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The Cable Industry Is Absolutely Terrified Of Set Top Box Competition

from the hey-we're-innovatin'-over-here dept

Last week, we noted that the FCC has proposed new guidelines that would bring some much-needed competition to the cable TV set top box market. Data shows that 99% of consumers pay something on average to $230 a year in set top box rental fees, despite much of this dated hardware being worth little to nothing. Collectively, the cable industry pulls in around $20 billion annually in set top box rental fees, which are fairly consistently increased once or twice a year. Unsurprisingly, whenever the FCC has tried to do something about this proprietary, captive market, the industry becomes downright hysterical.

That was exemplified last week when the FCC simply proposed requiring cable operators deliver programming data to third-party hardware using any accepted standard they choose. Cable operators can still provide the traditional set top box (and consumers can still rent them), the industry would simply suddenly face competition for what’s been captive income. But with $20 billion in annual revenues at risk, the industry quickly got to work trying to argue that the FCC’s plan would demolish the very fabric or time/space and result in no limit of untold harm to consumers.

Despite the reality that most cable boxes (and many executives) are outdated relics of a dying era, the cable industry stuck to one central theme last week: the FCC’s plan is “big tech’s” attempt to thwart all of the amazing innovation occurring in the cable industry. A “diverse” group of cable companies and broadcasters calling itself the “Future of TV” coalition quickly launched to deride the FCC’s “attack on innovation,” with one press release circulated by the group going so far as to suggest that Google has been holding secret meetings at the FCC that undermine the cable industry’s relentless thirst for…diversity:

“…Secrecy and subterfuge shouldn?t be tolerated and professional staffers who know the ropes and are unlikely to be swayed by a flashy demo and a Golden Ticket. The AllVid scheme being flogged by Google and the FCC is unfair and destructive to values held far too dearly on Capitol Hill ? undermining free market competition and putting a government thumb on the scale for powerful incumbents like Google, and making it harder for those serving communities of color and providing diverse and independent programming to make the video ecosystem work.

There’s no secret cabal in the fact that Google, Apple, Roku, TiVo and countless other companies have lobbied for years for an open cable set top box market. But the cable industry has lobbied ferociously to dismantle any attempt to bring this goal to fruition (including CableCARD). So to mock Google for “secretly” lobbying for broader competition is both strange and hilarious. The argument that more robust set top box competition will somehow hurt diversity is equally absurd (more choice and lower product cost is good for diversity), yet it seems to pop up all over the Internet in mysteriously placed editorials.

But credit the cable industry for one thing, it knows how to rally around a central message, even if that message is absolute bullshit. The central theme of this blog post by the industry’s biggest lobbying organization (the NCTA) was cable’s amazing knack for innovation:

“We see these innovations almost daily, which is why it?s so strange that government feels compelled to insert itself in the mix in order to do Big Tech?s bidding. By forcing new government mandates on network providers and content creators, the FCC may intend to reward Google handsomely, but in the process it will ignore contractual freedoms, weaken content diversity and security, undermine important consumer protections like privacy, and stall the creative and technical innovation that is driving positive changes in today?s TV marketplace.

Likewise, a blog post by Comcast largely involves the company patting itself on the back for being incredibly, awesomely innovative:

“Comcast is responding with our innovative X1 platform, and enabling access on a growing array of devices. Like other traditional TV distributors, online video distributors, networks, and sports leagues, Comcast is using apps to deliver its Xfinity service to popular customer-owned retail devices. These apps are wildly popular with consumers. Comcast customers alone have downloaded our apps more than 20 million times. This apps revolution is rapidly proliferating, and we are working with others in the industry and standards-setting bodies to expand apps to reach even more devices.

Given these exciting, pro-consumer marketplace developments, it is perplexing that the FCC is now considering a proposal that would impose new government technology mandates on satellite and cable TV providers with the purported goal of promoting device options for consumers.

