FCC Moves Forward on Proposal to ‘Open’ Set-Top Cable Box

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Courtesy of FCC

The FCC voted to put a proposal to “open up” the set-top box out for public comment, despite fierce lobbying against it from cable and satellite firms as well as Hollywood studios.

The vote was 3-2, with commissioners Ajit Pai and Michael O’Rielly dissenting.

FCC chairman Tom Wheeler says that the proposal will boost competition, as consumers would have the choice of renting the devices from their pay-TV provider or buying one on their own. Many cable and satellite companies charge their subscribers a fee to rent a box. The proposal would establish an open platform so manufacturers could create their own set-top box.

“Nothing in this proposal slows down or stops cable innovation,” Wheeler said.

“Costs are too high, innovation is slow and competition is too limited,” said commissioner Jessica Rosenworcel, while acknowledging that “more work needs to be done to streamline the proposal.”

Under the proposal, a standard setting body would lay out technical specifications for manufacturers. The FCC will vote on final rules after a period of review.

Commissioner Mignon Clyburn predicted that the proposal would lead to a wider set of options for programming, countering critics’ claims that the proposal would reduce minority-focused choices.

“Our goal should not be to unlock the box; it should be to eliminate the box,” said Pai, who said that the proposal would “introduce an entirely new set of boxes into consumers’ homes.”

He said that the proposal is “likely to produce a stalemate,” doubting that the open standards body would be able to reach a consensus. He also suggested that the proposal would shift distribution power to set-top box manufacturers.

O’Rielly called the set-top box a “relic of the past,” while predicting that it would be harmful to consumers. He also raised concerns about content theft and other security issues. He also said that the video marketplace already was moving beyond the box.

“The application economy is weakening the MVPD video package before our very eyes,” he said.

Wheeler said that copyright, privacy and licensing agreements would remain in place and be unaffected. He said that nothing in the proposal would force consumers to rent or purchase an additional box.

Wheeler added that the 1996 Communications Act leaves “no doubt” to the FCC’s statutory responsibility to ensure competition in the set-top box market.

“There have been lots of wild assertions about this proposal before anyone saw it,” Wheeler said, while noting that the cable industry once supported a proposal similar to it.

A group of cable and satellite companies, along with some nonprofit associations representing minority groups, have formed the Future of TV Coalition to oppose the proposal.

The FCC proposal “would require an enormous amount of time, effort, re-engineering and cost,” Michael Powell, the president and CEO of the National Cable and Telecommunications Association said earlier this week. “It would take four, five, six, seven years to fully implement, even by their own admission, and by that time, who knows what the video marketplace will look like, or whether this is a solution in search of a problem.” The coalition believes most companies are moving to mobile apps, not a new set-top box, to distribute content on a myriad of new screens. Powell pointed to Netflix, Amazon Prime and Hulu as companies that were making content across screens and devices.

The MPAA also opposes Wheeler’s proposal, which critics say would jeopardize copyright and privacy protections or hobble innovation.

Wheeler has said that the average consumer is paying $231 per year to lease set-top boxes, even after cable and satellite companies have already recovered the cost to make them. The proposal also includes app developers in access to the open standards.

“All we are saying is, ‘Cable operators, you can go ahead and control your product,'” Wheeler said in a recent interview. “‘But have an open platform so that anyone can build a device, and then let’s compete on who can offer the better device.’ Let’s have the cable company say, ‘You want to pay me for my interface, because it does all these things nobody else does.’ Rather than, ‘You must pay me.’ We are just trying to get to that basic American concept of competition.”