Congress Scolds The FCC For Making The Cable Set Top Box Market More Competitive

from the pretending-to-care dept

Congress is simply fed up with the FCC’s pesky new habit of standing up to giant cable and broadband companies. Congress was outraged when the FCC announced it wanted to stop states from letting large ISPs write horrible, protectionist state laws. Congress was outraged when the FCC announced it wanted to pass actual, functioning net neutrality rules. Congress was even outraged when the FCC decided to raise the standard definition of broadband to 25 Mbps, since it only served to highlight a lack of competition for next-generation broadband service.

Now, not too surprisingly, Congress is just pissed that the FCC wants to try and bring some competition to the cable set top box space.

The FCC recently announced that it plans to craft rules requiring that cable operators deliver their existing content (at the same price and with the same copy protection) to third-party hardware without the need for a clunky CableCARD. The cable industry has been having an incredible, epic hissy fit over the announcement, not only because it would endanger $21 billion in captive annual revenue from set top box rental fees, but it would drive consumers to hardware delivering a wider variety of legacy TV alternatives than ever before.

Part of the cable industry’s ingenious plan to stop the FCC has involved funding an ocean of misleading editorials that try to claim the FCC’s plan will somehow boost piracy, hurt privacy, “steal the future,” and even harm ethnic diversity. Spend a few minutes perusing the news wires and you’ll find hundreds of such editorials, all penned by a wide variety of cable industry-tied consultants, think tankers, and others, suddenly pretending to be objective analysts just really worried about the welfare of consumers. It is too much, as usual, for news outlets to bother highlighting any financial conflicts of interest these authors might have.

In addition to pummeling the press with a parade of misleading editorials, the other wing of the cable industry’s brilliant strategy to stop the FCC involves convincing loyal Congressional allies — whose approval ratings are about on part with the cable industry — to whine like petulant children.

A new letter from sixty Congressmen and women (pdf) reads as if it was written by a cable industry lobbyist (because it probably was), deriding the FCC for daring to interrupt the cable industry’s glorious history of innovation with a pesky quest for better, cheaper, consumer-facing hardware:

“The Federal Communications Commission’s recently proposed rules on the Competitive Availability of Navigation Devices, if adopted, will jeopardize the incredible evolution of video distribution services enabled by generally reasonable regulation. Imposing new, onerous regulations on pay-TV providers would produce very few benefits for consumers, while potentially harming the viability of these providers. The particular obligations being considered by the FCC are all the more troubling because they would mandate compliance with technical standards that do not yet exist, injecting even greater uncertainty into the marketplace.

How horrible! Except it’s not true. The FCC’s proposal as it currently stands (pdf) says that cable providers can use any technology they see fit, and any copy protection they’d like, to ensure their content can be delivered to third-party hardware under the FCC’s rules. In fact, Comcast recently demonstrated how non-onerous it was by offering its content via apps on Samsung and Roku devices. Again, the FCC’s proposal isn’t difficult or onerous, but it does put a giant crack in the side of the cable industry’s walled garden, of which clunky, outdated, closed cable boxes are a cornerstone.

Knowing how hated cable providers generally are, the Senators (including traditional telecom allies like Marsha Blackburn and Bob Latta) try to insist they’re solely worried about the impact the FCC’s plan will have on small cable providers. But not before penning some additional, gushing adoration of the incredible quality the cable industry provides:

“Consumers today enjoy unprecedented access to some of the highest-quality television programming ever produced, which they can watch anytime, anywhere, on a wide variety of devices. Given this proliferation of consumer choice, it is concerning the Commission continues to consider a proposal that will place significant technical and competitive burdens on pay-TV providers operating in an increasingly competitive environment, particularly small providers who serve as the communications backbone of their communities.

That’s very sweet, but many of those smaller cable operators are getting out of the cable industry anyway. Many have noted that as smaller companies, they lack the scale and by proxy leverage to negotiate deals that could make offering TV sustainable in the face of unrelenting broadcaster price hikes. As such, many say they’re planning to exit the TV business anyway and focus on broadband and other services. The CEO of one such smaller cable company, Cable ONE, this week wrote a missive calling the pay TV Industry a tragedy of the commons, one that ends horribly in the face of real disruption.

I personally still think it makes more sense for the FCC to focus its regulatory calories on broadband competition, net neutrality and zero rating — and let the old cable box die organically in the face of streaming alternatives. But given the relatively glacial pace of cord cutting and continued, entrenched power of companies like Comcast, I can also understand the FCC’s logic in wanting to accelerate that process so it doesn’t take the lion’s share of the next decade.

That said, while it’s nice that Latta, Blackburn and friends are just so damn worried about consumers and small cable companies, there’s simply no debating the fact that the cable industry’s opposition to the FCC’s plan is rooted in just one thing: fear. Fear of losing control of monopoly power. Fear of losing $21 billion in annual captive revenue. Fear of third-party set tops that present consumers with actual choice instead of the expensive illusion of choice. And while it’s sweet to yell “how high” when the cable industry demands they jump, it’s not clear who Congress and the cable industry actually think they’re fooling when they pretend — after thirty years of abysmal service — to actually give a flying damn about consumer welfare.

