FCC Fighting to Unlock Boxes That Transmit Cable

The raging war over unlocking set top boxes (FCC, Google, Apple, et. al. vs. MPAA, SAG, RIAA, et. al.) is heading towards resolution (or litigation) as, this week, lawmakers had a chance to submit final comments about the controversial plan. The FCC wants to unlock the “set-top box” that brings cable television into your home. If this happens, consumers will no longer need to rent cable boxes, dealing a devastating blow to Time Warner, Charter, AT&T, etc. The New York Times estimates the average consumer pays $231 per year to lease boxes from cable or satellite providers, providing $20 billion in annual revenue to the companies.The FCC seems to be as fed up with the cable companies as consumers, who say the set-top boxes are sold to a captive market: consumers are forced to rent them from their cable or satellite provider since the boxes contain custom technology that decodes a cable or satellite provider’s transmissions. Amazon, Apple and Google want the FCC to “unlock” the boxes, giving the tech behemoths (and smaller companies) the ability to make their own boxes and transmit the unlocked cable content along with any other content it wants (imagine if Apple TV could also provide you with all the cable channels that Time Warner can!).

Cable and satellite providers are also slamming the plan because they make money from content companies that own networks by putting some networks ahead of others in a channel list, let’s call it a “location fee.” Content companies would also no longer have a platform to bundle networks that are under their umbrella (e.g. Disney owns ABC, SoapNET, A&E and Lifetime) hoping that, for example, ESPN lovers would stumble upon and fall in love with SoapNET.

Anthony Wood, CEO of Roku, who one would think supports the plan had this to say: “The proposed regulation would—as we say in the industry—‘decouple the user interface’ from the video and data itself. This would allow a company like Google to do to the TV what it did on the Web—build an interface without the ‘inconvenience’ of licensing content or entering into business agreements with content companies such as ABC, FOX, HBO, or video distributors like pay TV operators. The unintended consequences of circumventing these kinds of arrangements are likely to include increased costs for consumers, reduced choices and less innovation.’

On the one hand it seems as though Wood, whose Roku is a popular box that competes with Apple TV, fears that, if the FCC is successful, pirates could transmit unlicensed content via set-top boxes (many are questioning which companies would be allowed to create a set-top box and how they will guarantee that all content is licensed and that content creators will receive the payment they deserve; the FCC might have to limit the number of companies creating boxes that have access to cable content, otherwise piracy will run rampant). On the other hand, it’s hard to imagine that opening up the boxes would reduce choices or hinder innovation.

21st Century Fox, A&E Television Networks, CBS Corp., Scripps Networks Interactive, Time Warner, Viacom and the Walt Disney Co. say “(the proposal) would require that content provided today to existing distributors under detailed licensing agreements be distributed to a new group of both device manufacturers and app developers, none of which would be bound by any commitments to protect and secure content.”

The WGA and President Obama are backing the proposal saying that it will spur competition (consumers can choose one show, and lots of them, instead of being forced to buy all of the shows on a network). Millions of consumers have already “cut the cord” and are consuming over the top content along with watching on the web. Whether it’s now, or in the near future, cable and satellite companies will have to accept that consumers are no longer willing to pay a fat fee to rent a box that delivers content in an antiquated way.