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FCC proposal to ‘Unlock the Box’ is launched in 3-2 vote – A case of déjà vu?

by David Watkins | Feb 22, 2016

Last month, Tom Wheeler the chairman of the Federal Communications Commission formally unveiled a proposal to open up cable and satellite signals in the US to give manufacturers of third party devices such as Smart TVs and Digital Media Streamers easier access to Pay TV content from MVPDs. FCC commissioners voted to launch the proposal on the 18th February which will usher in a round of debates and likely refinements to the proposal over the coming months before a decision is made as to whether it gets written into law.

The idea behind the proposal is to give consumers the choice of either continuing to access their cable or satellite programming through a set-top box that they lease from their cable company or buy a ‘cable-compatible’ third party device at retail such as a Smart TV, Tablet or Media Streamer. The cost of leasing a Pay TV box from cable companies has been on the rise in recent years and an average Pay TV household in the US spends $231 every year in rental fees for a device that they never end up owning. The FCC proposal would allow them to save a lot of that money by simply buying their own box for potentially as little as $100.

The vast majority of Americans wanting to access cable or satellite programming today must have a Pay TV box that they lease from their Pay TV provider. Alternatives do exist such as leasing a CableCARD and slotting it into a third party box such as a Tivo device but such approaches have failed to really catch fire due to expensive hardware, limitations on how content can be presented on them and resistance from cable operators keen to show that the operator controlled box was the best option. Under the proposed FCC ruling, third party device manufacturers will be able to license a cable operator’s copy-protection software as well as have access to the specifications required for building a cable box of their own which they can sell to consumers at retail. These devices will be able to catch the cable or satellite signal coming into the home and integrate the Pay TV programming with the device vendor’s own apps and interface. However, the FCC has stated that third party manufacturers will not be allowed to overlay their own advertisements on the Pay TV content.

The ruling will no doubt be music to the ears to the likes of Apple and Google as well as the Smart TV vendors who will now be able to develop devices that are capable of offering a more comprehensive TV experience than has been possible before. However, there are deep concerns amongst the majority of US cable and satellite operators about what such a ruling will mean to consumer privacy as well as the complex (and hugely valuable) carriage agreements they have with networks with regards to channel placement. Pay TV operators would presumably also have to allow access to all of their metadata so that third parties could create EPGs (Electronic Program Guides) which is clearly a lot of valuable information to just hand over. MVPDs also argue that the FCC is ignoring the fact that they have made huge strides in opening up their content to retail devices by making their own apps available (albeit currently with limitations on content access) on Smart TVs and other connected devices. They argue that this path towards a set-top box-less world would better protect consumer privacy and allow them to maintain existing content deals.

A final decision on whether to write the proposal into law is likely to be some months away and in the meantime we can expect some heated debate as the proposal is picked apart by interested businesses and customers.  One thing for certain is that the way in which Pay TV subscribers access their Pay TV content is changing as operators experiment with delivering their programming through apps on retail devices or even licence software and hardware from third party companies like Roku. While we do not see the traditional Pay TV set-top box disappearing anytime soon, there are clearly mounting forces keen on resetting the balance of power in the living room of tomorrow.

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