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Comments on “Congress Scolds The FCC For Making The Cable Set Top Box Market More Competitive”

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Anonymous Coward says:

This is Regulation

The Federal Communications Commission’s recently proposed rules on the Competitive Availability of Navigation Devices, if adopted, will jeopardize the incredible evolution of video distribution services enabled by generally reasonable regulation.

To all you “Pro Regulation” people. This is how regulation ALWAYS goes. There is no exception, there is no “other outcome”. Regulation only provides one stop shopping for government corruption where businesses can show up and buy what they need to screw the little guy.

The market must be Capitalist and Free, with strong anti-trust & anti-monopoly laws. That is the best possible combination to serve the people all others just means government controlled market or oligarchy.

The Wanderer (profile) says:

Re: Re: This is Regulation

That’s what he doesn’t seem to get, in the way he keeps pounding on this point: that antitrust and anti-monopoly enforcement is a form of regulation. You can’t have “no regulation, just antitrust” – that’s a contradiction in terms.

(Note, just to head off one meaningless avenue of rebuttal, that the fact that they are regulation is not the same as saying that they are regulations. The law regulates the market in these respects, and the established agencies enforce that law, irrespective of whether or not those agencies establish regulations to provide more guidance than the law does about what exactly will be enforced.)

Shmerl says:

Re: This is Regulation

The market must be Capitalist and Free, with strong anti-trust & anti-monopoly laws

As you yourself highlight, monopoly is not a free market, that’s why you need to regulate it. See

So it’s not the question of “regulation or no regulation”. It’s the question of which regulation makes the market more free (when it reigns in monopolies increasing competition), and which doesn’t (when it actually prevents competition). Economics 101.

This particular example from FCC which reduces monopolistic lock-in is clearly making the market more free. Therefore those who oppose it are also opposing free market. Surprise!

Nony says:

Re: This is Regulation

The problem with your diatribe is that it’s predicated on the notion that regulation come out of a vacuum. It does not. Regulations are borne out of a need to correct for failings in “Capitalist” and “Free” markets.

Free markets and pure capitalism only work in academic theory. Because they can’t stand in the face of bad actors, evil doers, detrimental gamesmanship, greed, meanness, spite and downright mental impairment.

Wendy Cockcroft (user link) says:

Re: Re: Re: This is Regulation

Okay, you get that one, but I do believe there’s more to this debate than a straight up choice over which tyranny you prefer: the tyranny of the majority or the tyranny of the minority.

The Bill of Rights protects against tyranny of either kind in academic theory. Shall we bin it because it doesn’t work perfectly in practice? Be careful what you wish for.

David (profile) says:

This works today for internet access

My cable company provides internet access via my off the shelf cable modem. Security is provided by me having to register the box’s MAC address. I don’t see how that is secure enough for internet access but not video. I someone spoofs my MAC, either both devices will have problems or the network’s security software will detect the duplicate and shut down access to both devices. Either way, the clone device doesn’t get access.

Farce says:

Re: This works today for internet access

MAC addresses are only relevant between your device and the immediate devices it communicates with. 1 hop. And MAC addresses can be changed at will.

ISP’s sometimes use MAC addresses for inventory and identification purposes but that’s stupid and relies on the hope that nobody changes it.

Coyne Tibbets (profile) says:

Simple fix

There’s a very simple fix to all of this: Cable box at cost, under contract terms not to exceed 1/20th the full value monthly for two years.

So, suppose the cable box costs $50. The cable company would sell you the box at $2.50/month for 24 months, after which you pay nothing because the box belongs to you. Would also need controls on the cost of cable boxes.

That way, there’s no piracy, because the cable companies control the box used, just like now.

Surely the cable companies would jump on that because it’s not like they make a GIGANTIC PROFIT leasing a $50 box to the consumer for $20 a month, indefinitely.

(Realizes: That means that, so far, I’ve paid about $500 for my $50 box.)

Oh, wait, they do make a GIGANTIC PROFIT leasing a $50 box to the consumer for $20 a month, indefinitely. Never mind. This won’t work, they’d hate it, too.

VoteOrSitDownAndTakeIt says:

Vote Them Out Of Office

Left, center, right – we all have one thing in common; we have little to no choice over our ISPs and this comes down to who represents the people in this country.

Come this election season, VOTE THESE FEDERAL CONGRESSIONAL folks out of office, vote STATE REPS out that support this type of legislation.

Nothing is going to change until WE CHANGE IT.

Robson Tolson (user link) says:

Set-top boxes market

Set-top boxes (STB) refer to receiving devices that are plugged into televisions for reception of broadcast signals. The primary function of set-top boxes is to convert the content broadcasted by the service providers in a format compatible with the user/subscriber’s television. The global set-top boxes market is strongly governed by the mandatory switchover from analogue to digital television reception. Due to nearing deadlines, the sale of set-top box units is expected to soar substantially in the coming years.

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