SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Report and Order, PP Docket No. 00-67, FCC 00-342, adopted September 14, 2000; released September 15, 2000. The full text of the Commission's Report and Order is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW., Washington, DC 20554, or may be purchased from the Commission's copy contractor, International Transcription Service, Inc., (202) 857-3800, 1231 20th Street, NW., Washington, DC 20036. The Report and Order contains a new information collection subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new information collection contained in this proceeding.

Summary of the Report and Order

1. The R&O adopts labeling requirements for three categories of digital television receivers and other consumer electronics TV receiving devices. The labeling requirements are designed to ensure that consumers understand the capability of digital television equipment to operate with cable television systems providing digital services. Following are the three consumer electronics TV receiving device labels that the Commission adopted. Commission rules require that any digital consumer electronics TV receiving device that does not provide one or more of the feature sets described in the labels may not be marketed as “cable ready” or “cable compatible” and that digital consumer electronics TV receiving devices that do provide one or more of these feature sets must be labeled as such. Because the new labeling requirements fall on consumer electronics equipment, the new rules are found in part 15 of 47 CFR (“Radio Frequency Devices”) rather than part 76 (“Multichannel Video and Cable Television Service”).

(a) “Digital Cable Ready 1” is a consumer electronics TV receiving device capable of receiving analog basic, digital basic and digital premium cable television programming by direct connection to a cable system providing digital programming. This device does not have a 1394 connector or other digital interface. A security card (or POD) provided by the cable operator is required to view encrypted programming.

(b) “Digital Cable Ready 2” is a consumer electronics TV receiving device capable of receiving analog basic, digital basic and digital premium cable television programming by direct connection to a cable system providing digital programming. This receiving device will incorporate all features defined in Digital Cable Ready 1 and will also include the 1394 digital interface connector. A security card/POD provided by the cable operator is required to view encrypted programming.

Note:

The 1394 connector may be used for attaching the receiving device to various other consumer appliances, including a digital cable set-top box that incorporates the 1394 connector. Connection of a Digital Cable Ready 2 receiver to a digital set-top box may support advanced and interactive digital services and programming delivered by the cable system via the set-top box.

(c) “Digital Cable Ready 3” is a consumer electronics TV receiving device capable of receiving analog basic, digital basic and digital premium cable television programming. This device will incorporate all features defined in Digital Cable Ready 1 and will also receive advanced and interactive digital services by direct connection to a cable system providing digital programming and advanced and interactive digital services. A security card/POD provided by the cable operator is required to view encrypted programming.

2. The R&O also keeps PP Docket No. 00-67 open in order to give the Commission the option of incorporating into its rules specifications, on which the industries are still working, for the Digital Cable Ready 3 receiver. Additionally, the R&O requires the cable and consumer electronics industries to report at intervals to the Commission on progress in implementing earlier agreements on technical standards for direct connection of digital television receivers to digital cable systems and on providing tuning and program scheduling information (Program and Scheduling Information Protocol or “PSIP” information) to support the navigation function of DTV receivers. The first report is due November 30, 2000 and subsequent reports are due April 30 and October 31, 2001 and April 30 and October 31, 2002.

3. The Notice of Proposed Rulemaking,65 FR 24671, April 27, 2000, in this proceeding also sought comment about scrambling of digital broadcast signals and their placement on cable service tiers and about whether the digital transition necessitates any amendment to Commission requirements that cable operators offer supplemental equipment to subscribers to enable them to utilize certain special features of their digital television receivers ( e.g., “picture in picture”). The R&O concludes the pending digital must carry proceeding is the appropriate venue for resolving digital broadcast signal carriage issues and that no action is required at this time with respect to our supplemental equipment rules.

4. Additionally, the Notice of Proposed Rulemaking in this proceeding addressed licensing terms for copy protection technology. Because the question that emerged in the filed comments relates to the Commission's navigation devices rules, the Commission addressed this issue in a separate decision in the navigation devices docket. See Further Notice of Proposed Rulemaking, Memorandum Opinion & Order, and Declaratory Ruling in CS Docket No. 97-80, Implementation of Section 304 of the Telecommunications Act of 1996-Commercial Availability of Navigation Devices, FCC 00-341, adopted Sept. 14, 2000.

Paperwork Reduction Act

This Report and Order contains new information collection(s) subject to the PRA of 1995, Public Law 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under Section 3507(d) of the PRA, with a request for emergency approval. OMB, the general public, and other Federal agencies are invited to comment. Public and agency comments are due December 26, 2000. Comments should address: (a) whether the new or modified 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 Control Number: 3060-XXXX. ( printed page 64390)

Title: Compatibility Between Cable Systems and Consumer Electronics Equipment.

Form No.: Not Applicable.

Type of Review: New Collection.

Respondents: Business or other for profit.

Number of Respondents: 102.

Estimated Time Per Response: 10-80 hours.

Total Annual Burden: Varies by year and information collection (for progress reports, burden is 160 hours in 2000 and 320 hours per year in 2001 and 2002; for labeling, burden is 1,400 hours in 2001 and 1,000 hours/year in each later year).

Cost to Respondents: Progress reports total cost is $12,000 in 2000 and $24,000/year in each of 2001 and 2002. Labeling total cost is $28,000 in 2001 and $25,000/year in future years.

