Law Professor Mark Lemley: Hollywood Is Simply Wrong About FCC's Set Top Box Plan

from the not-a-copyright-issue dept

We've been discussing for a while now about how the MPAA, with the help of the Copyright Office, has been propping up the complete myth that the FCC's plan to create more competition in the cable set top box space involves violating the copyrights of studios. It's a complete myth. The cable industry has been leading the charge here, mainly because it makes billions of dollars by charging people to "rent" its crappy boxes. But it found a strong ally in copyright maximalists who have repeatedly misrepresented the proposal. As we noted, the Copyright Office put out a report that flat out lied about what the FCC's proposal entailed and about how copyright itself works (arguing that contracts between two third parties could somehow eliminate the fair use rights of private citizens). And, incredibly, the basic argument being put forth by copyright maximalists, if taken to its logical conclusion, would mean that VCRs and DVRs are illegal too.

That's not how copyright law actually works -- but the message has caught on, and the FCC has already been forced to weaken its proposal -- and the industry is still bitching about it.

Thankfully, we're finally starting to see some copyright experts speak up about just how wrong Hollywood and the Copyright Office are on this. Mark Lemley, by far the most cited intellectual property professor (who is also a practicing lawyer), has written up a piece for the Hill that rips to shreds the idea that the FCC's plan somehow would implicate Hollywood's copyrights. As he notes, they're totally overstating what copyright allows:

The MPAA’s argument that studios have the right to control the device on which you view your content reflects a fundamental misunderstanding of copyright law. Copyright gives its owner the right to control the making of copies and public performances of a work. But it does not give them control over any use of a work. That’s no accident. Once the copyright owner has been paid once for a particular copy, its control over that copy ends. That’s why I can lend a book to friends, or sell my used record collection outright.

True, there are some things I can ‘t do even with a copy of a movie or song I own. I can’t upload it on a file-sharing site, for instance, and I can’t play it on the radio. But that’s because doing those things either makes a new copy or makes a new, public performance of the work.

The studios have already been paid for the movies shown on a cable or satellite service. Indeed, they’ve been paid specifically for the right to publicly perform the work by transmitting it to my (and everyone else’s) home.

And here, copyright law says something very important to copyright owners: that’s all you get. Once the cable companies have paid the MPAA for the right to deliver their movie into my home, the MPAA loses control over how I choose to watch their movie in the privacy of my own home. I can record it on a DVR and watch it whenever I want. I can watch it on a big-screen TV or a small one, with the sound on or off, in one sitting or many, while fast-forwarding through parts I don’t like or rewinding to rewatch parts I do. I can watch it again and again. Most important, I can watch it on any device I want, including my computer, my iPad, or my phone.

And, while the MPAA and its supporters keep calling the FCC proposal a "compulsory license," Lemley points out that it's not a compulsory license that lets you record a TV program to your VCR or DVR, and neither is this:

That isn’t a “compulsory license” of copyrights; it’s a limit on the scope of those rights. That limit exists even if copyright owners try to declare that it doesn’t. This is the law. It has always been the law. Every effort by copyright owners to control how I watch a show in my own home has ended in failure.

Unfortunately, this blatantly false attack by Hollywood and the Copyright Office on the FCC's plan has been effective. It seems unlikely that the plan will go through, and what's troubling about it is that it's all based on flat-out falsehoods by Hollywood, the Copyright Office and its supporters.

Filed Under: competition, copyright, copyright office, fcc, mark lemley, set top box, set top boxes
Companies: mpaa

MPAA Freaks Out In Response To FCC's Revised Set Top Box Plan

from the because-of-course-they-would dept

So Karl has already pointed out the ridiculousness of Comcast complaining about the new FCC set top box proposal -- a proposal that is basically identical to the one that Comcast itself had proposed in response to the FCC's original, more comprehensive set top box proposal. And a bunch of other organizations have rushed out statements slamming the FCC proposal as well, despite their previous support for an "app-based" solution.

