347 F.3d 291 (D.C. Cir. 2003), 02-1312, Consumer Electronics Ass'n v. F.C.C.

Docket Nº:02-1312
Citation:347 F.3d 291
Party Name:Consumer Electronics Ass'n v. F.C.C.
Case Date:October 28, 2003
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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347 F.3d 291 (D.C. Cir. 2003)

CONSUMER ELECTRONICS ASSOCIATION, Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.

National Association of Broadcasters and Association for Maximum Service Television, Inc., Intervenors.

No. 02-1312.

United States Court of Appeals, District of Columbia Circuit

October 28, 2003

Argued Sept. 16, 2003.

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On Petition for Review of an Order of the Federal Communications Commission.

Jonathan Jacob Nadler argued the cause for petitioner. With him on the briefs were Joseph P. Markoski, David A. Nall, Angela M. Simpson, and David R. Siddall.

Joel Marcus, Counsel, Federal Communications Commission (FCC), argued the cause for respondents. With him on the brief were John A. Rogovin, General Counsel, FCC, and Daniel M. Armstrong,

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Associate General Counsel, FCC, R. Hewitt Pate, Acting Assistant Attorney General, U.S. Department of Justice, and Catherine G. O'Sullivan and Andrea Limmer, Attorneys, Department of Justice.

Donald B. Verrilli, Jr., argued the cause for intervenors. With him on the brief were Ian Heath Gershengorn and Robin M. Meriweather, Henry L. Baumann, National Association of Broadcasters (NAB), Jack N. Goodman, NAB, and Valerie Schulte, NAB, and David Donovan, Association for Maximum Service Television, Inc.

Before: GINSBURG, Chief Circuit Judge, ROBERTS, Circuit Judge, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROBERTS.

The Consumer Electronics Association (CEA) is a trade association representing businesses in the consumer technology industry, including designers and manufacturers of televisions, DVD players, and VCRs. CEA seeks review of a final order of the Federal Communications Commission (FCC or Commission) requiring that all televisions with a display of 13 inches or greater and certain other devices capable of receiving over-the-air television signals (such as certain DVD players and VCRs) include a tuner capable of receiving and decoding digital television (DTV) signals. See In re Review of the Commission's Rules and Policies Affecting the Conversion to Digital Television, 17 F.C.C.R. 15,978 (2002) (Digital Tuner Order or Order). CEA contends that the FCC lacks statutory authority to enact the Digital Tuner Order, and that, even if the FCC has such authority, the Order is an arbitrary and capricious abuse of it. Finding the Digital Tuner Order to be a reasonable exercise of the Commission's authority under the All Channel Receiver Act (ACRA), 47 U.S.C. § 303(s), we deny the petition for review.

I. Since the 1940s, television stations have broadcast their programs over the air using an analog transmission standard adopted by the National Television System Committee (NTSC), and for almost all that time every television sold in the United States has contained an analog tuner designed to receive those NTSC signals and convert them into pictures and sound. Today, digital technology permits television content to be broadcast as streams of binary data bits, allowing broadcasters to transmit more information over a channel of electromagnetic spectrum than is possible through analog broadcasting. For example, an analog broadcaster can fit only one video and two or three audio signals into a 6 MHz broadcast channel; a DTV station can transmit up to four such programs simultaneously (along with CD-quality audio signals) across the same 6 MHz swath of spectrum. See In re Advanced Television Systems and Their Impact upon the Existing Television Broadcast Service, 10 F.C.C.R. 10,540, 10,541 ¶ 4 (1995) (Fourth Further Notice). Alternatively, a digital broadcaster can transmit the television program in high definition (HDTV) format -- a wide-screen, ultra-high resolution picture with movie theater-quality surround sound -- along with data such as program listings, sports scores, and stock prices. See id. Moreover, reception of over-the-air DTV broadcasts is less dependent on relative signal strength and more resistant to interference than analog broadcasts, yielding dramatically enhanced picture and sound quality. See In re Review of the Commission's Rules and Policies Affecting the Conversion to Digital Television, 15 F.C.C.R. 5257, 5266 ¶ 28 (2000)

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(Notice of Proposed Rule Making).

