To the relief of thousands of small operators, the Federal Communications Commission (FCC) has voted unanimously to grant small cable systems an exemption from having to carry the HD signal of must-carry stations.

The FCC ruled that cable systems that either have 2,500 or fewer subscribers and are not affiliated with a large cable operator, or have an activated channel capacity of 552 MHz or less, are exempt from the requirement to carry high-definition versions of broadcast signals for three years following the digital television transition – until 2012.

The decision means small operators can offer digital signals – HD or SD – in an analog format. The ruling comes with one caveat – must-carry stations must be viewable by all subscribers of an operator that qualifies for the exemption. Also, the exemption is not necessarily permanent; it will be reviewed in 2012.

The American Cable Association (ACA), backed by the NCTA and by members of Congress, had been arguing for the exemption for a year – since the FCC set its original must-carry decision – that if a station provides an HD signal, MSOs must provide it in HD format, as transmitting it in SD format would constitute “material degradation,” which is explicitly disallowed.

ACA CEO Matthew M. Polka said, “This exemption is a reprieve to thousands of cable system operators who had neither the extra bandwidth nor the budget to comply with the digital must-carry obligation.”

The ACA thanked FCC Chairman Kevin Martin but made it clear that it didn’t get everything on its wish list.

The organization also said that it “commends the early support of FCC Commissioner Jonathan S. Adelstein, who recognized the capacity limitations and financial and technological resource constraints of small and rural cable systems. Commissioner Adelstein dissented in part with the FCC’s original viewability order because it lacked a small system exemption. ACA also applauds Commissioner Michael J. Copps who similarly expressed a preference at the time for an accommodation for small cable systems.”

The ACA immediately turned up the heat on its other big concern associated with the digital transition, gaining a “quiet period” of sufficient length during which retransmission arguments with programmers would be suspended, to ensure no interruption of service leading into, or after, the transition date of Feb. 17.

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