By John D. McKinnon
Federal regulators soon are expected to propose overhauling
rules for television set-top boxes, a move aimed at lowering bills
for cable viewers and providing more access to Internet-based
programming.
The proposal by Tom Wheeler, chairman of the Federal
Communications Commission, likely would involve giving cable and
satellite customers more choice in whether to use their service
provider's set-top box and cable app, or instead choose competing
devices and apps, according to consumer advocates pushing for the
change.
That could open more of the market to alternative set-top-box
providers, such as TiVo Inc. and Alphabet Inc.'s Google unit.
Pay-TV customers now generally rent devices from their service
providers, often at prices that consumer advocates regard as
inflated. Critics also say those set-top boxes tend to favor
content from the cable company that provides them.
The service providers are planning to resist the initiative,
warning of government overreach. More than 40 telecommunications,
media and other groups are expected to announce a coalition as soon
as Wednesday to oppose Mr. Wheeler's anticipated plan.
Cable and media companies, which face a potential loss of
billions of dollars in rental fees for set-top boxes, are concerned
that a plan to open up that market could disrupt their
business.
At a minimum, they say, it could upend the way the channel
positioning they have carefully negotiated, providing certain
programmers premium spots in their lineup in exchange for higher
payments.
They also warn that tech companies could gain unfair access to
valuable consumer data--such as which channels they watch and
when--and sell their own ads against the programming. Cable
companies say they operate under stricter privacy standards.
Given the opposition, Mr. Wheeler's plan faces a tight timetable
if it is to be enacted by the end of the year, before an expected
change of leadership at the FCC as a new president takes
office.
For years, consumer advocates have complained that the market
for set-top devices has been effectively controlled by the cable
companies, despite congressional efforts to boost competition.
Customers could be overpaying for these devices by $6 billion to
$14 billion a year, according to the Consumer Federation of
America. Critics say that other technologies have plummeted in
price while cable-box rental fees have soared. They say the current
system, in some cases, has limited customers' access to emerging
Internet media, stifling alternative programming.
Some minority-oriented companies have been particularly
outspoken. In a recent opinion piece in the Hill newspaper, Black
Entertainment Television founder Robert L. Johnson urged the FCC to
make changes that would give viewers more access to
alternatives.
"If you have a good program idea, some financing, and access to
the Internet, you can find your audience," wrote Mr. Johnson,
chairman of RLJ Entertainment Inc. "But your audience can find you
only if they have a modem or a set-top box or software that lets
them know you are there and gives them access to your programs
unconstrained by the network gatekeeper."
Access now varies considerably, depending on the pay-TV
provider, experts say. And some cable companies say they are eager
to get out of the set-top-box business.
Still, "the fact remains that you're in a walled garden
controlled by the cable company," said John Bergmayer, a senior
attorney at Public Knowledge, a consumer group.
Those pushing for the change are getting support from some big
names in the technology sector. Google, in a recent FCC filing,
said the agency "should commence a rule making quickly to unleash
competition in the retail navigation-device market."
"We see great consumer benefits in choice, including lower cost
[and] increasing desirability of cable service," said Matt Zinn,
TiVo's senior vice president and general counsel, in an interview
Tuesday.
But foes of the FCC plan have drawn support from more than two
dozen members of the Congressional Black Caucus, who argue that the
overhaul could raise costs and complexity, requiring some customers
to acquire another device. Unlike RLJ's Mr. Johnson, they worry
that with a more wide-open system, minority programming could be
relegated to "the bottom of the pile," as they wrote in December to
the FCC.
Pay-TV industry officials said the plan would be more
far-reaching than it seemed.
"They say it's just a box, [but] it's allowing another company
to build an entirely different offering" in addition to the
traditional cable service, said Michael Powell, a former FCC
chairman and now president of the National Cable &
Telecommunications Association.
He said that the FCC's approach also might focus too much on
devices in an age when apps are increasingly important.
The issue could be one of the most significant policy debates of
Mr. Wheeler's final year in office.
Write to John D. McKinnon at john.mckinnon@wsj.com
(END) Dow Jones Newswires
January 26, 2016 20:28 ET (01:28 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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