Oooh, step back FCC, Comcast is developing apps! The problem is, and the insular cable industry forgets this constantly, that absolutely nobody likes or believes the cable industry outside of the cable industry. Cable providers continue to have the worst customer satisfaction and support ratings of any U.S. industry or government agency (no small feat). So when “big cable” breathlessly insists it’s just trying to protect its monopoly over cable set top hardware to the benefit of minorities and puppies, it’s unclear who the hell would be daft enough to actually take them seriously.

Here’s the thing: if the cable industry’s existing set top box systems are as “innovative” as the industry claims, surely competition will bear that out? When faced with a myriad of new hardware options, customers will clearly want to continue paying Comcast a significant amount of money for a traditional cable box, right? If the cable industry is half as adaptive as it claimed last week, surely this sudden influx of competition will be like a gnat at the ear of a god of innovation. Unless of course this prattling on about innovation is just the insecure braying of an industry absolutely terrified by the foreign specter of real competition?

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Companies: comcast, ncta

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Comments on “The Cable Industry Is Absolutely Terrified Of Set Top Box Competition”

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That One Guy (profile) says:

To be fair...

The cable companies are absolutely innovative when it comes to new and exciting ways to squeeze a few extra bucks out of people, or charge people more for the same product as before.

As such I don’t think it’s fair to say that they’re not innovative, the issue is that they’re only innovative in a very specialized way, that of ‘How can we get more money from our customers without having to actually do anything to earn it?’

mcinsand (profile) says:

Re: nah, that's not the real innovation

I have to disagree, the real innovation is in finding new ways to motivate people to cut the cord.

I’ve been to slack/sloppy/lazy to change, but issues like this motivate me. Sadly, I have 8 months left on a lease where cable is part of it. When I sign again, I will not check the cable box (unintentional pun left in place). If these are the rules of their game, then I will refuse to play.

Wickedsmack (profile) says:

Re: Re: nah, that's not the real innovation

I am actually cutting the cord tomorrow afternoon, had to sell my wife and kids on it, but in the end I showed them all the stuff they watch is readily available online. I got antennas for our TVs to pick up the excellent digital signal in our area. I paid 300 in rental fees a year for three years. I bought a cable modem, excellent wireless router and antennas for less than $180. I feel really silly that I spent so much money for really no good reason.

Anonymous Coward says:

Re: Re: Re: nah, that's not the real innovation

Good on you. For you (or other readers), I did the same thing several months ago, only instead of multiple antenna’s, I bought 1 (attic antenna) and a Tablo. I use Roku boxes and having one tablo connected to my network and using the app on Roku is giving me OTA programming everywhere in my house.

Mason Wheeler (profile) says:

Secrecy and subterfuge shouldn’t be tolerated

I couldn’t agree more, cable dudes. So why don’t you set the example? In the field of hardware and software, there’s another special word that means the same thing as “secret”: proprietary. Give up your proprietary systems and switch to an open standard, and we’ll believe you don’t tolerate harmful secrets.

Until then, just go away and let the adults talk in peace.

Grey (profile) says:

Few weeks ago after a phone call and online chat with Comcast detailing our refusal to upgrade to the X1 system, we received a large box from UPS, full of X1 equipment.

We called Comcast and found out that they had scheduled a tech visit to our house, without our permission or knowledge and apparently were going to just show up and try to talk us into it.

Their Rep swore they were going to call back (Oh really! Suuuure….) and of course, never did.

Of course, we can keep our legacy boxes, at $30 a month, That alone is almost half the price of switching to the local Microwave internet carrier. Even if their system barely works, it’s becoming temping just to cut Comcast off entirely.

teknosapien (profile) says:

So what happens when

Competition comes into play we are allowed to have 3rd party STB’s, What’s to say that they don’t start doing things like packet injection, that causes an inferior experience. Or change standards that obsolete the customer purchased equipment?
This is what I would expect from an industry that has had a cash cow taken from it,

Anonymous Coward says:

Doesn't even matter

They can put any ridiculous line item reasoning, the only thing that matters in the end is the total cost for the value received. When compared to a Roku with Netflix we determined that Dish fell far short and we were tired of calling in to stop the continual attempts to raise our monthly rate. We dumped expensive Dish over a year ago and feel we are better served with Netflix on Roku at a fraction of the cost. We also subscribe to CBS because Grandma like her Gibbs on NCIS.

