ORAL ARGUMENT NOT YET SCHEDULED BRIEF FOR RESPONDENTS IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT NOS. 04-1033 & 04-1109 (CONSOLIDATED) ECHOSTAR SATELLITE L.L.C., PETITIONER, V. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS. ON PETITIONS FOR REVIEW OF ORDERS OF THE FEDERAL COMMUNICATIONS COMMISSION AUSTIN C. SCHLICK GENERAL COUNSEL PETER KARANJIA DEPUTY GENERAL COUNSEL JACOB M. LEWIS ASSOCIATE GENERAL COUNSEL JAMES M. CARR COUNSEL SHARIS A. POZEN ACTING ASSISTANT ATTORNEY GENERAL CATHERINE G. O’SULLIVAN JAMES J. FREDRICKS ATTORNEYS UNITED STATES DEPARTMENT OF JUSTICE WASHINGTON, D.C. 20530 FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 (202) 418-1740 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 1 of 74 CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES 1. Parties. All parties, intervenors, and amici appearing in this Court are listed in the petitioner’s brief. Parties appearing before the Commission are listed in Appendix A of the principal order on review (JA 471). 2. Rulings under review. Implementation of Section 304 of the Telecommunications Act of 1996, Second Report and Order, 18 FCC Rcd 20885 (2003) (“Order”) (JA 431), on reconsideration, 18 FCC Rcd 27059 (2003) (“Reconsideration Order”) (JA 517). 3. Related cases. This case has not previously been before this Court. We are not aware of any related case pending before this Court or any other court. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 2 of 74 i TABLE OF CONTENTS Table of Contents .............................................................................................. i Table of Authorities.......................................................................................... ii Glossary.............................................................................................................v Jurisdiction ........................................................................................................1 Questions Presented ..........................................................................................2 Statutes and Regulations ...................................................................................4 Counterstatement...............................................................................................4 A. Section 629 Of The Communications Act ............................................4 B. The “Plug And Play” Agreement..........................................................6 C. The Proceeding Below ........................................................................10 D. The Orders On Review........................................................................14 Summary of Argument....................................................................................20 Standard of Review .........................................................................................24 Argument.........................................................................................................25 I. DISH’s Statutory Challenges Are Barred By Section 405 Of The Communications Act ........................................................................25 II. The FCC Reasonably Concluded That It Had Authority To Adopt The Encoding Rules......................................................................28 A. The Commission Had Authority To Adopt The Encoding Rules Under Section 629.....................................................................29 B. The Commission Had Authority To Adopt The Encoding Rules Under Section 624A..................................................................40 III. The Commission Provided Adequate Notice And Opportunity For Comment.......................................................................45 Conclusion.......................................................................................................51 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 3 of 74 ii TABLE OF AUTHORITIES CASES Abourezk v. Reagan, 785 F.2d 1043 (D.C. Cir. 1986)............................................................................................................38 American Family Ass’n v. FCC, 365 F.3d 1156 (D.C. Cir. 2004)...........................................................................................27 American Library Ass’n v. FCC, 406 F.3d 689 (D.C. Cir. 2005).................................................................................... 36, 40 * AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999) ................................................................................................... 37, 38 * Baltimore Gas & Elec. Co. v. United States, 817 F.2d 108 (D.C. Cir. 1987) ...........................................................................46 BDPCS, Inc. v. FCC, 351 F.3d 1177 (D.C. Cir. 2003)............................................................................................................29 * Cablevision Sys. Corp. v. FCC, 649 F.3d 695 (D.C. Cir. 2011).............................................................................................. 33, 34 * Charter Commc’ns, Inc. v. FCC, 460 F.3d 31 (D.C. Cir. 2006).......................................................................................... 4, 25, 32 Cheney R.R. Co. v. ICC, 902 F.2d 66 (D.C. Cir. 1990)..................................................................................................... 42, 43 Chevron USA, Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984) ....................................................................................24 Comcast Corp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010)............................................................................................................39 Consumer Electronics Ass’n v. FCC, 347 F.3d 291 (D.C. Cir. 2003)...........................................................................................33 Covad Commc’ns Co. v. FCC, 450 F.3d 528 (D.C. Cir. 2006).....................................................................................................24 * General Instrument Corp. v. FCC, 213 F.3d 724 (D.C. Cir. 2000).................................................................................. 4, 6, 39 Globalstar, Inc. v. FCC, 564 F.3d 476 (D.C. Cir. 2009)............................................................................................................25 Halverson v. Slater, 129 F.3d 180 (D.C. Cir. 1997) .......................................38 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 4 of 74 iii Hengesbach v. Hengesbach, 114 F.2d 845 (D.C. Cir. 1940).....................................................................................................37 Martini v. FNMA, 178 F.3d 1336 (D.C. Cir. 1999) ........................................42 * Mobile Commc’ns Corp. of America v. FCC, 77 F.3d 1399 (D.C. Cir. 1996) .................................................................. 42, 43 National Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005)...........................................................24 National Tel. Coop. Ass’n v. FCC, 563 F.3d 536 (D.C. Cir. 2009)...........................................................................................25 Qwest Corp. v. FCC, 482 F.3d 471 (D.C. Cir. 2007) .....................................25 RCA Global Commc’ns, Inc. v. FCC, 758 F.2d 722 (D.C. Cir. 1985)...........................................................................................38 * Rural Cellular Ass’n v. FCC, 588 F.3d 1095 (D.C. Cir. 2009).....................................................................................................45 Sacramento Mun. Util. Dist. v. FERC, 616 F.3d 520 (D.C. Cir. 2010)...........................................................................................24 Schlossberg v. Barney, 380 F.3d 174 (4th Cir. 2004).....................................37 * Sprint Nextel Corp. v. FCC, 524 F.3d 253 (D.C. Cir. 2008).....................................................................................................27 Texas Office of Pub. Util. Counsel v. FCC, 265 F.3d 313 (5th Cir. 2001) ............................................................................... 47, 48 United States v. Midwest Video Corp., 406 U.S. 649 (1972) ..........................................................................................................42 United States v. Southwestern Cable Co., 392 U.S. 157 (1968) ............................................................................................ 14, 42 ADMINISTRATIVE DECISIONS Implementation of Section 304 of the Telecommunications Act of 1996, 13 FCC Rcd 14775 (1998) .................................................................................................6 STATUTES AND REGULATIONS * 5 U.S.C. § 553 .................................................................................................45 5 U.S.C. § 706(2)(A).......................................................................................25 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 5 of 74 iv 28 U.S.C. § 2342(1) ..........................................................................................2 28 U.S.C. § 2344 ...............................................................................................2 47 U.S.C. § 151 ...............................................................................................36 47 U.S.C. § 152(b)...........................................................................................37 47 U.S.C. § 256(b)(1)......................................................................................39 47 U.S.C. § 402(a).............................................................................................2 * 47 U.S.C. § 405 .................................................................................... 2, 20, 25 * 47 U.S.C. § 405(a)...........................................................................................25 47 U.S.C. § 522(13) ..........................................................................................5 * 47 U.S.C. § 544a(a)(2) ....................................................................................41 * 47 U.S.C. § 544a(b)(1) ................................................................. 12, 20, 23, 40 47 U.S.C. § 548(b)...........................................................................................34 * 47 U.S.C. § 549 .................................................................................................5 * 47 U.S.C. § 549(a)............................ 3, 5, 11, 16, 20, 21, 22, 29, 31, 33, 35, 38 47 U.S.C. § 549(b)...................................................................................... 5, 38 47 U.S.C. § 549(f) .................................................................................... 