Are you sitting down (in front of your TV)? The government might just make it easier for you to finally get rid of that big clunky cable box—and those annoying monthly rental fees.
This week, FCC Chairman Tom Wheeler released a three-page proposal that pay-TV subscribers should have other options than renting a cable or satellite set-top box from their provider. Those rental fees average $231 per year, and add up to about $20 billion nationally. The proposal (based on a nine-month study) goes to a vote before the five FCC commissioners on February 18. It's not surprising that TV providers would balk at requirements to change how they do things. But what looks like a regulatory dustup is turning into a holy war involving not only TV providers and the FCC, but also TV networks, Google, and even the Congressional Black Caucus—with accusations of copyright violation, child endangerment, and discrimination against minorities.
Things might not have gotten so crazy if it were just about the big box sitting under, behind, or next to a TV (they haven't fit on top since picture tubes went away). What's really at stake is who controls all the video flooding into not just sets but increasingly computers, tablets, and phones—and who can make money off all that. "The cable box is a problem in and of itself, because consumers are paying way too much," says Matt Zinn, general counsel for TiVo. "The cable box is also a metaphor for the control of the viewing experience."
TiVo is in the business of selling an alternative experience with its own user interface. TiVo's boxes aren't cheap, either: at about $300, plus a $15 per month service fee after the first year. That's right: It's already possible to get cable TV without renting a box from the cable company. It's just been a really cumbersome process that few people have undertaken. Just 620,000 devices use CableCARD as an alternative to a rented cable box, says the FCC; nearly all Americans with pay TV rent a box from their provider.
The FCC may have started out trying to fix set-top boxes. But pay-TV providers say Wheeler has ultimately proposed turning cable and satellite into a mere data feed that tech companies can rejigger, repackage, and profit from, not only with smart TVs but with apps on computers or mobile devices. One cable company representative, who asked to not be identified, claims that Google is leading the effort.
Cable boxes have been unpopular for a long time. In 1996, Congress required cable companies to offer an alternative way of connecting to their networks. That eventually resulted in CableCARD, which hit the market in 2004, allowing TVs, computers, and other boxes such as TiVo to receive signals directly, without a cable box. All these devices could sport a slot to fit a card that each cable company provided to unlock its content—a bit like SIM cards in cellphones.
Sounds simple, but it's been a disaster. Comcast says that cable companies spent more than $1 billion implementing the technology (even the boxes that they rented out had to have CableCARDs). Some in the FCC suggest cable companies are deliberately sluggish about getting the cards to customers. Companies that rely on CableCARDs say they work poorly, and that cable providers don't help get them to work. "They took no ownership [of the problems] because they didn't want any competition. They didn't want anyone to use other devices," says Zinn. CableCARDs also don't allow two-way communication—so no ordering movies on demand.
Yet even the latest cable boxes aren't so great, says Joel Silver of the Imaging Science Foundation. He consults with TV manufacturers on their performance and interface design and also worked on Microsoft's ill-fated development of high-end Windows Media Center PCs (which use CableCARD). Silver backs Wheeler's plan. "This will be really cool if it is forced through—set-top boxes are the bane of our existence—numerous HDCP [digital content protection] issues after updates—poor build quality—and certainly not a good UHD [4K] solution," he writes in an email.
Wheeler's proposal builds on the precedent of CableCARD but goes much further, giving makers of devices and apps complete control of the cable or satellite feed. It doesn’t bar cable and satellite companies from providing their own boxes and apps for smart TVs, game consoles, phones, or other gadgets; but it allows anyone else to do the same. "Just as consumers shop at retail for a smartphone today, and they can choose to purchase a wireless router instead of leasing one from their provider, consumers will have the same choice to use a competitive device with a third-party app if they choose," says the proposal. It achieves that by requiring TV providers to furnish all the data needed to find and access a TV feed, including the channel lineup and on-demand offerings, so app builders can create their own user interface. (Viewers still pay the cable or satellite provider for the content, regardless what interface it comes through.)
Here's where the charge of discrimination comes in. The study that Wheeler's proposal is based on (called DSTAC) came out in September. Then in December, 30 members of the Congressional Black Caucus sent a letter to Wheeler opposing the plan, which they and industry opponents call All Vid, saying that it would raise prices for consumers by requiring them to rent an additional adapter. (It's not clear that the plan would do that.) The letter, issued by Representative Yvette D. Clarke of Brooklyn, goes on to say, "All Vid will cause irreparable harm to independent and minority programmers by allowing third parties to strip programming from visible channel placements and relegate it to the bottom of the pile."
These arguments are echoed by cable and satellite providers and broadcasters in a group called the Future of TV Coalition, which launched on January 27. (Clarke has received some campaign contributions from telecom companies in recent years, such as the PACs for Coalition members Charter Communications and Comcast, according to Federal Election Commission filings.) The Future of TV Coalition and other industry opponents warn that giving control of the TV feed to other parties could endanger copyright protection provisions on broadcasters' content, allow rebundlers to insert their own ads, and might put inappropriate ad content on children's programs. The group also claims that Google already has a set-top box it is demonstrating to Congressional staffers (something we are working to confirm).
The arguments and the combatants in the cable box fight are reminiscent of the regulatory battle over net neutrality, in which both sides issued dire predictions. This showdown also resembles the legal spat over Aereo, which also repackaged TV broadcasts with its own online interface and features—a fight that went all the way to the Supreme Court.