FCC: Set-Top Fines Max Out at $325K

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

Big and small cable operators are growing increasingly concerned about the impending set-top ban, which will force cable to use removable security mechanisms for digital set-tops. And the FCC had not previously indicated what the penalty would be for not complying.

The FCC's Media Bureau, asked by a reporter 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.

Questions remain, though, including whether the FCC would consider every set-top box that includes integrated security deployed after July 1 as a separate violation.

The purpose of the set-top rule is to ensure 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.

Cable companies and the National Cable & Telecommunications Association call the ban unnecessary and a hefty financial burden. Several multiple-system operators — including Comcast, the U.S.'s largest MSO — 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 Technology's Chicago boxes exempt from the ban, saying 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.

Comcast in a Jan. 30 letter asked the FCC's five commissioners to review that “fatally flawed” decision. The Consumer Electronics Association last week urged the FCC to reject that appeal.

The FCC did grant a waiver request to Cablevision Systems, which uses removable smart cards in SA boxes. It hasn't ruled yet 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.

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