22, 37 Balanced Budget Act of 1997, § 3003, Pub. L. No. 105-33, 111 Stat. 251 (1997).........................................................................7 Deficit Reduction Act of 2005, § 3002, Pub. L. No. 109-171, 120 Stat. 4 (2006)...........................................................................7 DTV Delay Act, § 2, Pub. L. No. 111-4, 123 Stat. 112 (2009) .....................................................................................................7 OTHERS 2A N. Singer, Sutherland Statutory Construction § 46.06 (4th ed. 1984) .................................................................................38 * Cases and other authorities principally relied upon are marked with asterisks. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 6 of 74 v GLOSSARY CEA Consumer Electronics Association DBS direct broadcast satellite; a form of multichannel video programming service provided via satellite down-resolution the ability to degrade the resolution of programming content from a higher to a lower level (e.g., from high definition to standard definition) DTV digital television HRRC Home Recording Rights Coalition MOU Memorandum of Understanding; the document setting forth the details of the “plug and play” agreement between the cable and consumer electronics industries MVPD multichannel video programming distributor; defined by the Communications Act to include cable operators, DBS providers, and other entities that make “available for purchase, by subscribers or customers, multiple channels of video programming” (47 U.S.C. § 522(13)) NCTA National Cable & Telecommunications Association SBCA Satellite Broadcasting & Communications Association selectable output control the ability to remotely shut off a particular output or connector on a program-by-program basis USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 7 of 74 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT NOS. 04-1033 & 04-1109 (CONSOLIDATED) ECHOSTAR SATELLITE L.L.C., PETITIONER, V. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS. ON PETITIONS FOR REVIEW OF ORDERS OF THE FEDERAL COMMUNICATIONS COMMISSION BRIEF FOR RESPONDENTS JURISDICTION The petitioner in this case seeks review of two FCC orders: Implementation of Section 304 of the Telecommunications Act of 1996, Second Report and Order, 18 FCC Rcd 20885 (2003) (“Order”) (JA 431), on reconsideration, 18 FCC Rcd 27059 (2003) (“Reconsideration Order”) (JA USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 8 of 74 2 517). 1 The Order was published in the Federal Register on November 28, 2003. 68 Fed. Reg. 66278 (2003). DISH’s predecessor, EchoStar, filed a timely petition for review of the Order in Case No. 04-1033 on January 27, 2004, within the 60-day deadline established by 28 U.S.C. § 2344. The Reconsideration Order was published in the Federal Register on January 28, 2004. 69 Fed. Reg. 4081 (2004). EchoStar filed a timely petition for review of the Reconsideration Order in Case No. 04-1109 on March 29, 2004, within the 60-day statutory deadline. The Court has jurisdiction to review these orders under 47 U.S.C. § 402(a) and 28 U.S.C. § 2342(1). As we explain in Part I of the Argument below, however, the Court lacks jurisdiction to consider DISH’s statutory arguments because they were never presented to the Commission pursuant to 47 U.S.C. § 405. QUESTIONS PRESENTED Ten years ago, cable operators and consumer electronics manufacturers negotiated an agreement establishing technical standards for the design and manufacture of digital cable equipment. Pursuant to that agreement, the 1 At the time it filed the petitions for review, petitioner was known as EchoStar Satellite L.L.C. (“EchoStar”). The company later changed its name to DISH Network (“DISH”). See Opening Brief (“Br.”) of Petitioner at i n.1. When discussing petitioner’s participation in the proceeding below, this brief will refer to petitioner as EchoStar. Otherwise, we will refer to petitioner as DISH. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 9 of 74 3 parties jointly proposed that the Federal Communications Commission (“FCC” or “Commission”) adopt encoding rules – i.e., rules limiting the use of technologies that could block consumers from recording television programs. Under this proposal, the same encoding rules would apply to all providers of multichannel video programming service, not just cable operators. In response to the agency’s notice seeking comment on the proposed rules, providers of multichannel satellite video service argued that their service should not be subject to any encoding restrictions because they did not participate in the negotiations that produced the proposed rules. Notwithstanding the objections of the satellite providers, the agency adopted rules that apply to all providers of multichannel video programming service. Citing its statutory mandate to “assure the commercial availability” of equipment used to access multichannel video programming service, 47 U.S.C. § 549(a), the Commission concluded that uniform application of the encoding rules would most effectively protect the interests of consumers and preserve competitive parity among all multichannel video programming distributors. This case presents the following questions: USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 10 of 74 4 (1) Whether Section 405 of the Communications Act bars judicial review of DISH’s statutory arguments because they were not first presented to the FCC; (2) If those statutory arguments have not been waived, whether the Communications Act authorized the FCC to adopt the encoding rules; and (3) Whether the Commission provided notice and an opportunity for comment before adopting the rules. STATUTES AND REGULATIONS Pertinent statutes and regulations are attached as an addendum to this brief. COUNTERSTATEMENT A. Section 629 Of The Communications Act Subscribers to multichannel video programming services use “navigation devices” (such as set-top converter boxes) to access those services. In the past, cable television subscribers could obtain a converter box only from their cable operator. See Charter Commc’ns, Inc. v. FCC, 460 F.3d 31, 34 (D.C. Cir. 2006); General Instrument Corp. v. FCC, 213 F.3d 724, 727 (D.C. Cir. 2000). In the mid-1990s, Congress concluded that consumers would benefit from the development of a competitive retail market for navigation devices. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 11 of 74 5 Accordingly, Congress amended the Communications Act in 1996 by adding Section 629, 47 U.S.C. § 549. Section 629 directs the FCC to “adopt regulations to assure the commercial availability” of “equipment used by consumers to access … services offered over multichannel video programming systems, from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor.” 47 U.S.C. § 549(a). The Act defines the term “multichannel video programming distributor” (or “MVPD”) to include cable operators, providers of direct broadcast satellite (“DBS”) service (such as DISH), and other entities that make “available for purchase, by subscribers or customers, multiple channels of video programming.” 47 U.S.C. § 522(13). The commercial availability mandate of Section 629 is broad. The statute applies to “converter boxes, interactive communications equipment, and other equipment used by consumers to access … services offered over multichannel video programming systems.” 47 U.S.C. § 549(a). For purposes of implementing Section 629, however, the Commission is barred from prescribing regulations that “would jeopardize security” of MVPD services “or impede the legal rights” of MVPDs “to prevent theft of service.” 47 U.S.C. § 549(b). This provision is concerned with “system security” (i.e., USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 12 of 74 6 signal security and prevention of unauthorized access to MVPD service) rather than the protection of intellectual property rights. Order ¶ 50 (JA 453). 2 B. The “Plug And Play” Agreement Before a competitive market for navigation devices could take shape, “a number of practical issues” concerning the design of the devices had to be resolved. Order ¶ 4 (JA 434). The Commission recognized that some of those issues could best be addressed by inter-industry coordination rather than FCC regulation. For example, the formulation of uniform “engineering and technical standards” for mass-produced, nationally marketed navigation devices required close cooperation between equipment manufacturers and MVPDs. Id. In addition, manufacturers and MVPDs worked to reach consensus on how much protection navigation devices should provide against 2 The FCC first adopted rules to implement Section 629 in 1998. Implementation of Section 304 of the Telecommunications Act of 1996, 13 FCC Rcd 14775 (1998) (JA 1). At that time, the Commission adopted a rule requiring MVPDs, as of January 1, 2005, to discontinue the sale or lease of new navigation devices that integrate security and non-security functions. The Commission found that this integration ban was necessary because the continued availability of integrated devices – which only MVPDs could provide – would “imped[e] consumers from switching to devices that become available through retail outlets.” Id. at 14803 ¶ 69 (JA 29); see also Charter, 460 F.3d at 35. In General Instrument, 213 F.3d at 730-31, this Court held that Section 629 authorized the Commission’s integration ban. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 13 of 74 7 “unauthorized redistribution or copying of programming content legally acquired for a limited use.” Order ¶ 4 (JA 434). One of the “stumbling blocks” in inter-industry negotiations over navigation devices involved the parties’ “inability … to agree on a comprehensive set of technical copy protection measures and corresponding encoding rules” to govern digital programming. Order ¶ 55 (JA 455). This impasse reflected a fundamental “disagreement over how to protect high value content while permitting consumers to watch and record [digital] programming as they had done with analog programming.” NCTA Comments at 12-13 (JA 247-48). Resolution of this dispute took on special urgency due to the impending transition of over-the-air television broadcasts from analog format to digital television (“DTV”). 3 “With the encouragement of” the FCC’s Chairman and other Commission officials, senior executives from the cable television and consumer electronics industries “engaged in five months of extensive negotiations” in the second half of 2002 in an effort “to resolve questions and 3 Originally, Congress set December 31, 2006, as the deadline for completion of the DTV transition. See Balanced Budget Act of 1997, § 3003, Pub. L. No. 105-33, 111 Stat. 251 (1997). Congress twice extended that deadline. See Deficit Reduction Act of 2005, § 3002, Pub. L. No. 109-171, 120 Stat. 4 (2006); DTV Delay Act, § 2, Pub. L. No. 111-4, 123 Stat. 112 (2009). The DTV transition was ultimately completed on June 12, 2009. