DirecTV: Opening Up Set-Tops Would Be Too Costly

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DirecTV reiterated in a filing with the Federal Communications Commission this week that it should not be required to open its set-top boxes to allow consumer-electronics manufacturers to sell devices at retail that would be able to access its satellite TV programming along with other sources of video.

In a Dec. 15 filing, DirecTV responded to the FCC's request for input on how Internet-delivered video and pay-TV operators' services could be accessed through the same set-top box, and potentially further the national adoption of broadband. Specifically the FCC said it wanted to "spur the development of a retail market for nationally portable video devices that will work across all delivery platforms, including MVPD [multichannel video programming distribution] platforms and broadband-based video platforms."

But DirecTV argued that moving to an "all-MVPD" solution would "impose unnecessary costs and would impede, rather than advance, technical innovation."

"A rule requiring development of network-agnostic devices that will allow for both MVPD video and Internet access, regardless of the provider and technological platform for each service component, would be cost-prohibitive, time-consuming, and quickly surpassed by newer technology," DirecTV said.

Under FCC rules, cable operators are required to let retail navigation devices access programming via CableCards, which handle encryption and authentication functions. Satellite TV and IPTV operators have been exempt from this requirement.

DirecTV said it should continue to be exempt from the FCC's conditional-access compatibility provisions of the navigation device rules because it uses "multiple manufacturers to develop a number of set-top box models" and there is "competition in the market for DBS equipment"; because its boxes are nationally portable; and because it has an incentive to innovate "in order to pursue additional market share as it competes against providers that offer bundled, two-way services."

Moreover, using an argument cable operators have used in the past, DirecTV said most customers find leasing to be a better alternative than buying the set-top equipment.

"The low, monthly lease charge avoids large, out-of-pocket expenses for a new DirecTV customer, which had proved to be an impediment to video competition," the company said.

An all-MVPD solution would also put DirecTV at a disadvantage to cable, it claimed. "Requiring all navigation devices to allow for two-way service fundamentally disadvantages a consumer-friendly, standalone video service (DBS) that is inherently one-way," DirecTV said.

Meanwhile, DirecTV said, "it is not clear that increasing access to Internet content through MVPDs' set-top boxes will spur broadband adoption." The company said that while the FCC's broadband team identified a "gap" between households with PCs (76%) and those with TVs (99%), the 99% of households with TVs do not all subscribe to subscription video services, and not all subscribers have set-top boxes.

"If there is a ‘gap' and if addressing it could increase broadband adoption, there is no evidence that equipment provided by MVPDs currently is precluding consumers from accessing Internet video," DirecTV said.

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