FCC: Set-Top Fines Capped at $325K

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Federal Communications Commission officials indicated that fines to cable operators that are not in compliance with the July 1 ban on deploying set-top boxes with integrated security features would not exceed $325,000.

The FCC’s Media Bureau, asked what the penalty would be for violating the set-top ban, referred to Section 1.80(b)(1) of the agency’s rules, which describes penalties for violating FCC orders. According to the document, fines for cable operators “shall not exceed $32,500” for each violation or each day of a continuing violation, with a maximum total fine of $325,000 for any continuing violation.

It remains unclear, however, whether the FCC would consider every set-top box that includes integrated security deployed after July 1 as a separate violation, or whether it would assess one overall penalty.

A $325,000 fine is also the maximum the FCC is allowed to levy against TV stations per indecency violation under a law passed last year, a tenfold increase from the previous maximum.

MSOs and small operators alike are growing increasingly concerned about the impending set-top ban, which will force cable to use removable security mechanisms for digital set-tops.

The purpose of the rule is to ensure that cable networks are accessible to consumer-electronics devices by making operators use the same conditional-access technologies themselves. Initially, that will mean using operator-issued CableCARDs -- hardware that plugs into set-tops, TVs or other electronic gear to handle authorization and decryption of cable programming.

Many cable operators, as well as the National Cable & Telecommunications Association, have objected to the ban as unnecessary and imposing a hefty financial burden. Several operators have requested waivers to the ban for low-end set-tops with integrated security functions.

On Jan. 10, the Media Bureau turned down Comcast’s request to have Motorola’s DCT-700, Scientific Atlanta’s Explorer 940 and Pace Micro Technologies’ Chicago boxes exempt from the ban, ruling that the boxes don’t meet the definition of “low-cost, limited-capability” devices because they include two-way functionality to access services like video-on-demand.

Late last month Comcast took what it called “the highly unusual step” of appealing to the FCC’s five commissioners to review the “fatally flawed” decision.

“In decades of experience with the commission, Comcast has never found itself placed in such a difficult position, forced to incur (and to pass along to its customers) substantial costs that are counterbalanced by no public benefit,” the company said in a Jan. 30 letter to the agency.

The FCC did grant a waiver request to Cablevision Systems, which uses removable smart cards in SA boxes.

Meanwhile, the FCC hasn’t ruled on a waiver request from RCN for the Motorola DCT-700. On Feb. 13, RCN sent the agency a letter expressing “very serious concern” about the denial of Comcast’s waiver and emphasizing that denying RCN’s waiver would result in “significant” price increases to consumers for basic digital cable.