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 14 of 74 8 concerns regarding the interoperability of cable systems and consumer electronics equipment.” Letter from Carl E. Vogel, Charter Communications, to FCC Chairman Michael Powell, Dec. 19, 2002, at 2 (JA 90) (“MOU Letter”). These negotiations produced a major breakthrough: “a comprehensive agreement on a cable compatibility standard for integrated, unidirectional digital cable television receivers.” Order ¶ 2 (JA 433). This agreement was crafted to accommodate the development of so-called “plug and play” devices: DTV sets that integrate reception and navigation functions, enabling cable subscribers to receive digital cable channels without a set-top box or other external navigation device. MOU Letter at 1 (JA 89). 4 On December 19, 2002, the parties to the “plug and play” agreement submitted to the FCC a Memorandum of Understanding (“MOU”) setting forth the details of the agreement. MOU Letter at 1 (JA 89). They explained that their “voluntary, private sector agreements about standards, testing, interoperability, and consumer support … assume and depend upon implementation by the Commission of certain regulations” proposed by the MOU. Id. at 2 (JA 90). The proposed regulations fell into three categories: 4 This agreement covered only “unidirectional” equipment. Consumers using such equipment would still need a separate navigation device to access “bidirectional” (i.e., interactive) services such as video on demand. Order ¶ 7 (JA 436). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 15 of 74 9 technical rules; labeling rules; and encoding rules. Order ¶ 8 (JA 436). Only the proposed encoding rules are at issue in this case. The proposed encoding rules had three parts: (1) a rule prohibiting MVPDs from encoding or modifying content to activate “selectable output control” – i.e., “the ability to remotely shut off a particular output or connector on a program-by-program basis,” 5 Order ¶ 58 (JA 456); (2) a rule barring MVPDs from degrading the resolution of broadcast programs from a higher to a lower level (e.g., from high definition to standard definition) – a practice known as “down-resolution,” Order ¶¶ 62-63 (JA 458-59); and (3) “caps on the level of copy protection that may apply to various categories of MVPD programming,” Order ¶ 65 (JA 459-60). Under the proposed copy protection caps, (1) no copy restrictions could be imposed on unencrypted broadcast television; (2) consumers would be permitted to make at least one copy (for example, using a VCR or digital video recorder) of pay television, non-premium subscription television, and free conditional access delivery transmissions; and (3) copying of video on demand, pay per view, and subscription-on-demand transmissions could be 5 An MVPD using selectable output control could, for example, block subscribers from recording the Super Bowl by shutting off transmission of the program to video recording devices that are connected to converter boxes. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 16 of 74 10 prohibited, but “even when no copies are allowed, such content may be paused up to 90 minutes from its initial transmission.” Order ¶ 65 (JA 460). C. The Proceeding Below In January 2003, the Commission sought comment on the MOU, its rule proposals, and their “potential impact” on “consumers, content providers, small cable operators and MVPDs other than cable operators.” Implementation of Section 304 of the Telecommunications Act of 1996, 18 FCC Rcd 518, 519 ¶ 4 (2003) (JA 75, 76) (“Further NPRM”). The agency also requested comment on “the jurisdictional basis for Commission action in this area, including the creation of encoding rules for audiovisual content provided by MVPDs.” Id. (JA 76) The Commission received comments from a wide variety of parties, including equipment manufacturers, cable operators, consumer groups, content providers, and non-cable MVPDs. See Order, Appendix A (JA 471). In their comments, neither EchoStar nor DIRECTV (the nation’s other DBS provider) disputed the FCC’s statutory authority to adopt the encoding rules set out in the MOU. Instead, the DBS providers and their trade association maintained that the agency should not apply the rules to DBS because no DBS providers had participated in the negotiations that produced the encoding proposals. For example, EchoStar asserted that, “in light of the USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 17 of 74 11 entire DBS industry’s exclusion from the [MOU] talks,” there is “serious question” concerning “the legality of adopting the draft rules in their entirety.” EchoStar Reply Comments at 6 (JA 330). 6 The DBS providers also questioned the need for encoding rules as a policy matter. They posited that the best way to resolve copy protection issues was to allow each MPVD to establish its own encoding standards through private agreements with content providers. See SBCA Comments at 5 (JA 268); DIRECTV Comments at 6 (JA 217). By contrast, the cable and consumer electronics industries urged the Commission to adopt the encoding rules. They assured the agency that it had jurisdiction to regulate encoding under two provisions of the Communications Act: Section 629, which directs the FCC to “adopt regulations to assure the commercial availability” of navigation devices from sources other than MVPDs, 47 U.S.C. § 549(a); and Section 624A, which mandates that the Commission adopt regulations to assure “compatibility 6 See also Satellite Broadcasting & Communications Association (“SBCA”) Comments at 4 (JA 267) (contending that the “exclusion” of DBS providers “from the MOU process resulted in” encoding proposals “that unfairly discriminate against DBS”); DIRECTV Comments at 3 (JA 214) (complaining that the proposed rules would impose encoding restrictions on DBS providers “without taking into account their unique interests”). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 18 of 74 12 between televisions and video cassette recorders and cable systems,” 47 U.S.C. § 544a(b)(1). 7 The parties to the MOU warned the FCC that their agreement would likely “unravel” if the agency did not adopt the encoding rules. Comcast Reply Comments at 5 (JA 276); see also CEA Reply Comments at 25 (JA 320). When the cable industry originally proposed to license the manufacture of navigation devices that met certain specifications, the consumer electronics industry pointed out that any such licensing regime “would be incomplete and unbalanced” without encoding rules. CEA Comments at 13 (JA 202). Manufacturers would not agree to make “cable-ready devices that read and respect[ed] copy protection signals” unless they obtained some “assurance that such signals would not be used to nullify home copying.” NCTA Reply Comments at 12 (JA 374). The proponents of the encoding rules opposed the DBS industry’s request for an exemption. They contended that the proposed limits on copy protection “must apply to all” MVPDs: “[O]therwise,” content owners could “snuff out settled consumer expectations” regarding home recording by providing high value content (such as recently released movies) only to 7 See National Cable & Telecommunications Association (“NCTA”) Comments at 17 (JA 252); Consumer Electronics Association (“CEA”) Comments at 4-15 (JA 193-204). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 19 of 74 13 MVPDs that “employ the most restrictive [copy protection] ‘tools.’” CEA Reply Comments at 21 (JA 316). Movie studios had already “threatened to restrict the supply of [their video content] to cable” unless the cable industry adopted the more stringent copy protections afforded by DBS. NCTA Reply Comments at 13 (JA 375). If the proposed encoding constraints applied only to cable operators, content providers might choose to “provide their most highly-valued content only to DBS and other non-cable MVPDs.” Comcast Comments at 14 (JA 182). Faced with this prospect, cable operators refused to agree to restrictions on the use of copy protection tools unless the same restrictions applied to all MVPDs. NCTA Reply Comments at 15 (JA 377). 8 Various commenters also warned that the market for video recording devices could suffer unless the FCC adopted the MOU’s proposal to bar all MVPDs (including DBS providers) from using selectable output control – “the remote signaling of home devices … to turn off consumer home interfaces on a program-by-program basis.” Home Recording Rights Coalition (“HRRC”) Comments at 8 (JA 230). According to advocates of home recording rights, the use of selectable output control would “discourage consumers from relying on an interface that supports … home recording,” 8 See also Comcast Reply Comments at 9 (JA 280) (“it is essential that the encoding rules be imposed on all MVPDs in order to ensure that all MVPD customers will have equal access to high-value digital content”). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 20 of 74 14 CEA Comments at 18 (JA 207), and “would have the likely effect of driving from the market any home interface that supports home recording.” HRRC Comments at 8 (JA 230). D. The Orders On Review With certain revisions, the FCC adopted the MOU’s proposed encoding rules in October 2003. Order ¶¶ 42-74 (JA 450-64). The Commission found that it had “explicit authority” under Section 629 to adopt the encoding rules. Order ¶ 45 (JA 451). Describing those rules as “an essential component” of the MOU, the Commission concluded that they “will assure the commercial availability of navigation devices and strike a measured balance between the rights of content owners and the home viewing expectations of consumers.” Order ¶ 47 (JA 452). Consequently, the Commission decided that adoption of the encoding rules was “necessary to fulfill” the commercial availability mandate of Section 629. Id. In addition to its direct authority under Section 629, the Commission determined that it had “ancillary jurisdiction” to adopt the encoding rules under Sections 629 and 624A – i.e., authority reasonably ancillary to the agency’s effective performance of its statutorily mandated responsibilities. Order ¶¶ 55-57 (JA 455-56) (citing, inter alia, United States v. Southwestern Cable Co., 392 U.S. 157, 172 (1968)). It reasoned that the rules would USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 21 of 74 15 “increase consumer demand” for digital “navigation devices at retail” – and thus “significantly advance” Section 629’s “mandate of commercial availability of navigation devices” – by ensuring that consumers have “access to high value digital content.” Order ¶ 55 (JA 455). Similarly, the Commission concluded that the encoding rules would “advance” the mandate of Section 624A: “to ensure that cable subscribers will be able to enjoy the full benefits of available cable programming and the functionality of their televisions and video cassette recorders.” Order ¶ 56 (JA 456). Acknowledging that Section 624A “does not directly apply to MVPDs other than cable operators,” the Commission found that its exercise of ancillary jurisdiction over non-cable MVPDs would “avoid the creation of a regulatory and marketplace imbalance between cable and DBS.” Order ¶ 57 (JA 456). The Commission explained that unless the encoding rules applied to all MVPDs, “cable operators would be at a significant competitive disadvantage in obtaining access to content,” and this market disparity “could frustrate the [FCC’s] ability to satisfy Section 624A’s mandate.” Id. Therefore, the Commission concluded, application of the proposed encoding rules to all MVPDs would “further the goals of Section 624A.” Id. The Commission rejected the contention that Section 629(b) bars the FCC from adopting the encoding rules. Order ¶¶ 49-52 (JA 453-54). It USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 22 of 74 16 explained that because those rules concern the copying of content that MVPD subscribers have “legally acquired,” they “do not implicate” the issues addressed by Section 629(b): “theft of [MVPD] service” and “harm to the MVPD network.” Order ¶ 51 (JA 453). The Commission found “nothing in either the statutory language or the legislative history” to suggest that Section 629(b) bans the regulation of copy protection technologies for programming that subscribers have paid to receive. Order ¶ 50 (JA 453). The Commission determined that even if Section 629(b) applied to copy protection, the encoding rules would not violate the statute because they “will not jeopardize the security of copyrighted programming or impede the legal rights of MVPDs to prevent theft of programming.” Order ¶ 52 (JA 453-54). 