And now the MPAA has stepped into this mess with a hilariously misleading, to downright false, claim that this revised proposal still violates copyright law:

If Chairman Wheeler's revised proposal is as it has been described to MPAA members and others in meetings, it still amounts to a compulsory copyright license that the FCC does not have authority to grant. The MPAA does not support compulsory licenses, has never supported compulsory licenses, and we cannot do so here. Whether through a licensing body subject to FCC review or otherwise, the FCC must not encroach upon copyright holders' discretion in how they exercise or license the exclusive rights Congress granted them in section 106 of the Copyright Act, or jeopardize the security of their content, as the Copyright Office explained in its expert analysis."

Except, of course, there's nothing in there that's a copyright issue at all (just as there was nothing in the original proposal). The new proposal doesn't impact copyright licensing at all. Just read it. It only requires that TV providers offer apps that are fully controlled by the provider, enabling subscribers to then access licensed content. There is no infringement here. There is no compulsory license. The TV providers still have the same license they've always had with the content providers. The end users still have the same contract they've always had with the TV providers. The only difference is that end users might not have to rent expensive boxes any more, and now the TV providers will make apps available to those subscribers, which can work on various boxes to access the same licensed content.

The complaint here is really about the loss of control for the cable providers and the ability to shake down the public in renting boxes. The MPAA's ridiculous complaint seems to be that it doesn't like the content being made available on new devices without some sort of additional payment. But that's not the law, and it's certainly not copyright law. For years, we've known that it's legal to use other devices to access content -- the VCR and DVRs have both been declared legal. The MPAA's complaint here is basically that it doesn't like the fact that those court cases have gone against it, and it's trying to pretend they did not.

There is no additional licensing that needs to be done to record TV or movies via a VCR or DVR, just as there is no additional licensing necessary here to make apps available on other devices. The licensed providers aren't doing anything different -- and the content is not going to any unauthorized party. This is just the MPAA (and others) flipping out because they hate the idea that they're losing any amount of control.

Filed Under: competition, copyright, fcc, set top box
Companies: mpaa

Under Cable Lobbying Assault, FCC Commissioners Waffling On Cable Box Competition Plan

from the $21-billion-reasons-to-fold dept

The cable industry's relentless lobbying assault on the FCC's plan to bring competition to the cable box appears to be working. As we've been covering, cable lobbyists have been filling editorial sections nationwide with all manner of misleading dreck, claiming the FCC's plan (which you can read here (pdf)) will increase piracy, hinder innovation, hurt minorities, and rip giant holes in the time-space continuum. They've also engaged in the time-honored tradition of paying lawmakers that have no idea how technology works to make all manner of false claims about what the FCC's plan actually does.

Unfortunately for those of you tired of paying the cable industry $21 billion annually to rent a shitty cable box, it looks like the efforts are working.

Two of the Democratic Commissioners that originally voted yes on the plan say they're starting to get cold feet, surely only coincidentally after the cable industry decided to ramp up lobbying to levels not seen since 2009 to try and kill the plan. FCC Commissioner Jessica Rosenworcel, for example, is now claiming that the FCC plan she voted for is "too complicated" and that the FCC should compromise with the cable industry on some kind of new arrangement:

"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. We need to find another way forward." She was not endorsing the cable effort, but instead appeared to be supporting the effort to find a compromise proposal that addresses the flaws. "I am glad that efforts are underway to hash out alternatives that provide consumers with more choice and more competition at lower cost."

Except there's nothing really that complicated or "flawed" about what the FCC is proposing. Under the plan, cable operators simply have to provide access to their programming -- using systems and copy protection of their choice -- to third-party hardware vendors without the need for a cable card. While there's certainly some engineering challenges with the idea, the "complicated" part only really comes from the cable industry's decision to fight cable box competition tooth and nail.

