Set-Top Competition Helps Consumers, Middle Class, Innovation

Cell phones have changed tremendously in the past 20 years. Sadly, the way most people access cable TV has not. The cable industry would like to keep its customers locked in — using their cable-provided set-top boxes — even though Congress mandated the agency overseeing it to do something to give customers more choices.

Earlier this year, the Federal Communications Commission proposed new rules designed to ensure customers could access their pay-TV content on the device of their choosing. In every other area of consumer electronics, consumers can choose whichever device they want to get on the network and use different services.

The set-top box marketplace is the only one where the cable company dictates which device you can use. Renting out TV set-top boxes is a $20 billion a year revenue stream for the cable industry, despite a climate where more customers are cutting the cable cord. Thus the Cable industry is now doing everything to avoid having to follow these proposed rules.

Cable has been turning up the heat on members of Congress this election year, pushing Congress to use arcane, inside-the-beltway tactics to block the FCC from enacting these type of reforms which Congress itself ordered the FCC to take on 20 years ago.

While this is certainly one among many consumer issues for policymakers to address, it is one highlighted by President Obama.

For policymakers looking for low-cost economic solutions helping consumers and encouraging innovation solving the set-top box issue is a natural. This set-top box obstacle is like others we have faced repeatedly when U.S. technology companies and startups with good ideas could not enter the marketplace and produce compatible products because incumbent companies would erect unnecessary barriers to entry and not allow for interoperability.

The technology trade association I lead has seen similar attempts to block innovation over the past 40 years. Some may remember when AT&T required customers to lease black rotary dial phones, insisting they were protecting customers from a bad experience with potentially faulty phones. But instead of problems, when the rules changed to allow people to access their phone service on the device of their choice, there was a blossoming of innovations that quickly followed — fax machines, cordless phones and then mobile phones.

It’s a different decade and a different device, but the same old arguments. Cable insists it wants to protect customers from tech glitches from other TV boxes. Then they tried to confuse the real issues with complex and specious arguments saying these competing devices would lead to copyright and even security problems.

When the facts got in the way of their arguments, cable rolled out a proposal to give up the cable box altogether and let people access their TV programming instead with cable’s own apps.

It sounds innovative, but the real motive is to keep control of the cable box. Cable is not ditching its own TV boxes anytime soon.  Comcast is rolling out about 40,000 of its X1 boxes per day and licensing the X1 technology to other cable companies. Cable is not going to give up those $20 billion in leasing fees.

In reality, cable’s “apps proposal” is a cynical strategy to switch off third-party competition. But for consumers, this is not much of a choice. Their choice would be between a closed box or a closed app — still controlled by cable. As it stands now, the apps proposal doesn’t address the issues the FCC sought to solve after more than 2 years of analysis.

We have urged the FCC to go forward with its planned rules requiring that cable let consumers access the programming they paid for on the device of their choosing. It’s a win for consumers, innovation and our economy.

We know the FCC members will face pressure from members of Congress responding to heavy pressure from cable. We hope they can remain focused on consumers unnecessarily paying billions every year for cable’s outdated set-top boxes. Public Knowledge estimates that cable’s delay tactics have cost consumers more than $4 billion alone since the FCC announced its plans.

Congress, meanwhile, should let the agency they asked to act on this issue 20 years ago, finally let the FCC do its job, protect the public interest and bring competition to the TV set-top box arena.

Ed Black is president and chief executive officer of the Computer & Communications Industry Association.

Morning Consult