Skip to content
Link copied to clipboard

A challenge to Comcast: FCC votes to open set-top cable boxes

Admitting a 20-year whiff in bringing competition to the $20 billion cable-TV box industry, federal regulators voted Thursday to open cable-box standards for Google and other technology companies.

Admitting a 20-year whiff in bringing competition to the $20 billion cable-TV box industry, federal regulators voted Thursday to open cable-box standards for Google and other technology companies.

The goal is for them to devise new ways for consumers to search TV channels and on-demand streaming on television.

The Federal Communications Commission voted along partisan lines, with three Democrats voting for the proposal and two Republicans voting against it.

The measure, if ultimately successful, could undermine a longtime profit center for Comcast and pay-TV companies that have a monopoly on the business of leasing tens of millions of cable, or set-top, boxes to consumers.

Comcast lobbied against the proposal in the Washington corridors of power in the last week, releasing a statement after the FCC vote that said, in part: "The playing field of the FCC in imposing technological mandates is littered with failure."

FCC Chairman Tom Wheeler, a Democrat and a staunch supporter of opening cable boxes to competition, said the proposed reforms were "not complex."

He also rejected criticism that his cable-box proposal could weaken privacy protections - Google is not subject to the same stringent privacy laws as pay-TV companies - or cost telecom companies billions to reengineer networks.

The FCC is under a congressional mandate in the 1996 Telecom Act to foster a competitive cable-box industry. The agency's last attempt to infuse the cable box sector with competition, using the so-called CableCard technology, was a disappointment and cost consumers about $1 billion over the last eight years, according to industry statistics. Regulators forced box makers to engineer all devices to take the cable card technology whether it was used or not.

The cable box is the typically black box positioned next to TVs through which Comcast, DirecTV, Verizon, or other providers deliver television services to homes.

FCC officials say that, today, 99 percent of pay-TV subscribers lease boxes from their pay-TV providers, with the typical subscriber spending more than $200 a year on them.

"Congress has explicitly instructed us to assure that there are competitive information devices, be it a box or an app," Wheeler said Thursday before the commission's vote.

But the FCC faces political headwinds from the pay-TV trade association and federal lawmakers who describe the proposal as an ill-conceived mandate that could undermine privacy, disrupt entertainment networks, and lead to additional clunky boxes in homes.

These opponents also say the FCC's proposal puts off many hard technology questions. And it opens the door for Google, an influential Washington player on par with the pay-TV industry, to develop a video-search tool for TV shows and movies and sell ads around the video-search results, they say.

The trade association Incompas, which includes Google, smaller cable-box manufacturers, and tech firms, has lobbied for the proposal.

"Today, an FCC divided along partisan lines adopted an unbalanced notice seemingly predestined to lead to a new, anti-consumer government technology mandate on video set-top boxes," Comcast said in the statement after the FCC vote.

On Tuesday, Michael Powell, the head of the National Cable and Telecommunications Association, said that implementing the FCC's proposal could take four or more years. He indicated that the industry eventually could sue to block it.

"The proposal promises a lot but it will probably not deliver much," said Republican FCC commissioner Ajit Pai.

"The entire video industry is moving away from a box mentality and as such we should reconsider the need for regulations to maintain a competitive set-top box marketplace," said the second Republican FCC commissioner, Michael O'Rielly.

Jessica Rosenworcel, a Democratic FCC commissioner, said a consumer has only to compare smartphones to cable boxes to see which one has benefited from competition.

"The answer is obvious," she said: the smartphone.

Consumers Union, a frequent critic of the pay-TV industry, said that "for too long, pay-TV customers have had to shell out money month after month to lease these boxes, on top of the ever-increasing price of service. It's time to untether the consumer from that clunky, old box. This vote is an important step toward tearing down barriers that have limited competition and innovation in this market."

Thursday's action, technically a "notice of proposed rule-making," was a preliminary vote on the open standards. In the coming months, the FCC will draft the final rules. They will likely be voted on later in the year, perhaps the summer.