DTV also promises more efficient use of scarce electromagnetic spectrum. Currently, while over 400 MHz of spectrum is devoted to analog television broadcasting (enough for sixty-eight 6 MHz channels), the vulnerability of analog broadcasts to interference means that only a few channels actually can be used in any geographic area. See Fourth Further Notice, 10 F.C.C.R. at 10,549 ¶ 58. Particularly in the UHF band, channels must be spaced far apart to avoid interference. See In re Advanced Television Systems and Their Impact upon the Existing Television Broadcast Service, 2 F.C.C.R. 5125, 5132 ¶ 59-60 (1987) (Notice of Inquiry). DTV does not have this problem. Once television broadcasters have switched to DTV, the FCC will be able to stack broadcast channels right beside one another along the spectrum, and ultimately utilize significantly less than the 400 MHz of spectrum the analog system absorbs today. See In re Review of the Commission's Rules and Policies Affecting the Conversion to Digital Television, 16 F.C.C.R. 5946, 5951 ¶ 12 (2001) (Further Notice of Proposed Rulemaking). The FCC can then reallocate the spectrum no longer needed by broadcasters for other uses, such as emergency and wireless communications.

In 1987, at the request of a coalition of television broadcasters, the FCC began to explore the possibility of using then-nascent digital technology to broadcast television programming. See Notice of Inquiry, 2 F.C.C.R. at 5125 ¶ 2. By 1997, the Commission had adopted a standard for DTV transmissions and had committed itself to the goal of abandoning analog broadcasting and switching all television broadcasts to DTV by the end of 2006. See In re Advanced Television Systems and Their Impact upon the Existing Television Broadcast Service, 12 F.C.C.R. 12,809, 12,850 ¶ 99 (1997) (Fifth Report and Order). Shortly thereafter, Congress adopted the Commission's goal as its own, stating that "[a] television broadcast license that authorizes analog television service may not be renewed ... for a period that extends beyond December 31, 2006." 47 U.S.C. § 309(j)(14)(A). Congress, however, also directed the FCC to grant extensions to a television station if 15 percent or more of the television households in its market cannot receive DTV programming either from a cable or satellite service carrying such programming, or through a television or set-top box with a digital tuner capable of processing over-the-air DTV signals. Id. § 309(j)(14)(B)(iii).

The FCC originally anticipated that market forces would drive consumers to want and manufacturers to provide tuners capable of receiving DTV signals, see, e.g., Fifth Report and Order, 12 F.C.C.R. at 12,855-56 ¶ 113, but by 2001, the Commission found that "DTV receivers are not yet available in the market in large quantities, and certainly not in sufficient volume to support a rapid transition to an all-digital broadcast television service." Further Notice of Proposed Rulemaking, 16 F.C.C.R. at 5985 ¶ 107. The FCC thus requested comment on "whether a requirement to include DTV reception capability in certain new television sets could help to develop the production volumes needed to bring DTV prices down to where they are more attractive to consumers and thereby promote more rapid development of high DTV set penetration." Id. After receiving comments from numerous parties (including CEA, which opposed any digital tuner requirement) the FCC issued its Digital Tuner Order in August 2002. The FCC directed that, on a phased-in basis starting in July 2004, all televisions sold in the

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United States contain a digital tuner. 1

The Commission found statutory authority for the Order in the All Channel Receiver Act, 47 U.S.C. § 303(s). Digital Tuner Order, 17 F.C.C.R. at 15,989-92 pp 24-31. ACRA grants the FCC authority to require that televisions shipped in interstate commerce for sale "be capable of adequately receiving all frequencies allocated by the Commission to television broadcasting." 47 U.S.C. § 303(s). The FCC acknowledged that when ACRA was enacted in 1962, Congress was addressing the "specific problem" of the "lack of TV sets that could receive UHF channels." Digital Tuner Order, 17 F.C.C.R. at 15,990 ¶ 26. The Commission nevertheless rejected the argument of CEA and others that ACRA's grant of authority was so limited, concluding that "[w]hile Congress discussed the need for a statutory remedy in [the UHF] context, it crafted the statutory language more generally -- to address analogous situations that might arise in the future." Id. And the Commission found that the problems it faced in the transition to DTV, in fact, strongly resembled the logjam of conflicting forces that stifled the development of UHF broadcasting in the early 1960s.

Here, the Commission is faced with a similar problem -- that is, the reluctance of the public to buy DTV receivers until there are DTV stations offering attractive DTV programs, and the lack of incentive for broadcasters to provide good attractive DTV programming in the absence of an audience which will attract advertisers. As Congress and the Commission found in the UHF context, requiring the manufacture of DTV receivers will address the root cause of the problem, namely the lack of television receivers capable of receiving DTV signals.

Id. at 15,990 ¶ 27.

The Commission acknowledged that it had, in earlier administrative proceedings, rejected calls for a digital tuner mandate, believing that market forces were...

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