The Cable Industry Threatens To Sue If FCC Tries To Bring Competition To Cable Set Top Boxes

from the you-see,-we-don't-really-do-competition dept

Fri, Apr 29th 2016 6:37am — Karl Bode

Back in February the FCC voted on a new plan to open up the traditional cable box to competition. According to a fact sheet being circulated by the agency (pdf), under the FCC's plan you'd still pay your cable company for the exact same content, cable operators would simply have to design systems -- using standards and copy protection of their choice -- that delivered this content to third-party hardware. The FCC's goal is cheaper, better hardware and a shift away from the insular gatekeeper model the cable box has long protected.

Given this would obliterate a $21 billion captive market in set top box rental fees -- and likely direct consumers to more third-party streaming services -- the cable industry has been engaged in an utterly adorable new hissy fit. This breathless hysteria has primarily come in the form of an endless stream of editorials -- most of which fail utterly to disclose financial ties to cable -- claiming that the FCC's plan will boost piracy, hurt privacy, "steal the future," and even harm ethnic diversity.

And now, the industry is also threatening a lawsuit. As the industry argued with Title II, net neutrality, and everything else, former FCC boss turned top cable lobbyist Michael Powell is arguing that the FCC has once again overstepped its regulatory authority:

"An agency of limited jurisdiction has to act properly within that jurisdiction," Powell said, making it abundantly clear the NCTA does not believe the FCC has not done so in this case. He said that the statute empowers the FCC to create competition in navigation devices, not new services. "Every problem does not empower an FCC-directed solution. The agency is not an agency with unbridled plenary power to roam around markets and decide to go fix inconveniences everywhere they find them irrespective of the bounds of their authority.

Except unlike net neutrality, telecom policy wonks like Public Knowledge's Harold Feld (who probably spends more time wading through FCC policy and legal issues than anybody on earth) notes there's absolutely no doubt the FCC has the authority to act here:

"First, it’s important to recognize that the cable folks were already in front of the D.C. Circuit three times on this issue, and lost each time. See General Instrument Corp. v. FCC, 213 F.3d 724 (D.C. Cir. 2000); Charter Communications Corp. v. FCC, 461 F.3d 31 (D.C. Cir. 2006); and Comcast Corp. v. FCC. In each of these cases, the cable industry made similar statutory arguments about the limits of FCC authority in Section 629. On each occasion, the D.C. Cir. — which was a lot more pro-business and anti-FCC back then, rejected them.

Despite being 0-3 on all challenges to the FCC’s 629 rules to date, NCTA’s cadre of lawyers assures us that this time will be totally different because FCC, overreach, regulation, power mad, Title II, Google too, Leonard Bernstein Leonid Brezhnev, Lenny Bruce, and Tom Wheeler END OF THE WORLD AS WE KNOW IT!! Or something like that.

So if the cable industry's lawsuit goes nowhere, its only other hope is that it can convince the public via editorials, sockpuppetry and astroturfing that the FCC's plan isn't actually about helping consumers, it's just a power-crazed attempt by "big tech" (read: Google, Amazon) to treat poor, under-appreciated cable companies unfairly. The problem with this effort, as usual, is that the cable industry remains the least liked industry in America thanks to a generation of anti-competitive behavior. Therefore the only folks likely to buy the cable industry's argument here are those with a political axe to grind (conflating government over-reach in other areas with the FCC's attempts to fix a broken telecom market), or those that tend to profit from said broken telecom and TV market.

If there's any question at all about the FCC's effort, it's whether or not the agency would find its time better spent focusing its regulatory calories on shoring up broadband competition, since the rise of Internet video is inevitably destined (even though it may take another decade) to put the lame old cable box out to pasture without government intervention.

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Filed Under: cable, competition, fcc, lawsuit, set top box, stbs
Companies: comcast, ncta, time warner cable

29 Comments

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NotACableShill, 29 Apr 2016 @ 7:07am

Complete Armageddon
Not to sound alarmist here but in addition to turning everyone to piracy, utterly destroying privacy, complete theft of the future, and forcing ethnic segregation the likes of which history has never seen, allowing 3rd party cable set top boxes will also corrupt our youth, murder puppies, resurrect Hitler and pull asteroids from the skies causing untold damage and destruction to the world that rivals the dinosaur extinction (be sure to get your tickets to Ice Age: Collision Course in theaters July 2016).

