It just sits there next to your television, dusty and neglected, taunting you. But you’re almost powerless to get rid of it. It’s that ugly black set-top box.
And even now, in the era of the connected home and smart devices, this relic of the 1990s stubbornly holds on. While increasing numbers of people have cut the cord and stream content via Chromecast or Roku, tens of millions of people continue to pay that annoying monthly fee to rent their set-top boxes.
Now, the government is taking the first step to break the cable and satellite companies’ lock on the boxes, with a recent FCC decision to let consumers scrap them for cheaper apps and alternative devices. But cable giants such as Comcast and Time Warner Cable are fighting back against the proposal to increase competition in the $20 billion market. On the other side are tech behemoths such as Google and Apple, who are hungry to deliver videos to consumers. And the feud is turning into one of the fiercest battles in Washington, with each side deploying armies of lobbyists, interest groups, and plenty of money to gain the upper hand.
Even if the FCC is able to overcome the opposition of the pay-TV industry, the proposal could still be undone by technical difficulties and competing business interests—and the FCC doesn't seem to fully grasp how complicated this is going to be. Implementing the set-top box plan could be a lengthy slog—comparable even to the notorious difficulty of net neutrality regulation, according to experts who shared their concerns on and off the record with Fast Company.
Set-top boxes and their unending rental fees (averaging $89.16 per box per year) are reviled and even cable companies—which often rank at the bottom of consumer satisfaction surveys—say they'd like to eventually dump them and move to apps that run on everything from smart TVs to iPads. But even the apps approach will be fraught with problems, and possibly introduce a whole new class of headaches by dragging in hardware makers such as Apple and online TV providers such as Amazon and Netflix—since the new regulations would place much stricter controls on pay-TV companies' monopolies on devices and apps while leaving online TV untouched.
The first roadblock will be more bureaucratic haggling, as this fight's been going on for a while already. The box-unlocking proposal was actually the latest chapter of an ongoing battle and nearly a year of stalemate by a committee of technical experts from pay-TV providers, Silicon Valley firms, Hollywood, and consumer-advocacy nonprofits about finding a way to implement Section 629 of the Telecommunications Act of 2016, which requires the FCC to "adopt regulations to assure the commercial availability" to pay-TV subscribers of equipment "from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor." Members argued over whether copyright protections could be preserved, whether the law covers apps as well as hardware, and even the definition of a pay-TV service. The final report submitted to the FCC last August runs 344 pages, but has one key excerpt, " . . . DSTAC is not reporting a consensus recommendation." These are the same warring parties that will now be asked to reach a consensus on how to implement FCC chairman Tom Wheeler's proposal.
Cable and satellite companies use a few different network and security formats—since today's mammoths such as Comcast and Time Warner Cable are agglomerations of smaller operators. They claim that standardizing their data could require a multibillion-dollar "re-architecting" of their networks. Yet several have managed to connect these disparate systems to their own apps running on various devices, including smart TVs, Roku, Xbox, and iOS and Android mobiles. Just the cable apps for Android and iOS gadgets have been downloaded 56 million times. At least one side may be exaggerating about how easy or hard this compatibility challenge will be.
Another source of strife will be the requirement to serve all the data needed for a box or app maker to provide access to pay TV. The goal is to enable not only, say, an alternate app to get DirecTV, but also an omnibus app that integrates DirecTV with Netflix, Hulu, YouTube, and any other online service.
This data would include the video streams themselves, information on rights to access the streams (what could be watched or recorded on what devices), and a listing of content—what's on what channel, for example.
For pay-TV companies, the third item might not be theirs to give away. They buy content listings from companies such as Gracenote and Rovi that scramble to get data from every network, cable channel, local affiliate, and public-access operation. Info comes in emails, spreadsheets, and even faxes. Gracenote and Rovi collect data for online services as well as regular TV, so you don't need the new FCC requirements to make a universal TV-plus-online search engine. "We have our metadata that cover every cable provider in the United States," says Rovi VP Paul Stathacopoulos. "And we've been matching those lineups and their catalogs with OTT [online video] providers to enable a seamless search metaphor for probably the last three years." Rovi worked with Samsung, for example, to get universal search on its smart TVs.
The Peel app uses such data to turn a smartphone into both a universal search and universal remote control for navigating both cable box and set-top streaming box content. But subscribing to all of this data is not necessarily cheap for startups. Jeremy Toeman, a former executive at a now-defunct company called Dijit Media that provided an app similar to Peel says that "Dijit spent more on data than anything other than salaries." He adds, "There’s no way someone's going to tell Comcast or DirecTV that they have to give a free license to metadata to some third party."
These TV-plus-online services remain something of a kludge, since you still need a bunch of apps to bring it all together. The FCC rules would make it possible to pull any cable or satellite streams into an app, but they wouldn't do the same for Netflix, Hulu, or Amazon. If you want to watch Orange Is the New Black, you need to use Netflix's app. You can't build your own app to get it, as the FCC would require this capability only for cable and satellite TV. When I asked about this, the FCC pointed out that it has legal authority only over cable and satellite TV, not online videos. (The law it's using was passed in 1996.)
The new rules would at least make it easier to get any pay-TV provider on popular devices. Relying on the cable companies to do this is hit or miss. Time Warner Cable has an app for Roku, for example; Comcast does not. But how far would the FCC go? Apple has a notoriously difficult approval process for apps on its iPhone and iPad. Would the FCC get involved in the process? Apple and Google have long left Amazon Prime off Apple TV and Chromecast.
And here we have the $530 billion-dollar gorilla. Google has been the big proponent of opening up pay-TV streams, which isn't new. The company tried (and failed, miserably) in 2010 with a product called Google TV, installed on televisions and set-top boxes, that provided an integrated search engine and interface for broadcast and online videos. The UI and remotes were ungodly complex, and Google annoyed online streamers like Hulu by trying to skim their video streams for free.
This time, it’s cable and satellite TV providers that are are outraged. Some of their arguments are weak, like that Google will steal their content. New boxes and apps will work only for subscribers who are paying for TV service. The FCC has also made clear that neither Google nor anyone else can strip out a channel's commercials and replace them with its own ads—another claim that's been repeatedly made by the cable companies.
But the FCC hasn't been clear about whether Google or anyone else could put in additional ads, say on the home screen for its app or device—or whether it could put paid results at the top of a search for shows and channels to watch. Google has told Fast Company—through a game of telephone tag with an unofficial PR person—that it won’t do either. Although Google has declined to show Fast Company its demonstration of an omnibus TV app, a source who has seen it tells us that it doesn't include additional ads or paid search results.
Still, Google doesn't usually do things for free. It makes money by selling ads, collecting user data (another fear raised by opponents), or both. It would be odd for Google to provide a service, which may make its way into its Android TV software, that doesn't bring in money. Cable and satellite companies, as well as Hollywood, will certainly keep stressing that point.
The whole process is so confusing, bureaucratic, and frustrating that it's tempting to just ignore it all and veg out in front of the TV.