9 The Commission further concluded that the MOU’s specific encoding proposals would promote the commercial availability of digital navigation devices in accordance with the mandate of Section 629. Order ¶¶ 58-74 (JA 456-64); see 47 U.S.C. § 549(a). 9 The agency also found no basis for the claim that “adoption of the encoding rules would impermissibly involve the Commission in copyright issues.” Order ¶ 54 (JA 454). As the Commission pointed out, the encoding rules “are not directed at” copyright owners and will not alter content providers’ rights and remedies under copyright law, which “are set by statute and interpreted on a fact-specific basis by the courts.” Id. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 23 of 74 17 The Commission expressed concern that selectable output control (the ability to remotely shut off a particular programming outlet or connector on a program-specific basis) “would harm” consumers “whose DTV equipment only has component analog inputs for high definition display, placing these consumers at risk of being completely shut off from the high-definition content they expect to receive.” Order ¶ 60 (JA 457). The agency was also “concerned that consumer expectations regarding the functionality” of DTV products “would be frustrated by the use of down-resolution by MVPDs.” Order ¶ 64 (JA 459). The Commission found that banning the use of selectable output control and the down-resolution of broadcast programming would “ensure that consumer expectations” concerning the capabilities of DTV products “are met,” Order ¶ 11 (JA 437), and thereby help assuage “concerns over connectivity and functionality” that might dissuade consumers from buying DTV equipment, Order ¶ 61 (JA 458). For similar reasons, the FCC largely adopted the MOU’s proposed caps on copy protection for specific categories of programming. 10 The 10 The caps adopted by the FCC differed from the MOU’s proposal in one respect: the treatment of subscription video on demand. The MOU proposed to permit a prohibition on copying of subscription video on demand. The Commission chose to give MVPDs “discretion to determine whether specific” offerings of this service “merit different encoding terms.” Order ¶ 74 (JA 464). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 24 of 74 18 Commission concluded that the caps strike “a measured balance” between the desire of content providers “to prevent the unauthorized redistribution or copying of content distributed by MVPDs” and “the preservation of consumer expectations regarding the time shifting of programming for home viewing and other permitted uses of such material.” Order ¶ 11 (JA 437). In the agency’s assessment, this reasonable accommodation of the “competing interests” of consumers and content providers would “foster the development of a commercial market in navigation devices.” Order ¶ 68 (JA 461). The Commission declined to adopt the DBS industry’s request to create an exemption from the encoding rules for non-cable MVPDs such as the two DBS providers, EchoStar and DIRECTV. The agency reasoned that “[u]niform application” of the encoding caps to all MVPDs was essential to “ensuring that consumers have equal access to content regardless of their service provider.” Order ¶ 71 (JA 462). Likewise, the Commission concluded that “the ban on selectable output control logically should apply uniformly to all MVPDs in order to ensure that consumer expectations are not unreasonably frustrated regardless of the MVPD platform to which they subscribe.” Order ¶ 61 (JA 457-58). The encoding rules were designed to ensure “competitive parity among MVPDs in access to high value digital content” by requiring all MVPDs to USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 25 of 74 19 start from the same “baseline” when negotiating copy protection issues with content providers. Order ¶ 71 (JA 462). The Commission explained that if the encoding restrictions applied only to the cable industry, and if non-cable MVPDs could offer content providers copy protections that cable operators were legally barred from matching, the rules “would create a permanent competitive imbalance in the MVPD programming market,” which “could negatively impact consumers.” Id. The Commission found no merit in the DBS providers’ argument that they should not be subject to the encoding rules “because they did not participate in the MOU negotiations.” Order ¶ 43 (JA 450). The agency observed that the Further NPRM gave interested parties an opportunity to comment on the MOU’s proposals, and that both DBS providers filed comments explaining their objections to the proposed encoding rules. Id. (JA 450-51). The Commission concluded on the merits, however, that “the arguments advanced by the DBS providers” for exempting DBS from the USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 26 of 74 20 encoding rules were “insufficient to outweigh the need for competitive parity among MVPDs.” Id. (JA 451). 11 SUMMARY OF ARGUMENT The FCC reasonably concluded that the Order’s encoding rules will assure the commercial availability of MVPD navigation devices, as required by Section 629 of the Communications Act, 47 U.S.C. § 549(a), and promote compatibility between televisions and video recorders and cable systems in accordance with Section 624A of the Act, 47 U.S.C. § 544a(b)(1). In the Commission’s considered judgment, application of the encoding rules to all MVPDs, including DBS providers, best advances those statutory mandates. I. DISH’s principal arguments on appeal (that the Commission lacked statutory authority to adopt the encoding rules) have not been preserved for review by this Court because those arguments were not presented to the FCC. Therefore, the Court lacks jurisdiction to consider those claims under Section 405 of the Communications Act, 47 U.S.C. § 405. 11 On reconsideration, the Commission on its own motion revised the encoding rules’ definition of “Unencrypted Broadcast Television” to clarify that the same encoding restrictions apply to both encrypted and unencrypted broadcast programming. Reconsideration Order ¶ 2 (JA 517-18). Although DISH has petitioned for review of the Reconsideration Order, it does not make any arguments that pertain specifically to the Commission’s action in that order. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 27 of 74 21 II. Even if they had not been waived, DISH’s statutory authority arguments lack merit. The Commission’s adoption of the encoding rules plainly fell within its authority under Section 629 to “adopt regulations to assure the commercial availability” of navigation devices. See 47 U.S.C. § 549(a). As the Commission explained in the Order, the encoding rules were an “essential component” of an agreement that was designed to jump-start the retail market for digital cable equipment. Order ¶ 47 (JA 452). The Commission reasonably found that the rules “will assure the commercial availability of navigation devices and strike a measured balance between the rights of content owners and the home viewing expectations of consumers.” Id. In particular, the encoding rules sought to guard against frustration of the legitimate “expectations of consumers regarding their home viewing habits and the functionality of their digital devices.” Order ¶ 68 (JA 461). In the absence of encoding restrictions, the use of certain copy protection tools could seriously disrupt consumers’ efforts to record – or even watch – their favorite television programs on DTV equipment. The resulting consumer frustration could severely hinder the development of the retail market for DTV products. The encoding rules addressed this concern by taking steps to USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 28 of 74 22 “ensure that consumer expectations regarding the functionality” of DTV devices “are met.” Order ¶ 11 (JA 437). DISH argues that the encoding rules fall outside the scope of Section 629 because they do not affect the design, manufacture, sale, or support for navigation devices. Br. 35-40. The statute places no such restrictions on the FCC’s regulatory authority. Section 629 simply directs the agency to “adopt regulations to assure the commercial availability” of navigation devices. 47 U.S.C. § 549(a). Congress did not limit the FCC to regulating the design, manufacture, or marketing of navigation devices in order to carry out the Commission’s responsibility to assure the commercial availability of those devices. DISH also asserts that Section 629 is not an independent grant of authority. Br. 33-35. It bases that claim entirely on Section 629(f), which states that nothing in Section 629 “shall be construed as expanding” pre- existing FCC authority. 