If you don't want to live in a puppyless, post-apocalyptic world run by Zombie Hitler, you must side with the Cable Companies to which I am absolutely not affiliated with in any way.
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Capt ICE Enforcer, 29 Apr 2016 @ 7:12am

Sad to say
God, this is sad to say. But I think the FCC is the only government agency which knows what it is doing.
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Dave Cortright (profile), 29 Apr 2016 @ 7:21am

Rearranging deck chairs on the Titanic
The cable subscription business model is on its way out anyway. Sure, it's good to do the right thing here. But for me, I do not now nor will I ever in the future subscribe to TV services that I cannot receive over the internet.
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Violynne (profile), 29 Apr 2016 @ 7:21am

What's truly ridiculous about this entire situation is how the cable industry brought this on themselves.

Many years ago, there was no such thing as a damn lease fee for the hardware used. That was included in the cable bill.

One day, one of the shithead companies out there decided to add a fee, and the rest followed suit because they got away with it.

It's just like the stupid shit we're dealing with now, such as paying 3x for the same digital signal or a higher price for HD channels despite the fact HD is now the format for signal transmission.

Then there's the ridiculous "Federal Regulatory Fee" of $4.99 AT&T U-Verse charges us. Regulatory fee? For what?

If I were to strip all the bullshit "fees" from my cable bill, I'd be paying less than $40/mo.

You know, like the rest of the damn world pays.
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Anonymous Coward, 29 Apr 2016 @ 7:30am

the immediate concern for the FCC should be which members of Congress are being paid by the cable industries and will therefore do whatever they can to thwart any plans they may have. just like the two who declared it a victory when gutting 'net neutrality, these politicians will be running around like headless chickens, making all sorts of untrue claims of the impending death of an industry (that deserves to die anyway!) and how the FCC needs to be disbanded just so companies and industries can continue to screw customers into the ground while, at the same time, stopping any and all advances in technology that would greatly enhance the customer experience by giving better, faster, more readily available products and services to the market and getting rid og the incumbents that should have died off with the dinosaur!!
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Anonymous Coward, 29 Apr 2016 @ 7:38am

The last sentence really should have been the first. Government intervention is not needed when companies are learning from informed consumers.
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Anonymous Coward, 29 Apr 2016 @ 7:40am

Layer upon layer of regulation s are added a thimbleful at a time until the whole show looks like a shit storm of regulatory capture; for, at some point, the fox gains control of the hen house and the purpose of regulation takes a 180.

Ahh, modern times, ya gotta love the sound of a system cracking under the weight of it's own bureaucracy.
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Anonymous Coward, 29 Apr 2016 @ 7:42am

Re: Sad to say
Seems like a waste of resources to me. Where is the consumer harm? There are multitudinous options for video services, why not use the money to run a PSA about these?

Cars are here, let's stop pretenfing we need to regulate the buggy industry.
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Anonymous Coward, 29 Apr 2016 @ 7:59am

Re: Re: Sad to say
Say that in a few years when all these cable companies offer is essentially the same as those video services, but insist you have to use their box (they basically already do).
I know, not exactly going to happen like that, at least in "a few years", but allowing them to require their boxes creates a privileged position and perpetuates a precedent that said video services are moving away from.
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Landamen_Lancer, 29 Apr 2016 @ 8:04am

All the more reason...
While the FCC seems to stand on good legal ground, I cannot help but think that "IF" TTIP was already ratified, that Comcast & Co. would use ISDS to send this straight through to arbitration where the FCC would lose.

We'd pay out through the nose because we infringed on their rights to make a profit.
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Anonymous Coward, 29 Apr 2016 @ 8:13am

And?
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Anonymous Coward, 29 Apr 2016 @ 8:22am

Re: Re: Re: Sad to say
"allowing them to require their boxes"

The question isn't if they should be allowed, it's whether government should restrict them. We don't live in a permission based society.

Your "in a few years" scenario already exists as nearly all cable TV companies have transitioned from analog broadcasts to digital. Everyone's just moving bits around. If people want to choose a bit provider that requires a special box, more power to them! Many people see how little value that offers (see cordcutting) and chosen the dumb-pipe option.

A much more important issue that the FCC should address is data caps and increased broadband speeds as those are much more of an impediment to competition than the antiquated cable box.
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dave blevins (profile), 29 Apr 2016 @ 8:27am

Those who forget the past ...
Remember the Ma Bell and MCI. You couldn't put a cover on you AT&T provided phone book and that was the only phone book.

BTW today's AT&T is just a new name for that wonderfully remembered Cellular One.

Why is Comcast allowed to buy media providers and be a carrier? Very conflict of interest, very.
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Anonymous Coward, 29 Apr 2016 @ 9:08am

Re: Sad to say
1996 called and wants its cable boxes back.

People are cutting cords, not patching them into new shiny open access cable boxes.

