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

Politics

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.

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