On October 12, 2012, the FCC released an Order amending its rules and lifting its ban on basic tier encryption for all-digital cable systems, provided that the all-digital systems comply with specific consumer protection measures.  These rules became effective December 10, 2012.

Under the amended rules, “all-digital systems” mean systems in which “no television signals are provided using the NTSC system.”  This covers systems that offer unencrypted analog “barker channels,” but does not include hybrid analog/digital systems.

Before opting to encrypt their basic service tier, all-digital cable operators must fulfill the express customer service protection measures related to equipment offers and subscriber notifications described below.

Required Equipment Offers. Operators must for a limited, “transitional” period provide existingcustomers with their choice of equipment to receive the encrypted basic service tier, as detailed below, all at no charge (including no service charges related to the equipment):

(i)            For customers receiving only the basic service tier without a set-top box or CableCARD, either a set-top box or CableCARD on up to two televisions sets for two years from the date of encryption;

(ii)           For customers receiving a level of service above basic on one television set, but receiving only basic on other sets without a set-top box or CableCARD, either a set-top box or CableCARD on one television set for one year from the date of encryption; and

(iii)          For Medicaid recipient customers receiving only the basic service tier without a set-top box or CableCARD, either a set-top box or CableCARD on up to two televisions sets for five years from the date of encryption.

Operators must keep these offers open for a period lasting from at least 30 days prior to encrypting the first basic tier channel through at least 120 days after that.

Subscriber Notice Requirements. Related to these required equipment offers, the FCC requires operators to provide notice to existing customers about:

(i)            the planned encryption and free equipment offers at least 30 days before beginning encryption of the basic service tier; and

(ii)           the end of the free equipment transitional period 30-60 days before its end.

These notices must contain certain specific language detailed in the Order and FCC regulations.

If you have questions about basic service tier encryption, please contact Jake Baldwin or Scott Friedman at (312) 372-3930, or at jbaldwin@cm-chi.com or sfriedman@cm-chi.com.