On Feb 18, 2016, the Federal Communications Commission (FCC) narrowly approved a proposal by Chairman Tom Wheeler to let consumers swap their cable television boxes for cheaper devices and apps, a move that is intended to increase competition in the $20 billion set-top box market. The proposal passed on a 3-to-2 vote, with commissioners Ajit Pai and Michael O’Rielly dissenting.
FCC chairman, Tom Wheeler, said of the measure: “Technology allows it,” but the cable industry is likely to challenge the ruling in court. During the FCC meeting, Wheeler reiterated that “nothing in this proposal slows down or stops cable innovation.”
Cable providers and other stakeholders will have 60 days to comment [Editor’s note: 30 days for initial comments and 60 days for reply comments after publication in Federal Registry]. If the proposal takes effect, the industry will have two years to comply. However, opponents are already voicing their concerns. The Future of TV Coalition said the regulations would cause consumers to pay more, hurt programmers and “blow a gaping hole in Congressional protections for our TV privacy.” Coalition member AT&T [1.] said the plan “threatens the very competition and innovation that has led to this vibrant marketplace.”
Note 1. AT&T U-verse customers pay a $7 monthly fee for their Residential Gateway (DSL modem, WiFi router and frequency band splitter). The U-verse set-top box is technically free, but is much more complex. It’s a special purpose high-speed computer that streams video, enables Video on Demand (VoD), and has several Internet-like apps. The U-verse TV service is delivered by AT&T’s private, high-speed Intranet using IPTV framing for real-time/linear video and VoD.
USTelecom president Walter McCormick said the regulator’s decision to “insert itself into how video should be delivered to American consumers is unlikely to serve consumers or competition.” This author disagrees.
“The FCC’s thumb on the scales will inevitably straitjacket innovation and harm competition, neither of which will serve the public interest,” McCormick added.
The proposal is backed by companies such as Google and TiVo, which could develop products to compete with traditional cable boxes. It also recommended that cable, satellite and telecommunications companies open access to their video feeds so that other companies could build the devices and apps to compete with the boxes.
Rumor has it that Google wants to make such devices with all sorts of apps to access cloud resident videos and data as yet another way to generate advertising revenue from content providers.