Trouble Looming for Set-Top Plan

Concerns by Senate leaders, top FCC Democrat threaten proposal
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WASHINGTON — After weeks of heated opposition, it appears that Federal Communications Commission chairman Tom Wheeler does not have the votes to pass his set-top box reform plan — at least as originally proposed.

The proposal, which would require multichannel video programming distributors (MVPDs) to make their programming and data streams available to third-party devices and app developers, has taken shots from all sides — now including both the Senate majority and minority leader.

Wheeler, a Democrat, has said from the outset that he was willing to tweak the set-top plan if there were a better route to his goal of a competitive market in third-party video access devices — ideally a path that allows for access to both traditional video and the over-the-top video he sees as a key new competitor.

But cable operators were unconvinced, saying they feared Wheeler’s words were more talk than action and the item would pass pretty much as proposed.

The proposal was approved 3-2, on a straight party line vote, and while Democratic commissioner Jessica Rosenworcel voted with the majority, from the outset she said she had issues the plan.

DEMOCRAT CALLS FOR CHANGES

Rosenworcel last week said she remains optimistic that the FCC and the pay TV industry can find a way forward on set-tops to promote a competitive marketplace for navigation devices, but signaled that the problems with Wheeler’s proposal have become clear, as has the need for changes.

Rosenworcel was responding to a flurry of activity that surrounded the proposal, including efforts to block it in Congress via an appropriations bill; “ditch the box,” a National Cable & Telecommunications Association-backed alternative to the chairman’s “unlock the box” proposal; and the Motion Picture Association of America’s support for working with the FCC to resolve copyright issues.

“Set-top boxes are clunky and costly,” Rosenworcel said in a statement provided to Multichannel News. “Consumers don’t like them and they don’t like paying for them.

“Kudos to the chairman for kicking off this conversation [Rosenworcel voted along with Wheeler and Democrat Mignon Clyburn to kick off that conversation], but it has become clear the original proposal has real flaws and, as I have suggested before, is too complicated,” she added. “We need to find another way forward.”

Rosenworcel wasn’t explicitly advocating for the cable industry’s “ditch the box” effort. Rather, she was supporting efforts to find some variant of a compromise proposal that addresses the Wheeler plan’s flaws.

“I am glad that efforts are underway to hash out alternatives that provide consumers with more choice and more competition at lower cost,” she said.

Rosenworcel voted to approve the notice of proposed rulemaking (NPRM) proposing the set-top unbundling, but from the outset she suggested it was a work in progress that needed more work.

The set-top plan suffered another blow when Sen. Harry Reid (D-Nevada), the Senate’s minority leader, wrote Wheeler last week to say he thought the proposal did not sufficiently protect programmer contracts or consumer privacy, points that MVPDs have been making pointedly.

OPEN TO ‘DITCH’ PITCH

Even the chairman seemed eager to seek more common ground.

In his first public statements on cable operators’ proposal to “ditch” the set-top box, Wheeler said he was glad the industry offered up the compromise, but suggested it indicated that many of the problems those same parties had with the initial proposal weren’t problems after all. In a Q&A following a speech at the National Press Club on 5G wireless broadband, Wheeler was asked about the cable-backed effort.

“I think it is absolutely terrific that the cable industry came forward with this proposal,” he said. “I have been asking them to do this, and I think that by coming forward they indicated that a lot of the arguments that had been put up against our set-top box proposal really fell by the wayside.”

But he also said that the cable proposal indicated that copyrights and privacy can be protected, that small networks can continue to thrive and that providers’ networks don’t have to be redesigned to do all that.

Wheeler said he wanted to now engage in “constructive” dialogue on how to write the specific regulations to achieve those ends.

Asked if the set-top proposal was in trouble, FCC press secretary Kim Hart responded: “Chairman Wheeler has repeatedly said he is interested in a constructive dialogue with his FCC colleagues and all stakeholders to reach the best result for consumers. He welcomes the feedback to his proposal to give consumers new options for accessing the content they pay for, and he looks forward to engaging in continued conversations to inform the final rules.”

Internet giant Google, which pushed for the set-top proposal, echoed Wheeler in calling the cable-operator alternative “a constructive effort towards the goal of more competition and consumer choice,” adding, “We hope that it sparks a dialogue between the FCC and interested parties to reach a good outcome for American viewers.”

One MVPD executive said all that activity points to more than just more dialogue.

“I’ll let you determine whether chairman Wheeler’s proposal is dead,” said the executive, who asked to speak not for attribution. “But Google is now giving up the fight, Senator Reid’s letter was pretty strong and Commissioner Rosenworcel from the get-go called it too complicated and recently said it has real flaws.”

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