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Cable Pans Set-Top Rules, Saying Proposal Outstrips FCC Authority

9/12/2016 8:00 AM Eastern
TakeAway

Despite taking an apps-based approach the cable industry wanted, Tom Wheeler’s proposed set-top rules would exceed FCC authority and stymie innovation, MVPDs said last week.

Tom Wheeler’s proposed new set-top box rules didn’t gain any new fans in the cable industry.

 

In a proposal issued last Thursday (Sept. 8), the Federal Communications Commission chairman took the rules in an apps-focused direction that the cable industry, as well as telco TV and satellite TV providers, had preferred under their “Ditch the Box” campaign, but the MVPDs still blasted Wheeler’s version, labeling it a massive overreach of the agency’s authority.

 

The proposal, billed as a set of “simplified, consumer-first, app-driven” rules, is scheduled to be voted on at the commission’s next open meeting, Thursday, Sept. 29.

 

Per a fact sheet outlining the proposal, the largest U.S. pay TV providers, serving 95% of the nation’s pay TV subs, would have two years to come into compliance, while midsized MVPDs would get an additional two years. Small operators (those with fewer than 400,000 subs) would not be forced to comply, but could provide apps and software “as appropriate for their business.”

 

For pay TV providers that make the cut, the rules would require them to offer consumers a free app, controlled by the MVPD, to access all the programming a subscriber pays for on a variety of devices, including tablets, smartphones, gaming systems, streaming devices or smart TVs. The aim, the FCC said, is to spur more competition for retail video devices and give consumers more choice.

 

MVPDs must also write these free apps for “widely deployed” platforms, the rules say, pointing to those such as Roku, iOS, Windows and Android. The proposed rules define widely deployed as operating systems that have had shipments in the U.S. of at least 5 million devices during the previous year.

 

In addition to supporting an MVPD’s full pay TV service, including linear and video-on-demand, the apps must also provide data that enables retail devices to offer an integrated search system for the pay TV service as well as supported over-the-top offerings.

 

Wheeler’s proposal also would pave the way for a “standard license” that governs the process for placing an app or device on a platform. The FCC said it intends to “serve as a backstop” on that process, though it opened the door to retaining some oversight over the licensing body down the road.

 

That’s because “we learned our lesson in CableCard,” officials said, holding that cable operators were able to “manipulate the licensing process” and tamp down true device competition.

 

While the proposal abandons an alternative “Unlock the Box” idea originally favored by Wheeler — and opposed by the cable industry — that identified three “core information streams” (service discovery, entitlements and the video programming itself), MSOs and the National Cable Telecommunications Association argued that the current proposal is flawed and beyond the reach of the agency’s authority.

 

Comcast said the rules, as written, would impose an “overly complicated government licensing regime” and stop the apps revolution “dead in its tracks.” Charter Communications said the use of apps “may be a valid goal,” but the market is already delivering on that without government intervention. The NCTA said it’s wary that the FCC won’t merely serve as a “backstop” with regard to the standard license approach, but will play a much more intrusive role that will stymie innovation and “far exceed the Commission’s legal authority.”

 

One group that cheered the proposal was Incompas, a group that includes Google and Facebook among its members, holding that the rules would result in lower prices and more consumer choice.

 

“Unlocking the set-top box is a win for competition, consumers and innovators,” Incompas CEO Chip Pickering said in a statement.

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