Set-Top Cable Boxes Increasingly Coming Under Critics' Fire

Earlier this month, a group of technology companies and advocacy groups formed the Consumer Video Choice Coalition, aimed at opening video networks to more third-party devices on video networks (see 1507010064). Last week, senators touched on set-top box costs in a letter to FCC Chairman Tom Wheeler about monthly cable bills consumers face (see 1507100045), pointing to the ballooning cable modem rental fees charged by Time Warner Cable. All this occurs against the backdrop of work by the Downloadable Security Technical Advisory Committee set up late last year by the FCC to come up with recommendations to the agency on promoting a more competitive market for TV navigation devices. The DSTAC report is due to the FCC Sept. 4.

The set-top box issue “has really bubbled up in the last two years or so and now there is a real window [with DSTAC] to do something about it,” said Dan O’Connor, vice president-public policy for the Computer & Communications Industry Association, which is a member of the Consumer Video Choice Coalition. "Now you see a convergence of a lot of different people coming into the space from different angles." He cited the coalition's makeup ranging from technology companies such as Google and SiliconDust to advocacy groups.

Set-top boxes, with costs hidden in cable bills and "Soviet-style boxes with horrible interfaces ... are a classic consumer issue" and the result of the FCC's not better implementing the Telecom Act, said John Bergmayer, senior staff attorney at Public Knowledge, which is also a coalition member. Section 629 of the act required the FCC to create rules that would open the door to commercially available equipment for accessing multichannel video programming, with that equipment not being affiliated with any multichannel video programming distributor. Cable-ready TVs fit that bill, but since the move to digital and to encrypted cable, Section 629 "just hasn't been all that successful," Bergmayer said.

Cable TV would like to be out of the set-top box business, said NCTA General Counsel Neal Goldberg. "It's a huge expense and under FCC regulations cable companies can't charge more than the cost of the box and a rate of return the FCC sets," he said. "We would be just as happy in many instances to have third parties bear the cost burden." The FCC has been "quietly encouraging" a single, industry-wide downloadable standard, he said. "Unfortunately, DSTAC has kind of gone off the rails into a variety of other areas," Goldberg said, echoing statements made by a number of DSTAC critics (see 1506190057). Though with the DSTAC report due in seven weeks, "[m]aybe that's water under the bridge," Goldberg said.

CableCARD -- one offspring of Section 629 -- is clunky and obsolete, said cable industry officials and Consumer Video Choice Coalition members. Given the proliferation of device options for accessing video, from tablets to over-the-top devices such as Roku, "The question on the table is, do you let the FCC get involved in mandating a particular technology solution or, because it is already happening, would a technology mandate impede that market?" Goldberg said. "It is just such a dynamic industry we do not think the ... heavy hand of government should get involved." A competitive market needs a nationwide standard, which the FCC can facilitate, Bergmayer said. "Nobody is saying Comcast or whomever cannot provide their own set-top box solution. It should just be an open market."