Moving Beyond the Cable BoxJuly 22, 2016
Some critics of the Federal Communications Commission's “Unlock the Box” proposal have suggested that the FCC ought to pursue a “no box” approach–that is, some kind of policy (or hands-off approach) that would let customers do away with the set-top box entirely, relying on apps instead, rather than introducing new competition in the set-top box market. The proposal put forward by the National Cable & Telecommunications Association, AT&T, and others even calls itself “Ditch the Box.“
Getting rid of the box sounds great! Of course, apps have to run on some kind of device. But the ideal solution would be the device you already have, with no need for a separate TV-connected device. This is one reason why it's important to remember that the FCC's initial proposal, as outlined in its Notice of Proposed Rulemaking, allows for just that. Under that plan, customers would be able to watch TV on all kinds of devices, such as tablets, smart TVs, and DVRs, via apps, or otherwise.
That's one of the drawbacks of the app model proposed by multichannel video programming distributors (MVPDs). Even if it worked perfectly–and we still have questions on exactly how it's supposed to work–only some devices are app-oriented devices, or have app stores. Smartphones and app-oriented devices like the Roku or Apple TV are great, but not everyone wants every device in their lives to be a general-purpose computer. In a truly competitive market, users wouldn’t be required to use a particular class of device.
But there's something curious about cable industry calls for getting rid of the box: As we speak, some cable companies are doubling down on the rented set-top box model. Last year, it was reported that Comcast is installing 40,000 of its X1 set-top boxes per day, and it has made it clear that it plans to continue renting boxes for the foreseeable future.
The box remains important to companies like Comcast for a few reasons. Of course, the exorbitant rental fees they rake in from consumers are part of the appeal of the current business model for Big Cable. But there are other reasons as well.
Opportunities to cut deals with apps developers
Different app platforms have varying levels of openness. The cable approach so far appears to be on the closed side. To get on the X1 box, for instance, Netflix couldn't just create an app and put it in an app store–it had to cut a special deal with Comcast. That's not a model that scales well to the numerous small video providers the FCC's proposed approach would benefit. Controlling a hardware and app platform allows cable companies to pick and choose what apps viewers can access, as well as potentially charging app developers for access. This extends cable control–in addition to controlling the normal cable TV lineup, when you use an app-enabled cable box, cable companies can also control what online video you can see.
Data collection and advertising
As we've outlined in a recent complaint, cable companies collect, use, and sell data about their customers in myriad ways that violate cable privacy laws. Even within the scope of the law, control over the device viewers use gives cable companies a lot of access to consumer data–not to mention the ability to sell ads through the user interface, preferred placement in search results, recommendations to some content producers, and so on.
Of course, one of cable's go-to arguments has been that it is in fact competitive devices that will bring about all these harms. This overlooks that in a competitive market, consumers have the ability to choose what devices to use. But apart from that, Public Knowledge supports the Commission holding all competitors to the same privacy standards–real privacy standards, not the cable industry's version of them. A competitive market plus real privacy standards would protect consumers a lot more than the cable box status quo.
Entry into new markets
When a cable company controls the set-top box in your living room, it controls a lot more than just a video delivery device. A modern set-top box is a network-connected computer, and controlling a computer in your living room gives a cable company a lot of ways to become more central to people’s everyday lives. There's a reason why tech companies are still fighting “the battle for the living room.”
Pay TV companies can use their control of the set-top box to enter new markets, like home security, connected home services, and so on. Thus, despite claims by the industry that they want to move beyond the set-top box, many companies continue to pursue the new business opportunities controlling the box gives them.
There is, of course, nothing wrong with using a video device as a hub to control other services. But in a competitive market, the living room platform that appeals most to customers would win. The cable plan is to leverage the device you have no choice but to use.
Another interesting “feature” of the cable app proposal is that there is no guarantee that apps will have access to the same content that is available on the apps as is available on rented cable boxes. It specifically states, “The app would include the full suite of the linear and on-demand programming the MVPD has the rights to include.” All kinds of reasons may be proffered for this–but the fact is that, today, devices which use a CableCARD to access programming do have access to the same linear programming as first-party cable boxes. Programming licenses do not, and cannot, cut those devices off. To fulfill the statute, any solution has to ensure that viewers can access all the same programming and features on competitive devices, via apps or otherwise, that they can access on cable boxes.
These issues may be resolvable, but until they are, the “app” approach looks like another means incumbents can use to favor their own devices.
What would it really look like to move past the box?
The only way to make it so that viewers don’t need to rent a box from their pay TV providers is to open up a competitive market. And creating a competitive market requires creating certain conditions: viewers who choose to use a competitive device or app should have access to the same content and features they’d get from a cable box. Competitive alternatives need to be able to meaningfully compete, by offering users different experiences and feature sets at different prices. The FCC’s proposal already allows for these things, and in fact it allows different pay-TV providers to decide for themselves exactly how to support competitive alternatives. Nothing about the FCC’s proposal precludes the types of things that the cable “proposal” suggests – but where cable’s proposal would maintain their stranglehold and close the gate behind them, the Commission’s proposal allows all players, large and small, to come to the table with whatever new innovations they conceive.
When it comes down to it, though, it doesn’t matter exactly what the approach is called, or exactly how it works behind the scenes. The FCC should work with all the ideas before it to come up with a solution that will finally create the competitive marketplace the 1996 Telecommunications Act called for. Only that will allow viewers to ditch their cable boxes once and for all.
Image credit: Flickr user stevendepolo