Meanwhile, the "compromise" referenced by the article that appears to have swayed Rosenworcel isn't much of one. Instead of real cable box competition, the cable industry has proposed a plan whereby they simply have to deliver their programming via app -- but consumers would still have to pay for a cable box if they want to do things like record via DVR. Consumer advocates and groups like INCOMPAS are warning that the cable industry will go out of is way in any voluntary proposal to find creative ways to continue forcing consumers to use their hardware and services.

And Rosenworcel doesn't appear to be alone in waffling. Commissioner Mignon Clyburn also appears to be buckling under the weight of false narratives suggesting the FCC's plan somehow needs to be rolled back, lest it damage "copyright, security and privacy":

"We also asked Democratic Commissioner Mignon Clyburn's office if she still supports the original proposal and got this response: "Commissioner Clyburn appreciates and welcomes the constructive ‎efforts by industry to put forward an alternative apps-based proposal. She continues to study the proposal with an eye towards a solution that adheres to Section 629 of the Communications Act; ensures truly competitive choice; enhances access to diverse programming; and provides the protections for copyright, security and privacy that consumers have come to expect."

Note again that the two waffling commissioners don't really provide any solid reasons why the FCC's original proposal couldn't work, but it's pretty clear that they've been influenced -- to one degree or another -- by the paid sound wall cable lobbyists have constructed in trying to scuttle real cable box competition. With their fellow Commissioners Pai and O'Rielly voting no on the proposal (because voting no on consumer friendly policies is their entire purpose in life) and foundering support among Democratic commissioners, Wheeler won't have the political firepower to get the plan approved.

Again that's not the end of the world. The legacy cable TV industry's empire is slowly crumbling with or without the FCC's help, it will just take a little longer if the FCC doesn't give the entire process a swift kick in the ass. If the FCC's cable box proposal sinks, the agency has more time and calories to focus on what's truly going to be important in the new streaming TV age: bringing real, sustained competition to bear on the broken U.S. broadband market.

Filed Under: cable, cable tv, competition, fcc, jessica rosenworcel, mignon clyburn, monopolies, set top box, tom wheeler, unlock the box
Companies: comcast, time warner cable

Cable Industry: Our Shitty TV Apps Are Just As Good As Real Cable Box Competition, Right?

from the half-baked dept

The cable industry is aggressively fighting the FCC's attempt to bring competition to the cable box market. So far that's been via a two-pronged approach of buying a torrent of incredibly misleading editorials by people pretending to be objective observers (including Jesse Jackson), and throwing money at politicians who oppose the plan, but pretty clearly have no goddamned idea what they're actually talking about.

Under the FCC's plan (pdf), cable providers would be required to provide their existing programming to third-party hardware vendors, creating competition and hopefully a flood of better, cheaper hardware without the need for expensive, and annoying CableCARDs. But with the average user paying $231 annually in set top box rental fees, the cable industry is pulling out all the stops to protect $21 billion in annual, captive revenues.

The cable sector's latest attempt to scuttle the FCC's plan? A voluntary counter-proposal that pretends to deliver what the FCC is asking for, but falls well short. Under the proposal unveiled during recent meetings at the FCC (pdf), the cable industry would instead provide much of its existing programming via apps. This, the cable industry claims, would somehow create competition in the third-party hardware market without FCC involvement:

This alternative could be built on enforcing an industry-wide commitment to develop and deploy video “apps” that all large MVPDs would build to open HTML5 web standards....They expressed their belief that such an approach could further advance competition for independent device manufacturers within the context of a market transformation already underway and in a manner that fully protects and respects the rights of content owners.

But while this has been portrayed as some kind of revolutionary concession by hired telecom sector policy cheerleaders and several different press outlets, it isn't much different than what cable operators offer today. Currently, most cable providers offer some of their content via apps usable on tablets, smartphones, and many streaming devices. Historically, they offer fewer features and less content than is available via full, traditional cable; little more than a token gesture toward innovation in the hopes of keeping paying customers from jumping ship to Netflix, Amazon, or a collection of other cheaper options.

