DC Circuit Upholds FCC DTV Tuner Mandates Order

October 28, 2003. The U.S. Court of Appeals (DCCir) issued its opinion [20 pages in PDF] in Consumer Electronics Association v. FCC, upholding the Federal Communications Commission's (FCC) order mandating that most TV sets be built with digital TV tuners.

The FCC order mandates technology standards, and sets deadlines for compliance with those standards, for all but the smallest TV sets. The order requires that by 2007 all TV sets capable of receiving over the air signals with screen sizes larger than thirteen inches and all TV receiving equipment, such as videocassette recorders (VCRs) and digital versatile disk (DVD) players and recorders, include digital television (DTV) reception capability.

This order is the Second Report and Order and Second Memorandum Opinion and Order [49 pages in PDF] in Media Bureau Docket No. 00-39. This is FCC No. 02-230. See also, stories titled "FCC Mandates DTV Standards and Deadlines" and "CEA Will Appeal FCC DTV Order" in TLJ Daily E-Mail Alert No. 488, August 9, 2002.

Equipment makers have been free to make TV sets with DTV tuners, and consumers have had the choice of which type to buy, but very few consumers have chosen TV sets with DTV tuners. Moreover, most households have cable or DBS service, and thus do not stand to benefit from DTV tuners for over the air signals. Also, consumers who use a TV for prerecorded material do not benefit from having a DTV tuner

The FCC order eliminates this consumer choice, and raises the price of equipment for consumers, whether or not they will benefit from the DTV tuner. Predictably, the National Broadcasters Association (NAB), which will benefit from this order, while incurring none of the costs, supported the order. In contrast, the Consumer Electronics Association (CEA), which will have to make more expensive products, opposed it.

The CEA argued to the FCC in its rulemaking proceeding, and before the Court of Appeals, that the FCC exceeded its statutory authority, and that it acted in an arbitrary and capricious manner.

The FCC argued that it has statutory authority under the 1962 All Channel Receiver Act (ACRA), which is codified at 47 U.S.C. § 303. This section provides, in part, that "the Commission from time to time, as public convenience, interest, or necessity requires, shall ... (s) Have authority to require that apparatus designed to receive television pictures broadcast simultaneously with sound be capable of adequately receiving all frequencies allocated by the Commission to television broadcasting when such apparatus is shipped in interstate commerce, or is imported from any foreign country into the United States, for sale or resale to the public".

The CEA also argued that the FCC's order was arbitrary and capricious under the Administrative Procedure Act. The Court summarized its arguments as follows: "the Order the FCC: (1) addressed a problem that does not exist; (2) chose an irrational means to ensure that households can access DTV; and (3) failed to assess reasonably the costs of its mandate to consumers."

The Court of Appeals, with Judges Roberts, Williams and Ginsburg presiding, held that the FCC order is neither beyond the statutory authority of the FCC, nor arbitrary and capricious. It denied the petition for review.

The Court reviewed the history of analog and digital TV, and the efforts of the Congress and the FCC to promote a conversion to DTV.

The Court wrote that when the Congress enacted the ACRA it had in mind TV sets that could not receive analog UHF signals. However, it did not intend that the statute be limited to the analog context. Hence, the Court, applying Chevron analysis, concluded that the FCC's interpretation of the ACRA is permissible.

The Court also rejected all of the CEA's arguments regarding arbitrary and capricious conduct.

Finally, the Court held that "We hold that a petition for review filed after public notice, but still on the same day, is not premature under 28 U.S.C. § 2344." That is, attorneys may rush to their favorite courthouses to file their petitions for review on the same day that notice of the final order is published in the Federal Register.

FCC Chairman Michael Powell stated in a release [PDF] that "We're on track to have most television sets digital-ready by 2007. This will ensure that consumers are able to enjoy high-quality digital broadcast programming without the hassle and expense of hooking up a separate set-top box. We're pleased that the court has upheld a key component of our digital television transition plan."

NAB P/CEO Edward Fritts stated in a release that the opinion of the Court is "a milestone towards completing the DTV transition."

CEA CEO Gary Shapiro stated in a release that "We obviously are disappointed by the DC Circuit Court of Appeals ruling, which we are still studying. We will be reviewing the full opinion and consulting with our member companies, but of course will be compliant with any final court order."

"Everyone involved in the analog to DTV transition is trying his utmost to accomplish shared objectives. We certainly reached a critical tipping point a few weeks ago with the FCC's adoption of the historic cable plug-and-play agreement. From here, the Commission needs to be vigilant in ensuring that this well-crafted plug-and-play agreement is dutifully implemented and enforced with the interests of the American consumer top of mind", said Shapiro.

There is also legislation pending in Congress that pertains to the FCC's order. On January 28, 2003, Rep. James Sensenbrenner (R-WI) and others introduced HR 426, the TV Consumer Choice Act of 2003. See, story titled "Representatives Introduce Bill to Block FCC Digital TV Tuner Mandates" in TLJ Daily E-Mail Alert No. 596, February 3, 2003.

This bill provides that "Neither section 303(s) of the Communications Act of 1934 (47 U.S.C. 303(s)) nor any other provision of such Act shall be construed to authorize the Federal Communications Commission to require, or prescribe any schedule for the implementation of, digital television reception capability in television broadcast reception equipment."

This bill further provides that "The requirements and schedule established by the Commission for the implementation of digital television reception capability in television broadcast reception equipment as contained in section 15.117(i) of the Commission's regulations (47 CFR 15.117(i)) as modified in FCC 02-230 (August 8, 2002), shall not be effective except as expressly hereafter provided by Act of Congress."

Rep. Sensenbrenner is the Chairman of the House Judiciary Committee. But, HR 426 was referred to the House Commerce Committee, and its Subcommittee on Telecommunications and the Internet. Rep. Chris Cox (R-CA) is a member of the Subcommittee and a cosponsor of the bill. However, no action has been taken on the bill.

This case is Consumer Electronics Association v. FCC and USA, National Association of Broadcasters and Association for Maximum Service Television, intervenors, U.S. Court of Appeals for the District of Columbia, No. 02-1312, a petition for review of a final order of the FCC.