This week, the FCC released a Compliance Guide intended to help small entities comply with the FCC’s basic tier encryption rules.  Under the FCC’s amended rules – which became effective December 10, 2012 – all-digital cable systems may voluntarily encrypt the basic service tier so long as they meet certain customer service protection measures.

As highlighted in the Compliance Guide, “all-digital systems” mean systems in which “no television signals are provided using the NTSC system,” and instead all signals are sent using QAM.  Moreover, before opting to encrypt their basic service tier, cable operators must fulfill 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. Cable operators which choose to encrypt their basic service tier are required 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, including the date that the subscriber will be charged for the continued use of the cable operator’s equipment, and the name and address of the local franchising authority.

These notices must contain certain specific language detailed in the Compliance Guide.

In addition, the Compliance Guide notes that cable operators that do not have all-digital systems may continue to seek a waiver of the FCC’s rule prohibiting scrambling of channels on the basic service tier in cases of extreme service theft.

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