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HQ 964524




October 22, 2001

CLA-2 RR: CR: GC: 964524 TPB

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.50.10

Mr. Mitchell Neriah
Customs Consulting Services
415 S. Prospect Ave. Ste. 110
Redondo Beach, CA 90277

RE: Cable Modems

Dear Mr. Neriah:

This is in response to your letter dated August 22, 2000, to the Director, Customs National Commodity Specialist Division, New York, requesting a ruling as to the classification of a cable modem and other products under the Harmonized Tariff Schedule of the United States (“HTSUS”), on behalf of Toshiba America Information Systems, Inc. (“TAIS”). That request was referred to this office for reply. We regret the delay.

FACTS:

The cable modem (TAIS Model PCX-2000) is a stand-alone electronic apparatus which connects to a personal computer (“PC”) via an Ethernet interface card. The cable modem is also connected to a cable service provider via a coaxial cable. The function of the cable modem is to allow two-way internet access for the personal computer(s) with which it is used. The cable modem utilizes the coaxial cable from the cable provider rather than a telephone for internet access. Model PCX-2000 utilizes the Data Over Cable Service Interface Specification (DOCSIS) standard.

The cable modem differs from a telephone modem in that a telephone modem transmits data through a “twisted pair” wire, and uses a “point to point” connection through a Central Telephone Office. Thus the connection between two telephonic points requires a dedicated single line between points of communication. With cable service, the connection is a “point to multiple point”
connection (shared access). This means that transmissions can originate from a single point and can be transmitted to multiple points.

The signals transmitted through the cable modem are digital. At one end, a cable modem receives an internet transmission from the PC. It will encode packets of data, modulate the packets and transmit the data in an upstream direction where the cable transmission is centered. The addressing scheme will direct the data to a specific address. The cable modem, at the receiving end, will demodulate and decode the data packets, sending them to the receiving PC.

ISSUE:

What is the proper classification of the cable modems?

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.

The HTSUS provisions under consideration are as follows:

Electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and tele-communication apparatus for carrier-current line systems or for digital line systems

Other apparatus, for carrier current line systems or for digital line systems:

8517.50.10 Modems, of a kind used with data processing machines of heading 8471.

Transmission apparatus for radio-telephony, radio-telegraphy, radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus

Transmission apparatus incorporating reception apparatus:

You claim in your letter that the articles in question are properly classified under subheading 8525.20, HTSUS. You also indicate that “[t]he cable modem is a transceiver, transmitting and receiving modular radio frequency transmissions. The transmitting radio frequency range is 5-42 MHz, and the receiving frequency range is 88-860 MHz” (emphasis added).

This is not our understanding of the operation of a cable modem system. The literature that you provided indicates that the cable modem bandwidth is 6MHz, and the downstream, or receiving frequency range is 88-860 MHz, while the upstream, or transmitting frequency range is 5-42 MHz. These frequencies occur within the 6 MHz bandwidth that is provided on the cable, not through a radio transmission, as you have indicated.

The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80.

To be considered for classification under heading 8525, HTSUS, the transmission/reception device (transceiver) must meet the limitations as set forth in the ENs. EN 85.25(A), which discusses transmission apparatus for radio-telephony or radio telegraphy, stipulates that “[t]his apparatus is used for the transmission of signals (representing speech, messages or still pictures) by means of electro-magnetic wavers which are transmitted through the ether without any line connection” (emphasis added).

There is an exception covering television transmissions. EN 85.25(B), which deals with transmission apparatus for radio-broadcasting or television, states, in pertinent part, that “television apparatus falls here whether or not the transmission is by electro-magnetic waves or by line” (emphasis added).

The device at issue, however, is not designed for television transmission or reception. It is designed to transmit and receive digital data over a cable line. Therefore, the cable modem does not meet the specifications of heading 8525, HTSUS, and is precluded from consideration under that heading (cf. HQ 088255, dated December 17, 1990; HQ 959138, dated October 17, 1997).

Heading 8517, HTSUS, provides for electrical apparatus for line telephony or line telegraphy and telecommunication apparatus for carrier-current line systems or for digital line systems. EN 85.17 (III) discusses apparatus for carrier-current line systems or for digital line systems. It states, in pertinent part, that “[t]hese systems are based on the modulation of an electrical carrier-current or of a light beam by analogue or digital signals. Use is made of the carrier-current modulation technique and pulse code modulation (“PCM”) or some other digital system. These systems are used for the transmission of all kinds of information (words, data, images, etc.). . Combined modulators-demodulators (modems) are also classified here.”

The cable modem will modulate and demodulate data signals in much the same way that a voiceband modem will. However, the PCX-2000 cable modem connects to a cable TV line for Internet access. This type of (cable) connection provides the same Internet access as a modem that connects to a standard telephone line but, because of its cable connection, is considerably faster.

For these reasons, the cable modem will be classified as a telecommunications device in subheading 8517.50.10, which provides for modems, of a kind used with data processing machines of heading 8471.

HOLDING:

The TAIS Model PCX-2000 is to be classified under subheading 8517.50.10, HTSUS, as: for electrical apparatus for line telephony or line telegraphy and telecommunication apparatus for carrier-current line systems or for digital line systems, other apparatus, for carrier-current line systems or for digital line systems, modems, of a kind used with data processing machines of heading 8471.

Sincerely,

John Durant, Director
Commercial Rulings Division

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