FCC Votes to Dismantle Cable's Monopoly Over The Set Top Box

(Mis)Uses of Technology

from the unlock-the-box dept

The FCC voted 3-2 today to begin dismantling the cable industry’s long-standing monopoly over ye olde set top cable box. As noted previously, the FCC is pushing a proposal that would require cable operators make their programming accessible to third-party set top manufacturers, without requiring the use of a CableCARD. The goal is to create competition in the set top box market, giving consumers a choice of better and cheaper gear, in the same way consumers can buy their own cable modems. 99% of consumers currently pay about $231 annually in rental fees for hardware that’s generally worth about half that much.

Note this morning’s vote simply sets forth a notice of proposed rulemaking (NPRM) that won’t be voted on and fully revealed to the public until later this spring. The NPRM also indicates that cable operators will have two years from full approval to implement the changes. Assuming, that is, the elections don’t end up with a totally revamped FCC that reverses the plan.

As you might expect, the cable industry has been engaged in hysterical, breathless protest against the FCC’s proposal, since it would instantly demolish around $20 billion in captive revenue cable providers enjoy every year. The industry’s also well aware that third-party set tops will be much more likely to include streaming services that compete with cable, accelerating cord cutting as the nation’s Luddites suddenly realize they don’t need to pay $150 a month for five hundred channels of garbage they don’t actually watch.

But the industry can’t just come out and admit these obvious motivations, so they’ve turned to the usual practice of farmed outrage in editorial sections nationwide. Including the creation of the Future of TV Coalition, which calls itself a “diverse group of programmers, content creators, civic groups and television providers” who’ve joined forces to “celebrate and promote the thriving innovation” going on in the cable industry. This group has been making the rounds trying to argue that set top box competition would destroy the universe as we know it, harm innovation, damage consumer privacy, and even hurt minorities.

On the heels of the vote, the group was quick to fire out an e-mail statement blaming “big tech” for the FCC’s plan to…secretly make life hell for American cable consumers:

“The massive outpouring of opposition to this costly and destructive rule from members of congress, the creative community, TV distributors, and public advocates reflects a basic truth: the rules under consideration will drive up consumer costs, hurt programmers (and most especially small and diversity programming), and blow a gaping hole in Congressional protections for our TV privacy ? all for an unnecessary government giveaway to Big Tech. In short, this rule does not make sense.

Ahead of his dissenting vote this morning, former Verizon regulatory lawyer turned FCC Commissioner Ajit Pai was quick to parrot many of these claims:

“Among Pai’s concerns were what he said could be the advserse impact on programmers, including on diverse programmers. “[N]othing in this proposal would prevent a set-top box manufacturer from replacing the commercials in a television show with commercials sold by that manufacturer. And nothing in this proposal would prevent a set-top box manufacturer from adding commercials to a program,” he said.”

This idea that “big tech” companies like Google and TiVo will come in and intentionally filter out minority programming is something the industry has been scare-mongering over for weeks, but there’s no evidence of this actually being a threat. Logically, broader access to cheaper, better hardware would be good for all consumers, as would access to a broader array of streaming options, layered on top of existing content. FCC boss Tom Wheeler was quick to state that these claims are “red herrings” being pushed by an industry that’s perfectly happy with the status quo, and that nothing in his plan puts existing content or business relationships at risk:

“There is nothing in here that allows third parties to disaggregate cable content or sell advertising around it… It takes the same system that goes to the cable box today with the same structures and moves it through a different box requiring the same structures. As a result, existing copyrights and programming agreements are unaffected, consumer privacy is protected, emergency alerts are passed through and child protection laws are unaffected. Nothing in this proposal slows down or stops cable innovation.”

While the cable industry’s opposition is by and large bullshit, there are some lingering questions with the FCC’s well-intentioned plan. One, the plan will require an awful lot of effort, political fighting, enforcement and FCC man hours to revamp a technology that Internet video will likely make irrelevant in the next decade anyway. And once implemented, providers will likely look to simply recoup that lost revenue from broadband users in uncompetitive markets in the form of more fees, usage caps, zero rating and other potentially anti-competitive behavior. Behavior the FCC has been turning a blind eye to — to focus on the cable box.

Following that line of thinking long term, it may have been wiser for the FCC to focus its energy and resources on broadband competition, and leave the cable box for dead as the vultures begin to circle overhead.

Filed Under: competition, fcc, innovation, set top box