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FCC’s Wheeler Rocks the Box World

MVPDs say plan to open up set-tops blows up the business model 2/01/2016 8:00 AM Eastern
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Pay TV providers are crying foul over FCC chairman Tom Wheeler’s plan to foster competition in the cable set-top box market.

WASHINGTON — Federal Communications Commission chairman Tom Wheeler stirred up a hornet’s nest of cable operator resentment last week with a set-top box proposal meant to spur competition that had cable operators crying “foul” and competitors already pitching new devices inside the Beltway.

 

The chairman’s ongoing mantra of “competition, competition, competition,” combined with the agency’s focus on access to Internet video content, is driving some of the FCC’s biggest decisions.

 

Wheeler said his proposal was all about open vs. closed standards and “unlocking” the set-top box, but it was also driven by the price and dominance of leased boxes.

 

For cable operators, one irksome tenet of the proposal is making the guts of those boxes — channel listings, video-on-demand lineups and the programming itself — available to device competitors for their own hardware, or, in the case of accessing content via tablet or phone, for no device at all.

 

LASHING OUT AT LEASING

 

Wheeler delivered his proposal with attacks on multichannel video programming distributors (MVPDs), even using a press conference to read emails from a widow complaining about the cost of her set-top and another consumer who called cable box rentals a rip-off.

 

He likened the proposal to open up set-top content to third parties to the FCC’s Bell System-era requirement that phone companies to open their networks to non-Bell phones, and to wireless providers unlocking their mobile phones. In both cases, functionality went up and prices went down, he said.

 

But National Cable & Telecommunications Association president Michael Powell, himself a former FCC chairman under President George W. Bush, shot back at the plan.

 

“This rear-view-mirror regulation is the wrong vision for the video future, and one should be surprised and alarmed that the FCC is peddling it,” Powell said.

 

The FCC was under orders from Congress to come up with a software successor to its CableCard security regime. But with this plan, Wheeler and the FCC took an opportunity to respond directly to critics of the cost of cable boxes, as well as the desire of technology firms — most notably Google — to wed access to traditional and online video content.

 

An MVPD source who asked not be identified pointed to a D.C. demonstration at Google’s offices set for last Friday (Jan. 28), the day after the proposal was circulated. There, congressional staffers were invited to “Test Drive the Future” with the suggestion that “the era of being forced to rent a box from your cable company could be coming to an end” with “the ability to channel surf between traditional cable programing, broadcast channels and over-the-top streaming networks, like Netflix and Amazon, all with one device.”

 

Wheeler hammered on the competition problem with boxes.

 

“Ninety-nine percent of pay TV subscribers are chained to their set-top boxes because cable and satellite operators have locked up the market,” FCC officials said in summarizing the proposal to reporters. “Lack of competition has meant few choices and high prices for consumers.”

 

PAY TV PUSHBACK

 

Anticipating they might face such a move, cable and satellite companies formed the Future of TV Coalition to push back on that characterization and try to head off the effort.

 

Wheeler said his plan was not the one-box proposal of the FCC’s 2010 AllVid plan, but the coalition said, “it’s clear that his proposal shares the fundamental flaws of the AllVid rule that was considered and abandoned by the commission.”

 

It is only a proposal, though the chairman said he planned a vote on it for the Feb. 18 FCC’s public meeting; it has already appeared on the tentative agenda. If approved — Wheeler is unlikely to have scheduled the vote without at least two other commissioners lined up — the agency must next solicit comments, then vote on a final order.

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