47 U.S.C. § 549(f). But the general rule of construction prescribed by Section 629(f) cannot override the specific grant of regulatory authority contained in Section 629(a). DISH’s proposed reading would render Section 629(a) meaningless. As an alternative and independent source of authority, the Commission found that the encoding rules fall within the Commission’s ancillary authority USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 29 of 74 23 under Section 624A to assure “compatibility between televisions and video cassette recorders and cable systems,” 47 U.S.C. § 544a(b)(1), by preventing the creation of a competitive imbalance between the cable and DBS industries and ensuring that consumer expectations regarding the functionality of their DTV devices are not frustrated. Contrary to DISH’s contention (Br. 22-33), Congress’s decision in Section 624A to mandate regulation of compatibility with respect to cable systems did not deprive the FCC of its discretion to extend regulation to non-cable MVPDs in order to preserve competitive parity and consumer expectations. III. The only claim in this case that DISH did not waive is its contention that DBS providers were denied adequate notice and opportunity for comment in this proceeding. See Br. 43-46. But that claim is baseless. There is no dispute that (1) the FCC provided notice and an opportunity for public comment on the proposed rules, (2) it received comments from numerous parties, including EchoStar (DISH’s predecessor), and (3) it considered those comments before adopting the encoding rules (with certain changes). Nothing more was required. The Commission determined that it could most effectively protect consumer interests and maintain competitive parity by applying the proposed encoding rules to all MVPDs. That reasonable decision should be upheld. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 30 of 74 24 STANDARD OF REVIEW DISH’s challenge to the FCC’s interpretation of its authority under the Communications Act is governed by Chevron USA, Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984). Under Chevron, if “Congress has directly spoken to the precise question at issue,” the Court “must give effect to the unambiguously expressed intent of Congress.” Id. at 842-43. But “if the statute is silent or ambiguous with respect to the specific issue, the question” for the Court is whether the agency has adopted “a permissible construction of the statute.” Id. at 843. If the implementing agency’s reading of an ambiguous statute is reasonable, Chevron requires the Court “to accept the agency’s construction of the statute, even if the agency’s reading differs from what the [Court] believes is the best statutory interpretation.” Covad Commc’ns Co. v. FCC, 450 F.3d 528, 537 (D.C. Cir. 2006) (quoting National Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 980 (2005)). The Commission’s “interpretation of its own statutory jurisdiction is entitled to Chevron deference.” See Sacramento Mun. Util. Dist. v. FERC, 616 F.3d 520, 536 (D.C. Cir. 2010) (internal quotation marks omitted). DISH’s contention that the Commission failed to comply with the Administrative Procedure Act (“APA”) is also subject to “highly deferential” judicial review. See National Tel. Coop. Ass’n v. FCC, 563 F.3d 536, 541 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 31 of 74 25 (D.C. Cir. 2009). Under the applicable standard, the FCC’s action must be upheld unless it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). ARGUMENT I. DISH’S STATUTORY CHALLENGES ARE BARRED BY SECTION 405 OF THE COMMUNICATIONS ACT DISH principally argues that the FCC lacked statutory authority to adopt the encoding rules. Br. 22-40. In a similar vein, DISH contends that the agency’s decision to apply the rules to DBS was based on factors that Congress did not intend the FCC to consider. Br. 46-48. Neither DISH nor any other party presented those claims to the Commission in this proceeding. Accordingly, the Court lacks jurisdiction to consider them under Section 405 of the Communications Act, 47 U.S.C. § 405. Section 405 “requires that the Commission be afforded an ‘opportunity to pass’ on an issue as a ‘condition precedent to judicial review.’” Charter, 460 F.3d at 39 (quoting 47 U.S.C. § 405(a)). Construing Section 405 “strictly,” this Court has repeatedly held that it “generally lack[s] jurisdiction to review arguments that have not first been presented to the Commission.” Globalstar, Inc. v. FCC, 564 F.3d 476, 483 (D.C. Cir. 2009) (quoting Qwest Corp. v. FCC, 482 F.3d 471, 474 (D.C. Cir. 2007)). In this case, Section 405 precludes the Court from considering DISH’s statutory arguments because USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 32 of 74 26 the Commission was never provided with an opportunity to address those claims. In response to the Further NPRM, commenters raised only two challenges to the FCC’s authority to adopt the encoding rules. Some copyright holders contended that the rules “would impermissibly involve the Commission in copyright issues.” Order ¶ 54 (JA 454). And the Motion Picture Association of America argued that Section 629(b) prohibits the FCC from adopting the rules. Order ¶ 49 (JA 453). DISH does not raise either of those claims here. Instead, DISH presents the Court with entirely different arguments concerning the FCC’s authority. It argues that the agency cannot rely on ancillary jurisdiction under Section 624A to apply the encoding rules to DBS providers. Br. 22-33. DISH also contends that Section 629 cannot provide a basis for adopting the encoding rules because it is not “an independent grant of authority” (Br. 33-35), and because the statute limits the Commission to measures affecting the design, manufacture, or marketing of navigation devices (Br. 35-40). Finally, DISH maintains that the FCC improperly subjected all MVPDs to the encoding rules out of concern for competitive parity – a factor that (according to DISH) Congress did not intend the Commission to consider. Br. 46-48. None of these arguments were USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 33 of 74 27 presented to the Commission in this proceeding. Therefore, Section 405 bars DISH from raising any such claims here. See Sprint Nextel Corp. v. FCC, 524 F.3d 253, 256-57 (D.C. Cir. 2008). We note that an attachment to an ex parte notice filed by EchoStar in August 2003 asserted without elaboration that the “Commission does not have clear authority to apply [the MOU] to DBS.” Letter from David R. Goodfriend, EchoStar, to Marlene H. Dortch, FCC, August 27, 2003, Attachment at 3 (JA 426). That vague and equivocal statement does not suffice to satisfy Section 405, which requires that arguments be raised “with sufficient clarity” to give the FCC an opportunity to address them. American Family Ass’n v. FCC, 365 F.3d 1156, 1167 (D.C. Cir. 2004). EchoStar’s ex parte notice did not present any of the statutory arguments that DISH makes here. As this Court has observed, “relying on [ex parte] notices to satisfy § 405 is a risky strategy,” particularly when such notices contain no specific arguments. Sprint Nextel, 524 F.3d at 257. As DISH notes (Br. 10 n.4), DIRECTV questioned the FCC’s jurisdiction to adopt encoding rules in a petition for reconsideration. But DIRECTV made a different argument from the one DISH advances here. DIRECTV asked the Commission to reconsider whether the encoding rules were barred by Section 629(b), which prohibits the Commission from USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 34 of 74 28 adopting measures that would “jeopardize” the “security” of MVPD services or impede the legal rights of MVPDs to “prevent theft of service.” DIRECTV Petition for Reconsideration at 2-3 n.5 (JA 524-25). DISH makes no such argument in this case. To the contrary, it concedes that the agency’s interpretation of Section 629(b) “appears reasonable.” Br. 39. 12 In short, no party presented the FCC with an opportunity to address the statutory arguments that DISH presents to this Court. As a result, the Court lacks jurisdiction to consider DISH’s statutory arguments under Section 405. II. THE FCC REASONABLY CONCLUDED THAT IT HAD AUTHORITY TO ADOPT THE ENCODING RULES Even if DISH’s statutory arguments were not procedurally barred, they lack merit. The Commission identified three separate and independent jurisdictional bases for adopting the encoding rules under the Communications Act: direct authority under Section 629; ancillary jurisdiction under Section 629; and ancillary jurisdiction under Section 624A. 12 Even if DIRECTV’s reconsideration petition had raised the same statutory arguments presented by DISH’s brief, those arguments still would be precluded by Section 405. Because DIRECTV’s petition was filed after the FCC adopted the Order, it could not possibly have given the Commission an opportunity to pass on DIRECTV’s arguments in the Order. To be sure, the agency received an opportunity to address those arguments when it denied DIRECTV’s petition. See Implementation of Section 304 of the Telecommunications Act of 1996, 25 FCC Rcd 14657 (2010) (JA 544). But DISH did not seek review of the order denying DIRECTV’s petition. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 35 of 74 29 Order ¶¶ 45-57 (JA 451-56). If the Court finds any one (or more) of these jurisdictional grounds sufficient to authorize adoption of the rules, it must reject DISH’s claim that the agency lacked authority. 13 A. The Commission Had Authority To Adopt The Encoding Rules Under Section 629. The Commission reasonably determined that it had authority to adopt the encoding rules under Section 629. “The mandate of Section 629 is broad.” Order ¶ 46 (JA 451). The statute directs the FCC to “adopt regulations to assure the commercial availability” of navigation devices – i.e., “equipment used by consumers to access” MVPD services – from sources that are “not affiliated” with any MVPD. 47 U.S.C. § 549(a). By its terms, Section 629 “applies to any type of equipment used to access MVPD programming and services” – not just set-top converter boxes, but a variety of other consumer electronics products, including television sets, personal computers, and video recorders. Order ¶ 46 (JA 451-52). Moreover, the 13 See BDPCS, Inc. v. FCC, 351 F.3d 1177, 1183 (D.C. Cir. 2003) (when “an agency offers multiple” independent “grounds for a decision,” the Court “will affirm the agency so long as any one of the grounds is valid”). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 36 of 74 30 statute covers “all MVPDs” – not only cable operators, but also DBS providers and other non-cable MVPDs. Id. (JA 451-52). 14 1. The Commission reasonably concluded that its adoption of the encoding rules fell well within the agency’s “explicit authority” under Section 629 to adopt regulations to assure the commercial availability of navigation devices. Order ¶ 45 (JA 451). The encoding rules were an “essential component” of the MOU – an agreement crafted to assure the commercial availability of the next generation of navigation devices. Order ¶ 47 (JA 452). 15 The Commission specifically found that the encoding rules “will assure the commercial availability of navigation devices and strike a measured balance between the rights of content owners and the home viewing expectations of consumers.” Id. 14 DISH does not dispute that Section 629 applies to all MVPDs. For that reason, when DISH contends that Congress did not intend for the FCC to consider competitive parity (Br. 46-48), it makes that argument only with respect to Section 624A. There is no question that Section 629 authorizes the Commission to apply the encoding rules to all MVPDs. 