Afraid Of Upsetting The Cable Industry, Roku Won't Support FCC Quest For Increased Set Top Box Competition

from the i-got-mine,-thanks dept

As the FCC continues its push to open up the cable set top box market to competition, one of the companies that could benefit the most from such a shift isn't willing to support the initiative. The FCC's plan calls for the cable industry to deliver its existing cable content to third-party hardware, creating a new competitive market and putting an end to the $20 billion in fees consumers pay yearly for often-outdated hardware. But unlike companies like Google and TiVO, Roku isn't supporting the plan, making it clear this week the company doesn't want to upset its friends in the cable industry:
"We have not been advocating for a rule making in this area at this time,” Tricia Mifsud, a Roku spokeswoman, told IBD. “While we are known for selling streaming players, it is only one area of our business. Customers also access our platform through smart TVs and streaming players that operators deploy."
Roku's been partnering with Charter and Time Warner Cable (soon to be merged) on small-scale trials that involve the cable companies giving away a free Roku alongside a skinny bundle of basic channels. In New York City, for example, Time Warner Cable's trial offers the free Roku as a replacement for the cable box, delivering three different skinny promo bundles ranging from $10 to $50. Roku makes it pretty clear it's keeping its mouth shut in the fight over the cable box because it believes these relationships will only flourish:
"In addition to Time Warner Cable, we also have a similar arrangement with Charter where they are buying streaming players to offer in a bundle,” added Roku’s Mifsud. “Overseas, we have partnerships with Sky in several countries and Telstra where we have licensed use of our platform and they have deployed their streaming video services to co-branded streaming players."
Indeed, Roku's already cooking up a hybrid streaming and cable box for use overseas it hopes the soon-to-be fused Time Warner Cable Charter will adopt as well. The problem is that these trials aren't likely to see broader deployment in the States, because execs fear such alternatives will cannibalize their already-struggling traditional cable subscriber bases. Cable operators have a long, proud history of flirting with more innovative, less expensive alternatives only for executives to scrap or hamstring the ideas for fear they might hurt the sacred, legacy TV cash cow.

But, because Roku believes it's first in line for the cable industry's affections, it appears to be backing away from an initiative that would likely be good for the entire sector (investment by Viacom, 21st Century Fox, and UK cable operator Sky might be shaping Roku's thinking as well). After all, why support broader, healthy competition when you believe you've got the inside track? Well, because should the FCC's gambit actually work, Roku (which people forget began as a brain child of Netflix) stands to gain a much larger chunk of this suddenly-open market than it will from remaining mute.

Filed Under: cable, fcc, set top boxes, tv
Companies: roku


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  • icon
    jilocasin (profile), 2 Mar 2016 @ 12:26pm

    Roku's betting on this initiative ending up just like CableCARD

    Roku's probably betting on this initiative ending up just like CableCARD. If history's any guide, there will be a lot of fanfare, maybe some progress, and then it will either be stillborn, or so hamstrung with restrictions that it may well have been.

    CableCARD itself, not exactly the poster child of success.

    Aero - crushed by lawsuits, Hulu hamstrung into uselessness, various third party players (including the great and powerful Apple) scaling back or abandoning the space altogether.

    The only success stories are those outside of the traditional cable industry entirely (see: Netflix, Amazon Prime).

    The FCC still hasn't done anything about; below the line fees, cushy insider deals (ex: XBox as cable box, but not PS), capping the competition while giving your own programming a free ride, etc.

    They are probably betting that when the dust settles, it's better to be on CableCo's good side than out in the cold.

    Just a thought.....

    reply to this | link to this | view in chronology ]

  • identicon
    Christenson, 2 Mar 2016 @ 12:29pm

    What if they are prepared to do a rapid turn?

    If I were to be running Roku, I'd be hedging my bets. The public foot stays with the legacy cable industry, the private foot says: But what if set-top box competition is inevitable?

    reply to this | link to this | view in chronology ]

  • identicon
    Joel Coehoorn, 2 Mar 2016 @ 12:38pm

    In their position, I wouldn't support this either.

    Let me start by being clear: I DO support the initiative (or at least it's goal) to open up the cable box market. I can't wait for this to come to fruition, and I greatly hope it happens quickly.

    However, if I were Roku, I'd be really worried about this.

    You see, I believe the big benefit to be had from this move is not new improved cable boxes with lots of shiny new features. I don't even believe the big benefit from this is cheaper cable boxes. While I would welcome both changes, I think there's something bigger here we can push for: the death of the cable box entirely.