Under this latest proposal, you'd be able to watch some cable content via apps, but if you wanted to, say, record via DVR -- you'd still have to sign up for old, vanilla QAM-based cable and pay for the same, old, clunky set top box. Ultimately, my guess is that these cable executives would eventually get rid of the cable box if you use their apps, but force you to pay a monthly fee for their cloud-based streaming or other services. Potentially using zero rating (exempting their services from usage caps) to ensure fealty. Slight variation on the same, existing song.

INCOMPAS, a trade association that has Google, Amazon, Netflix, and some ISPs as members (mostly telcos with no interest in selling cable TV), issued a statement pointing out that this "compromise" wasn't much of one, while reminding everyone that cable sector promises historically don't mean much:

...The cable industry is proposing competitive choice for streaming devices, but still seeks to retain a controlling grip on DVRs and recordable devices. “The cable industry has made promises before about ditching the set-top box, that have not materialized. So it is important for the FCC’s unlock the box proposal to include enforceable standards that will create a thriving market for competition, congruent with the law.

Consumer groups too were quick to point out that the cable industry's proposal is murky and falls short:

"The proposal does not allow for many features that consumers want, such as home recording, and it does not allow for true user interface competition," Public Knowledge Senior Staff Attorney John Bergmayer said in a statement sent to Ars. "Additionally, core aspects of the proposal are unclear, in particular, the precise mechanism by which MVPDs propose to provide apps for various hardware and software platforms, and whether consumers would need a broadband connection to access video programming instead of leveraging their existing pay TV connections."

While it's good this proposal at least brings the cable industry to the table, skepticism is more than warranted. This is, after all, an industry with a long, proud history of engaging in anti-competitive behavior under the auspices of phantom technical justification, with net neutrality and usage caps being only a small part of the equation. Comcast, for example, is so eager to limit streaming competition it refuses to let its broadband customers access HBO Go across a wide variety of devices, providing only fleeting, half-baked justifications for the behavior.

Make no mistake, the cable industry is absolutely terrified of not only losing tens of billions in rental fees, but of truly open hardware platforms willing to direct customers to cheaper streaming alternatives. Under this app-based approach, you can be dead certain that cable would include all manner of caveats to ensure customers still need to sign up for traditional cable or their DVR services if they want the "full TV experience." Anyone who thinks the sector's going to honestly volunteer any plan that puts its existing monopoly power at any serious risk -- simply doesn't know the cable industry.

If the FCC is truly intent on real competition to the set top box market, the cable industry may need to be dragged kicking and screaming to the finish line.

Filed Under: apps, cable, cable tv, competition, fcc, set top box, unlock the box

The Cable Industry Trots Out Mitch McConnell To Fight Against Cable Box Competition

from the nobody-believes-the-words-coming-out-of-your-mouth dept

We've been talking for weeks about how the cable industry has dramatically ramped up lobbying in an attempt to kill the FCC's plan to bring some competition to the set top box market. The cable industry opposes the idea for two reasons: competition would dramatically reduce the $21 billion the sector makes each year off of rental fees, but the flood of new, cheaper boxes would also likely direct users -- historically locked behind cable's walled gardens -- to a huge variety of streaming video alternatives.

But the cable industry can't just come out and admit that they're terrified of competition -- so they've been attacking the FCC's plan with a two pronged approach. One, pay for an absolute torrent of hysterically-misleading editorials that claim set top competition will hurt consumers, scare the children, ramp up piracy, and knock the planet off of its orbital axis. The other prong of their attack involves a lobbying mainstay: throwing money at politicians to take positions they don't have the slightest actual understanding of.

Case in point is Senate Majority Leader Mitch McConnell, who this week was nudged by the cable sector to jump into the fray with comments like this one:

"Rather than applying a light regulatory touch," Senator McConnell wrote in a letter to FCC Chairman Tom Wheeler, "the FCC would require existing programming distributors to provide the copyrighted programming they have licensed from content providers to third party manufacturers and app developers, none of whom would be bound by the agreements to protect the content."

