Roku Users Lose Access To YouTube TV As Dumb Contract Fights Shift From Cable TV To Streaming

from the meet-the-new-boss dept

For decades now, cable TV consumers have been subjected to idiotic cable TV "retransmission feuds" that black out content consumers pay for as broadcasters and cable operators bicker over rates. And while streaming TV was supposed to remedy many of the dumber aspects of the traditional cable TV model, that's not really happening. The names and gatekeepers are simply shifting.

Case in point: last year, bickering between AT&T and Roku over ad data sharing and contract details prevented AT&T's HBO Max from appearing on Roku devices. Later on last year, Sinclair-owned CBS stations were pulled from Hulu completely because the two sides couldn't put on their big boy pants and agree to a new contract without taking it out on paying subscribers.

This week, it's Roku and Google (YouTube TV) in a standoff that resulted in the YouTube TV app being pulled from the Roku channel store. YouTube TV (not to be confused with vanilla YouTube) is Google's live TV streaming alternative to traditional cable. Users who already have it installed can still use it, but those who just bought the service and want to install it can't do so as of today. Fortunately this isn't a full ban either, since there's still a workaround that involves casting content from your phone, tablet, or PC to the Roku in a way that's a little more cumbersome but doesn't require the YouTubeTV app.

Why the hassle in the first place? Roku, in a statement earlier this week, claimed Google was abusing its "monopoly position" (which really doesn't make sense when talking about live streaming TV, where they're a relatively niche player) to do all sorts of dastardly things:

"Google is attempting to use its YouTube monopoly position to force Roku into accepting predatory, anti-competitive and discriminatory terms that will directly harm Roku and our users. It should come as no surprise that Google is now demanding unfair and anti-competitive terms that harm Roku’s users."

Google then issued a statement claiming Roku was just being a bully:

"We have been working with Roku in good faith to reach an agreement that benefits our viewers and their customers. Unfortunately, Roku often engages in these types of tactics in their negotiations. We’re disappointed that they chose to make baseless claims while we continue our ongoing negotiations. All of our work with them has been focused on ensuring a high quality and consistent experience for our viewers. We have made no requests to access user data or interfere with search results. We hope we can resolve this for the sake of our mutual users."

Roku says it's not demanding any additional money, even though these debates always revolve around money in one form or another. How much access each side has to valuable user usage data, where and how channels see placement within the GUI, search results, etc. But whichever side is to blame, it's all stuff that should be getting hammered out by adults long before it bubbles over into a giant annoyance that impacts consumers.

A YouTube TV blog post offers a little more detail, stating that Google simply wanted its existing contract renewed, but Roku, buoyed by significant user growth thanks to COVID lockdowns, has been getting increasingly demanding in negotiations. The post also notes that Google really wants Roku to get on board with the AV1 codec, so things, you know, work:

"Our agreements with partners have technical requirements to ensure a high quality experience on YouTube. Roku requested exceptions that would break the YouTube experience and limit our ability to update YouTube in order to fix issues or add new features. For example, by not supporting open-source video codecs, you wouldn’t be able to watch YouTube in 4K HDR or 8K even if you bought a Roku device that supports that resolution."

While I doubt Google is faultless, I do tend to think Roku is starting to get cocky as it gets more powerful. And while I'll admit a certain enjoyment in traditional telecom monopoly gatekeepers like AT&T and Comcast whining about unfair gatekeeping behavior of streaming hardware companies, none of this is what adult professionals doing business should look like, and I worry a lot of these kinds of disputes will only be getting worse. Traditionally, regulators like the FCC have treated this kind of stuff as just "boys being boys." That, in turn, generally results in nobody, at any point, looking out for the interest of the end user.

Filed Under: contract fights, negotiations, retransmission, streaming
Companies: google, roku, youtube

Wonder Woman Forces AT&T & Roku To End Their Petty Squabbles

from the gatekeepers-gonna-gatekeep dept

At the start of this year, AT&T's creatively named streaming app, AT&T TV Now (since renamed HBO Max), was unceremoniously pulled from all Roku streaming hardware after a contract between the two companies expired and they couldn't agree on a new one.

