Rumors of Apple Set-Top Box a Reminder of Thwarted Innovation

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The Wall Street Journal has run two recent reports that describe Apple's plan to roll out a cable set-top box. There have been rumors about this for years. Back in 2007, Steve Jobs showed a level of familiarity with obscure cable technology that would suggest that Apple engineers were looking into this kind of product back then. But Jobs was repelled by the janky technology, and instead, Apple introduced a pure streaming device--the AppleTV--that did not interact with cable TV content. But most of the most valuable content is still available only on cable, or on cable first. Lots of people seem to love the AppleTV, but there's a reason why Apple still describes it as a "hobby."

But however inelegant the technology, and however much of a pain it must be to deal with the incumbent cable companies, it still makes sense for Apple to try to introduce some kind of new set-top box that works with cable content if it wants to colonize the living room.

This is all assuming the cable companies let it, of course. While a lot of people rightly criticize aspects of Apple's locked-down ecosystems, compared with cable Apple is as open and freewheeling as a Maker Faire. Cable is not exactly eager to partner with a company that might show consumers what they've been missing.

But here's a thought. Wouldn't it be great if Apple was able to roll out a new video device without having to specially get the permission of each and every cable company in the country? And wouldn't it be great if it didn't take being the richest company on earth to be able to even consider such a thing?

Well, Congress had that thought too. Part of the 1996 Telecommunications Act reads as follows:

The Commission shall, in consultation with appropriate industry standard-setting organizations, adopt regulations to assure the commercial availability, to consumers of multichannel video programming and other services offered over multichannel video programming systems, of converter boxes, interactive communications equipment, and other equipment used by consumers to access multichannel video programming and other services offered over multichannel video programming systems, from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor.

That's right. There's a law enacted by Congress that directs the FCC to come up with a technology standard that allows companies like Apple to simply sell innovative devices directly to consumers, without having to separately negotiate with cable systems. But the only thing this law has ever gotten us is CableCARD, a technology that works for some use cases, but is not robust enough for the kinds of things that Apple, Google, Intel, Sony and other companies have wanted to do with TV. There's a proposal for a successor technology in front of the FCC right now -- it's called AllVid -– but the Commission has not shown much interest in moving forward with it. Nor has it shown much interest in other possibilities, such as Steve Schultze's proposal that proprietary cable set top boxes come equipped with standard outputs to allow them to interconnect with third-party devices.

That's a shame, because it's keeping interesting devices like this rumored Apple set-top box off the market. And the lack of a stable system to allow for third-party innovation on top of TV content leads to other problems as well, such as the dispute that Boxee had with Comcast over the encryption of basic tier channels.

Very often Public Knowledge advances policy proposals that that we believe will allow for unforeseen innovation. We don't know exactly what kinds of cool things people will do with white spaces spectrum technology, for instance, but no one predicted that the "Industrial, Scientific, and Medical" spectrum band would eventually be used for things like Bluetooth and WiFi. It can be challenging to convince policymakers to embrace the unknown, and if they fail to take steps to promote innovation there are no sob stories to tell or shuttered businesses to point to--the people who would have done the innovating just did something else instead.

But the failure of the FCC to implement the law this is a rare case where we can see thwarted innovation all around us. Boxee, Roku, and similar companies would have very different products if they could easily display cable content. And companies like Samsung, Apple, and HTC that have brought such changes to the wireless handset market would be battling it out for the living room, as well.

I certainly hope someone can shake up the living room. But stories like those about the Apple set-top box are a reminder that the innovation Congress wanted to happen in 1996 has yet to occur.

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