In a Wednesday press release, the FCC announced a proposal to ban anti-competitive cable company hardware practices. The new rule would open up the set-top box market to third-party innovators. The proposed new ruling would also include IPTV and satellite operators, not just cablers.
If the proposal goes into effect, all platforms will have to share key information with third-party box and app makers. This would open up the market for the likes of Apple TV, Google Android TV, TiVo STBs and many others. So far none of these newcomers managed to get agreements with cable companies to get access to their programming.
In the statement, the FFC said “99% 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 in rental fees annually for the average American household. Altogether, US consumers spend $20 billion a year to lease these d evices. Since 1994, according to a recent analysis, the cost of cable set-top boxes has risen 185% while the cost of computers, televisions and mobile phones has dropped by 90%. Congress recogniszed the importance of a competitive marketplace and directed the Commission to adopt rules tha t will ensure consumers will be able to use the device they prefer for accessing programming they’ve paid for.”
FCC chairman Tom 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 including cable, satellite or telco companies) 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 us er 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: first there is service discovery: information about what programming is available to the consumer, such as the channel listing and video-on-demand lineup, and what is on those channels. Secondly, entitlements: information about what a device is allowed to do with content, such as recording. And finally, content delivery: the video programming itself.
The full release can be found on the FCC website.
Broadband TV Views. The opening up of the STB market for cable and other platforms would add another threat to the operators, who are already faced with cord cutting and streaming services including Netflix. The FCC seems right to argue that consumers are paying over the odds for the rental of equipment, which has traditionally been a source of income for operators. I remember here in the Netherlands that premium service FilmNet was reportedly making more money from the its rental decoders than from the actual channels themselves. And remember the old telephone, which consumers had to rent rather than buy.
With the telephones, regulators stepped in and forced the telco’s to open up their networks so people could buy and choose their own equipment. The time seems right now for distribution platforms as well to open up – not only in the US, but also here in Europe. The American cable association NCTA has so far not reacted, but I am sure they will protest. However, opening up the networks could be a blessing in disguise – when consumers have to pay less for access to their cable services, they might not want to cut the cord. And really, why not use all the features that are in most of today’s smart TVs? Through my smart TV I have access to more services than my local operator (Ziggo) offers…..