The Cable Industry Is Absolutely Terrified Of Set Top Box Competition

from the hey-we're-innovatin'-over-here dept

Last week, we noted that the FCC has proposed new guidelines that would bring some much-needed competition to the cable TV set top box market. Data shows that 99% of consumers pay something on average to $230 a year in set top box rental fees, despite much of this dated hardware being worth little to nothing. Collectively, the cable industry pulls in around $20 billion annually in set top box rental fees, which are fairly consistently increased once or twice a year. Unsurprisingly, whenever the FCC has tried to do something about this proprietary, captive market, the industry becomes downright hysterical.

That was exemplified last week when the FCC simply proposed requiring cable operators deliver programming data to third-party hardware using any accepted standard they choose. Cable operators can still provide the traditional set top box (and consumers can still rent them), the industry would simply suddenly face competition for what's been captive income. But with $20 billion in annual revenues at risk, the industry quickly got to work trying to argue that the FCC's plan would demolish the very fabric or time/space and result in no limit of untold harm to consumers.

Despite the reality that most cable boxes (and many executives) are outdated relics of a dying era, the cable industry stuck to one central theme last week: the FCC's plan is "big tech's" attempt to thwart all of the amazing innovation occurring in the cable industry. A "diverse" group of cable companies and broadcasters calling itself the "Future of TV" coalition quickly launched to deride the FCC's "attack on innovation," with one press release circulated by the group going so far as to suggest that Google has been holding secret meetings at the FCC that undermine the cable industry's relentless thirst for...diversity:

"...Secrecy and subterfuge shouldn’t be tolerated and professional staffers who know the ropes and are unlikely to be swayed by a flashy demo and a Golden Ticket. The AllVid scheme being flogged by Google and the FCC is unfair and destructive to values held far too dearly on Capitol Hill – undermining free market competition and putting a government thumb on the scale for powerful incumbents like Google, and making it harder for those serving communities of color and providing diverse and independent programming to make the video ecosystem work.

There's no secret cabal in the fact that Google, Apple, Roku, TiVo and countless other companies have lobbied for years for an open cable set top box market. But the cable industry has lobbied ferociously to dismantle any attempt to bring this goal to fruition (including CableCARD). So to mock Google for "secretly" lobbying for broader competition is both strange and hilarious. The argument that more robust set top box competition will somehow hurt diversity is equally absurd (more choice and lower product cost is good for diversity), yet it seems to pop up all over the Internet in mysteriously placed editorials.

But credit the cable industry for one thing, it knows how to rally around a central message, even if that message is absolute bullshit. The central theme of this blog post by the industry's biggest lobbying organization (the NCTA) was cable's amazing knack for innovation:

"We see these innovations almost daily, which is why it’s so strange that government feels compelled to insert itself in the mix in order to do Big Tech’s bidding. By forcing new government mandates on network providers and content creators, the FCC may intend to reward Google handsomely, but in the process it will ignore contractual freedoms, weaken content diversity and security, undermine important consumer protections like privacy, and stall the creative and technical innovation that is driving positive changes in today’s TV marketplace.

Likewise, a blog post by Comcast largely involves the company patting itself on the back for being incredibly, awesomely innovative:

"Comcast is responding with our innovative X1 platform, and enabling access on a growing array of devices. Like other traditional TV distributors, online video distributors, networks, and sports leagues, Comcast is using apps to deliver its Xfinity service to popular customer-owned retail devices. These apps are wildly popular with consumers. Comcast customers alone have downloaded our apps more than 20 million times. This apps revolution is rapidly proliferating, and we are working with others in the industry and standards-setting bodies to expand apps to reach even more devices.

Given these exciting, pro-consumer marketplace developments, it is perplexing that the FCC is now considering a proposal that would impose new government technology mandates on satellite and cable TV providers with the purported goal of promoting device options for consumers.

Oooh, step back FCC, Comcast is developing apps! The problem is, and the insular cable industry forgets this constantly, that absolutely nobody likes or believes the cable industry outside of the cable industry. Cable providers continue to have the worst customer satisfaction and support ratings of any U.S. industry or government agency (no small feat). So when "big cable" breathlessly insists it's just trying to protect its monopoly over cable set top hardware to the benefit of minorities and puppies, it's unclear who the hell would be daft enough to actually take them seriously.