15 The cable and consumer electronics industries indicated that without the encoding rules, “the compromise agreement reached in the MOU” would be “upset,” and “their efforts to produce unidirectional digital cable products will falter.” Order ¶ 47 (JA 452). The resulting harm, the Commission found, “would directly undermine the explicit goal of Section 629, to assure the commercial availability of navigation devices.” Id. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 37 of 74 31 As the Commission explained, the encoding rules help ensure that “consumer expectations regarding the functionality” of DTV products “are met.” Order ¶ 11 (JA 437). The rules thus serve to “assure the commercial availability” of DTV products “from manufacturers, retailers, and other vendors not affiliated with any [MVPD].” 47 U.S.C. § 549(a). The Commission was justifiably concerned that consumers might be reluctant to purchase DTV equipment if they were unsure whether it would provide them with the same viewing and recording capabilities they had come to expect from their home entertainment systems. Such doubts could dampen consumer demand and stunt the growth of the nascent retail market for digital navigation devices. The encoding rules were designed to allay those doubts by accommodating the legitimate “expectations of consumers regarding their home viewing habits and the functionality of their digital devices.” Order ¶ 68 (JA 461); see also id. ¶¶ 60-61, 64 (JA 457-59). In particular, the Commission reasonably concluded that selectable output control and the down-resolution of broadcast television could erode consumer confidence in the performance of DTV equipment. Order ¶¶ 58-64 (JA 456-59). Down-resolution could upset DTV viewers by causing an unexpected degradation of the picture quality on their DTV sets. Order ¶ 64 (JA 459). Even worse, selectable output control could leave DTV viewers USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 38 of 74 32 with a blank screen, “completely shut off from the high-definition content they expect to receive,” if their “DTV equipment only has component analog inputs for high definition display” (a common feature of DTV products at the time the Order was adopted). Order ¶ 60 (JA 457). By prohibiting these copy protection tools, the Commission sought to alleviate “concerns over connectivity and functionality” that might discourage consumers from purchasing DTV equipment. Order ¶ 61 (JA 458). The record showed that the Commission’s concern with consumer expectations was warranted. According to advocates of home recording rights, the use of selectable output control would “discourage consumers from relying on an interface that supports … home recording,” CEA Comments at 18 (JA 207), and “would have the likely effect of driving from the market any home interface that supports home recording,” HRRC Comments at 8 (JA 230). In light of this evidence, the Commission reasonably concluded that without encoding restrictions, disappointed consumer expectations could seriously hamper efforts to develop the then-incipient retail market for DTV equipment. That sort of predictive judgment is entitled to substantial deference. The Court is “particularly deferential” where (as here) the “FCC must make judgments about future market behavior with respect to a brand- new technology.” Charter, 460 F.3d at 41 (internal quotation marks USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 39 of 74 33 omitted); see also Consumer Electronics Ass’n v. FCC, 347 F.3d 291, 303 (D.C. Cir. 2003). DISH claims that the encoding rules “have no connection” to the purpose of Section 629 because they do not affect “the design, manufacture, sale, [or] support for navigation devices.” Br. 35. The statute, however, does not require the FCC’s implementing rules to regulate any particular characteristics of navigation devices. Section 629 simply directs the Commission to “adopt regulations to assure the commercial availability” of navigation devices from sources unaffiliated with MVPDs. 47 U.S.C. § 549(a) (emphasis added). By enhancing the availability of navigation devices in the retail market, the Commission’s adoption of the encoding rules plainly served the statute’s purpose. DISH also asserts that the FCC’s concern with consumer expectations was unrelated to “the availability of navigation devices.” Br. 41. This Court rejected a similar argument in Cablevision Sys. Corp. v. FCC, 649 F.3d 695 (D.C. Cir. 2011). The Court there upheld the Commission’s authority under Section 628(b) of the Communications Act to bar cable operators from unfairly withholding cable-affiliated terrestrial programming from rival MVPDs because such withholding would “hinder” competitors “significantly … from providing satellite … programming to subscribers.” 47 U.S.C. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 40 of 74 34 § 548(b). 16 In particular, the Court affirmed the Commission’s finding that if a competing MVPD could not obtain popular terrestrial programming (such as regional sports networks), its ability to provide satellite programming would be greatly diminished because it would be less commercially attractive than cable. Cablevision, 649 F.3d at 708-09. Petitioners in Cablevision argued that “the Commission lacks authority to regulate terrestrial programming withholding under” Section 628(b) because “the effect of such withholding on the provision of satellite programming” was “too attenuated.” Cablevision, 649 F.3d at 708. Specifically, petitioners contended that “commercial attractiveness has nothing to do with whether” a rival MVPD “can provide satellite programming.” Id. The Court explained that petitioners’ argument “wrongly assumes an MVPD’s lack of commercial attractiveness will never prevent or significantly hinder it from providing satellite programming.” Id. Similarly, DISH in this case incorrectly presumes that consumer expectations have no effect on the commercial availability of navigation devices. To the contrary, the record contained evidence that the use of selectable output control, which would “discourage consumers from relying 16 Satellite programming refers to “programming transmitted to MVPDs via satellite.” Cablevision, 649 F.3d at 700. Terrestrial programming refers to “programming delivered to MVPDs over land-based networks.” Id. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 41 of 74 35 on an interface that supports … home recording,” CEA Comments at 18 (JA 207), “would have the likely effect of driving from the market any home interface that supports home recording.” HRRC Comments at 8 (JA 230). By prohibiting selectable output control, the Commission acted to assure the continued commercial availability of video recording devices pursuant to Section 629(a). More generally, by adopting encoding restrictions that reflect consumers’ reasonable expectations regarding home viewing and recording, the Commission sought to address consumer concerns that might stifle the growth of the nascent retail market for DTV navigation devices. In taking this action, the agency properly exercised its authority under Section 629 to “adopt regulations to assure the commercial availability” of navigation devices. 47 U.S.C. § 549(a). 2. The Commission also reasonably found that it had ancillary jurisdiction arising from Section 629 to adopt the rules. Order ¶ 55 (JA 455). This Court has held that the FCC may exercise ancillary jurisdiction when two conditions are met: “(1) the Commission’s general jurisdictional grant under Title I [of the Communications Act] covers the regulated subject and (2) the regulations are reasonably ancillary to the Commission’s effective performance of its statutorily mandated responsibilities.” American Library USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 42 of 74 36 Ass’n v. FCC, 406 F.3d 689, 691-92 (D.C. Cir. 2005). Both of these conditions are present here. First, the subject regulated by the encoding rules – “MVPD content distribution” – falls within “the Commission’s broad authorization” under Title I “‘to make available to all Americans a radio and wire communication service.’” Order ¶ 55 (JA 455) (quoting 47 U.S.C. § 151). 17 Second, the encoding rules are reasonably related to the FCC’s fulfillment of its mandate under Section 629. The Commission explained that the rules would help “increase consumer demand” for “digital cable products and other navigation devices at retail” by ensuring that consumers have “access to high value digital content.” Id.; see also pp. 30-35, supra. 3. DISH contends that Section 629 “cannot be the basis for an assertion of either direct or ancillary jurisdiction” (Br. 33) because it “is not 17 In that respect, the encoding rules differ from the FCC rules that the Court struck down in American Library Association. The Court ruled that those rules “exceeded the scope of [the FCC’s] general jurisdictional grant under Title I” because the Commission in that case “impose[d] regulations on devices that receive communications after those communications have occurred.” American Library Ass’n, 406 F.3d at 703 (emphasis added). Unlike those rules – which did “not regulate the communications themselves,” id. – the rules at issue here regulate MVPDs’ encoding of programs that they transmit to subscribers. This regulation of MVPD content distribution indisputably falls within the FCC’s general jurisdiction under Title I. Moreover, in contrast to American Library Association, where the agency relied solely on its ancillary jurisdiction, the Commission here acted pursuant to an express grant of authority under Section 629(a). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 43 of 74 37 an independent grant of authority from Congress” (Br. 35). In support of its claim, DISH points to Section 629(f). That provision states: “Nothing in this section shall be construed as expanding or limiting any authority that the Commission may have under law in effect before [the date of enactment of the Telecommunications Act of 1996].” 47 U.S.C. § 549(f). DISH’s reading of the statute cannot withstand scrutiny. “Where the language of a statute is plain there is nothing to construe.” Hengesbach v. Hengesbach, 114 F.2d 845, 846 (D.C. Cir. 1940). See also Schlossberg v. Barney, 380 F.3d 174, 182 (4th Cir. 2004) (because courts “must account for a statute’s full text,” they “cannot interpret one section of a statute in a way that would nullify the clearly worded language of other sections of the same statute”) (internal quotation marks omitted). Consequently, a general rule of construction such as Section 629(f) has no power to invalidate a specific and unambiguous grant of authority such as Section 629(a). The Supreme Court made this clear in AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999). Although Section 2(b) of the Communications Act provides that “nothing in this [Act] shall be construed to apply or to give the Commission jurisdiction with respect to” intrastate telecommunications services, 47 U.S.C. § 152(b), the Court in AT&T held that Section 2(b) could not be read to “nullify” certain 1996 amendments to the Act because those USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 44 of 74 38 provisions “clearly ‘apply’ to intrastate service.” 