What exemption does the FCC allow for cable networks with less than 1,000 customers regarding proof-of-performance (POP) testing?

Cable networks with fewer than 1,000 customers are not subject to the standard proof-of-performance (POP) testing requirements that larger networks must adhere to. Instead, they are allowed an exemption from regular testing but are still required to demonstrate compliance when asked by regulatory bodies. This means that while they do not need to conduct frequent tests, they must be prepared to provide evidence of their adherence to standards if requested by the FCC. This flexibility is designed to reduce the regulatory burden on smaller cable operators while still holding them accountable for meeting certain performance standards if inquiries arise.

The other options suggest either ongoing testing requirements or a total exemption from all regulatory obligations, neither of which align with the FCC's guidelines specific to smaller networks. The requirement for annual audits is also not applicable in this context, as smaller operators are primarily given leniency in performance testing.