The Federal Communications Commission voted three-to-two Thursday to continue on with a proposal from Chairman Tom Wheeler to shake up cable and satellite equipment business models and possibly give subscribers new options for owning innovative new set-top boxes and other devices from multiple brands, instead of simply leasing them from service providers for high and sometimes hidden monthly fees.
Potentially, the changes would open up cable programming to third parties so that content listings can be entered into unified guides and programming searches in hardware sold outside of the cable service. Advocates hope the move could also lead to new innovation including the development of one box delivering cable channels, premium TV channels, streaming TV, etc.
Wheeler’s proposed rule changes would make it easier for consumers to purchase cable decoders, DVRs and other gear from multiple manufacturers, driving down prices through competition. Recent surveys have shown the vast majority of cable set-top boxes are leased from cable system operators, who charge customers more than $200 year in equipment fees in some cases.
Potentially, the new rules could also bring cable TV programming to tablets and other devices without need for a rented set-top box.
Following the FCC’s vote Thursday, the proposed rule changes advance to a public commentary period, giving companies and citizens the ability to submit their views before it advances on for a final vote a couple of months from now.
Read more on the FCC’s cable/satellite box plan after the jump:
After Chairman Wheeler introduced his proposal last month, multi-channel TV service providers were balked that instead of creating innovation, the move would be driving it in the wrong direction. Cable and satellite companies feel that advances in IP video delivery and use of apps is already bringing cable channel content to TVs without the need of set-top equipment.
The National Cable & Telecommunications Association (NCTA) has argued that these apps make a new open-cable-box mandate “unnecessary and backwards looking.”
For similar reasons, a group of opponents calling themselves the “Future of TV Coalition” that includes: Arris, AT&T, Cablevision, Cisco, Comcast, Cox, Dish, Time Warner Cable, USTelecom, and others, have reached out to citizens to enlist support in asking the FCC to drop the plan.
In voting against the issue, Commissioner Ajit Pai said the proposed rules changes would simply replace “one complex regulatory scheme for another.”
But Wheeler said that the action would not make major changes for consumers but would create the opportunity for them to have choices that they currently lack.
Commissioner Mignon Clyburn pointed out that as prices for other technologies have fallen with competition the cost of a set-top box “has risen at more than three times the rate of inflation.”
TiVo, the developer of DVR technology and a third-party supplier of such equipment using CableCARDs for select cable and satellite TV systems, issued a statement Thursday:
“Given the sunset of the integration ban and the absence of an industry-supported successor to CableCARD, the FCC’s rulemaking is important to ensure choice for consumers, operators, and content creators,” said Matt Zinn, TiVo’s senior VP, general counsel and chief privacy officer. “We are hopeful that this proceeding results in a competitive environment that increases choice, both for consumers and operators, and protects the business models that operators and device makers have created under the current CableCARD system.”
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The FCC sought more than a decade ago through a “security integration ban” to separate conditional access security systems from set-top decoders and tuners by using CableCARDs that the cable system operators would provide to subscribers to authorize third-party cable gear. But the integration ban recently expired.
Cable companies, which make millions every year on equipment leasing fees, fought the FCC’s earlier CableCARD plan by dragging their heels on making CableCARDs available in sufficient quantities, and then by assessing lease fees on the CableCARDs themselves.
The new plan potentially could dispense with the CableCARDs by authorizing gear remotely via IP technology, via downloads or other systems.
Only a handful of third party manufacturers, including TiVo, developed equipment using the CableCARD. TiVo’s DVRs bring addition features and functions, but critics who support deregulation say that TiVo’s DVRs are still expensive and impose their own monthly surcharges to use the devices.
By Greg Tarr
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