525 U.S. at 379-80. By the same reasoning, Section 629(f) cannot be read to nullify Section 629(a), which clearly directs the FCC to “adopt regulations to assure the commercial availability” of navigation devices. 47 U.S.C. § 549(a). Moreover, it is well settled that the Court should “avoid interpreting a statute in such a way as to make part of it meaningless.” Abourezk v. Reagan, 785 F.2d 1043, 1054 (D.C. Cir. 1986) (citing 2A N. Singer, Sutherland Statutory Construction § 46.06 (4th ed. 1984)). DISH’s proposed reading of Section 629 violates this basic canon of statutory construction. Its interpretation of Section 629(f) “would deprive” Section 629(a) – an express directive to adopt regulations to assure the commercial availability of navigation devices – “of all substantive effect, a result self evidently contrary to Congress’ intent.” See RCA Global Commc’ns, Inc. v. FCC, 758 F.2d 722, 733 (D.C. Cir. 1985). “Congress cannot be presumed to do a futile thing.” Halverson v. Slater, 129 F.3d 180, 185 (D.C. Cir. 1997). 18 Finally, DISH’s reading of Section 629 conflicts with this Court’s decision in General Instrument. The Court there held that Section 629 provided statutory authority for the FCC to impose a ban on integrated 18 DISH’s interpretation of Section 629(f) is also at odds with Section 629(b), which plainly contemplates that the Commission has authority to “prescribe regulations under [Section 629(a)].” 47 U.S.C. § 549(b). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 45 of 74 39 converter boxes. General Instrument, 213 F.3d at 730-31. DISH’s brief does not even mention that case, let alone try to distinguish it. In light of General Instrument, DISH cannot plausibly argue (Br. 35) that Section 629 “is not an independent grant of authority from Congress.” DISH attempts to derive support for its reading of Section 629 from the Court’s treatment of Section 256 of the Communications Act in Comcast Corp. v. FCC, 600 F.3d 642, 659 (D.C. Cir. 2010). That attempt fails because the two statutory provisions are very different from each other. Unlike Section 629’s express grant of rulemaking authority to the Commission, Section 256 provides only that the Commission “shall establish procedures for Commission oversight of coordinated network planning by [service providers] for the effective and efficient interconnection of public telecommunications networks.” 47 U.S.C. § 256(b)(1). In light of that statutory language, which can be read as directing only the establishment of internal FCC operating procedures, the Court in Comcast concluded that the FCC could not rely on Section 256 to prohibit discriminatory network management practices of an Internet access provider. By contrast, the encoding rules that the FCC adopted in this case are “regulations to assure the commercial availability” of navigation devices – precisely the sort of rules that Congress expressly directed the agency to adopt in Section 629(a). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 46 of 74 40 B. The Commission Had Authority To Adopt The Encoding Rules Under Section 624A. As a separate and independent ground for adopting the encoding rules, the FCC concluded that the rules would “advance the policies underlying Section 624A of the Communications Act.” Order ¶ 56 (JA 456). Section 624A requires the Commission to issue regulations “assuring compatibility between televisions and video cassette recorders and cable systems.” 47 U.S.C. § 544a(b)(1). The Commission reasonably found that the encoding rules would help achieve the “end goal” of Section 624A: “to ensure that cable subscribers will be able to enjoy the full benefits of available cable programming and the functionality of their televisions and video cassette recorders.” Order ¶ 56 (JA 456). The agency acknowledged that Section 624A “does not directly apply to MVPDs other than cable operators.” Order ¶ 57 (JA 456). Nonetheless, the Commission reasonably concluded that it could “exercise ancillary jurisdiction over non-cable MVPDs in order to avoid the creation of a regulatory and marketplace imbalance between cable and DBS.” Id. The FCC’s reliance on Section 624A satisfied this Court’s two-part test for the proper exercise of ancillary authority. See American Library Ass’n, 406 F.3d at 691-92. First, the subject regulated by the encoding rules – “MVPD content distribution” – falls within the FCC’s general jurisdiction USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 47 of 74 41 under Title I of the Communications Act. Order ¶ 55 (JA 455). Second, application of the rules to non-cable MVPDs is reasonably ancillary to the FCC’s effective performance of its duties under Section 624A. The Commission explained that unless the encoding rules applied to all MVPDs, “cable operators would be at a significant competitive disadvantage in obtaining access to content.” Order ¶ 57 (JA 456). In the agency’s assessment, the resulting competitive disparity “could frustrate the [FCC’s] ability to satisfy Section 624A’s mandate.” Id. Congress enacted Section 624A because it found that cable compatibility issues made “consumers … less likely to purchase, and electronics equipment manufacturers … less likely to develop, manufacture, or offer for sale, television receivers and video cassette recorders with new and innovative features and functions.” 47 U.S.C. § 544a(a)(2). The Commission was concerned that if its encoding rules did not apply uniformly to all MVPDs, consumers might come to doubt whether DTV receivers and digital video recording devices would provide the same functionality for cable subscribers as for DBS subscribers. Such doubts could undermine the FCC’s efforts to promote the market for cutting-edge consumer electronics equipment in accordance with Section 624A. In light of that concern, the Commission reasonably took steps here “to ensure that consumer USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 48 of 74 42 expectations are not unreasonably frustrated regardless of the MVPD platform to which [consumers] subscribe.” Order ¶ 61 (JA 458). DISH contends that because Congress mentioned no MVPDs other than cable operators in Section 624A, it clearly intended to bar the FCC from applying the statute’s requirements to non-cable MVPDs. Br. 22-33. This argument rests on “the expressio unius maxim – that the expression of one is the exclusion of others.” Mobile Commc’ns Corp. of America v. FCC, 77 F.3d 1399, 1404 (D.C. Cir. 1996) (“MCCA”). As this Court has repeatedly observed, however, that maxim is “an especially feeble helper in an administrative setting, where Congress is presumed to have left to reasonable agency discretion questions that it has not directly resolved.” Martini v. FNMA, 178 F.3d 1336, 1343 (D.C. Cir. 1999) (quoting Cheney R.R. Co. v. ICC, 902 F.2d 66, 69 (D.C. Cir. 1990)). For example, long before the Communications Act was amended to provide express authority for FCC regulation of cable television, the Supreme Court held that the agency had ancillary jurisdiction to regulate cable in order to ensure “the effective performance of [its] various responsibilities for the regulation of television broadcasting.” Southwestern Cable, 392 U.S. at 178; see also United States v. Midwest Video Corp., 406 U.S. 649, 659-63 (1972). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 49 of 74 43 The same sort of ancillary jurisdiction applies here. In the context of Section 624A, “the contrast between Congress’s mandate” with respect to cable operators and “its silence” with respect to non-cable MVPDs “suggests not a prohibition” on FCC regulation, “but simply a decision not to mandate” regulation of non-cable MVPDs, i.e., “to leave the question to agency discretion.” See Cheney, 902 F.2d at 69. The FCC reasonably exercised its discretion here when it chose to apply the encoding rules to all MVPDs. The Commission saw no good reason to create a competitive disparity between cable and DBS by imposing encoding restrictions only on cable. This Court has previously upheld the Commission’s use of ancillary authority to ensure regulatory parity. In MCCA, 77 F.3d at 1404-07, the Court held that the FCC could rely on its ancillary authority to require Mtel to pay for a wireless telecommunications license obtained through the agency’s “pioneer’s preference” program. Although Mtel was not subject to any statutory payment requirement, all other wireless licensees were statutorily required to pay for their licenses at auction. The Court concluded that the Commission could require Mtel to pay for its license in order to prevent Mtel’s “unjust enrichment” from “receipt of a free license.” Id. at 1406. The same considerations of regulatory parity justified the FCC’s decision in this case to apply the encoding rules to non-cable MVPDs as well USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 50 of 74 44 as cable operators. The record showed that if only cable operators were subject to the encoding rules, content providers would likely supply their high value content only to non-cable MVPDs, which could offer more stringent copy protections. See Comcast Comments at 14 (JA 182); NCTA Reply Comments at 13 (JA 375); CEA Reply Comments at 21 (JA 316). On the basis of that record, the Commission concluded: “Application of the encoding rules to the cable industry alone would create a permanent competitive imbalance in the MVPD programming market that could negatively impact consumers.” Order ¶ 71 (JA 462). To prevent this market distortion, the FCC reasonably chose to impose the same encoding restrictions on all MVPDs. DISH maintains that “Congress had not intended the FCC to consider” regulatory parity when implementing Section 624A. Br. 47. It contends that Congress’s principal concern in adopting the 1992 Cable Act was cable’s dominance of the MVPD marketplace. Br. 47-48. As the Commission observed, however, times have changed. Over the past two decades, “the MVPD market has diversified greatly.” Order ¶ 57 (JA 456). DBS, which “did not exist” when Section 624A was enacted in 1992, “has since grown to serve approximately twenty percent of the MVPD marketplace.” Id. