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FCC’s Plan for TV Set-Top Boxes Hangs by a Thread

September 19, 2016, 6:30 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

Earlier this year, the head of the Federal Communications Commission proposed a plan to help TV viewers ditch cable set-top boxes. At first glance, the plan seemed like a winner — after all, who would oppose a plan to break a monopoly that costs consumers $231 per year on average to rent the boxes?

Months later, however, FCC Chairman Tom Wheeler is struggling to pass the proposal as time runs out on his term. The latest setback involves a squabble over licensing rules that would determine how the TV industry makes cable apps—intended to replace the set-top boxes —available to third parties.

The app plan, which itself came as a concession by the FCC to industry, would allow consumers to get rid of their set-top boxes and instead access their cable channels through an app on their smart TV or through a device like a Roku or an Amazon Firestick.

For the plan to work, the cable industry and studios would have to issue a license to allow third parties to offer whatever app they create. But right now the TV providers are balking because Wheeler called for the FCC to act as a “backstop” — basically letting the agency step in and impose terms if the industry fails to offer fair license terms on its own.

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The fuss over license terms appears to have spooked Democratic lawmakers during a hearing last week, and led FCC Commissioner Jessica Rosenworcel to say the plan has “problems.” Her objections are a big obstacle for Wheeler, since he needs Rosenworcel’s vote to overcome those of the FCC’s two Republican commissioners. Wheeler has said he would make changes to the plan, though the details are not yet public.

According to a person close to the TV industry who did not want to be named, studios and cable companies want to replace the FCC “backstop” plan with an after-the-fact complaints process. Such a process would involve the FCC investigating situations where a company said it was unfairly denied a license.

Such a scenario would mean the FCC would not have a hand in drafting licenses for the cable apps — an outcome that, in the eyes of skeptics, could let the industry use license rules to sabotage any plan that threatened their set-top box revenue. Indeed, telecom giants like Comcast and AT&T have been vociferously opposed to much of the process, saying the FCC’s plan would undermine their incentive to innovate.

It’s also possible the TV industry is simply trying to run out the clock, and waiting for after the presidential election and for Wheeler to leave (it’s customary for agency heads to step down when a new President is inaugurated). The TV industry source, however, said Wheeler is determined to take action on set-top box issue and may delay the vote (now scheduled for September 29) but would not drop the issue entirely.

According to Gene Kimmelman, from the advocacy group Public Knowledge, Wheeler will ultimately be able to get the upper hand because the politics of the matter favor the FCC plan. He says that, despite the industry’s considerable lobbying clout, consumers are fed up with set-top box fees.

“We’ll hold everyone accountable for an ongoing consumer rip-off,” said Kimmelman, predicting most lawmakers will eventually join the White House in supporting Wheeler’s plan.