UPDATED: The FCC’s dumb-TV-gateway plan is perhaps even dumber than I thought (see The FCC’s Dumb-Box Idea: Who Wants Interactive TV, Anyway?).
The agency is proposing that all pay-TV distributors be required to install such a device for all new subscribers — as well as those who need a new set-top — within three years.
“The FCC should initiate a proceeding to ensure that all multichannel video programming distributors (MVPDs) install a gateway device or equivalent functionality in all new subscriber homes and in all homes requiring replacement set-top boxes, starting on or before Dec. 31, 2012,” the FCC says in the National Broadband Plan, released on Tuesday. (The national broadband plan can be downloaded in its entirety here.)
The FCC effectively is proposing that all pay-TV subscribers subsidize the ability for owners of TiVos and other third-party devices to more easily strip off the interactive guides and other services of Comcast, DirecTV, etc. and access their linear TV channels in a different interface. As I pointed out yesterday, this would disable all interactive TV features, including VOD and the on-screen guide.
All because the FCC speculates that such an edict would, somehow, spur more broadband adoption (on the unproven theory that retail boxes that merge TV with broadband video would flood the market and that consumes would buy them).
If you look at the CableCard deployment numbers, less than 2.7% of all subscribers have opted for the feature. Some argue that this is because the MSOs inadequately advertise and/or support the CableCard features. But clearly the number of people who previously bought TiVos are abandoning them and canceling TiVo service (see TiVo Subscriber Losses Accelerate In 2009) — mainly because subscribers prefer to lease their DVRs from their cable, satellite or telco provider.
We don’t know how much such an IP gateway (or “equivalent functionality”) would cost, but this regulation would require cable, satellite and telco providers to invest millions in R&D to develop. At a minimum, it would appear to require an additional tuner, an Ethernet port and video-transcoding capability; a standalone gateway also would need a power supply and conditional-access support.
Such a thing already exists for those who want it: It’s called a Slingbox, and the HD version is available for $299.99 MSRP.
Whatever the cost, the FCC’s IP-gateway proposal would be an indirect tax on you, the pay-TV subscriber, even if you use this IP video gateway functionality exactly as much as you use the FireWire port on your HD cable set-top (which is to say, probably never).
Perhaps more to the point, the FCC’s proposed regulation in my opinion will not actually accelerate the market for anything. TV providers are already adopting technologies like DLNA that will allow in-home portability of digital content. The IP gateway mandate would instead divert resources cable, satellite and telco would have used to develop interesting new services.
Let’s return to my Taco Bell analogy.
Should the U.S. government force Taco Bell to sell all tacos to all customers using — heck, I don’t know — a standardized removable plastic sheath that would make it easier for the 1% or 2% of the population that wants to eat their tacos in blue-corn tortillas to do so?
Or should policymakers instead look for ways to stimulate the number of taco providers to provide greater choice and competition?
To me, the FCC’s dumb-gateway idea represents the worst kind of government meddling in otherwise free markets: It will impose costs on everyone for the benefit of a few consumer-electronics manufacturers… whose business plans on this front are based on conjecture.