    What I hope this legislation will truly allow is a return to the days when I don't need Yet Another Box cluttering up my entertainment center. What I'm really hoping for here is that it will make it both possible and profitable for TV vendors to build this function back into TV sets, where it belongs, such that I can channel surf directly on the TV, without the need of a separate box.

    Combine this with existing smart TV features, and suddenly I ask myself why I'd want a Roku at all anymore.

    reply to this | link to this | view in chronology ]

    • icon
      jilocasin (profile), 2 Mar 2016 @ 1:03pm

      Back to when the TV's remote was the VHS Recorder.

      Sure, that would be nice. Those of us old enough to remember when VHS was a shiny new thing and a television was a hulking CRT with a couple of dials (one for VHF and another for UHF channels), you could use your VCR
      (that's video cassette recorder, think 8 track tape compared to CD... hmm if you don't know what a VCR is, what are the odds you'll know what 8 track is? Nevermind... Wikipedia is your friend).

      remote control as the remote for the television. After cable had been around for a while television makers started incorporating that functionality into televisions directly. Sure you still needed a cable box for PPV or premium channels (think HBO, Cinimax, etc.), but basic ones unscrambled and available to anyone who wanted to add it to their products.

      If you combined that with the changes to the law that prohibited cable companies from charging you per television, we entered the nirvana where we subscribed to cable and could run it to all the kids rooms, the rec room in the basement, or wherever without asking the cable company's permission (or paying them more). This was also the era where we had television decoder cards for our personal computers and you could watch television on your computer, or create the first personal DVRs.

      This ended when they switched from analog to scrambled digital. Every television requires it's own set top box. They're not charging per television, just per set top box. See all perfectly legal (does anyone remember the old Rabbit system that would broadcast the television signal from one television to one or more other televisions? Think in house analog Sling TV, limited to other televisions).

      If the FCC succeeds in reopening this can of worms, just think of all the innovation that could happen? Innovation that your local cable company won't necessarily be getting a cut of. That probably gives them more indigestion than just the potential loss of their 20 billion in set top revenue.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Mar 2016 @ 1:35pm

    so, the very people that gave ROKU such a hard time, restricting what it could and couldn't do and how, is now so scared of having further restrictions put on it, it refuses to get it's balls out and stand up for itself? that being the case, it needs to be left out on a limb when shit eventually hits fan and the legacy industries lose their stranglehold on what entertainment can be shown, when and how!!

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Mar 2016 @ 5:01pm

    In the long haul, it doesn't matter if these cable boxes are freed or not. The real issue that the public has with PPV is over prices and lack of competition. For a while skinny bundles will work but it will in the end suffer the same fate as the present bundled channels of continual price increases. This only delays the inevitable.

    In the rush for ever cheaper labor, the American worker has been cast aside. These same corporations are in for a rude awakening sometime in the future when they figure out the reason they aren't selling their products is because the public doesn't have the money to buy them. This is what has been driving the cord cutting and it isn't going to get magically better, without pay increases.

    When it comes to budget cutting, the first thing you cut in the unnecessary is the entertainment part.

    reply to this | link to this | view in chronology ]

  • icon
    Geno0wl (profile), 3 Mar 2016 @ 6:59am

    I completely understand

    Roku has A LOT of deals with pretty much every major Cable company to let them connect and stream channels and content from them. They are basically advertised as a "secondary cable box" which is what I bought one for.
    If I was them I wouldn't want to step on anybody's toes when the future is so uncertain right now either since they are in a good position currently.

    reply to this | link to this | view in chronology ]

  • icon
    Monday (profile), 3 Mar 2016 @ 11:45am

    Comes around, goes around, maybe?

    "First to feast. Last to Fight:

    reply to this | link to this | view in chronology ]

  • identicon
    Sam Adams, 9 Mar 2016 @ 7:16am

    Roku's got a good thing going

    Roku has got a good niche. And their entrance to being the smarts in smart TVs gets them in more living rooms and helps establish them as the standard. I think Roku is laying low because they don't want to jump on a sinking ship. Cable TV is going to gradually fade away with OTA and internet delivered options via smart TVs and devices like Roku replacing it. Eventually the only data/communications connection to your home will be your internet connection. My family dumped Cable over three years ago. With Roku (Netflix etc.), the antenna on our roof, and an Android TV box with Kodi, we've got all the entertainment we need or want.

    reply to this | link to this | view in chronology ]


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