This is a line that the cable sector and its marionettes have been repeating, but it's simply not true. As the FCC's proposal outline notes (pdf), all the plan does is require that cable operators deliver the same expensive programming they do now -- using the same copy protection and business arrangements -- without requiring a CableCARD. A set top vendor can't just claim cable broadcasts as their own and ignore existing programming agreements, but that's one of several misleading arguments being put forth by the sector to kill the initiative.

Advertisers looking to protect legacy cash cow relationships have also been trying to derail the FCC's effort, claiming that the reform plan will somehow hurt consumers, violate copyright (as the EFF did a great job detailing that's not true either), and thrust the entire pay TV advertising ecosystem into "chaos":

"The current market structure for television advertising supports advertisers' ability to place their ads based on national, regional or local distribution; the type of programming or specific content; the audience composition; and the time of day or night that the ads appear," the ANA wrote. The proposed regulations could tilt that system toward chaos, it suggested."

Perhaps the ANA hadn't noticed, but the legacy pay TV advertising ecosystem already faces a wholesale revolution in terms of how consumers are served TV programming and the ads attached to them. If the existing "market structure" can't adapt behavioral and location advertising to consumers viewing TV content on a myriad of devices and hardware, they may want to change professions. In reality, advertiser opposition is based on little more than fear; fear that they may have to share revenues with new economy companies, and fear that these companies may actually give consumers what they want -- like the ability to skip ads.

But again it's not as if the FCC's proposal is even really that dramatic of an idea. It would simply act to accelerate a shift that -- thanks in large part to cable and broadcast lobbying power -- is already happening but could take another decade to fully materialize. The shift away from the traditional cable box and legacy TV is well underway, and it's hubris to think it can be stopped by pouting. Opposition to the set top box reform plan is little more than the dull creaking of yet another legacy sector behaving like a toddler because the uncompetitive markets they've built over a generation can't somehow, magically, live forever.

Filed Under: competition, copyright, fcc, mitch mcconnell, set top box

Congress Scolds The FCC For Making The Cable Set Top Box Market More Competitive

from the pretending-to-care dept

Congress is simply fed up with the FCC's pesky new habit of standing up to giant cable and broadband companies. Congress was outraged when the FCC announced it wanted to stop states from letting large ISPs write horrible, protectionist state laws. Congress was outraged when the FCC announced it wanted to pass actual, functioning net neutrality rules. Congress was even outraged when the FCC decided to raise the standard definition of broadband to 25 Mbps, since it only served to highlight a lack of competition for next-generation broadband service.

Now, not too surprisingly, Congress is just pissed that the FCC wants to try and bring some competition to the cable set top box space.

The FCC recently announced that it plans to craft rules requiring that cable operators deliver their existing content (at the same price and with the same copy protection) to third-party hardware without the need for a clunky CableCARD. The cable industry has been having an incredible, epic hissy fit over the announcement, not only because it would endanger $21 billion in captive annual revenue from set top box rental fees, but it would drive consumers to hardware delivering a wider variety of legacy TV alternatives than ever before.

Part of the cable industry's ingenious plan to stop the FCC has involved funding an ocean of misleading editorials that try to claim the FCC's plan will somehow boost piracy, hurt privacy, "steal the future," and even harm ethnic diversity. Spend a few minutes perusing the news wires and you'll find hundreds of such editorials, all penned by a wide variety of cable industry-tied consultants, think tankers, and others, suddenly pretending to be objective analysts just really worried about the welfare of consumers. It is too much, as usual, for news outlets to bother highlighting any financial conflicts of interest these authors might have.

In addition to pummeling the press with a parade of misleading editorials, the other wing of the cable industry's brilliant strategy to stop the FCC involves convincing loyal Congressional allies -- whose approval ratings are about on part with the cable industry -- to whine like petulant children.

