Is It Time to Say Goodbye to the TV Cable Box That Costs $231 a Year to Rent?

Tom Wheeler FCC - H 2013
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Tom Wheeler FCC - H 2013

On Wednesday, FCC chairman Tom Wheeler announced that the regulatory agency would take a vote on a proposal to unlock the cable set-top box and "tear down anti-competitive barriers" that have led to consumers paying on average $231 a year in rental fees.

The proposal comes after the FCC took comments, which caused a divide in Hollywood about what to do about the future of television. Advocates of change wanted to inject radical innovation and competition by forcing programming into a much simpler format so that new devices could give consumers varying user interfaces and more features such as better ways to search content. Others urged caution by addressing contracts, intellectual property and potential interference in a marketplace where networks like ESPN, Fox, Showtime have developed their own apps for watching content.

Wheeler endorses an approach that he says will give consumers multiple choices on accessing programming. The proposal identifies "three core information streams that must pass from MVPDs to the creators of competitive devices or apps" — (1) service discovery, or information about what programming is available; (2) entitlements, or information about what a device is allowed to do with content; and (3) content delivery, the video programming itself.

Mindful of potential political controversy and even industry litigation that could erupt from fooling around with channel placement, on-demand access and place- and time-shifting, the FCC chairman is careful to note that the proposal doesn't amount to "mandating a government-specific standard for these three information flows." Wheeler says that what device and app makers will get will instead be a "published, transparent format that conforms to specifications set by an independent, open standards body."

Wheeler is already being hailed by advocates of change.

"Because of this, consumers could save billions in set-top box rental fees, and the video device market could benefit from the same technological and economic forces that have put a mobile supercomputer into millions of pockets," says Public Knowledge senior staff attorney John Bergmayer. "By eliminating cables’ stranglehold on the predominant way that people watch TV, the Commission will create opportunities for programmers who want to access viewers without passing through the cable gatekeeper.

The Writers Guild of America, West expressed similar sentiments.

"Seven media conglomerates control almost all of the television programming available to American consumers, and how that content reaches their homes is dictated by an even smaller number of big companies,"  said the labor union in a statement. "Set-top box rules that increase competition and enable the integration of television programming and online video on one device will greatly expand consumer access to a wider range of diverse and independent programming and help level the playing field that has been dominated by too few companies for too long.”

Content owners — who warned the FCC in comments that changes would impose significant costs, require the restructuring of networks and could run afoul of the First and Fifth Amendments of the U.S. Constitution — aren't quite as happy.

The MPAA hasn't directly reacted to the proposal, but it has joined the cable and satellite operators in the launch of a new group called the Future of TV Coalition to fight what's happening.

According to the new group, "This is a solution in search of a problem. Consumers can already access pay-TV programming right alongside streaming content on an ever-expanding universe of consumer-owned devices, from smart TVs, game consoles and streaming devices to laptops, tablets and smartphones. This app-driven innovation is already happening — and it doesn’t require a government mandate that would increase consumer costs, strip viewers of privacy protections and let third-party device makers ignore the terms of carriage agreements between programmers and distributors."

In his announcement, Wheeler attempted to play up security and antipiracy standards and noted that the proposal "will not interfere with the business relationships between MVPDs and their content providers or between MVPDs and their customers," promising that it would not "change a company's ability to package and price its programming to its subscribers."

The content owners and cable companies don't appear to believe him.

The Future of TV Coalition adds: "The FCC proposal, as best anyone can understand it, still strips out all the tools that are used to honor license agreements, would increase consumer costs by mandating yet a second box inside the home and thus ignores the trends away from in-home boxes and devices, eliminates security protections and provides no reassurance on privacy rights. Kicking the can down the road and simply saying that some standards-setting body may address these issues, fully or partially, in the future, is hardly a guarantee for consumers, creators and distributors. Rather than moving us to a second box and an endless muddle of unanswered questions, the FCC should be moving all of us towards an app-based future that consumers are embracing.”

The group doesn't indicate what specific plans it has to fight the proposal, but expect furious lobbying, and if the proposal gets approved, this subject could wind up in court.