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Obama Administration Backs FCC Plan to Break Open Set-Top Market

The White House issued a strong endorsement of the FCC’s move to force cable and satellite TV providers to open their set-top box platforms to competition — a regulatory step the pay-television lobby has fought fiercely for years.

“Instead of spending nearly $1,000 over four years to lease a set of behind-the-times boxes, American families will have options to own a device for much less money that will integrate everything they want — including their cable or satellite content, as well as online streaming apps — in one, easier-to-use gadget,” Obama economic advisers Jason Furman and Jeffrey Zients wrote in a blog post Friday.

The FCC, in a 3-2 vote in February, moved forward with a proposal to “open up” the set-top box market by establishing a technical platform that would let third-party manufacturers like Apple, Google, Roku or Amazon create their own set-tops capable of receiving cable or satellite TV programming.

The White House’s backing of the FCC’s set-top plan is part of a broader initiative by President Obama, who signed an executive order Friday directing federal agencies to identify new ways to increase competition in the economy.

“The idea is that whether we’re talking about financial services, whether we’re talking about products like the box on your cable TV — across the board if we have more players who can potentially participate, fewer barriers to entry, the rules aren’t rigged, then you get more people trying to get your business and you get better products at cheaper prices,” Obama said in an interview with Yahoo Finance.

NCTA president and CEO Michael Powell said the Obama administration’s weighing in on the debate was inappropriate. The cable trade group, as well as the MPAA and others, have voiced concerns that the FCC’s set-top box mandate would create new harms. The proposed rules, they say, would threaten copyright protections, hurt minority programmers, reduce consumer privacy and impose unnecessary costs to re-engineer networks.

“We are disappointed that White House political advisers are choosing to inject politics and inflammatory rhetoric into a regulatory proceeding by what is supposed to be an independent agency,” Powell said in a statement. “Consumers and regulated companies have the right to expect decisions affecting their businesses are made based on sound analysis of the record and not the political interests of the executive branch.”

The White House advisers compared the state of pay-TV set-tops today with pre-1980s telephones, when consumers were forced to buy their phones from Ma Bell. “A similar dynamic has taken hold elsewhere in American homes today: According to a recent study, 99% of all cable subscribers lease a set-top box to get their cable and satellite programming,” Furman and Zients said.

FCC chairman Tom Wheeler, an Obama appointee, has said the agency is simply trying to “get to that basic American concept of competition” with the set-top plan.

“All we are saying is, ‘Cable operators, you can go ahead and control your product,” he said in an interview on Variety‘s “PopPolitics” on SiriusXM in February. “But have an open platform so that anyone can build a device, and then let’s compete on who can offer the better device.’”

Obama officials positioned the endorsement of the FCC set-top proposal as an example of the need to change the rules of the road for corporations in order to benefit regular Americans.

“Across our economy, too many consumers are dealing with inferior or overpriced products, too many workers aren’t getting the wage increases they deserve, too many entrepreneurs and small businesses are getting squeezed out unfairly by their bigger competitors, and overall we are not seeing the level of innovative growth we would like to see,” the White House economic advisers wrote. “And a big piece of why that happens is anti-competitive behavior — companies stacking the deck against their competitors and their workers.”

NCTA’s Powell said the group “will continue to press our concerns vigorously about an ill-considered regulatory proposal that is unlawful, unnecessary, unworkable and unfair.”

“Perhaps the strategists at the White House believe their intervention is good politics,” he said. “But it is bad government, undermining the independence of the FCC and shattering any faith in impartiality and fundamental fairness.”

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