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

FCC Set-Top Box Neutrality

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

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.

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