President Obama Endorses FCC Effort To Promote Set Top Box Competition


President Obama just joined the debate over the FCC’s effort to promote competition in cable and satellite set top boxes — siding with the agency, electronics makers, and consumer advocates while opposing Hollywood, cable, and phone providers.

He endorsed the FCC’s plan to develop rules empowering independent manufacturers to offer alternatives. In addition, the president signed an Executive Order giving departments and agencies 60 days to propose additional initiatives designed to expand consumer choices.

The FCC’s rulemaking procedure is the “mascot” for “what happens when you don’t have the choice to go elsewhere—for all the parts of our economy where competition could do more,” Council of Economic Advisers Chairman Jason Furman and National Economic Council Director Jeffrey Zients say in a blog post.

The Commerce Department will file comments at the FCC, which in February voted to explore rules that would require cable and satellite companies to offer independent box makers at least one “openly licensed” system to unencrypt the programming they transmit.

The White House says that consumers pay about $20 billion a year to rent or lease boxes. That’s up 185% over the last 20 years, a time when prices for computers, televisions and mobile phones have declined by 90%.

“It’s been tied to the provider, and you rent it and consumers spend billions of dollars on this every single year,” Obama told Yahoo Finance in an interview. “There hasn’t been much innovation.”

He issued his Executive Order because “Congress has been stuck, partly for ideological reasons, in taking some common sense steps that would improve the economy and help working families. But I will tell you that consumer actions like this…they seem small bore initially ’cause they don’t get a lot of attention, but they can add up to billion of dollars out of the pockets of consumers.”

The development sent advocates running to their battle stations.

“The President’s support for set-top box competition virtually ensures that consumers will finally see a $15 billion per year rip-off exploded by new electronic devices streaming innovative video services that challenge cable monopolies,” says Public Knowledge CEO Gene Kimmelman.

Among other things, those supporting an open system say that boxes blending traditional pay TV channels with streaming services will make it easier for newcomers such as Netflix, Amazon Prime, Huklu and Sling TV to compete.

“Like the rest of us, President Obama must be tired of having to switch remote controls every time he watches House of Cards or other streaming content,” says Chip Pickering, CEO of Incompas, an activist group supported by internet companies including Google, Facebook, and Netflix. “New boxes from new companies will create a competition ecosphere that benefits consumers, innovators and content creators.”

The MPAA and pay TV providers have opposed the FCC. They say that rules are unnecessary as cable and satellite companies begin to stream programming without any box. What’s more, they fear that a change might open a Pandora’s Box of problems involving copyright protection.

National Cable and Telecommunications Association chief Michael Powell says today that he’s “disappointed” the administration is “choosing to inject politics and inflammatory rhetoric into a regulatory proceeding by what is supposed to be an independent agency….To see the White House take political credit for the actions of the ‘independent’ agency and direct it to reach a specific conclusion even before the record has been assembled, shatters that faith and undermines the Commission’s credibility.”

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