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Pay-TV Industry Makes A Counter Proposal To FCC Set-Top Cable Box Rules

In response to the new set-top box rules proposed by the U.S. Federal Communications Commission (FCC) in February to encourage innovation, choices, and lower prices for consumers, the pay-TV industry has made a counter proposal. During meetings last week with the FCC:

"... the pay-TV industry would commit to creating apps to allow consumers to watch programs without needing to lease a box and the FCC could implement regulations enforcing the commitment"

Consumers spend an average of $231 annually in set-top box rental fees, generating $20 billion for the industry. The proposed FCC rules would encourage competition, innovation, more consumer choices, and lower prices. The FCC has said that it needs to see more details about the industry's counter offer:

"... to determine whether their industry proposal fully meets all of the goals of our proceeding..."

Not long ago, the pay-TV industry threatened lawsuits if the FCC proceeded with its proposed set-top box rules. Now, the industry has proposed a half-baked counter offer. Committing to create apps is like giving the sleeves off your vest. Apps are something the industry should be doing anyway.

Plus, the faux commitment avoids competition which was a key goal of the FCC's original proposed rules. One goal was innovation, which means let the innovators innovate -- tech companies like Apple, Alphabet, and others. Clearly, the industry is afraid of competition and doing whatever it can to keep competitors out, regardless of the negative consequences for consumers.

Also, the pay-TV industry's objections to the proposed FCC set-top box rules are unsupportable. Nothing in the FCC's proposed set-top box rules restricts the industry. They can still negotiate content agreements, develop apps (by themselves or license others to do it), and maintain their copyrights or property ownership. The Electronic Frontier Foundation (EFF) explained the the pay-TV industry's sordid history, the industry's faux copyright objections, and its likely goals today:

"... they are hoping that the FCC will repeat the same mistake it has made in the past when attempting to break up the TV set-top box monopoly, which is to leave them with enough control over the design and features of personal TV hardware and software so that choice becomes an illusion... Consumers know they are being ripped off by the current marketplace ($230 per consumer totaling $20 billion in rental fees each year) because they don't have an easy way to just own their box like they do with computers, cable modems, smart phones, tablets, and other electronic devices. And consumers know the personal empowerment that comes with being able to choose the best entertainment devices and software for themselves, separate from the entertainment content itself. Congress recognized this problem twenty years ago and passed a law that empowered the FCC to fix the problem... So what happened? The FCC issued regulations but allowed the cable industry to keep some control. Cable companies today have to give customers a descrambling device called a CableCARD that can go into devices like a TiVO, a PC, or (in theory) a TV itself. But the CableCARD era has been riddled with endless examples of how cable companies frustrate consumer switching away from rented set-top boxes because they controlled the means to switch... "

The pay-TV industry also includes many of the same wireless and broadband providers that object to proposed broadband privacy rules, object to net neutrality rules, and hired lobbyists for local laws in 19 states that prevent citizens from forming municipal broadband networks. All of this keeps prices high, and restricts competition and innovation. What's with the executive myopia?

The TV and cable-TV industries are changing quickly. Pay-TV executives seem addicted to $20 billion annual revenue flows regardless of the consequences to consumers. Address consumers' changing needs or go the way of buggy-whip makers who failed to adapt.

What are your opinions? Comments?


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