It took more than a year of folks not being able to watch AT&T streaming services for this standoff to finally break, and it required leveraging the strength of Wonder Woman to do so. After being unable to come to an agreement for much of the year, AT&T used its ownership of Time Warner to gain a little leverage on Roku. First, it announced that the anticipated Wonder Woman sequel would be released on Christmas day, but only on HBO Max. Then, it announced a major plan to release most major 2021 theater releases simultaneously on both streaming and in theaters.

As the Wonder Woman 1984 release date approaches, Roku appears to have buckled. The sides this week announced a new deal that will finally bring AT&T's HBO Max to Roku:

"On Christmas Day, the superhero sequel “Wonder Woman 1984” from AT&T’s Warner Bros. will premiere on HBO Max on the same day as in theaters. That heightened the stakes for both HBO Max and Roku. The debut will be the biggest moment yet for HBO Max, a bet that a blockbuster film can boost subscribers at a time when the pandemic has shut down many theaters."

One of AT&T's major asks of Roku and companies like Amazon is that they stop selling access to HBO apps via their streaming platforms, instead shoveling folks toward AT&T's HBO Max platform. After a series of missteps and price hikes (caused by merger mania debt), AT&T lost an astonishing 7 million pay and streaming TV customers in just the last three years. It's now using its Warner Brothers catalog successfully for leverage, given Roku didn't want millions of U.S. consumers waking up on Christmas day wondering why they couldn't watch Wonder Woman with everybody else.

Whether this works out as a broader strategy for AT&T remains to be seen. AT&T's rush to release all Warner Brothers films to streaming has pissed off many mainstream directors like Christopher Nolan and Denis Villeneuve, who say the company didn't really share its plan with many folks at Time Warner, didn't give much (any) consideration on how the pivot impacted union employees struggling to survive, and is basically just a stunt to spur AT&T's lagging subscription numbers:

"There is absolutely no love for cinema, nor for the audience here. It is all about the survival of a telecom mammoth, one that is currently bearing an astronomical debt of more than $150 billion. Therefore, even though “Dune” is about cinema and audiences, AT&T is about its own survival on Wall Street. With HBO Max’s launch a failure thus far, AT&T decided to sacrifice Warner Bros.’ entire 2021 slate in a desperate attempt to grab the audience’s attention."

On one hand, releasing films straight to streaming is a good idea given the public health crisis. On the other hand, these directors are right that AT&T's probably the last company on Earth capable of making such a major pivot with nuance or any serious care of craft, given its repeated bumblings so far. Meanwhile it's ironic to watch AT&T, largely a gatekeeping bully in telecom, suddenly face gatekeeper restrictions as it's forced to actually compete. You can expect a lot more standoffs like the AT&T/Roku affair as media and platform giants begin truly flexing their muscles in a bid for platform domination.

Filed Under: streaming, tv, wonder woman
Companies: at&t, roku

Stupid Cable TV Retrans Feuds And Blackouts Make Their Way To Streaming TV

from the meet-the-new-boss dept

For the last decade or so, U.S. cable TV customers have been plagued by a steady parade of content blackouts as cable providers and broadcasters bicker over new programming contracts. For the end user, so-called "retransmission feuds" usually go something like this: a broadcaster demands a cable company pay significantly more money to carry the same content. The pay TV provider balks, and one side or the other blacks out the aforementioned content. Consumers spend a few months paying for content they can't access, while the two sides bitch at each other and try to leverage consumer anger against the other guy.

After a while a new confidential deal is struck, customers face a higher bill, and never get any sort of refund for missing content. Wash, rinse, repeat. Over and over again. With regulators largely sitting on their hands as consumers get the short end of the stick.

While some might think the innovative streaming revolution is going to fix stupidity like this, evidence suggests that's not likely. While a different variety of feud, AT&T and Roku have been in a standoff preventing AT&T's HBO Max from appearing on Roku devices. And last week, Sinclair-owned CBS stations were pulled from Hulu completely because the two sides couldn't put on their big boy pants and agree to a new contract without taking it out on paying subscribers:

"Hulu is next in the line of cable providers and streaming services to lose locals due to disputes with broadcasters. Some viewers started receiving scrolling on-screen notices over the weekend, letting them know that their CBS station could be removed from Hulu."

This being Sinclair's particular brand of highly partisan, homogenized disinfotainment, many won't care that they lose access to these networks. Sinclair obviously cares, given that fuboTV, YouTube TV, and SlingTV (Dish Network) removed the company's costly regional sports channels last year from their own streaming lineups, contributing to a $4.18 billion loss for Sinclair in the third quarter. But this sort of stuff is only going to get more common and probably dumber, as broadcasters relentlessly try to extract more and more money from already frustrated consumers during an historic health and economic crisis.

