Innovation

Replacing Your Tablet with a Set Top Box

How the FCC wants cable companies to remain in the 1940s

Many people, especially Millennials, watch television shows on cell phones, tablets or laptops, but they may be forced to watch their programs on a television if Federal Communications Commission Chairman Wheeler has his way.

The FCC recently issued a Notice of Proposed Rulemaking (NPRM) which contemplates a rule that would require video service companies to share their programming streams with other companies, apparently so that these companies can enhance their own businesses. If finalized, this proposed rule would significantly set back television and cable innovation.

Consumers no longer need to rely on bulky Set Top Boxes (STBs). They can, instead, receive these programs through apps on their smart TVs, tablets or even freestanding devices – devices such as Roku, AppleTV, Amazon Fire, TiVo and many others, are changing how people consume TV.  These devices provide consumers the ability to access programming on demand, live television, and other programs through apps, such as CBS All Access, Netflix, Hulu, Crackle and SlingTV, to name a few apps.

Yet the FCC is imposing more complicated regulations on set top boxes. Rather than foster innovation, the proposed rules would force consumers to use 1940s technology.

Not only is the FCC forcing consumers to use ancient devices, but the proposed rule may also interfere with intellectual property rights and contracts cable companies have with content producers. These contracts can govern everything from where a particular channel appears (something referred to as the channel’s “neighborhood”) to whether the company can stream the channel online.

The FCC, through the proposed rule, wants all the cable companies on one decoding system, which FCC Commissioner O’Rielly states will “allow the FCC to force [cable companies] to stream all of their content for free to any app developer willing to jump through a few hoops.” The result would be that any company wanting to produce a set top box may compel video providers to provide video streams for free.

Unfortunately for the consumer, under the proposed rule, the FCC would not be able to require “third parties to follow the same privacy rules as cable and satellite companies.” In a separate letter opposing the FCC’s decision, companies warn that if the proposal is finalized, other companies will “be able to strip-mine our creative work for free, while collecting valuable data on users’ viewing history and monetizing it through ads.”

The FCC seems stuck in the 1940s, when a box was necessary to decode cable. Worse, the FCC seems stuck in a place where crony capitalism is acceptable, where rent seeking is looked upon with approval.  In the 21st Century, program consumption has evolved to apps, streaming and on demand programing, with cable companies helping to lead the way. Unfortunately, the Federal Communication Commission’s proposed rule interferes with, instead of enabling, innovation and consumer choice.


In Depth: Innovation

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