Boxee: Who Needs Cable? Actually, We Do
Cut the cord! Save hundreds of dollars a year by not paying for cable TV!
Only, you know, not exactly.
Boxee, the Internet-video software startup, is engaging in some interesting rhetorical gymnastics. On the one hand, it’s trying to pitch Boxee Live TV, a $49 dongle for use with the $167.99 set-top made by D-Link, as a way to junk cable TV — just get your favorite programming over the air for free and watch whatever else for free on the Web!
Except, at the same time, Boxee is lobbying the FCC to prevent cable operators from encrypting basic-tier services, the way satellite TV operators do (see NCTA: Boxee Is Wrong About Basic Cable Encryption).
Why? Because Boxee wants to let Live TV users access clear QAM cable channels without the additional cost associated with putting a CableCard slot in the D-Link box. Upwards of 40% of Boxee Live TV users rely on unencrypted cable service, the company claims.
Boxee argues that encrypting cable TV (again, the way DirecTV and Dish do) would force “millions” of people who use clear QAM to rent cable boxes.
That’s wrong, on two counts. First, the industry will give free adapters to anybody who asks for them (two set-tops and/or CableCards free for two years, as per the FCC’s NPRM). Second, the number of people who would want these is not in the “millions”: Cablevision notes that in its New York City system, which converted part of its service area to full-lineup encryption in July 2011, less than 0.1% of approximately 400,000 subscribers affected by the change requested a free set-top or CableCard — somewhere around 400 households.
Boxee argues that more consumers would demand clear QAM if they knew options like Boxee Live TV were available to them.
But that’s speculative and, obviously, self-serving. From a policy perspective, cable operators shouldn’t have to adhere to an outmoded regulatory regime simply because doing so might help Boxee sell a few more of its boxes — and just because Boxee doesn’t want to invest in a CableCard solution (as TiVo and others have).
NCTA’s position has consistently been that, if the FCC mandates some kind of “AllVid” standard for securely accessing TV programming, the rules should apply to satellite and telco services, too. That’s a different can of worms, and I’ve argued that AllVid represents a tax on all pay-TV subscribers with dubious benefits given the increasing availability of pay-TV services across myriad devices (see FCC’s AllVid Grows Less Relevant By the Day).
Now, why is it in the public interest to allow cable operators to encrypt their basic lineups? Isn’t that just a move to make it easier to cut off people who are stealing cable, while inconveniencing the (very small number of) paying subscribers who like clear QAM?
Granted, the consumer benefits of full-lineup encryption are somewhat indirect — but they’re clear and quantifiable.
Let’s look at Cablevision NYC again: Customers in areas where encrypted basic is available can now have cable TV service remotely activated or disconnected — no waiting around for the cable guy to show up. That’s awesome, given that everyone hates to wait around for service appointments. According to one estimate, waiting for service visits costs American consumers an average of $243 per year in lost wages (see Waiting For The Cable Guy Hits Pocketbook: Study). Since July 2011, 99% of Cablevision’s disconnects in those areas have happened without a truck roll.
Meanwhile, Boxee weirdly promises that Live TV dongle users will get “HD picture quality that’s even better than cable.” Umm… yeah, unless they’re getting TV from their cable provider, in which case it will be exactly as good as cable.
Another odd bit of misinformation: Boxee claims on its website that basic cable TV packages are “usually free with a Cable Internet.” That’s incorrect. Cable companies charge for their TV services. I’m not suggesting Boxee is condoning theft of service, but if you’re watching cable TV and not paying for it you’re stealing it.
By the way, Boxee is right about one thing: Free, over-the-air TV is not universally available. It points out, “Many parts of the country still have little or no HD antenna reception. We can’t count on our users being able to use Boxee Live TV with an OTA signal.”
The NCTA counters (buttering up the FCC, you will note), “Given the Commission’s successful oversight of the digital television transition, Boxee’s claim that large swaths of the country are unable to receive digital broadcast signals lacks credibility.” But certainly, there are dead zones — in both cities like New York and rural areas — which is why an antenna-plus-cable-set-top solution is not, to my mind, a viable path for operators (see An Antenna-Connected Cable Set-Top Still Won’t Fly).
What do you think? Add your comments below.
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L1R commented:
Encrypt Basic and standard tiers and free up 40% of bandwidth... Reduces the need for SDV.
Steve Effros commented:
Cable only succeeds if it moves with the rest of the market. That is, we provide options so people can buy what they want, not what is easiest for the marketing department. The technology is actually relatively easy.
Todd Spangler commented:
Steve - it's bad because operators want to be able to provide the same service, and the same pricing & packaging, to everyone in a market. That's not only for marketing reasons, but for opex and operational complexity reasons as well.
Todd Spangler commented:
Math Whiz - Thanks for pointing that out. I've corrected the post.
Steve Effros commented:
Totally agree on the Boxee pseudo-arguments, Todd, but your last sentence, where you still think an "antenna plus cable set top box" "solution" is not "viable" misses the point. The "solution" is to deal with retransmission consent costs. For those (and there are millions) who DO get good DTV reception, why should the cable operator pay big bucks to the broadcaster? Wouldn't work for all subs, but if we cut retrans costs by 2/3 would that be bad? Why is that a bad "solution?"
Math Whiz commented:
0.1% of 400,000 is 400.
Jimbo commented:
Well stated Todd...Boxee wants the benefits of compatibility with pay TV without any of the effort that others, including the cable industry, have had to undertake (i.e. build a CableCard device). If not, then go out and secure streaming content to compete w/ Nexflix, Roku, and AppleTV.
Todd Spangler commented:
Right - as I said, it's obviously self-serving.
Self-serving is status quo commented:
Why is it surprising or suspicious that a company would file a self-serving document with the FCC? It happens every day. Cable operators have filed document after document with the FCC regarding re-trans, a la carte, RSN terrestrial loophole, franchising, attachment fees (the list goes on forever) that are entirely self-serving.
TechWzrd commented:
Todd, I couldn't agree more. Boxee's filing was very self-serving. I was just contemplating another filing with the FCC supporting the NPRM on basic tier encryption. My biggest issue with CableCARD is the requirement for a 2nd leased box (i.e., Tuning Adapter) to receive Switched Digital Video content. The FCC should move forward with the successor to CableCARD and mandate an IP Backchannel to receive SDV. This would be an evolutionary change that would not be as radical as the AllVid solution. Thanks, ~Sam (@TechWzrd)