For years, even Wall Street stock jocks have warned that the broadcast industry's relentless price hikes simply aren't sustainable. It's creating a sort of death loop where broadcasters demand more money, cable companies acquiesce and raise rates, and consumers, realizing they're better off skipping TV and reading a book or watching TikTok after several rate hikes each year, finally cut the cord. And while competition from streaming has certainly helped the sector in terms of more flexible choices and lower rates, many of the pay TV sectors dumbest and most self-harming tactics are starting to come along for the ride.

That means a steady parade of rate hikes that erode the value proposition of your monthly streaming subscription, and the routine blackouts and disputes that result in you paying more money for content you can't access. It would be relatively simple for a regulator to bar consumer-harming blackouts during negotiations (or at least ensure consumers are compensated for losing access to content they pay for), but this being a country where consumer protection policy is usually set by industry (which is why there often isn't any), that doesn't seem likely anytime soon.

Filed Under: content blackouts, hbo max, retransmission, streaming
Companies: at&t, cbs, hulu, roku, sinclair broadcasting

Old School TV Gatekeepers (AT&T, Comcast), Struggle With Modern Streaming Gatekeepers (Amazon, Roku)

from the meet-the-new-boss... dept

In years past, incumbent broadband and television giants like Comcast and AT&T enjoyed life from a comfortable position of dominance. If you want to subscribe to broadband, such companies are often your only option. If you wanted to subscribe to television service, you were required to rent a locked down, highly proprietary cable box courtesy of the industry's cable hardware monopoly. Want to have your cable channel in a conspicuous position in the lineup? You could also expect headaches.

As such, it's interesting to watch how these giants of yesterday are now struggling to adapt to a new era in which their interests are not the end all, be all of negotiations.

As AT&T tries to reverse the tide of TV customer defections, it has turned to the launch of yet another streaming service: HBO Max. But the company's efforts haven't gone as planned, with the service unavailable on two of the most dominant TV streaming hardware platforms (Roku and Amazon) due to contract disputes. AT&T, a government pampered giant that traditionally enjoys playing the role of the politically powerful bully (remember net neutrality?), hasn't been able to break this logjam despite HBO Max having launched a month ago:

"But streaming is an entirely new battlefield, with platforms like Roku and Fire TV becoming the main distributors. And legacy media companies like WarnerMedia and Disney are streaming newcomers with everyone seeking to challenge Netflix. None of the three companies would comment on the state of talks or say what the current impasse is over. Analysts agree that it probably harms HBO Max as it seeks to find its footing more than Roku and Amazon, which have built their businesses and subscriber bases over the past few years."

Comcast, despite all of its money, political influence, and power, is running into the same problem. The company's upcoming new streaming service, Peacock, also won't be launching on Roku (39% market share) or Amazon (30% market share) streaming hardware. It's a disadvantaged position AT&T and Comcast certainly aren't quite used to:

"Combined, Roku and Amazon have around 70 percent of the streaming TV-specific hardware market. Both companies have leveraged their market dominance to try to secure distribution deals on terms that are favorable to them. Those deals include data-sharing agreements and the right to sell subscriptions to streaming services to viewers natively through Roku and Amazon’s operating system, according to individuals familiar with the matter."

There are different negotiations hangups for both AT&T and Verizon. The AT&T and Roku standoff purportedly centers around AT&T being unwilling to let Roku customers who've already paid for HBO via Roku (who gets a cut) access AT&T's HBO Max app (read: AT&T doesn't want middlemen getting a cut). The Roku and Comcast standoff, in contrast, allegedly is focused on a dispute over advertising and access to viewer tracking data. In both instances, dominant monopolists are now being forced to compromise as they attempt to pivot to disruption... and at least so far, it's not going particularly well.

Filed Under: broadband, competition, gatekeepers, streaming, tv
Companies: amazon, at&t, comcast, roku

AT&T's Streaming Headaches Continue As Contract Feuds Keep New TV Service Off Amazon, Roku

from the meet-the-new-boss dept

So we've noted repeatedly how AT&T's entry into the video space hasn't gone according to plan. First, the company spent so much money on mergers ($150 billion for Time Warner and DirecTV) in recent years, it effectively crippled itself with debt. Second, the company passed that merger debt on to most of its customers in the form of price hikes, which defeated the whole point of "cutting the TV cord." Third, AT&T launched so damn many confusing streaming brands simultaneously, it even confused the company's own employees.

Collectively, this resulted in AT&T losing 3.43 million TV subscribers last year alone, which certainly wasn't the kind of sector domination executives originally envisioned.

And there's every indication that things might get worse.

As noted, AT&T already offers a very confusing array of TV services: HBO Go, HBO Now, AT&T Now, AT&T TV, AT&T WatchTV, AT&T U-verse (IPTV) and DirecTV (satellite). Last week the company launched yet another streaming platform, HBO Max. But there's trouble in paradise: because of contractual standoffs with Amazon and Roku, the service apparently won't be appearing on either platform at launch. Given Roku is the most popular streaming hardware in America by a pretty wide margin (39% market share in 2019), that's kind of a problem for AT&T:

"Because of unresolved contractual agreements, anyone who has subscribed to HBO through Amazon, Roku, Comcast or a few other partners will be missing out on all that new content. And while HBO Now is effectively being phased out this week, the network will have to keep HBO Go up and running as a zombie service to give Comcast customers a way to stream.

All of this is more than just a branding nightmare. It's also a reminder of how hard it is for even a big network like HBO to transition to streaming. Pundits have long focused on the growing competition within the industry, dubbing it the "streaming wars." However, some of the most consequential conflicts in this new age of television aren't between Netflix, HBO and Disney, but between the streaming services and the tech companies that have quickly become the new intermediaries, controlling the platforms and devices that deliver movies and TV shows to our homes.

It's interesting to see the tables turned on AT&T, a company routinely used to being in the driver's seat. With Roku now so dominant, AT&T now has to deal with dominant gatekeepers to get its content and services seen on platforms, and so far it's not going particularly great. AT&T had already been in a stand off with Roku that involved the company's creatively-named AT&T TV Now service going dark on all Roku devices. That standoff has now extended to HBO Max, which was supposed to be AT&T's attempt at turning its subscriber losses around.

And while a Roku deal is supposedly getting closer, AT&T remains in a standoff with Amazon over licensing that seems more intractable, given Amazon currently takes a 30-50% cut of HBO subscribers via its "channel" approach to offering other platforms' content:

"Roku is said to be close to a deal, but WarnerMedia has been unable to come to an agreement with Amazon. The ecommerce giant has been distributing HBO online through Amazon Channels, a dedicated marketplace for subscription video services that is tightly integrated into streaming adapters and smart TVs running Amazon's Fire TV platform. Prime Video subscribers can easily add HBO with a few button taps of their Fire TV remote."

So in many ways, the kind of annoying content licensing and retransmission feuds (and annoying blackouts) we saw with traditional cable TV have only simply evolved in the streaming era. But AT&T now finds itself without the kind of power it enjoyed in telecom, where competition is virtually nonexistent and government routinely protected it from the faintest whiff of failure. Even AT&T's attempt to tilt the playing field in its favor to gain leverage in the streaming wars via the net neutrality repeal (ensuring AT&T's unnecessary broadband caps only apply to a competitor's service) isn't likely to help here.

AT&T can probably still right the ship, consolidate its confusing brands, and strike new deals in time. But it's still frequently entertaining to see broadband giants try to compete and innovate after decades of being government pampered monopolies. More often than not, the end result of that steep learning curve (see Verizon's Go90) isn't particularly pretty. Meanwhile, these kinds of standoffs will only lead to frustration and higher piracy rates, which these companies will then blame on everything but themselves a few years from now.

Filed Under: competition, contracts, streaming, video
Companies: amazon, at&t, roku

AT&T TV Service Goes Dark On Roku As The Streaming Wars Get Stupid

from the meet-the-new-boss dept

For years cable customers have been plagued by content blackouts as cable providers and broadcasters bicker over new programming contracts. So called "retransmission feuds" usually go something like this: a broadcaster demands a cable company pay twice as much money to carry the same content. The pay TV provider balks, and blacks out the aforementioned content. Consumers spend a few months paying for content they can't access, while the two sides bitch at each other and try to leverage consumer anger against the other guy. After a while a new confidential deal is struck, and customers face a higher bill with little to show for it. Rinse, wash, repeat.

While some might think the innovative streaming revolution is going to fix stupidity like this, evidence suggests that's not likely. This week, AT&T's creatively-named streaming app, AT&T TV Now, was unceremoniously pulled from all Roku streaming hardware after a contract between the two companies expired and they couldn't agree on a new one. As a result, existing users can still access the AT&T streaming apps on the platform, but any new AT&T TV subscribers will suddenly find the app won't work on the most popular streaming platform on the market:

"AT&T may ultimately hurt more than Roku from the dispute: Roku is one of the top streaming hardware devices in the United States, with around one in four homes picking it over similar devices offered from Apple and Amazon. On the other hand, AT&T has been losing ground to startup services like YouTube TV, Hulu with Live TV and Fubo since the company nearly doubled its subscription fee since it launched a few years ago."

It's possible the stand off involves a dispute over revenue from collected consumer data, given AT&T's ambitions in the video ad space. But, just like the retrans fights of old, nobody's actually willing to say what the problem is, because consumer welfare (as usual) is a distant afterthought. AT&T's website statement to consumers is murky at best on what caused the blackout and when it might get resolved:

"Starting January 1, 2020, you won’t be able to add the AT&T TV channel to your Roku device. Already have AT&T TV on your Roku device? You can keep using it as long as you don’t delete the app. We’re actively working on a new agreement with Roku and hope to resolve this soon."

In the interim, users who just got a shiny new Roku for Christmas and already pay AT&T for TV services are just shit out of luck, sorry. When you combine retrans fights with these new hardware/app maker feuds, one gets the impression these kinds of standoffs are only going to get dumber. In its fight over TV rates with Cablevision in 2010, News Corporation got Hulu to block Cablevision broadband customers from accessing all Fox content. Viacom did something similar in 2014 when it blocked all CableONE broadband customers from accessing Viacom content online, even if those broadband users were paying for TV from another provider.

US regulators generally don't step into these kinds of feuds, viewing them as little more than gentlemanly debates, even if consumers are getting the short end of the stick. Given the FCC all but obliterating its own authority over telecom and cable at lobbyist behest, and the number of companies all vying for exclusive access to consumer viewing data and control over your viewing hardware, you can probably predict this kind of stuff is only going to get dumber in the next few years.

Filed Under: blackouts, contracts, streaming
Companies: at&t, roku

Mexico Reverses Ban On Selling Roku Hardware After Absurd Piracy Ruling

from the closed-platforms dept

So just about a year ago the Mexican court system decided to ban all Roku streaming hardware from being sold in Mexico. The ban was the result of legal action taken by Mexican cable company Cablevision, which accused Roku of facilitating piracy. How? While Roku devices are more locked down than many of the more open home media PC solutions (also the target of endless pearl clutching and hyperventilation by the entertainment industry), users can install certain unofficial, third-party "private" channels that provide access to pirated live streams of cable content.

While Roku went out of its way to try and lock down their hardware, some users paid hackers a few bucks to crack open and modify the devices anyway, letting them access the dubious third-party channels in question. While this obviously wasn't Roku's fault, Cablevision believed Roku should be punished for the behavior of the company's customers, and declared it was doing Mexican consumers a public service:

"Cablevision cannot allow the content that it licenses from domestic and foreign companies to be illegally used,” Cablevision spokeswoman Maria Eugenia Zurita told Reuters via email. “We would also like Roku Inc to better supervise the use of its software so that it’s not used inappropriately."

Roku quickly appealed, and while a federal judge initially overturned the ban, a subsequent ruling restored it, so the ban has been in place for the better part of the year, costing Roku a notable sum. Roku subsequently jumped through all manner of hoops in a bid to please the courts, including building a new internal team specifically dedicated to cracking down on piracy, posting notable warnings to users who decide to install unofficial channels, and renaming the channels from "private" to "non-certified" in a bid to make it even more obvious Roku wasn't sanctioning the behavior of its users.

Fast forward to this week, and the 11th Collegiate Court in Mexico City has ruled to again overturn the ban, opening the door to Mexican consumers being able to, you know, buy whatever hardware they like and use the devices as they see fit.

"The Court reportedly acknowledged Roku’s efforts to keep pirated content away from its platform, an opinion also shared by Cablevision. However, should pirate channels appear on Roku in the future, Cablevision warned that it would take further legal action to have those sources blocked via the Mexican Institute of Industrial Property and other local authorities."

Again, consumers are just using a computer to access content online, and what that content is really shouldn't really be seen as Roku's responsibility. The irony here is that Roku has spent a lot of time kissing up to entrenched cable operators here in the States, helping them scuttle efforts to make traditional cable boxes more open. Of course much like the cable industry, the more locked down Roku makes its products, the more likely consumers are to flock to products that actually let them do what they want, which obviously doesn't necessarily include piracy.

The same hysteria surrounding Roku has been doubly-applied to programs like Kodi, which (in much the same way that Roku is just a computer) is just software that (with the help of plugins) can be used to access copyrighted content... and a laundry list of other things. This nannyish approach to what hardware and software can be used and how is an unproductive and expensive game of Whac-a-Mole, which is why we've pretty consistently argued that embracing openness and innovation tends to be a notably more productive and profitable solution.

Filed Under: bans, copyright, hardware, mexico, piracy, streaming
Companies: roku

Comcast's Decision To Charge Roku Users A Bogus Fee Highlights Its Uncanny Ability To Shoot Innovation In The Foot

from the sabotaging-innovation dept

So when we last checked in with Comcast, the company was whining about a now deceased FCC plan to bring some much-needed openness and competition to your dusty old cable box. The FCC had proposed requiring that cable providers let users pick the cable box of their choice, later modifying the plan (after endless industry pearl-clutching) to simply requiring that cable providers bring their existing content in app form to existing streaming boxes. Granted, Comcast was at the heart of a massive, bizarre disinformation effort claiming the plan would end civilization as we know it.

Of course, what it would have ended was not only $21 billion in cable box monopoly rental fees, but a cornerstone of the closed, locked down walled garden that helps prop up the cable industry's gatekeeper power. Comcast, for what it's worth, claimed that bringing its content to third-party devices would harm copyright, increase piracy, hinder cable industry "innovation," and was technically impossible anyway. Regardless, the FCC's plan is dead, and it's not coming back any time soon.

But Comcast still has to drive the impression that it's listening to consumers and driving innovation, so the cable giant recently announced it would be bringing its Xfinity cable TV service to Roku streaming hardware. The app, currently in beta, lets users access their existing Comcast TV content without the need for a cable box, highlighting, Comcast insists, the company's innovation in the TV space:

"Featuring an immersive guide with rich graphics, imagery, personalized recommendations and detailed information for tens of thousands of movies and TV shows, the app will allow Xfinity TV customers to watch live and on demand programming, including local broadcast and Public Educational and Governmental channels, as well as their cloud DVR recordings, delivered over Comcast’s secure private managed network, on Roku devices in the home."

On its surface this sounded great. But this being Comcast, the company couldn't allow itself to be innovative without saddling customers with entirely unnecessary fees. Reports quickly began to emerge that Comcast would be charging customers that use Roku in this fashion an additional $7.95 every month, for no coherent reason whatsoever:

"What makes this fee striking is that it's not designed to pay for any particular cost to Comcast's business. The $9.95 fee that 99 percent of cable customers pay for set-top boxes is listed on bills as an equipment "rental fee." Even the Cablecard fee includes a bit of hardware from the cable operator. But the Roku app is purely software. It doesn't require a piece of equipment supplied by the cable company, nor does it require a technician to come to your home to set it up."

But Gigi Sohn, who served as a senior adviser to former FCC Chairman Tom Wheeler, said she knows why.

"It's gravy to them," Sohn said. "You're already paying handsomely for the service. And now they're making you pay a second time."

It is, in effect, a $7.95 "because we can" fee, and a big reason the FCC wanted to standardize this process to keep cable executive "creativity" under control. Of course, this being Comcast, the company was also quick to make sure this service wouldn't count against the completely unnecessary broadband usage caps it continues to deploy across the least competitive portions of the company's footprint. Comcast's FAQ on the new Roku beta correctly notes that this technically isn't a net neutrality violation, because this traffic never actually touches the general internet:

The Xfinity TV service delivered through the Xfinity TV Beta app is not an Internet service and does not touch or use the Internet. Rather, it is a Title VI cable service delivered solely over Comcast's private, managed cable network, so it will not count toward your Xfinity Internet Data Usage Plan.