Needs and Uses: The labeling requirements will ensure that consumers understand the capability of digital television equipment to operate with cable television systems. This will not only aid consumers in making informed purchasing decisions with respect to DTV equipment but also promote the overall transition from analog to digital television. The progress reports will allow the Commission to monitor industry development of specifications for the Digital Cable Ready 3 receiver, as well as tracking industry progress in implementing earlier agreements on technical standards for direct connection of digital television receivers to digital cable systems and on providing tuning and program scheduling information (Program and Scheduling Information Protocol or “PSIP” information) to support the navigation function of DTV receivers. Through oversight and identification of outstanding areas of disagreement, the Commission will be able to encourage the industries to reach agreement on and put into effect specifications for DTV products that will offer major benefits to American consumers.

Final Regulatory Flexibility Certification

The Regulatory Flexibility Act (RFA) ^[1] requires that an agency prepare a regulatory flexibility analysis for notice-and-comment rulemaking proceedings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” ^[2] The Notice of Proposed Rulemaking (NPRM) ^[3] in this proceeding proposed rules to resolve outstanding compatibility issues between cable television systems and consumer electronics equipment, in particular, requirements for labeling digital television (DTV) receivers to describe their capabilities to operate with digital cable television systems, and questions regarding licensing terms for copy protection technology. Out of an abundance of caution, the Commission published an Initial Regulatory Flexibility Analysis (IRFA) in the NPRM, even though the Commission was reasonably confident that any economic effect on small entities would be minimal. The IRFA sought written public comment on the proposed rules and our tentative conclusions in the IRFA. We received one written comment in response to the IRFA, from the U.S. Small Business Administration (SBA).^[4]

As noted, the NPRM in this proceeding raised two issues—labeling of digital television receivers and copy protection technology licensing terms. The second issue has now been moved to another proceeding and resolved therein via a declaratory ruling.^[5] The present Report and Order addresses only the labeling of “consumer electronics TV receiving devices, including TV receivers, videocassette recorders, and similar devices, that include digital video signal processing capability and incorporate features intended to be used with digital cable television service.” The impact of the rules adopted is thus on manufacturers of consumer electronics TV receiving devices. The rules do not mandate any particular design or set of features for this equipment. They merely require manufacturers to attach specified labels to receiving devices that provide certain sets of features. Of course, manufacturers of consumer electronics TV receiving devices already package and label their products with various descriptive captions. Moreover, we believe that manufacturers generally find it in their interest to ensure that consumers understand the capabilities of the product being offered for sale. Hence, manufacturers actually have commercial incentives to label their products clearly. (Concomitantly, consumers also benefit from the information in product labels.) For these reasons, and for reasons we discuss additionally below, we certify, pursuant to the RFA, that the labeling requirements adopted in the present Report and Order will not have a significant economic impact on a substantial number of small entities. The Report and Order directs the National Cable Television Association and the Consumer Electronics Association to file reports with the Commission on November 30, 2000, April 30, 2001, October 31, 2001, April 30, 2002, and October 31, 2002 detailing the progress of their efforts to develop standards for a bidirectional direct connection DTV receiver and their progress in implementing their February 2000 agreements on technical requirements for direct connection of digital television receivers to digital cable systems and on provision of tuning and program scheduling information to support the navigation functions of DTV receivers. Because the requirements apply only to these two trade associations, which together do not constitute a substantial number of entities, we certify, pursuant to the RFA, that the reporting requirements will not have a significant impact on a substantial number of small entities.

On the labeling issue as described in the IRFA, the SBA stated, “The Commission * * * asserts that its labeling rules would have a minimal impact, because labeling would be standardized, costs would be spread over sufficient quantities of goods as to be insubstantial, and manufacturers could pass costs on to their subscribers. But this ignores the differences in output or customer base that may exist between a small company and a large company. A business with less output or fewer customers might find its per unit costs are higher. The Commission should explore any such potential cost discrepancies based on business size, not simply dismiss them as minimal.” As described in the Report and Order, pursuant to the new rule, manufacturers must label the pertinent products with labels that meet the requirements of § 2.925 of the Commission's rules, 47 CFR 2.925. Manufacturers of transceivers must already label their equipment to demonstrate compliance with the Commission's equipment authorization rules. Such labels must “be permanently affixed to the equipment and * * * be readily visible ( printed page 64391) to the purchaser at the time of purchase.” Section 2.925(d). The manufacturer may choose the means to make the label permanent, including using a nameplate (of material of the manufacturer's choosing) fastened to the equipment with a permanent adhesive. While we do not wish to favor one type of labeling choice over another, we note that use of an adhesive label containing the additional information at issue should not create a significant economic impact for any manufacturer, and in fact probably represents an insignificant economic impact. The cost of paper labels with adhesive, containing brief information specified by rule, would appear to be minimal. Finally, the rules permit manufacturers to request alternative means of labeling. Section 2.925(e).

The Commission will send a copy of the present Report and Order, including a copy of this final certification, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act, see5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the Report and Order, including a copy of this final certification, to the Chief Counsel for Advocacy of the SBA.

Rule Changes

For the reasons discussed in the preamble, the Federal Communications Commission amends part 15 of title 47 of the Code of Federal Regulations as follows:

1. The authority citation for part 15 is revised to read as follows:

Authority: 47 U.S.C. 154, 302, 303, 304, 307, 336, and 544A.

2. Section 15.3 is amended by revising the last sentence in paragraph (aa) to read as follows:

3. Section 15.19 paragraph (d) is amended by adding paragraphs (d)(1), (d)(2), (d)(3), and (d)(4) to read as follows:

4. Section 15.118 is amended by adding a new sentence at the end of paragraph (a) to read as follows: