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FCC Votes To Bust Cable's Set-Top-Box Monopoly

Cable and satellite TV providers must basically open-source their programming, allowing anyone to build a set-top box or app to receive it.

FCC Votes To Bust Cable's Set-Top-Box Monopoly
[Photo: Flickr user Bev Sykes]

People who hate their cable boxes, or hate paying to rent them, have reason to celebrate today. The Federal Communications Commission has voted to open up competition for companies that make alternative boxes, as well as apps that replace the hardware entirely. That wasn't a shocker: FCC Chairman Tom Wheeler and the two other liberal members of the commission have favored the plan since it was announced on January 27.

More surprising has been the grand rhetoric on both sides of the issue: a level of intensity not heard since the great Net neutrality battles of 2014-2015. Proponents point to the crippling cost for low-income Americans of renting cable boxes (an average of $89.16 per box per year, according to a Senate report). Opponents say the new policy will require extra hardware and actually cost consumers more. Pay TV providers claim they will have to spend a fortune to "re-architect" their networks and claim that Google will create apps to suck in cable TV feeds and festoon them with their own ads. "It could open MVPD [cable and satellite] networks to serious security vulnerabilities exposing them to network damage and content theft," said conservative Commissioner Michael O'Rielly at the FCC meeting.

Chairman Tom Wheeler said he was "disappointed" in O'Rielly and fellow conservative Commissioner Ajit Pai for rushing to judgement. "There have been lots of wild assertions about this proposal before anybody saw it," said Wheeler. "There is nothing in here that allows third parties to disaggregate cable content, sell advertising around it. There has been misrepresentation made to date with the assertion that this item does allow that."

Proponents like Black Entertainment Television (BET) founder Robert L. Johnson say that unlocking the box will promote minority programming; opponents like Congresswoman Yvette Clarke say it will hurt minority programming.

In the immediate future, today's FCC ruling won't do anything, as the implementation process can drag on for years—at least three years, under the most optimistic scenario. Beyond that, it's still hard to tell.

Renting a cable box from Comcast, Dish, or any other provider is not cheap, but neither is buying one from competitors like TiVo. Companies have, in fact, been able to build competing set-top boxes for cable (though not satellite) for about a decade, but the necessary decoder cards cable companies provide, called CableCARD, were janky in the first years—and they never allowed the two-way communication needed to not just watch TV but order video on demand.

If the next generation of independent cable boxes works better, perhaps competition will flourish and prices will drop. In any case, consumers could opt to save money by purchasing the box outright and holding onto it for 3, 4, or 5 years. They might not get the latest features of a new set-top-box, but they wouldn't be paying for one, either. With the current regime, customers pay their monthly fee no matter what hardware they have, so you might as well take a shiny new box every few years, whether or not it makes a difference. It's like being forced to upgrade your smartphone every two years.

The bigger hope, on both sides, is that apps will take the place of hardware—with TV streaming right into an iPad, laptop, smart TV, or online set-top box like Roku. This is already happening on a limited scale, but it's on the cable companies' terms. Time Warner Cable makes an app for Roku; Comcast doesn't. If you're in a Comcast service area and own a Roku, the only way to put the two together is to move to an area serviced by Time Warner.

That's where today's vote may have the biggest effect. Cable and satellite companies would have to completely open up their data so that any device and any app could read it: A bit like the open APIs that allow, say, chat app Slack to directly access files in cloud storage service Dropbox. That's a level of access you don't even get with streaming-TV services like Amazon, Hulu, and Netflix. If you want Netflix, you need to use Netflix's app—one that runs on a device you already have. Netflix seems to run on everything short of toasters nowadays, but the company isn't obligated to provide access to any old startup with a dream. Cable companies would be.

What today's decision comes down to, really, is a vote of no confidence in the cable and satellite industries. Those companies argue that they are providing everything that consumers need—be it boxes to put on their TVs or apps to put on their tablets. To this, the majority on the FCC is basically saying: Yes, you provide all these products, but they suck. We want to give someone else a try.

This article has been updated with additional information.

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