FCC Chairman Tom Wheeler plans to introduce rules that he says would tear down anti-competitive barriers and pave the way for software, devices and other innovative solutions to compete with the set-top boxes that a majority of consumers must lease at the moment.
According to the FCC, 99 per cent of pay-TV subscribers are chained to their set-top boxes because cable and satellite operators have locked up the market. Lack of competition has meant few choices and high prices for consumers – on average, $231 (€212) in rental fees annually for the average American household. Altogether, consumers spend $20 billion a year to lease these devices. Since 1994, according to a recent analysis, the cost of cable set-top boxes has risen 185 per cent while the cost of computers, televisions and mobile phones has dropped by 90 per cent. Congress recognised the importance of a competitive marketplace and directed the Commission to adopt rules that will ensure consumers will be able to use the device they prefer for accessing programming they’ve paid for.
Wheeler is circulating for a vote a Notice of Proposed Rulemaking (NPRM) that will be voted by the full Commission on February 18, 2016. According to Wheeler, the proposal is about one thing: consumer choice, suggesting that consumers should have options created by competition. The Chairman’s proposal will let innovators create and then let consumers choose.
Wheeler’s proposal will create a framework for providing innovators, device manufacturers and app developers the information they need to develop new technologies. Consumers should be able to choose how they access the Multichannel Video Programming Distributor’s (MVPDs) – cable, satellite or telcos – video services to which they subscribe. For example, consumers should be able to have the choice of accessing programming through the MVPD-provided interface on a pay-TV set-top box or app, or through devices such as a tablet or smart TV using a competitive app or software. MVPDs and competitors should be able to differentiate themselves and compete based on the experience they offer users, including the quality of the user interface and additional features like suggested content, integration with home entertainment systems, caller ID and future innovations.
To ensure a competitive marketplace as required by the Telecommunications Act of 1996, the proposal identifies three core information streams that must pass from MVPDs to the creators of competitive devices or apps:
Standards: Promoting interoperability and removing barriers to innovation
Security: Preventing theft and misuse
As technology has evolved, so has the market’s ability to prevent theft and misuse. Smart TVs, for example, currently ensure the same security for copyrighted material as the traditional set-top box. The proposal provides MVPDs flexibility in the security systems they use while putting in place some constraints to ensure that they do not use their security choices for anti-competitive purposes.
Programming: Lifting Up Independent and Minority Content
When consumers are able to access all their content – from MVPD programming to streaming video – in a single place, they will be better able to find and enjoy the programming most relevant to them. When it’s easier for content creators to reach consumers, we would expect this to lead to more and better programming accessed more easily, especially minority, independent, and international programming.
Copyright Protection and Distribution: Honouring the sanctity of contracts
The proposal maintains important aspects of the traditional video distribution regime, such as protections against copyright infringement and theft of service. The proposal is clear – the Commission will not interfere with the business relationships between MVPDs and their content providers or between MVPDs and their customers. The proposal does not change a company’s ability to package and price its programming to its subscribers.
Consumer Protection: Emergency Alerts, Privacy and Advertising
The proposal seeks to ensure that important consumer protections like emergency alerting, privacy, and children’s advertising restrictions will apply.
The Bottom-Line for Consumers
In response, the newly-launched Future of TV Coalition described the proposed rulemaking as “a solution in search of a problem” suggesting that consumers can already access pay-TV programming right alongside streaming content on an ever-expanding universe of consumer-owned devices, from smart TVs, game consoles and streaming devices to laptops, tablets, and smartphones. “This app-driven innovation is already happening — and it doesn’t require a government mandate that would increase consumer costs, strip viewers of privacy protections, and let third party device makers ignore the terms of carriage agreements between programmers and distributors.
The FCC proposal, as best anyone can understand it, still strips out all the tools that are used to honor license agreements, would increase consumer costs by mandating yet a second box inside the home and thus ignores the trends away from in-home boxes and devices, eliminates security protections, and provides no reassurance on privacy rights. Kicking the can down the road and simply saying that some standards setting body may address these issues, fully or partially, in the future, is hardly a guarantee for consumers, creators and distributors. Rather than moving us to a second box and an endless muddle of unanswered questions, the FCC should be moving all of us towards an app-based future that consumers are embracing.”