FCC Chairman Tom Wheeler Pokes Hornet’s Nest As Cable Industry Torches Cable Box Proposal

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It’s hard to believe that anyone in the United States expects the cable industry to react quickly to anything; be it customer complaints, innovation, or even something as simple as showing up on time for a scheduled service appointments. However, if you threaten a steady revenue stream for America’s cable giants, there’s sure to be a swift and furious response.

Such was the case when the FCC issued a proposal that would give customers more choice when it comes to accessing cable video content, allowing them to save hundreds of dollars in fees at the same time. Under the FCC’s proposal, cable companies would be forced to deploy open standards that would give customers the option of using a third-party device — like one from Google, Amazon or perhaps Roku — instead of renting a box from your cable provider to access TV content.

Customers that want to keep the status quo and rent a cable box could still do so if they wish. In essence, it would be similar to what’s possible now with Internet service provided by cable companies — you can either rent a cable modem or purchase your own and save on monthly rental fees.

As you might expect, the cable industry is fuming mad and issued lightning quick retorts to the proposal. Here are a few choice exerts from some of the key players — actual cable TV providers and lobbying groups — within the cable industry:

The proposal, like prior federal government technology mandates, would impose costs on consumers, adversely impact the creation of high-quality content, and chill innovation.  It also flies in the face of the rapid changes that are occurring in the marketplace and benefitting consumers.  —  Mark Hess, Comcast SVP, Office of the Chief Technology Officer, Business and Industry Affairs

Hess goes onto add that the Comcast has no reason to plot a new course as there is plenty of new competition in the market in the form of Netflix, Amazon Video and Sling TV. He also touts that Comcast uses its X1 platform to deliver apps to “deliver its Xfinity service to popular customer-owned retail devices.” In the end, Hess says that more government regulation is not the answer.

By forcing new government mandates on network providers and content creators, the FCC may intend to reward Google handsomely, but in the process it will ignore contractual freedoms, weaken content diversity and security, undermine important consumer protections like privacy, and stall the creative and technical innovation that is driving positive changes in today’s TV marketplace.

In other words, these technology companies see all this great programming being distributed via free-to-download apps and they want in. They want to sell you an access device that you don’t need in order to give you content you already receive.The National Cable & Telecommunications Association (NCTA)

On that last point, the NCTA makes it seem as though cable TV customers would be forced to purchase additional hardware that they don’t need in order to appease “winners” that the FCC has already chosen in the tech marketplace. This line of thought, however, is misguided for two simple reasons. For starters, customers would not be forced to purchase a third-party device to access TV content in the first place; it would be completely optional. And second, you actually would only need a third-party device if you decided to forgo the clunky cable box from your TV provider. The only difference is that you’d pay a relatively low, one-time cost for the hardware (which would pay for itself in roughly a year if we take into account monthly cable box rental fees) instead of paying the same $7.43 monthly (a fee that has risen 185 percent in the past twenty years) for the rest of your life.

The Chairman’s proposal is another disappointing example of an FCC that thinks it’s smarter than highly competitive markets.  Pretending to favor consumers, they’re instead favoring one company that seeks to siphon profits away from those actually investing to build broadband and create exciting content.  In short, by once again putting its thumb on the scale, the FCC will discourage the very investment it claims to want.Jim Cicconi, AT&T Senior Executive Vice President of External and Legislative Affairs

Although not named in its retort, AT&T seems to be singling out Google as the main benefactor of this proposal, as hinted at by the NCTA.

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FCC Chairman Tom Wheeler

FCC chairman Tom Wheeler is showing a rather icy resolve to this blowback from the cable industry and exhibits no signs of melting under pressure. He hit back hard, saying the FCC proposal is "all about whether the standard for set-top boxes should be a closed standard or an open standard.

"Ninety-nine percent of pay-TV customers lease set-top boxes from there cable, satellite, or telco providers. There is no competitive market." Wheeler went on to reiterate that the cost of cable box hardware and rental fees have skyrocketed while the price of other consumer electronics (like PCs and smartphones) have decreased by 90 percent during the same time period.

"The bottom line is the America people get it. They are literally paying the price for the lack of alternatives,” Wheeler added.

The FCC will take the proposal to a vote on February 18th, after which a public comment period will open. If all goes according to plan new rules could be in place for cable boxes before the close of 2016.

Tags:  Comcast, FCC, cable box, ncta