John Nemesh (profile) says:

Sony's Playstation Vue

If I weren’t locked into a two year contract, and if they offered service in Seattle, I would immediately switch to Sony’s Playstation Vue cable service! I could use my game console as my set top box, and eliminate the cable box from my system completely! Not to mention that I could record an UNLIMITED number of shows…

The only thing that the cable companies have “innovated” is a sub par viewing experience with outdated, hard to control hardware and cumbersome remotes!

John Nemesh (profile) says:

Sony's Playstation Vue

If I weren’t locked into a two year contract, and if they offered service in Seattle, I would immediately switch to Sony’s Playstation Vue cable service! I could use my game console as my set top box, and eliminate the cable box from my system completely! Not to mention that I could record an UNLIMITED number of shows…

The only thing that the cable companies have “innovated” is a sub par viewing experience with outdated, hard to control hardware and cumbersome remotes!

Mason Wheeler (profile) says:

Re: "contractual freedoms"

Precisely. The entire point of a contract–any contract–is to limit the freedom of both parties in specifically enumerated ways. As such, it’s entirely appropriate for a government tasked with upholding the freedom of its people to place reasonable restrictions on what can and cannot constitute a valid contract.

Anonymous Coward says:

The story does not cover ALL of the details in what it will happen when 3rd party set top boxes are allowed. Don’t get me wrong I am in total agreement with the story, and I agree that third party equipment is NEEDED. As I was saying, the reasons the cable companies are fighting to keep the 3rd party boxes out of the picture, goes deeper then the story explained. The main reason would be Piracy!. Third party boxes will most likely have the ability to record in a format that is compatible with other devices, there would also be a way to move those recordings to another device, and when that happens the rebroadcast of tv shows and signals will become a norm of the internet.

Almost Anonymous (profile) says:

Re: Re:

“… and when that happens the rebroadcast of tv shows and signals will become a norm of the internet.”

Um. Every tv show in existence is uploaded as a commercial-free mkv/mp4/pickyourformat file within a day of being aired already. Their objections have nothing to do with piracy, and everything to do with losing their insanely profitable rental fee income.

JBDragon says:

Re: Re:

Not really because it’s a special encrypted standard where Piracy wouldn’t be any bigger issue then it is now. You can already just copy the HDMI output of a cable Box onto your computer to pirate. What’s the difference?

IN fact if you open it up and make it easier and a software solution, no Cable card needed where any company can support it, More people would use their service as they can now use any box they want.

Rich Kulawiec (profile) says:

Security considerations

There are tens of millions of set top boxes running horribly outdated, terribly insecure software that nobody’s even [i[trying[/i] to maintain. The cable industry has been in denial about this for years, no doubt because they don’t want to incur the expenses associated with maintaining that software in a professional manner.

And they can stay in denial, because there’s no competition. Open things up, and there will be — and an increasingly security- and privacy-conscious public will vote with their wallets.

Anonymous Coward says:

Re: Re:

What you seem to really be asking is “Why don’t we just replace set top boxes with smart TVs, and let STBs die?” Several reasons come to mind.

1) A lot of people are either disinterested in “smart” TVs due to increased price, or are simply disinterested in their features. News reports of some of them spying on their owners for advertising purposes, and general difficulty in locking them down so they don’t send things you don’t want them to send provides further disincentive.

2) STBs often double as DVRs. A separate box for this is likely to be more capable in the role, more capable of supporting the entire household, and easier to repair or upgrade, than a smart TV filling the same role.