A new letter from sixty Congressmen and women (pdf) reads as if it was written by a cable industry lobbyist (because it probably was), deriding the FCC for daring to interrupt the cable industry's glorious history of innovation with a pesky quest for better, cheaper, consumer-facing hardware:

"The Federal Communications Commission's recently proposed rules on the Competitive Availability of Navigation Devices, if adopted, will jeopardize the incredible evolution of video distribution services enabled by generally reasonable regulation. Imposing new, onerous regulations on pay-TV providers would produce very few benefits for consumers, while potentially harming the viability of these providers. The particular obligations being considered by the FCC are all the more troubling because they would mandate compliance with technical standards that do not yet exist, injecting even greater uncertainty into the marketplace.

How horrible! Except it's not true. The FCC's proposal as it currently stands (pdf) says that cable providers can use any technology they see fit, and any copy protection they'd like, to ensure their content can be delivered to third-party hardware under the FCC's rules. In fact, Comcast recently demonstrated how non-onerous it was by offering its content via apps on Samsung and Roku devices. Again, the FCC's proposal isn't difficult or onerous, but it does put a giant crack in the side of the cable industry's walled garden, of which clunky, outdated, closed cable boxes are a cornerstone.

Knowing how hated cable providers generally are, the Senators (including traditional telecom allies like Marsha Blackburn and Bob Latta) try to insist they're solely worried about the impact the FCC's plan will have on small cable providers. But not before penning some additional, gushing adoration of the incredible quality the cable industry provides:

"Consumers today enjoy unprecedented access to some of the highest-quality television programming ever produced, which they can watch anytime, anywhere, on a wide variety of devices. Given this proliferation of consumer choice, it is concerning the Commission continues to consider a proposal that will place significant technical and competitive burdens on pay-TV providers operating in an increasingly competitive environment, particularly small providers who serve as the communications backbone of their communities.

That's very sweet, but many of those smaller cable operators are getting out of the cable industry anyway. Many have noted that as smaller companies, they lack the scale and by proxy leverage to negotiate deals that could make offering TV sustainable in the face of unrelenting broadcaster price hikes. As such, many say they're planning to exit the TV business anyway and focus on broadband and other services. The CEO of one such smaller cable company, Cable ONE, this week wrote a missive calling the pay TV Industry a tragedy of the commons, one that ends horribly in the face of real disruption.

I personally still think it makes more sense for the FCC to focus its regulatory calories on broadband competition, net neutrality and zero rating -- and let the old cable box die organically in the face of streaming alternatives. But given the relatively glacial pace of cord cutting and continued, entrenched power of companies like Comcast, I can also understand the FCC's logic in wanting to accelerate that process so it doesn't take the lion's share of the next decade.

That said, while it's nice that Latta, Blackburn and friends are just so damn worried about consumers and small cable companies, there's simply no debating the fact that the cable industry's opposition to the FCC's plan is rooted in just one thing: fear. Fear of losing control of monopoly power. Fear of losing $21 billion in annual captive revenue. Fear of third-party set tops that present consumers with actual choice instead of the expensive illusion of choice. And while it's sweet to yell "how high" when the cable industry demands they jump, it's not clear who Congress and the cable industry actually think they're fooling when they pretend -- after thirty years of abysmal service -- to actually give a flying damn about consumer welfare.

Filed Under: competition, congress, fcc, set top box

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

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.

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

FCC Votes to Dismantle Cable's Monopoly Over The Set Top Box

from the unlock-the-box dept

The FCC voted 3-2 today to begin dismantling the cable industry's long-standing monopoly over ye olde set top cable box. As noted previously, the FCC is pushing a proposal that would require cable operators make their programming accessible to third-party set top manufacturers, without requiring the use of a CableCARD. The goal is to create competition in the set top box market, giving consumers a choice of better and cheaper gear, in the same way consumers can buy their own cable modems. 99% of consumers currently pay about $231 annually in rental fees for hardware that's generally worth about half that much.

