UPDATED, with WGA West statement at bottom: Will set-top boxes become the next hot consumer electronics product? That’s FCC Chairman Tom Wheeler’s goal in a rulemaking proceeding announced today designed to break cable and satellite companies’ grip on the boxes subscribers now pay $20 billion a year to lease so they can watch programming.
The proposal he’s circulating — ahead of a February 18 vote — would require pay TV distributors to let independent manufacturers create devices that can unencrypt shows. While the FCC is not mandating a specific technology, it would require providers to offer at least one “openly licensed” system.
Providers also would have to give independent manufacturers information about the programming offered to subscribers, and where shows will be found among the various channels and VOD services.
The proposal would enable companies to come up with devices that blend pay TV programming with streamed offerings from providers such as Netflix, Amazon Prime or Hulu without requiring users to switch to a different input on their TV sets.
“Over the past 20 years, the cost of cable set-top boxes has risen 185% while the cost of computers, televisions and mobile phones has dropped by 90%,” Wheeler said in a commentary on Re/Code. “If you’ve ever signed up for a $99-a-month bundle for cable, phone and Internet and then wondered why your bill is significantly higher, this is a big reason. Even when the company has recovered the cost of the box, you must continue to pay for it…. In fact, according to a recent analysis, over the past 20 years, the cost of cable set-top boxes has risen 185% while the cost of computers, televisions and mobile phones has dropped by 90%. It doesn’t have to be this way.”
The FCC tried before to open up the set top box market by requiring cable and satellite companies to license a smart card, called a CableCard, to unencrypt programming. But they don’t accommodate the two-way communications needed for services such as video on demand. Operators also often failed to promote them, or provide service for them.
The nine largest cable companies served just 618,000 CableCards in independent devices, such as TiVo DVRs, the National Cable and Telecommunications Association told the FCC in October.
A new group supported by pay TV companies, called the Future of TV Coalition, says that Wheeler’s proposal “would force programmers and TV providers to dismantle their shows and services for [independent manufracturers] to repackage, reuse, and exploit without negotiating for the rights like everybody else in the market does today.”
The group adds that it “would not give viewers access to any new programming or content that isn’t already available in their homes and would not replace or lower their existing television bills. Moreover, it would increase the equipment in consumer homes by requiring a new “AllVid” adapter in the home to deliver programming to a set-top box or video device purchased at retail, further
escalating consumer cost.”
But consumer groups applauded Wheeler.
“It’s a triple play that the cable companies will hate, but fans and creators of award winning streaming programming will love,” says Chip Pickering, CEO of advocacy group INCOMPAS. “We can’t truly realize the golden age of television while consumers are stuck watching TV on the set top box of the past. …By ending monopoly control and breaking open the set top box market, Chairman Wheeler and the FCC have the power to present a free market solution for video devices that will bring both competition and innovation and more video choice to consumers.”
The WGA West issued a statement this afternoon supporting the FCC’s position on set-top boxes:
“With the announcement of his proposal to increase set-top box competition, FCC Chairman Tom Wheeler has once again demonstrated his commitment to advancing the development of a more competitive media landscape. Seven media conglomerates control almost all of the television programming available to American consumers, and how that content reaches their homes is dictated by an even smaller number of big companies. The Internet has enhanced content competition and increased consumer choice, but cable providers, through their proprietary set-top boxes, control the way viewers access video content on their television sets. Set-top box rules that increase competition and enable the integration of television programming and online video on one device will greatly expand consumer access to a wider range of diverse and independent programming and help level the playing field that has been dominated by too few companies for too long.”