Here's the thing: if the cable industry's existing set top box systems are as "innovative" as the industry claims, surely competition will bear that out? When faced with a myriad of new hardware options, customers will clearly want to continue paying Comcast a significant amount of money for a traditional cable box, right? If the cable industry is half as adaptive as it claimed last week, surely this sudden influx of competition will be like a gnat at the ear of a god of innovation. Unless of course this prattling on about innovation is just the insecure braying of an industry absolutely terrified by the foreign specter of real competition?

Filed Under: allvid, cable, cable tv, competition, fcc, innovation, set top boxes
Companies: comcast, ncta

FCC Takes Aim At The Pathetic Lack Of Cable Set Top Box Competition

from the killing-sacred-cash-cows dept

The FCC has formally declared war on the outdated, over-priced traditional cable box. The agency has put forth a new proposal (pdf) for guidelines intended to bring much-needed competition to the cable set top box market. As recently noted, data collected from the top ten biggest cable companies found that 99% of cable customers still rent a cable box, paying $231 in fees annually for often-outdated hardware that's frequently worth very little. This cozy little captive market nets the cable industry roughly $20 billion in rental fees every year.

In a public sales pitch for the proposal over at Recode, FCC boss Tom Wheeler invokes the spirit of ma bell to highlight the absurdity of the cable industry's continued control over the set top box market:

"Decades ago, if you wanted to have a landline in your home, you had to lease your phone from Ma Bell. There was little choice in telephones, and prices were high. The FCC unlocked competition and empowered consumers with a simple but powerful rule: Consumers could connect the telephones and modems of their choice to the telephone network. Competition and game-changing innovation followed, from lower-priced phones to answering machines to technology that is the foundation of the Internet."

The FCC wants to design a software-based solution that lets consumers access cable content via the hardware of their choice. Hardware that, thanks to competition, would be better, cheaper and faster than the clunky old cable boxes we all know and love. The FCC's careful to state it's not mandating a specific standard by which cable operators have to provide programming data to these devices, stating they simply need to adhere to "any published, transparent format that conforms to specifications set by an independent, open standards body."

This isn't the FCC's first attempt to force competition on the set top box market. CableCARD was the agency's earlier, ineffective attempt to mandate a standardized card for use in third-party set tops. CableCARD regulations were well-intentioned but cumbersome, and frequently left unenforced. The cable industry also went out of its way to avoid pitching the cards to consumers, and often made the installation process as cumbersome and nightmarish as possible. When meager CableCARD stats were released annually, the cable industry would then collectively shrug and insist low adoption reflected a genuine lack of interest in the idea of better third-party devices.

With $20 billion in set top box revenues on the line, the cable industry has spent the better part of a decade fighting tooth and nail to kill this FCC proposal and anything like it. Opponents including AT&T, the MPAA, and the cable industry's biggest lobbying organization today formed what they're calling the "Future of TV Coalition," which argued in a release that greater set top box competition will kill diversity programming, hurt consumer privacy, embolden pirates, and generally just destroy the known universe:

"Many parties, including 30 members of the Congressional Black Caucus, have warned this would unravel the modern TV ecosystem, doing particular damage to small, independent, and diverse programmers and the communities they serve. AllVid would also undermine vital privacy and other consumer protections that apply to pay-TV providers but not the tech firms advocating adoption of AllVid. And it would erode protections against video piracy, rendering programming less secure."

Of course that's bullshit, and what the industry's really afraid of is seeing a cornerstone of its uncompetitive walled-garden empire demolished by real competition. Granted it's worth noting that the FCC's proposal doesn't prevent customers from keeping their existing cable boxes, nor does it stop cable providers from providing them. In other words, if the cable industry wants to retain customers on its systems, all it has to do is innovate and compete.

All of that said, you can't begrudge those who look at the CableCARD fracas of the last decade and legitimately wonder whether the FCC has the chops to actually implement and enforce such guidelines with an election (and potential FCC shuffle) looming. It's also worth asking if another multi-year enforcement fight is worth it with the cable industry on a collision course with Internet video and irrelevance anyway. Whatever happens, it's at the very least amusing to see a former cable lobbyist nobody expected much from plunge a dagger into one of the cable industry's largest and most sacred cash cows.

Filed Under: allvid, cable, cable tv, cablecard, competition, fcc, set top box