FCC Chairman Proposes Rules to Free Cable Subscribers From Set-Top Box

Tom Wheeler FCC
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FCC Chairman Tom Wheeler outlined a proposal that would require cable, satellite, and telecom providers to offer subscribers a free app where they can access all of the programming they pay for without having to shell out for the rental each month of a set-top box.

Wheeler’s proposal, unveiled on Thursday, is a revision of a plan he promoted earlier this year that would have required cable providers to “open up” their set-top box so third-party manufacturers could create their own box for sale to consumers. But the plan faced stiff opposition from multichannel pay-TV distributors and from studios and networks, who said that it would undermine their carriage contracts.

“If you want to watch Comcast’s content through your Apple TV or Roku, you can,” Wheeler wrote in an op-ed in the Los Angeles Times. “If you want to watch DirectTV’s offerings through your Xbox, you can. If you want to pipe Verizon’s service directly to your smart TV, you can. And if you want to watch your current pay-TV package on your current set-top box, you can do that, too.”

FCC officials said that under the new plan, programmers and pay-TV distributors would be in control of the content on the app, along with such things as copyright protection, channel placement and advertising. Still, industry lobbyists are objecting to some aspects of the plan.

They point to a plan to create a licensing body, made up of  multichannel distributors and programmers, who will be charged with coming up with a standard license for the app. An FCC senior official said that the agency would have oversight over the body so it could review the standard license to make sure that its terms do not stifle competition.

Not all carriage agreements between studios and pay-TV providers include provisions that allow for online viewing. That is also a source of friction, as the proposal requires that the app offer all of the programming that subscribers pay for to watch via their boxes. An FCC official acknowledged that the proposal would spur additional rights discussions for carriage, but “the ecosystem is already moving this way.”

Chris Dodd, the chairman of the MPAA, said that the new plan “still amounts to a compulsory copyright license that the FCC does not have authority to grant.”

“The MPAA does not support compulsory licenses, has never supported compulsory licenses, and we cannot do so here,” he said.

A number of studio and network lobbyists, including members from the Walt Disney Co., 21st Century Fox, CBS and Viacom, met with FCC officials last week and said that they would oppose “any arrangement in which they are forced to allow their content to be distributed on terms or conditions to which programmers would not agree.”

The proposal was circulated among FCC commissioners on Thursday, and will come to a vote on Sept. 29.

Wheeler has called for more competition in pay-TV navigation, bemoaning the average $231-per-year that consumers pap in rental fees.

The proposal requires that the app be compatible across a variety of devices, including tablets, smartphones, gaming systems, streaming devices, or smart TVs. FCC officials believe that the plan will spur competition and accelerate the development of new products.

Another provision of the proposal would require that consumers be able to search programming options in one place, whether it be the app or an over-the-top service like Netflix. Pay-TV providers will not be able to require that their app gets better search results than other sources of programming. It also requires that cable and satellite providers make it just as easy for a subscriber to authenticate other programming apps, as it does their own.

Wheeler wrote that such “integrated search” also means” expanded access to programming created by independent and diverse voices on the same platform as your pay-TV providers. Consumers will more easily find content even if it’s not on the pay-TV service to which they subscribe.”

The FCC says that because the proposal leaves control of video distribution in the hands of pay-TVproviders, existing content distribution deals — like program carriage contracts between content companies and a cable provider — would remain in place.

“Pay-TV companies retain their customers and will still receive a monthly subscription fee for the content they provide — consumers will simply have new ways to access that content,” according to a summary of the proposal.

Cable and satellite providers will have some flexibility in how they comply with the rules — they could develop apps themselves, or give code to a third-party developer. Large providers will have two years to comply, medium-sized providers will have an addition two years, and smaller operators — with fewer than 400,000 subscribers — will not have to comply.

The Future of TV Coalition, an industry-backed group that opposed the original proposal, released a statement from Victor Cerda of Vme TV, a Latino-owned network. Credo said that the new proposal creates “an unprecedented licensing body to dictate terms for programming and apps is akin to one step forward and two steps backwards.”

He called the licensing body a “gross invasion of creators’ ability to control their work that would destabilize the video ecosystem and leave consumers with fewer and less diverse options on TV.”

Comcast said in a statement that compared to his original proposal, Wheeler’s “latest tortured approach is equally flawed.”

“It would stop the apps revolution dead in its tracks by imposing an overly complicated government licensing regime and heavy-handed regulation in a fast-moving technological space,” Comcast said.

Chip Pickering, representing a trade group of Internet and technology companies, said that the praised the proposal as it is in line with their call for “an open-user interface, real integrated search, consumer friendly functionality and enforceability.”

“The FCC has made the critical key choice for an open, not closed future,” he said.