3) Current STBs being underpowered is a symptom of a lack of competition. You can’t go down to the store, buy the latest and greatest, and swap it out. You have to jump through hoops, and likely incur additional fees with your cable company, to upgrade to the newest of whatever they’re offering. Moving to an open standard where anyone could make a STB would encourage the development of far more powerful STBs.

4) An open standard could make it possible for modern videogame consoles to serve as STBs. I’m sure Microsoft and Sony would leap at the opportunity to add that capability to the Playstation and Xbox. Having one device capable of fulfilling the role of playing videogames, internet streaming, and watching TV would be much appreciated by a number of people. As would being able to switch between the three without needing to fool with TV inputs.

5) Then there’s the long lifespan, and slow upgrade time for TVs. People buy TVs, and unless they break, keep them for decades. Occasionally there will be cause to upgrade, such as the transition from bulky CRTs to flat panels, or the transition to HD, but people still usually retain their older TV either to serve as a secondary TV, or to give to younger relatives, or less fortunate acquaintances for whom even an obsolete TV would be an improvement. In short, you could stop selling anything except smart TVs which support the proposed standard today, and there would still be a need for STBs for the next 30 years.

In summary, yes a smart TV can theoretically replicate the functions of a STB. That’s almost entirely irrelevant to the discussion at hand, as smart TVs are not universal, set top boxes, or other successor stand alone devices fulfilling the same role will be called for for decades yet, and there are additional benefits to having the roles currently performed by STBs be separate from the TV itself.

streetlight (profile) says:

Re: Re:

TV sets have basically become video monitors with multiple inputs – cable/satellite boxes, Blu-ray players, Chromecasts, Rokus, gaming consoles, computers, etc. The only real requirement is they contain an over the air broadcast tuner. I don’t even know why they need to have “smartness” built in and from my experience the smart TV UI is horrible. If the built in cable box were to die or need hardware upgrade to get the latest video experience, you’d probably have to throw the whole thing away or get a new attachment anyway. Keep the TV as a video monitor and let folks buy the attachments they want.

Wickedsmack (profile) says:

Not a lot to like

I think opening up set top boxes to competition is a great thing. Most of the boxes I have gotten over the year have been cheap and poorly made. I have paid just a ridiculous amount of money renting from cable companies. Luckily I managed to convince my family to cut the cord. My bill will halve itself and I will be doubling my internet speed in the process. I feel kind of silly that I have wasted so much money over the years. Especially when the service I pay for has included blocked content, channel blackouts and other ridiculous things that should probably be illegal. $300/year in rental fees. Cord cutting equipment (Cable modem, new wirless router, digital antennas) was only a one time purchase of $180. So instead of paying and average of 140/month I will be paying 68/month (internet, hulu, netflix, amazon (if you break it down by month)) I am pretty excited about this.

AnonCow says:

After reading this article, I pulled up my bill. Disgusted, I asked my wife, “What can’t you live without on TV?” She said “HGTV”. I googled “Watch HGTV without cable.” Installed SlingTV. Showed my wife, thumbs up. Called cable company, downgraded to naked broadband. Ordered a OTA antenna from Amazon.

Cable cut in less than an hour.

JBDragon says:

Re: Re: Re:

I cut the cord over 4 years ago. Don’t miss it! My brother finally did, and it was his wife also holding him back. It was the Housewife’s of whatever, whatever shows. I don’t know what happened, but he finally cut the cord about a year ago and mounted a Antenna!!!

He’ll go to the In-laws right down the street about a block away if there’s a sports game on he wants to see that he can’t get. His kids pretty much only watch Netflix for Kids! Hell they didn’t know what a Commercial was for the longest time.

4 years ago I was paying $170 a month to Comcast for slower internet and a duel tuner HD DVR. That’s $2,040 per year and it goes up and up and up every year. I them got my house and paid U-Verse $35 a month for Internet only. That’s $420. I got that for a couple years. That’s a $1,620 savings if prices stayed the same for 1 year!!!. U-Verse prices went up, they wouldn’t make a good deal again so I went to Comcast for Internet only at $50 for 1 year which is cheaper then what U-Verse wanted to charge me for a fraction of the speed. That’s $60 a year. That’s still a $1440 a year savings. That’s the start of things I did to save money. Why give all that money to Comcast.