So yeah, while not technically a violation of net neutrality (not that those rules will be around long anyway), it still gives Comcast a competitive advantage. If you're trying to choose between a new streaming live TV service like Sony's Playstation Vue or Dish's Sling TV or Comcast's offering, the fact that those services will erode your Comcast usage cap could very likely drive you back into the arms of Comcast. Of course, that's quite by design, and is a perfect example of how every "innovation" Comcast pushes into the market tends to have a nasty underlayer of price gouging and anti-competitive shenanigans.

Filed Under: fees, innovation, set top boxes, tv
Companies: comcast, roku

Roku CEO Kisses Up To Comcast, Supports Opposition To Cable Set Top Box Competition

from the rooting-against-your-best-self-interests dept

As we've been discussing, the FCC is cooking up a plan to open up the closed cable set top box to third party competition. As we've also been pointing out, the cable industry has been throwing an absolutely epic hissy fit about this plan, given it would destroy the $21 billion in annual revenues cable operators make off of cable box rental fees. Since it can't just admit this is all about protecting set top rental fees, the cable industry has been pushing an endless wave of editorials in newspapers and websites nationwide, claiming more set top box competition will hurt consumer privacy, increase piracy, harm diversity, and rip the very planet from its orbital axis.

Most of these editorials are being penned by the usual assortment of entertainment industry and telecom hand-wringers, the majority of whom have a vested financial interest in the status quo and as such have been happy to repeat the talking point that the FCC's well-intentioned plan is just a secret plan by "big Tech" (aka Google) to treat the noble and ultra-innovative cable industry unfairly.

Back in March we noted that despite the fact that such rules would obviously help streaming set top vendors, Roku had come out in defense of the cable industry, rather timidly saying it wouldn't be supporting the FCC's plan because it has been trying to secure new, semi-exclusive deals with cable providers:

"We have not been advocating for a rule making in this area at this time,” Tricia Mifsud, a Roku spokeswoman, told IBD. “While we are known for selling streaming players, it is only one area of our business. Customers also access our platform through smart TVs and streaming players that operators deploy."

Roku's opposition to the FCC's plan became a little clearer last week, when Comcast (trying to preempt the FCC's plan), announced it was launching an initiative to let some Comcast customers access cable content via Comcast apps on third party devices. Comcast's partners in this new initiative? Samsung and Roku, who'll be offering the Comcast Xfinity app on smart TVs and streaming devices. And while Comcast's plan is certainly a step in the right direction, Comcast being Comcast you can be fairly certain that there will be caveats when the program launches to ensure the impact to set top box revenue is minimized. Comcast's plan obviously also doesn't impact other pay TV operators, so it doesn't really change things for the overall industry.

Trying to defend the company's self-immolating position, Roku CEO Anothony Wood decided last week to write an editorial over at the Wall Street Journal, breathlessly insisting the FCC's plan would hurt consumers. And, as with every editorial of this type, Google is trotted out as the bogeyman pulling the FCC's strings in a plan to somehow treat cable companies unfairly:

"...With prodding from Google and TiVo, the FCC is proposing new “set-top-box” rules that would force cable companies to make their video services available as an “open” set of streams. In other words, companies like Comcast or DirecTV would be required to provide their video, guide data and encryption for use by other companies who could then create their own hardware and software to deliver cable content. As Google argued in an FCC filing last year, the intent is to “unleash competition in the retail navigation-device market” and drive down costs.

This might seem like a great deal for consumers and companies like mine, but once you start peeling back the layers, the picture changes. The proposed regulation would—as we say in the industry—“decouple the user interface” from the video and data itself. This would allow a company like Google to do to the TV what it did on the Web—build an interface without the “inconvenience” of licensing content or entering into business agreements with content companies such as ABC, FOX, HBO, or video distributors like pay TV operators. The unintended consequences of circumventing these kinds of arrangements are likely to include increased costs for consumers, reduced choices and less innovation."

But if you actually read the FCC's proposal so far (pdf), you'll notice the plan does nothing of the sort. In short, customers will still have to pay their cable provider to access cable content, it will just be delivered to additional hardware platforms -- using copyright protection standards determined by the cable industry. The content can't just be repackaged without cable companies getting compensation. How letting consumers have access to more, better and cheaper methods to access the same content results in "reduced choice and less innovation" is a logical leap that makes no coherent sense whatsoever. Similarly, this repeated claim that this is some secret cabal by Google -- when the quest for clunky cable set top box reform is decades old -- remains a bizarre narrative unsupported by reason. Would Google benefit from open set top boxes? Yes. So would countless other hardware vendors and developers.

