FCC Takes Aim At The Pathetic Lack Of Cable Set Top Box Competition

from the killing-sacred-cash-cows dept

The FCC has formally declared war on the outdated, over-priced traditional cable box. The agency has put forth a new proposal (pdf) for guidelines intended to bring much-needed competition to the cable set top box market. As recently noted, data collected from the top ten biggest cable companies found that 99% of cable customers still rent a cable box, paying $231 in fees annually for often-outdated hardware that’s frequently worth very little. This cozy little captive market nets the cable industry roughly $20 billion in rental fees every year.

In a public sales pitch for the proposal over at Recode, FCC boss Tom Wheeler invokes the spirit of ma bell to highlight the absurdity of the cable industry’s continued control over the set top box market:

“Decades ago, if you wanted to have a landline in your home, you had to lease your phone from Ma Bell. There was little choice in telephones, and prices were high. The FCC unlocked competition and empowered consumers with a simple but powerful rule: Consumers could connect the telephones and modems of their choice to the telephone network. Competition and game-changing innovation followed, from lower-priced phones to answering machines to technology that is the foundation of the Internet.”

The FCC wants to design a software-based solution that lets consumers access cable content via the hardware of their choice. Hardware that, thanks to competition, would be better, cheaper and faster than the clunky old cable boxes we all know and love. The FCC’s careful to state it’s not mandating a specific standard by which cable operators have to provide programming data to these devices, stating they simply need to adhere to “any published, transparent format that conforms to specifications set by an independent, open standards body.”

This isn’t the FCC’s first attempt to force competition on the set top box market. CableCARD was the agency’s earlier, ineffective attempt to mandate a standardized card for use in third-party set tops. CableCARD regulations were well-intentioned but cumbersome, and frequently left unenforced. The cable industry also went out of its way to avoid pitching the cards to consumers, and often made the installation process as cumbersome and nightmarish as possible. When meager CableCARD stats were released annually, the cable industry would then collectively shrug and insist low adoption reflected a genuine lack of interest in the idea of better third-party devices.

With $20 billion in set top box revenues on the line, the cable industry has spent the better part of a decade fighting tooth and nail to kill this FCC proposal and anything like it. Opponents including AT&T, the MPAA, and the cable industry’s biggest lobbying organization today formed what they’re calling the “Future of TV Coalition,” which argued in a release that greater set top box competition will kill diversity programming, hurt consumer privacy, embolden pirates, and generally just destroy the known universe:

“Many parties, including 30 members of the Congressional Black Caucus, have warned this would unravel the modern TV ecosystem, doing particular damage to small, independent, and diverse programmers and the communities they serve. AllVid would also undermine vital privacy and other consumer protections that apply to pay-TV providers but not the tech firms advocating adoption of AllVid. And it would erode protections against video piracy, rendering programming less secure.”

Of course that’s bullshit, and what the industry’s really afraid of is seeing a cornerstone of its uncompetitive walled-garden empire demolished by real competition. Granted it’s worth noting that the FCC’s proposal doesn’t prevent customers from keeping their existing cable boxes, nor does it stop cable providers from providing them. In other words, if the cable industry wants to retain customers on its systems, all it has to do is innovate and compete.

All of that said, you can’t begrudge those who look at the CableCARD fracas of the last decade and legitimately wonder whether the FCC has the chops to actually implement and enforce such guidelines with an election (and potential FCC shuffle) looming. It’s also worth asking if another multi-year enforcement fight is worth it with the cable industry on a collision course with Internet video and irrelevance anyway. Whatever happens, it’s at the very least amusing to see a former cable lobbyist nobody expected much from plunge a dagger into one of the cable industry’s largest and most sacred cash cows.

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Comments on “FCC Takes Aim At The Pathetic Lack Of Cable Set Top Box Competition”

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28 Comments
Wendy Cockcroft says:

Re: Re: Here we go again...

Now now, wereisjessicahyde, pure capitalism is incapable of doing evil. When evil deeds are carried out by people purporting to be capitalists, they are:

a) doin’ it wrong
b) trivial or nonexistent
c) lies by takers desperate to steal from the makers
d) the government’s fault

I know this from a conversation I had last night with a member of the Capitalist Party, and this is pretty much his answer to every one of my questions.

tqk (profile) says:

Re: Here we go again...

Campaigning against a problem THEY caused!

First, who’s “THEY”? I’d say the cable industry caused it. There was money on the table and it wasn’t illegal to demand it, just like phones and AT&T. However, assuming you mean gov’t, I’d say it’s more they allowed it to happen, through inaction. “Consumer protection? What a novel idea!”