Note this morning's vote simply sets forth a notice of proposed rulemaking (NPRM) that won't be voted on and fully revealed to the public until later this spring. The NPRM also indicates that cable operators will have two years from full approval to implement the changes. Assuming, that is, the elections don't end up with a totally revamped FCC that reverses the plan.

As you might expect, the cable industry has been engaged in hysterical, breathless protest against the FCC's proposal, since it would instantly demolish around $20 billion in captive revenue cable providers enjoy every year. The industry's also well aware that third-party set tops will be much more likely to include streaming services that compete with cable, accelerating cord cutting as the nation's Luddites suddenly realize they don't need to pay $150 a month for five hundred channels of garbage they don't actually watch.

But the industry can't just come out and admit these obvious motivations, so they've turned to the usual practice of farmed outrage in editorial sections nationwide. Including the creation of the Future of TV Coalition, which calls itself a "diverse group of programmers, content creators, civic groups and television providers" who've joined forces to "celebrate and promote the thriving innovation" going on in the cable industry. This group has been making the rounds trying to argue that set top box competition would destroy the universe as we know it, harm innovation, damage consumer privacy, and even hurt minorities.

On the heels of the vote, the group was quick to fire out an e-mail statement blaming "big tech" for the FCC's plan to...secretly make life hell for American cable consumers:

"The massive outpouring of opposition to this costly and destructive rule from members of congress, the creative community, TV distributors, and public advocates reflects a basic truth: the rules under consideration will drive up consumer costs, hurt programmers (and most especially small and diversity programming), and blow a gaping hole in Congressional protections for our TV privacy – all for an unnecessary government giveaway to Big Tech. In short, this rule does not make sense.

Ahead of his dissenting vote this morning, former Verizon regulatory lawyer turned FCC Commissioner Ajit Pai was quick to parrot many of these claims:

"Among Pai's concerns were what he said could be the advserse impact on programmers, including on diverse programmers. "[N]othing in this proposal would prevent a set-top box manufacturer from replacing the commercials in a television show with commercials sold by that manufacturer. And nothing in this proposal would prevent a set-top box manufacturer from adding commercials to a program," he said."

This idea that "big tech" companies like Google and TiVo will come in and intentionally filter out minority programming is something the industry has been scare-mongering over for weeks, but there's no evidence of this actually being a threat. Logically, broader access to cheaper, better hardware would be good for all consumers, as would access to a broader array of streaming options, layered on top of existing content. FCC boss Tom Wheeler was quick to state that these claims are "red herrings" being pushed by an industry that's perfectly happy with the status quo, and that nothing in his plan puts existing content or business relationships at risk:

"There is nothing in here that allows third parties to disaggregate cable content or sell advertising around it... It takes the same system that goes to the cable box today with the same structures and moves it through a different box requiring the same structures. As a result, existing copyrights and programming agreements are unaffected, consumer privacy is protected, emergency alerts are passed through and child protection laws are unaffected. Nothing in this proposal slows down or stops cable innovation."

While the cable industry's opposition is by and large bullshit, there are some lingering questions with the FCC's well-intentioned plan. One, the plan will require an awful lot of effort, political fighting, enforcement and FCC man hours to revamp a technology that Internet video will likely make irrelevant in the next decade anyway. And once implemented, providers will likely look to simply recoup that lost revenue from broadband users in uncompetitive markets in the form of more fees, usage caps, zero rating and other potentially anti-competitive behavior. Behavior the FCC has been turning a blind eye to -- to focus on the cable box.

Following that line of thinking long term, it may have been wiser for the FCC to focus its energy and resources on broadband competition, and leave the cable box for dead as the vultures begin to circle overhead.

Filed Under: competition, fcc, innovation, set top box

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

The Cable Industry Is Fighting Tooth And Nail To Prevent Cable Set Top Box Competition

from the protectin'-innovation-through-obstinance dept

For years now regulators have tried fruitlessly to bring a little more competition to the cable set top box market. While CableCARD was supposed to be a revolution on this front, regulatory enforcement was messy and inconsistent, and to protect set top box rental revenues and overall market control, cable companies rarely advertised the technology and made installations frequently nightmarish and expensive. When lackluster CableCARD stats then emerged annually, the cable industry just shrugged and apathetically declared that gosh -- nobody really wanted choice anyway.

