On Wednesday, November 28, 2012, the FCC released an Order granting cable operators more time, until June 2, 2014, to implement the requirement that all new HD set-top boxes include an IP-output port that complies with an open industry standard for home networking.  Cable companies serving 400,000 or fewer subscribers over one or more cable systems received an additional three months’ time – until September 2, 2014 – to come into compliance.  In addition, the FCC clarified what qualifies as an “open industry standard” for purposes of complying with the IP-output requirement.

Background. In its October 14, 2010 Third Report and Order in the Commercial Availability of Navigation Devices proceeding, the FCC eliminated the 1394 interface mandate.  In its place, the FCC specified that, by December 1, 2012, operator-supplied two-way HD boxes must meet certain functional requirements to enable the networking of content to connected devices in the home (i.e., “an open industry standard that provides for audiovisual communications including service discovery, video transport, and remote control command pass-through standards for home networking”).

In adopting the IP-output mandate, the FCC did not specify any particular technology that would presumptively satisfy these functional requirements (e.g. through Ethernet, Wi-Fi, MoCA, IEEE 1394).  Nor did it specify a standard by which the functionalities (service discovery, video transport, and remote control command pass-through standards for home networking) are to be provided.  Instead, the Order left these issues for the industry to work out.

While the Digital Living Network Alliance (“DLNA”) has been hard at work developing an IP-output standard, it has not yet completed this work.  Consequently, ACA, NCTA, TiVo, and others suggested to the FCC that the Media Bureau extend the compliance deadline.

Open Industry Standard. In its Order released Wednesday, the FCC concluded that it would not change its policy of not mandating a single standard that all cable set-top boxes must use.  Nonetheless, the FCC agreed with TiVo that it would be useful to clarify the meaning of the phrase “open industry standard.”

The FCC explained that it “will analyze whether a set of specifications is an open industry standard based on the elements established in OMB Circular A-119.”  These elements are:

(i)            Openness;

(ii)          Balance of interest;

(iii)         Due process;

(iv)         An appeals process; and

(v)          Consensus.

Moreover, the FCC found that the industry is working to develop a future version of the DLNA Premium Video profile that will serve as a home-networking solution compliant with the home networking requirement, and further concluded that the process DLNA uses to develop and adopt standards satisfies the elements of an “open industry standard.”  Accordingly, the FCC stated that any cable operator that includes a DLNA output on its set-top boxes that supports the IP-output requirements will be in compliance with its home networking rule.

Extension of December 1, 2012 Deadline. Because finalized standards have not yet materialized, and because the cable industry does not expect the DNLA standard to be settled until 2013, the FCC granted cable operators an 18-month extension of the December 1, 2012 deadline – to June 2, 2014.

Moreover, in response to ACA’s argument that small cable companies are often unable to obtain equipment and related software until after the needs of larger cable operators are satisfied, the FCC granted small cable companies an additional three-month extension beyond that provided for larger cable operators.  Small cable companies that serve 400,000 or fewer subscribers over one or more cable systems have until September 2, 2014 to comply.

For more information about outage reporting obligations, please contact Barbara Esbin at (202) 872-6811 or besbin@cm-chi.com or Scott Friedman at (312) 372-3930 or sfriedman@cm-chi.com.