Under the proposal, a standard setting body would lay out technical specifications for manufacturers, so any third-party manufacturer would be able to sell cable devices to the end consumer. The FCC will vote on final rules after a period of review. 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 January, FCC Chairman Tom Wheeler proposed to change all that. His proposal would allow American consumers to buy their own boxes through third-party companies instead of through their TV providers. Not only would this lead to better devices and more consumer choice, Wheeler argued, but it would drive down the exorbitant costs to rent them.
According the FCC, “lack of competition has meant few choices and high prices for consumers – on average, $231 in rental fees annually for the average American household.”
Today’s decision by the FCC is just a first step towards the opening up of the platforms, it will now move into a comment period, where supporters and critics will be able to voice their arguments. A final vote is expected by the end of the year.
In its decision, the FCC recommends that pay-TV providers be required to deliver three core information streams: 1) 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; 2) Entitlements: Information about what a device is allowed to do with content, such as recording; and 3) Content delivery: The video programming itself.
Instead of mandating a government-specific standard that might impede innovation, the FCC “recommends that these three streams be available to the creators of competitive solutions using any published, transparent format that conforms to specifications set by an independent, open standards body. Consumers who enjoy their current set-up through their pay-TV provider do not have to take any action. The proposal would instead provide an option for consumers looking for a competitive device or app to access the pay-TV content to which they currently subscribe.”
This is not the first time that the FCC is trying to open up the cable networks. In response to a law passed by Congress in 1996, FCC required cable companies to make available a ‘CableCard’ that could be installed in a third-party box to allow it to receive TV channels. But cable companies undermined the idea, requiring customers to pay extra monthly rental fees for the cards and often insisting that they be installed only by company technicians. As a result of these policies, customers of the nine largest pay TV providers had acquired just 617,000 CableCards vs. 53 million rental boxes, as per July 2015.