FCC Takes Aim At The Pathetic Lack Of Cable Set Top Box Competition

The FCC has formally declared war on the outdated, over-priced traditional cable box. The agency has put forth a new proposal (pdf) for guidelines intended to bring much-needed competition to the cable set top box market. As recently noted, data collected from the top ten biggest cable companies found that 99% of cable customers still rent a cable box, paying $231 in fees annually for often-outdated hardware that's frequently worth very little. This cozy little captive market nets the cable industry roughly $20 billion in rental fees every year. In a public sales pitch for the proposal over at Recode, FCC boss Tom Wheeler invokes the spirit of ma bell to highlight the absurdity of the cable industry's continued control over the set top box market:

"Decades ago, if you wanted to have a landline in your home, you had to lease your phone from Ma Bell. There was little choice in telephones, and prices were high. The FCC unlocked competition and empowered consumers with a simple but powerful rule: Consumers could connect the telephones and modems of their choice to the telephone network. Competition and game-changing innovation followed, from lower-priced phones to answering machines to technology that is the foundation of the Internet."

The FCC wants to design a software-based solution that lets consumers access cable content via the hardware of their choice. Hardware that, thanks to competition, would be better, cheaper and faster than the clunky old cable boxes we all know and love. The FCC's careful to state it's not mandating a specific standard by which cable operators have to provide programming data to these devices, stating they simply need to adhere to "any published, transparent format that conforms to specifications set by an independent, open standards body." This isn't the FCC's first attempt to force competition on the set top box market. CableCARD was the agency's earlier, ineffective attempt to mandate a standardized card for use in third-party set tops. CableCARD regulations were well-intentioned but cumbersome, and frequently left unenforced. The cable industry also went out of its way to avoid pitching the cards to consumers, and often made the installation process as cumbersome and nightmarish as possible. When meager CableCARD stats were released annually, the cable industry would then collectively shrug and insist low adoption reflected a genuine lack of interest in the idea of better third-party devices. With $20 billion in set top box revenues on the line, the cable industry has spent the better part of a decade fighting tooth and nail to kill this FCC proposal and anything like it. Opponents including AT&T, the MPAA, and the cable industry's biggest lobbying organization today formed what they're calling the "Future of TV Coalition," which argued in a release that greater set top box competition will kill diversity programming, hurt consumer privacy, embolden pirates, and generally just destroy the known universe:

"Many parties, including 30 members of the Congressional Black Caucus, have warned this would unravel the modern TV ecosystem, doing particular damage to small, independent, and diverse programmers and the communities they serve. AllVid would also undermine vital privacy and other consumer protections that apply to pay-TV providers but not the tech firms advocating adoption of AllVid. And it would erode protections against video piracy, rendering programming less secure."

Of course that's bullshit, and what the industry's really afraid of is seeing a cornerstone of its uncompetitive walled-garden empire demolished by real competition. Granted it's worth noting that the FCC's proposal doesn't prevent customers from keeping their existing cable boxes, nor does it stop cable providers from providing them. In other words, if the cable industry wants to retain customers on its systems, all it has to do is innovate and compete. All of that said, you can't begrudge those who look at the CableCARD fracas of the last decade and legitimately wonder whether the FCC has the chops to actually implement and enforce such guidelines with an election (and potential FCC shuffle) looming. It's also worth asking if another multi-year enforcement fight is worth it with the cable industry on a collision c