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