People can have Comcast for 10,20,30+ years. A $1,440 savings for 10 years is $14,400. In 20 years, $28,800, and so on and so on. That looks like some retirement money or a nice trip out of the country money, etc.

You pay for your local library in taxes, why not use it? They have more then Books! Rent out ebooks without even leaving home. You can rent out DVD’s and Audio books, etc. Sure they have normal books. It’s a free resource. Cut the cord and free yourself. Just don’t be a sucker and sign up for everything to where it costs you more money for less they what you had. You don’t need SlingTV, Netflix, HULU+,. Amazon Prime, etc all at once.

Anonymous Coward says:

If they lose cable box rental fees all they are going to do is impose new fees on something else or just raise rates to compensate for the loss of income. Sounds great that the FCC is proposing the rule, but all they are doing is putting their finger of a symptom of the broken nature of cable industry monopolies on physical infrastructure in the areas they service. It’s a bandaid at best because satellite isn’t a real direct competition. Anyone that’s dealt with “rain out” knows what I’m talking about. They are often the only real choice for ISP in many communities as DSL can have severe limitations due to poorly maintained copper infrastructure. Fiber is a non-starter in many cities because it’s either vastly more expensive or not available at all.

Great_Scott (profile) says:

Re: Why Do They Care?

This fight makes no sense to me. If the cable companies are concerned about revenue, they can just cancel the line item for “equipment rental” and just raise the base fee an identical amount. Boom, done.

If they are worried about losing control… I don’t understand why. They own the pipes, so changing which box makes the connection ultimately doesn’t alter anything.

Whatever (profile) says:

Karl, you need to learn that the SnarkMaker App you are using allows you to adjust the settings so your attempts at being snarky aren’t quite so obvious and overdone. Try setting it to “mildly snarky” instead of “Krusty The Clown talking to idiot underlings snarky” and your posts might read a little better.

You might also way to consider that part of the issue of set top boxes is security and control of accept to programming. Cable boxes are often the gateway / security / usage control device that keeps end users from being able to see certain types of programming.

The point is not about money, it’s about control – which leads to money.

R2_v2.0 (profile) says:

Trigger Warnings

…undermining free market competition and putting a government thumb on the scale for powerful incumbents like Google, and making it harder for those serving communities of color and providing diverse and independent programming to make the video ecosystem work

Thanks a lot! I was eating while reading this and I literally had yoghurt come out of my nose. I think there’s still a blueberry in there somewhere

Anonymous Coward says:

YAPC. Fur lined handcuffs are still handcuffs.

YAPC (Yet Another Placebo for Choice).

The idea that a a selection of two or three shiny boxes in the living room is going to create diversity is pretty myopic. What we’re really talking about here is using end-node appliances to channelize Internet service. This is probably worse for the Internet than the current infrastructure.

Or more to the point, it is an indication that Comcast has finally come around to accepting Netflix, but thinks Netflix should have a box, and all other content will be even more throttled.

The difference will be now they will point and say “LOOK! SHINY! errr? Consumer Choice!” and the argument for free and open speech and trade will be even muddled.

It isn’t about consumer choice. New shiny appliances will not result in the restoration of civil rights that are being usurped from the American people. The only thing that will change by adding a few new shiny boxes, is that there will be more pimps and hustlers arguing on the side of fascism.

Bits are speech. Always have been.

WillSee (profile) says:

Who'd beleve them?

“So when “big cable” breathlessly insists it’s just trying to protect its monopoly over cable set top hardware to the benefit of minorities and puppies, it’s unclear who the hell would be daft enough to actually take them seriously”

Scope out the “Pay To:” line on the contribution checks the industry has been writing …

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