I do not see wasting time on something that will soon be a relic of the past as "knowing what they are doing"
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Anonymous Coward, 29 Apr 2016 @ 9:43am

They tried this once before. Only they were going to use 'smart cards' instead of boxes. The industry made it so difficult for any maker to match standards that it never got off the ground.
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Coyne Tibbets (profile), 29 Apr 2016 @ 10:21am

Re:
Why is that of interest? We already know the answer. Just see the list of sponsors and cosponsors on HR 2666. There's your list.
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Shilling, 29 Apr 2016 @ 11:42am

The FCC's mission, specified in Section One of the Communications Act of 1934 and amended by the Telecommunications Act of 1996 (amendment to 47 U.S.C. §151) is to "make available so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, rapid, efficient, Nationwide, and world-wide wire and radio communication services with adequate facilities at reasonable charges."

So I wonder where the limited jurisdiction comes from.

However when you read some former editorials from him (http://m.ocregister.com/articles/competition-640516-regulation-new.html) he believes in competition and not in over regulating the industry. So when an industry lobbies the government in adjusting/introducing laws to prohibit said competition then he surely must agree that regulation should be advisable.

To me this guy is just another pawn in trying to sway the opinion of the uninformed public.
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Chris Shields, 29 Apr 2016 @ 12:58pm

Re: Re: Re: Re: Sad to say
Communications absolutely are a 'permissions based' system. That is the purpose of the FCC. That's why you can't broadcast a radio station on a channel without FCC approval. The system simply wouldn't work without an organization like the FCC defining what is permissible.
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Anonymous Coward, 29 Apr 2016 @ 1:09pm

In Canada, we've been able to buy a cable box from the local big box electronics retailer for years. It has to be registered and when you sell it or give it away, the seller has to 'release' it and the buyer has to reregister it to their account. The down side? The cable company can brick it with a bad update whenever they want.
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Anonymous Coward, 29 Apr 2016 @ 2:49pm

Re: Re: Sad to say
Ok lobbyist.
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Ben, 29 Apr 2016 @ 3:21pm

It's funny to use this as a crutch, but honestly as a recent college graduate I would probably pay for a cable service if my student loans weren't so high. Because of this I just use Apple TV and solely stick to Hulu and Netflix.

In my case, the messed up college education system is the reason I won't get cable.
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Whatever (profile), 30 Apr 2016 @ 7:08am

I think that something that has to be considered is what a cable box does for a given system. It is the locking door, the point that controls access and measures use (such as PPV). It's the locking door to the system.

What the FCC wants to do is take control of that lock, and allow someone else to install whatever they want on their door, hoping that it in fact locks properly and reports access.

Can you imagine the government mandating that the locks on every business in America be installed by the customers, and they can hold they key?

It may force some cable companies to have to change the way their systems operate, changing the cable box from a trusted gatekeeper device into untrusted user equipment.
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John Fenderson (profile), 30 Apr 2016 @ 7:12am

Re:
If they're really using the cable box as the "trusted gatekeeper", then they really should fix that problem. Security equipment that is physically in the hands of the people it's trying to secure against is a massive weakness right off the bat. If the cable industry really is concerned about such security, then they should have been working of fixing this obvious hole years ago.

That they haven't tells me it's not their actual concern.
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Coyne Tibbets (profile), 1 May 2016 @ 3:25am

Re:
That is a very shallow interpretation.

Compare the cell phone market. In order to sell cell phones for a particular network, such as AT&T, the cell phone has to meet certain gatekeeper requirements. It is not the customer that decides those, but the manufacturer.

This proposed cable box market would be similar: the cable boxes will meet gatekeeper requirements or they can't run on a particular cable system at all. The customer will not get to decide those requirements. But in that market, the customer gets a choice of cable boxes, and where to actually buy them, and the available features, and the price they pay.

Right now, the cable company provides this crappy 100 Watt round-the-clock box that has damn few features. They probably pay $10-$30 for the box, but they charge me $5-$10 a month to have it.

A market more like the cell phone market is much to my advantage, as a consumer, and the security aspect is way overblown.
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Whatever (profile), 1 May 2016 @ 8:46pm

Re: Re:
Yet nobody forces you to use them. Cut the cord!
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Ninja (profile), 2 May 2016 @ 6:25am

Re: Re: Re:
People are already doing it in droves. Yes, cut the cord! LEt this crap of an industry die already.
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Anonymous Coward, 2 May 2016 @ 11:21pm

Re: Re: Re:
Nobody forces you to use Google.
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Peter, 14 May 2016 @ 7:45am

Re: intervention
The trouble is, when cable companies are allowed to operate monopolies and cartels, especially when it comes to broadband, there's no need to learn from the customer. Responsiveness to customer needs occurs only in certain corporate cultures, and only when the customer has a choice.
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Craig Welch (profile), 28 May 2016 @ 12:44pm

Re: All the more reason...
Do you figure that under ISDS provisions a US company could sue the US Government?
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