: FCC Levies More SDV-Related Fines
Until tuning adapters become widely available (they seem to be only trickling out of Moto and Cisco at this point), it seems plausible that the FCC will hit more operators and more systems that are using SDV with these sorts of fines. Nice little revenue stream for the gov't, I suppose, even if it will be short-lived. We'll have to see if TWC (and perhaps Cox) can demonstrate that a remedy is on the way and they can avoid having to pay these fines. Jeff
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