Is the FCC’s Set-Top Box Plan Technology Neutral? Spoiler Alert: It’s Not

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At a press conference following the FCC’s April 28 public meeting, Chairman Wheeler took the opportunity to call out NCTA for raising concerns about his proposal that would impose significant new rate regulation on competitive providers of business data services. According to the Chairman, the cable industry has long advocated technology neutral regulation and he suggested we were being hypocritical when we questioned his purportedly technology neutral approach to business data services.

We explained in response that the Chairman was incorrect and that NCTA had long advocated a technology neutral approach to business data services. We also pointed out that, in fact, it is the Chairman’s approach to new set-top box regulations that falls sadly short of a technology neutral ideal and if technology neutrality is a goal of the Chairman, perhaps he should begin with that proceeding. Allow us to explain:

In its proposal to require new standards to encourage the development of retail set-top boxes, the FCC is mandating that pay-TV providers hand over their programming content for free to any company who wants to break it apart, distribute it, and sell it as they see fit. They’re doing this, as FCC Chairman Wheeler has said, in an effort to create a more competitive set-top box marketplace. Separate from the fact that the proposed set-top box rules are a terrible solution to a problem that doesn’t exist (after all, video apps, streaming devices, smart TVs and a choice of pay-TV providers already exist in a rapidly changing and competitive marketplace) it’s still worth asking whether this “solution” could lead to a technology neutral environment, a goal the Chairman is now championing. We’ll just ruin the surprise now. It won’t.

The tremendous and growing outpouring of opposition to the proposed FCC mandate shows how unnecessary and harmful it is. But from a purely practical viewpoint, this approach is hardly the type of “technology neutral” solution that the Chairman touts in other contexts. To begin with, pay-TV providers such as cable, telco TV, and satellite companies would be the only ones subject to this content disaggregation rule. Netflix wouldn’t have to hand over its content. Neither would Hulu, Amazon or any other streaming service. Just cable, telco TV, and satellite providers. For the record, we don’t think streaming services should have to share their content, but is it a neutral proposal if it excludes the biggest subscription TV provider and several other popular services that many consumers rely on? Clearly, the answer to this rhetorical question is a resounding no. The Chairman’s proposal isn’t even close to being neutral.

Besides singling out a certain group of providers and forcing them to hand over content they’ve paid for, these same companies would be the only ones to lose control of their distribution contracts. They would be the only ones forced to strip out their competitive features such as on-demand, interactive guides, shop-at-home channels, live highlights, scores, and fantasy league support tools. And perhaps most concerning to minority programmers and family-oriented programmers, pay-TV providers would be the only ones who could no longer negotiate channel placement and brand protection for networks. This may seem small, but the fact that the Disney Channel, by contract, can’t be placed next to adult programming is a huge part of ensuring a quality experience for its viewers. The FCC’s plan removes the ability of the Disney Channel and other programmers to negotiate for channel placement.

Clearly, these technology non-neutral consequences of the Chairman’s plan are harmful, but some might still insist these sacrifices are worth the potential upsides of having more set-top boxes on Best Buy shelves. Until they remember pay-TV providers would be the only companies to have to give up consumer security and privacy protections. Today, pay-TV customers enjoy strong personal data and security safeguards that, under the FCC’s proposal, would essentially cease to exist. They’d get only what the box maker promised, and even then they’d have no recourse for broken promises. If the FCC gets its way, prepare to be targeted with ads in a whole new and intrusive way on and off TV. It seems that rather than proposing a “technology and platform neutral” approach, the FCC’s set-top box mandate would create huge disparities between the privacy protections expected from technology companies and the privacy protections consumers are supposed to get with pay TV.

There’s a lot more to platform and technology neutrality than just “anyone can build a box.” If the FCC wants to advocate for technology neutral solutions (as they’re doing with business data services) then they should pursue that goal with respect to all of their proposals, including set-top boxes. If they do, they’ll stop in their tracks when they clearly see consumers are already using a vast array of technology neutral apps, devices, services, and tools that compete in an open marketplace. The bottom line is the FCC’s set-top box solution is unnecessary and backwards looking and couldn’t be further from a technology neutral ideal.

  • yair_marx

    This is complete nonsense. This is about being able to get the guide on any device we want. Comcast made an app to work on Roku right? Did Roku break apart the programming however they see fit? I cut the cord and rely on rabbit ears. All my tv’s have a guide that displays my OTA channels. Why is that not an issue? But for some reason its going to be an issue for cable? Just say it. Once and for all: “We pull in a collective $20 billion per year in STB/cable card fees and we don’t want to lose that”.

    Intrusive ads? When I did have cable TV service from Fios, It seemed like every other line in the guide from the cable box is an ad from the cable company to upgrade my internet speed, or an ad for an on demand movie.

    You guys must truly think people are stupid.

    • I’m afraid your mixing up more than one issue. The relationship between Roku and Xfinity is agreed upon. It’s apps-based and we think that’s great. A deal for any guide system to appear on any device that is agreed upon by the providers, content creators, and device makers is a good thing. The FCC want’s to make deals like that INVOLUNTARY and that’s a big problem for the many many reasons we’ve already discussed.

      And again, for the many many reasons we’ve already discussed together, that $20b isn’t profit and none of the money related to set top box goes to the myriad content creators who are staunchly opposed to this plan.

      • yair_marx

        Google leads to piracy too, should we shut down google as well? Fedex is unwittingly the biggest drug dealer in america. Lets shut them down too. Yes, I get the $20B is not pure profit. But It is a profit center. You aren’t losing money on this. Your lobby’s reasons for not wanting to unlock the box is no justification for forcing people into these crappy monopolistic box rental scams. You know whats funny too, I would have more respect for you guys if you at least admitted the $20b a year in fees is also a factor in being against this. But you don’t, all you talk about is fears of losing out on minority programming, and piracy. Telcos do not give your lobbying group millions of dollars a year in funding to defend minority programming. People lobby to protect financial interests. So please stop.

        • I’d be happy to tell you it’s about preserving box rental fees if it actually were about that. But it’s not. If it were, why would we be so happy to hear the Xfinity/Roku deal doesn’t need a box? If it were, why would we be so supportive of app-based video authentication? If it were, why would we be so thrilled to sunset the CableCARD provision? If it were, why would we be touting TWC’s live app? Why would we secretly want to preserve boxes and box tech and publicly try to innovate past them at the same time?

          Our objection with the FCC’s plan is about retaining our right to not have our content given away to technology giants so they can cut it up and rearrange it as they please. We’re working to prevent all of the negatives that come with that.

          • yair_marx

            People just want to see their guide in a box not forced upon them from a price gouging monopoly. If I ever go back to getting cable TV, I want to see the full guide that comes with my service. Why do you think google is going to cut it up and rearrange how they see fit? Also: “There is nothing in here that allows third parties to disaggregate cable content, sell advertising around it… It takes the same system that goes to the cable box today, with the same structure, and moves it through a different box requiring the same structures.”

            http://www.wired.com/2016/02/fcc-set-top-box-rules/

  • yair_marx