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The "Consumer Choice in Video Devices Act" Would Move Set-Top Competition Backward
November has been a promising month for the prospect of reform in the video marketplace, with Senate Commerce Committee Chairman Jay Rockefeller's (D-WV) ambitious Consumer Choice in Online Video Act. While we're eager to see how Congress responds to Chairman Rockefeller's bill, we're also keeping an eye on video-related activity on the other side of the Hill.
Back in September, Rep. Bob Latta (R-OH), the Vice-Chairman of the House Energy and Commerce Committee’s Subcommittee on Communications and Technology introduced H.R. 3196, the Consumer Choice in Video Devices Act, a bill that would amend the Communications Act to restrict FCC authority for adopting certain rules or policies relating to multichannel video programming distributors (such as cable operators). In particular, this bill targets Section 629 of the Telecom Act and would end the "integration ban," an FCC requirement that cable operator-supplied set-top boxes use some of the same technology--currently CableCARD--that third-party device makers use.
Consumers overpay for cable. That's for several reasons, one being the unadvertised charges that providers slip into viewers' bills that don't reflect the true cost of cable subscription. Most consumers today are limited to only renting a set-top box from their cable provider, which can add anywhere between $5-$20 per month to their bill (and more in some cases). Congress addressed this problem with Section 629 of the Communications Act, where it directed the FCC to adopt standards ensuring that customers can buy their own video equipment at retail and avoid the hidden cost of equipment rentals.
While Congress left the FCC to fill in the details, most plausible plans for promoting video equipment competition rely on a principle known as "common reliance," which ensures that cable companies use the same technical standards for their own devices that outside companies have to use. These common reliance principles don't prevent cable providers from upgrading their networks, providing new services or offering new content. They only ensure that these improvements are also available to consumers who decide not to rent a set-top box from their providers. The purpose of this requirement is to align the interests of cable operators with those of viewers and competing device-makers, by making it impossible for them to "accidentally" break third-party devices without also crippling their own.
Proponents of the Latta-Green bill say their approach would be a response to the CableCARD system that is currently in place, which they allege raises costs for consumers. This overlooks the fact that the largest set-top box-related expense that consumers pay is the rental fee itself. The Latta-Green bill would move us no closer to a world where fewer people are required to rent devices just to watch TV.
It is true that the CableCARD system has not been as successful as it could have been. While this is largely due to inadequate FCC implementation and resistance from the cable industry (the same folks pushing to support the Latta-Green bill), it is reality. Many customers benefit from CableCARD today, though, and Congress should seek to extend the device choice those customers enjoy to everyone instead of rolling it back for the people it works for now. Unfortunately, the Latta-Green bill would limit viewer choice and hinder moves to a successor technology that would more broadly implement the goals of Section 629. It's trying to move forward by taking a few steps backward. That can't work.
The bill could make it difficult for the FCC to implement a successor technology by potentially outlawing the "common reliance" principle mentioned above. The ability for third-party devices to have the same access and support as operator-supplied devices fosters a more competitive marketplace, gives the consumer more options for his or her user experience and establishes an environment more favorable to innovation. Regrettably, this would be hindered by the Latta-Green bill.
As we stated when this bill was first introduced, we support efforts to modernize the FCC’s approach to this issue and to move beyond the CableCARD system. But this bill has very little upside.