Still won’t make me want to sign up for teevee any time soon.

Anonymous Coward says:

“Opponents including AT&T, the MPAA, and the cable industry’s biggest lobbying organization today formed what they’re calling the “Future of TV Coalition,” which argued in a release that greater set top box competition will kill diversity programming, hurt consumer privacy, embolden pirates, and generally just destroy the known universe:”

At one time we had no box and ran cable TV on four televisions in our house. We now pay more for one box that runs on one TV, and has about half the programming. Up yours Comcast, even the business I work for that uses about two hundred televisions kicked your sorry ass to the curb.

Christenson says:

Digital Rights (Mis)Management included

My Karl
I thought you’d picked up on the requirement to include “respecting copyright licensing agreements” in the speech. That’s code for DRM, which means “Gee, what could go wrong here???”

I think the end result will be simple irrelevance. Call me a “cord never”…much better content on the internet.

Whoever says:

Re: Re: I have an idea.

Comcast already does that (don’t know about other providers). They are perfectly willing to provide you with a single standard definition cable box for free with your service.

Looked at your bill any time recently? Comcast used to provide these boxes free of charge. Now they are a small item on my Comcast bill.

Anonymous Coward says:

one vital omission from the description of the clunky old cable boxes is, just like aging routers that broadband companies charge a monthly lease fee on, without doing any sort of upgrading, let alone replacing, the serious fire risk that is all too present and very, very real!!

if the FCC fails to get anywhere with this, i sure hope it is successful in forcing the ISPs to renew routers at no extra charge at a minimum of every two years. the equipment costs pennies to produce, is charged a fortune for with the initial purchase and then roughly half of the initial price is charged as a monthly fee! if that isn’t taking the piss, i dont know what is!!

vastrightwing (profile) says:

it's over already

You can assume the FCC gave a heads up to the industry and was told to go ahead since the damage had already been done. Just like closing the barn door after all the animals are gone. This is all theatre with a bad ending.

I have an idea for cable: bundle more, charge more, cram as many commercials as you can. In fact, edit out content, speed it up. You’re right, forget cord cutters, they don’t matter. Then for good for measure, cap internet bandwidth so we have more choice. Charge extra for busting your caps. Make sure to tell us what a great deal we’re getting. Stop competition by bribing… I mean donating to political campaigns. Stop towns without broadband from operating their own, it’s bad for consumers with too much competition. Get the FCC to redefine broadband as 700kbps. After all, why would anyone legitimately need more than that?

Feel free to call me, I have many more fantastic ideas!

Whatever (profile) says:

My feeling is that if the FCC moves too far on this item, then the cable companies would take actions to protect their business models. They could eliminate the fee for the cable box by increasing every package by a similar amount, essentially making everyone pay anyway.

They could also move to more proprietary encoding for their networks that could only be decoded using their cable boxes. I don’t know if the FCC would tolerate this, as they have been trying to get cable boxes standardized (see the cable card debacle). But it is quite possible to imagine cable companies moving to more unique encoding methods that would not make it so easy for others to provide the set top boxes.

I think the FCC may have the upper hand on this one, but as vastrightwing mentions above, there is great potential that the industry already knew this was coming, and has already started to take action on pricing and distribution methods to deal with it and minimize the effects.

OldGeezer (profile) says:

In the days before cable ready TV’s and VCR’s Cablevision provided one box with their service. If you wanted cable in more than one room they charged monthly for each additional box. They also charged an installation fee for a splitter and coax that you could get from Radio Shack for just a few buck and do it yourself. There was also a monthly charge for this. There were ways around this. You could buy a block converter that changed channels 14 up to UHF. Some cable companies used a box that had a chip to block or allow premuim channels. You could order the chip or a box with it already installed. The drawback was that you had to disconnect and hide all this if you had to have a service call. The cable companies tried to block manufacturers from making cable ready VCR’s. The early ones were expensive. Over $500 in 80’s dollars.

Anonymous Coward says:

There won't be more competition in STB's

Simply because there are now only two major manufacturers of STBs left. I know this because my company sells connectors for STBs to those companies. The only choices left are now Arris and Technicolor(I guess you can sort of count Tivo so three). Pace just got bought by Arris, Technicolor bought Ciscos STB division, and Motorola also was sold to Arris after Google bought Motorola.

Slayer of Sacred Cows says:

FCC is the problem, not the solution.

What a load of crap. You can’t mandate competition, lol. The only reason shitty set-top boxes exist is because the cable companies have captured markets thanks to the FCC and other government regulations. You want better set top boxes and better cable service? Get the government and regulations out of the way and let the free market provide.

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