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 51 of 74 45 Given the growth of substantial competition in the MVPD market, the Commission acted within its discretion in declining to adopt encoding rules that would favor one class of MVPDs over another. Nothing in the text or legislative history of Section 624A suggests that Congress intended to foreclose the Commission from seeking to achieve regulatory parity after the MVPD market became competitive. III. THE COMMISSION PROVIDED ADEQUATE NOTICE AND OPPORTUNITY FOR COMMENT Finally, the FCC complied with the rulemaking requirements of the APA by seeking “comment on the MOU and the proposed Commission rules contained therein.” Further NPRM ¶ 4 (JA 76). The agency received comments from a wide array of interested parties, including equipment manufacturers, cable operators, consumer groups, content providers, and both DBS providers. See Order, Appendix A (JA 471). It considered those comments before adopting the encoding rules with certain changes. The APA requires nothing more. See 5 U.S.C. § 553; Rural Cellular Ass’n v. FCC, 588 F.3d 1095, 1101 (D.C. Cir. 2009). DISH argues that it did not receive a “meaningful” opportunity to comment because the Commission gave “insufficient” consideration to the concerns of DBS providers. Br. 43. According to DISH, the FCC treated the proposed encoding rules as a “fait accompli.” Br. 42. This Court rejected a USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 52 of 74 46 similar argument in Rural Cellular. Petitioners in that case claimed that notice and comment “served no purpose” because the Commission “rubber stamped” a rule change that had effectively been adopted in two earlier adjudications. Rural Cellular, 588 F.3d at 1101 (internal quotation marks omitted). But the Court found no indication that “the Commission improperly prejudged the issue.” Id. (internal quotation marks omitted). It held that the agency satisfied the APA by giving notice of the proposed rule change, compiling a record of comments, and considering those comments before adopting the rule. Id. Here, as in Rural Cellular, the Commission fulfilled all of its procedural obligations under the APA. DISH suggests that the Commission did not adequately consider objections to the encoding rules because those rules were proposed as part of “a private agreement.” Br. 43. As this Court long ago recognized, however, “there is nothing objectionable about parties jointly submitting a proposed rule to an agency,” even if the proposal is “the product of negotiation and compromise.” Baltimore Gas & Elec. Co. v. United States, 817 F.2d 108, 117 (D.C. Cir. 1987) (internal quotation marks omitted). Moreover, the fact that the FCC sought “to preserve” the “compromise” reached in the MOU by adopting encoding rules that “differ little” from the MOU’s proposals “does not itself establish” that the agency “elevated the effectuation of the USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 53 of 74 47 negotiated rules over its duty to protect the public interest.” See id. (internal quotation marks omitted). To the contrary, the Commission explained that its efforts to preserve the “plug and play” agreement served the public interest by ensuring that efforts to make digital navigation devices commercially available would not be upended. See Order ¶ 47 (JA 452). This is not the first case in which the FCC adopted rules that were originally developed through negotiations between private parties. In Texas Office of Pub. Util. Counsel v. FCC, 265 F.3d 313 (5th Cir. 2001) (“TOPUC”), a group of local and long-distance telecommunications carriers proposed a plan for reforming interstate access charges. Although local and long-distance carriers generally “held opposing views on telecommunications reform,” they developed the access charge reform proposal through negotiation and compromise. Id. at 319. The FCC issued a notice of proposed rulemaking to solicit comment on the carriers’ proposal. After reviewing the comments it had received, the agency adopted a modified version of the proposed reform plan. Id. at 319-20. Much like DISH in this case, petitioners in TOPUC argued that “the FCC had given approval” to the proposed rule changes “before considering public comment.” TOPUC, 265 F.3d at 325. They characterized the FCC’s adoption of the access charge reform plan as “a tainted political compromise USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 54 of 74 48 between the FCC” and the carriers that proposed the plan. Id. The Fifth Circuit found no basis for these claims. It correctly held that the Commission satisfied the APA’s rulemaking requirements by providing for notice and comment before adopting the carriers’ proposal. Id. at 326-27. The Commission followed the same approach in this case. After the parties to the “plug and play” agreement submitted their MOU to the FCC, the agency issued a notice of proposed rulemaking seeking comment on the MOU’s rule proposals. The Commission received and reviewed comments from many interested parties, including DBS providers. Moreover, in response to the comments, the Commission modified the proposed rules (where it deemed appropriate) before adopting them. For example, although the MOU proposed to permit a prohibition on copying of subscription video on demand, the Commission decided to give MVPDs “discretion to determine whether specific” offerings of this service “merit different encoding terms.” Order ¶ 74 (JA 464). The agency also adopted the MOU’s proposed technical rules “with certain modifications.” Order ¶ 10 (JA 437). These revisions to the proposed rules refute DISH’s claim that its opportunity to comment in this proceeding was not meaningful. DISH complains that because the two DBS providers “were shut out of the [MOU] process,” they “could not negotiate in their own interest in order USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 55 of 74 49 to balance the restrictions inherent in the encoding rules.” Br. 45. But both of the DBS providers and their trade association presented their objections to the proposed rules in comments filed with the FCC. The Commission considered those objections. It simply found them unpersuasive. Specifically, the Commission concluded that “the arguments advanced by the DBS providers” for exempting DBS from the encoding rules were “insufficient to outweigh the need for competitive parity among MVPDs.” Order ¶ 43 (JA 451). The record indicated that if the encoding rules applied only to cable operators, content providers would likely supply their high value content only to DBS providers and other non-cable MVPDs. 19 Such a “competitive imbalance in the MVPD programming market,” the Commission reasonably found, could have a negative impact on MVPD consumers by depriving them of “equal access to content regardless of their service provider.” Order ¶ 71 (JA 462). The Commission also reasonably determined that application of the encoding rules to all MVPDs, including DBS providers, would most effectively “ensure that consumer expectations regarding the functionality” of DTV products “are met.” Order ¶ 11 (JA 437). In particular, the 19 See Comcast Comments at 14 (JA 182); NCTA Reply Comments at 13 (JA 375); CEA Reply Comments at 21 (JA 316). USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 56 of 74 50 Commission explained that “the ban on selectable output control logically should apply uniformly to all MVPDs in order to ensure that consumer expectations are not unreasonably frustrated regardless of the MVPD platform to which they subscribe.” Order ¶ 61 (JA 457-58). Simply put, the Commission found that the public interest in accommodating the expectations of consumers outweighed the private interest of DBS providers. DISH has given the Court no good reason to disturb this reasonable policy judgment. USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 57 of 74 51 CONCLUSION For the foregoing reasons, the Court should deny the petitions for review. Respectfully submitted, SHARIS A. POZEN ACTING ASSISTANT ATTORNEY GENERAL CATHERINE G. O’SULLIVAN JAMES J. FREDRICKS ATTORNEYS UNITED STATES DEPARTMENT OF JUSTICE WASHINGTON, D.C. 20530 AUSTIN C. SCHLICK GENERAL COUNSEL PETER KARANJIA DEPUTY GENERAL COUNSEL JACOB M. LEWIS ASSOCIATE GENERAL COUNSEL /s/ James M. Carr JAMES M. CARR COUNSEL FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 (202) 418-1740 March 30, 2012 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 58 of 74 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT ECHOSTAR SATELLITE L.L.C., PETITIONER, v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS. NOS. 04-1033 & 04- 1109 (CONSOLIDATED) CERTIFICATE OF COMPLIANCE Pursuant to the requirements of Fed. R. App. P. 32(a)(7), I hereby certify that the accompanying “Brief for Respondents” in the captioned case contains 10,472 words. /s/ James M. Carr James M. Carr Counsel Federal Communications Commission Washington, D.C. 20554 (202) 418-1740 (Telephone) (202) 418-2819 (Fax) March 30, 2012 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 59 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 60 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 61 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 62 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 63 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 64 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 65 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 66 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 67 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 68 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 69 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 70 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 71 of 74 USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 72 of 74 04-1033 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT EchoStar Satellite LLC., et al. Petitioners v. Federal Communications Commission and the United States of America, Repondents CERTIFICATE OF SERVICE I, James M. Carr, hereby certify that on March 30, 2012, I electronically filed the foregoing Brief for Respondents with the Clerk of the Court for the United States Court of Appeals for the D.C. Circuit by using the CM/ECF system. Participants in the case who are registered CM/ECF users will be served by the CM/ECF system. Some of the participants in the case, denoted with asterisks below, are not CM/ECF users. I certify further that I have directed that copies of the foregoing document be mailed by First-Class Mail to those persons, unless another attorney at the same mailing address is receiving electronic service. Stephanie A. Roy Pantelis Michalopoulos Steptoe & Johnson LLP 1330 Connecticut Avenue, N.W. Washington, D.C. 20036-1795 Counsel for EchoStar Satellite L.L.C. James Joseph Fredricks Catherine G. O’Sullivan U.S. Department of Justice Antitrust Division, Appellate Section Room 3224 950 Pennsylvania Avenue, N.W. Washington, DC 20530-0001 Counsel for USA USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 73 of 74 04-1033 Neal Morse Goldberg *Loretta P. Polk National Cable & Telecommunications Association 25 Massachusetts Avenue, N.W. Suite 100 Washington, D.C. 20001-1431 Counsel for NCTA Paul Glist Davis Wright Tremaine LLP 1919 Pennsylvania Avenue, N.W. Suite 200 Washington, D.C. 20006-3402 Counsel for NCTA /s/ James M. Carr USCA Case #04-1033 Document #1366416 Filed: 03/30/2012 Page 74 of 74