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FCC Gives the Cable Industry What it Wants With New Set-Top Box Plan

September 8, 2016, 9:25 PM UTC
Federal Communications Commission (FCC) Chairman Tom Wheeler testifies before the Communications and Technology Subcommittee on Capitol Hill in Washington, DC, May 20, 2014. AFP PHOTO / Jim WATSON (Photo credit should read JIM WATSON/AFP/Getty Images)
Photograph by Jim Watson — AFP/Getty Images/file

Federal Communications Commission chairman Tom Wheeler on Thursday released the latest version of his proposal to open up the TV set-top box business in an attempt to encourage more competition, but it looks very different from his original plan.

The initial idea behind the proposal was that consumers would benefit from more innovation. But the main beneficiaries of his current plan appear to be the cable companies, since the new plan looks almost identical to their counter-proposals.

In January, the FCC chairman released a manifesto of sorts about the need to “Unlock the Box.” Cable subscribers and pay-TV watchers had been paying exorbitant prices for set-top units for too long, he said—more than $20 billion a year in total.

Wheeler said he was releasing a proposal that would “tear down the barriers that currently prevent innovators from developing new ways for consumers to access and enjoy their favorite shows and movies on their terms.”

The idea that the FCC chairman put forward as a “rule-making proposal,” which the commission approved in February, was that alternative providers of set-top boxes such as Google and Apple would be able to access content from pay-TV providers and stream that through their devices.

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Even before the specifics of the proposal were released, however, the cable industry was already fighting hard against any changes. Comcast and other major providers said they were already offering innovation through digital boxes such as the Infinity X1.

In response, the industry proposed something it called “Ditch the Box.” Instead of providing streams of content for anyone who wanted to make their own set-top controller or smart TV, the cable providers suggested that they could create apps.

These apps, the industry said, would reproduce the key functions of the cable box, and would live on any alternative box or TV set. But alternative providers wouldn’t be able to change the look or feel of the content, or sell ads against it.

This is essentially what the latest plan from the FCC chairman also proposes, according to an op-ed piece Wheeler wrote for the Los Angeles Times.

“Pay-TV providers will be required to provide apps – free of charge – that consumers can download to the device of their choosing to access all the programming and features they already paid for,” the FCC chairman said.

Hulu and YouTube are tapping into cable TV. Watch:

The new proposed rule changes would also give the cable industry another victory, which is exclusive control over the content provided to any alternative set-top box maker.

Cable companies argued that the original version would have increased piracy by forcing them to simply hand over their content without any copyright controls. And they were concerned that the FCC was going to try and interfere in their distribution and licensing deals.

The new proposal, however, ensures that “all copyright and licensing agreements will remain intact” by mandating that the delivery of any pay-TV programming “will continue to be overseen by pay-TV providers from end-to-end.”

The FCC chairman maintains that the original goals of his plan—to increase innovation and benefit consumers—will be fulfilled by the new version. But to some, it’s going to look like the commission caved in to the interests of cable-industry lobbyists.

In typical fashion, meanwhile, Comcast (CMCSA) is already complaining about the new proposal, saying it will create “an overly complicated government licensing regime and heavy-handed regulation.”

The new plan goes to a vote on September 29.