Woods also tries to argue that regulation isn't necessary, because we're already seeing innovation in the streaming set top box market:

"Regulating the set-top box is unnecessary in the modern age of Internet streaming. Consumers now have tremendous choice for their TV operating system and interface. Robust competition among companies like Roku, Apple, Amazon and Google is already driving rapid innovation and pushing costs down.

Right, but we're not talking about streaming players and services, we're talking about the traditional cable set top box. You know, the cable boxes that consumers, on average, pay $231 to rent annually (and thousands of dollars for over the life of the hardware) despite most boxes being worth a fraction of that? And while we have seen some innovation in recent years on the set top box front (voice search, marginally less archaic GUIs), by and large the cable box remains a clunky relic of a bygone era and a cornerstone of the cable industry's antiquated and uncompetitive walled garden approach to customer services.

The thing is that if anybody should know better, it's Roku. The company had to file a complaint with the FCC (pdf) after Comcast spent years refusing to let its customers access HBO Go on Roku devices (in order, of course, to push those users toward Comcast's own Xfinity set top boxes and apps). Roku also expressed concerns in net neutrality filings with the FCC that Comcast was using TV Anywhere authentication as yet another way to inhibit Internet video competitors; Roku included:

"A large and powerful MVPD may use this leverage in negotiations with content providers or operators of streaming platforms, ultimately favoring parties that can either afford to pay for the privilege of authentication, or have other business leverage that can be used as a counterweight to discriminatory authentication. Additionally, MVPDs with affiliated ISPs can abuse their power over authentication by choosing to authenticate only their own or affiliated offerings."

Yet here we are, with Roku's CEO now playing kissy face with that same company because they've struck a new deal that will give Roku its own, special advantage in the pay TV market.

It should be noted that Woods wasn't entirely willing to pledge unwavering fealty to Comcast. Nor is his editorial entirely devoid of good points. Though Woods isn't willing to mention his new BFF by name, he does make some vague references to Comcast's decision to give its own content an unfair advantage via usage caps and zero rating:

"...the FCC proposal is distracting from the leading risk to the continued evolution of TV—open and fair broadband Internet access for all consumers. In particular, cable companies often control their customers’ broadband access and can take measures against competing streaming services and devices to give their own streaming services and devices an advantage. FCC regulations banning the discriminatory use of data caps and “zero-rating” schemes that selectively exempt certain content from data limits are far more important to the future of TV than “opening” the cable box.

If broadband Internet services are accessible and affordable to consumers and there is a level playing field for content providers and devices makers, then consumers will benefit from a revolutionized television experience. Let’s not bog down the revolution with an unnecessary government intervention in a dynamic marketplace.

In other words, while Woods is perfectly happy to blow a few kisses to protect his new business relationship with the Philadelphia-based cable giant, he's not willing to entirely sell himself and his company down river by ignoring the problems Comcast is causing on the net neutrality and zero rating fronts. And this is actually the one area I don't disagree with Woods on. With Internet video disrupting traditional cable anyway, it might make more sense for the FCC to focus its efforts on improving broadband competition. And, more specifically, the telecom industry's use of usage caps and zero rating to protect legacy TV from Internet video.

By the FCC's logic however, the glacial pace of cord cutting means that traditional cable and ye olde cable box will still be a dominant force for much of the next decade -- and consumers could still benefit from increased cable set top box competition during that period. The problem is that the cable industry clearly intends to fight this proposal tooth and nail, by dragging the FCC's effort out via lawsuit, and funding a major PR offensive in the hopes of convincing the public the FCC's gone power mad. With so many efforts on its plate (from municipal broadband to new broadband privacy rules), the FCC may have to seriously consider just which battles are truly worth fighting, and which problems, like the cable box, may be resolved organically by the market.

All of that said, it remains more than a little embarrassing that Woods and Roku are so eager to sell their longer-term success -- and the overall viability of the broader streaming industry -- downriver just to snuggle up a little closer to one of the most anti-competitive companies in the television industry.

Filed Under: cable, competition, fcc, set top boxes, tv
Companies: comcast, roku