Senators Ed Markey and Richard Blumenthal recently collected data from ten cable companies and found that things haven't really improved when it comes to set top box competition. Their data found that 99% of cable customers still rent a cable box, and pay $231 in fees annually for hardware that's usually not even worth a single year's payments. As a result, the cable industry generates $19.5 billion per year in rental fees, and has every incentive to keep things as they are.

Last fall, Congress passed the Satellite Television Extension Act Reauthorization (STELAR), which effectively killed the CableCARD and the FCC's sloppy attempt to crack open the set top market. However, STELAR's passage included the creation of the the Downloadable Security Technology Advisory Committee (DSTAC), tasked with advising the FCC on how to move forward on a CableCARD replacement that actually works. That's no small feat given the cable industry desperately wants to maintain the status quo, and the copyright brigades want hardware to be as locked and crippled as possible.

Among the DSTAC proposals released last week (pdf) is the idea of a "virtual headend," where network security functionality is performed in the cloud, leaving the end user device flexible for an array of hardware and software solutions. It's an evolution of the "Allvid" proposal the FCC considered in 2010, intended to create a single, unified standard for a set top gateway that's open to all forms of video competition, software and hardware alike.

Not too surprisingly this idea has the support of companies like Google, Apple, Sony and Microsoft, but has faced stiff opposition from the cable industry. With reports suggesting DSTAC will be pushing such an open platform (even if more flexible than the original Allvid proposal), the cable industry's chief lobbying apparatus (the NCTA) is of course once again trotting out the safety, privacy and security bogeyman:

"Regrettably, the report veers off course by including a controversial proposal to place a burdensome technology mandate on MVPDs known as AllVid. This approach could jeopardize consumer protections including privacy, emergency alerts, parental controls, and inhibit innovation by allowing the government to dictate the way video content is delivered to consumers. Fortunately, the report reflects substantial opposition to the idea of a new, government-imposed technology mandate and extensively describes the proposal's shortcomings."

Yes, and we wouldn't want to "inhibit innovation," would we? Opening up the locked-down cable set top box not only would open the door to greater set top hardware competition, but it would ultimately threaten the cable industry's stranglehold over cable itself. As such, it's highly unlikely that any proposal worth its salt will see NCTA approval. It's also probably unsurprising that Allvid has the support of consumer advocates like Public Knowledge and the New York Times editorial board, which this week tried to soft sell the idea to the cable industry at the bottom of an editorial on the subject:

"Cable and satellite companies will surely resist change or try to water down the new F.C.C. regulations. After all, they stand to lose billions in rental fees. But it is in their long-term interest to give consumers more choices. A growing number of Americans are giving up cable-TV because it costs too much. Consumers might be more inclined to pay for cable if the industry stopped trying to nickel-and-dime them."

Except it's not really in their long-term interest to give consumers more choices. Open set top gateways and open, competing platforms would only further usher in increased Internet video options, incurring a mass realization that people pay the cable industry far too much, for far too little. As such, expect the cable industry to scratch, piss and moan until it has ensured that whatever standard emerges from the FCC committee is a scarred and bastardized shadow of the original intent. And should this shadow actually survive the lobbying gauntlet and see real-world adoption, the cable industry will surely work tirelessly to ensure the same level of dysfunction consumers enjoyed with the CableCARD.

On the bright side: none of this really matters longer term. Neither incompetent regulators nor terrified legacy giants can stop the Internet video revolution from threatening traditional cable television. And as traditional cable's power wanes, its all-too-comfortable walled-garden authority over the set top box market becomes utterly irrelevant. As such, the cable industry needs to stop focusing on swimming upstream, and start battening down the hatches ahead of what's going to be a particularly nasty storm.

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