Is this about to become an endangered species? Photo via Wikimedia, published under Creative Commons... [+]
Tom Wheeler, Chairman of the Federal Communication Commission (FCC), this morning released a plan that, if adopted, would fundamentally change the balance of power in the cable TV marketplace.
"American consumers enjoy unprecedented choice in how they view entertainment, news and sports programming," writes Wheeler. "You can pretty much watch what you want, where you want, when you want. But there’s one glaring exception in the competitive video marketplace: The 'set-top box.'”
Wheeler notes that 99 percent of pay-TV customers lease set-top boxes from their cable, satellite or telco providers, spending an average of $231 a year to rent these boxes. That translates to between $6 and $14B in annual revenue for cable providers.
But cable companies' dominion over the set-top box is more than just a cash cow. It gives them control over the interface between viewers and the programming. That lets them lock up the signal with proprietary standards that make customization and interoperability with other devices difficult or impossible. It also gives cable companies sole access to the invaluable data generated by set-top boxes: what people are watching, how often they change channels, pay-per-view metrics and even information about what they record and when they play it back.
Tech companies like Apple, Google and Microsoft have been waging a largely futile battle for the living room over the past decade, thwarted by their inability to access the cable signal directly. Microsoft's Xbox One gets around this using IR repeaters that simulate the remote control signal. Apple's efforts to "appify" TV stem from their inability to reach an agreement with cable companies to provide more straightforward over-the-top service.
Wheeler's proposal would change all that. He claims the plan he's putting before the FCC will "tear down the barriers that currently prevent innovators from developing new ways for consumers to access and enjoy their favorite shows and movies on their terms."
"The new rules would create a framework for providing device manufacturers, software developers and others the information they need to introduce innovative new technologies, while at the same time maintaining strong security, copyright and consumer protections," writes Wheeler.
In other words, it would require all cable carriers to follow a common standard, opening the market up to new competition. Consumers could likely expect more and better options at lower prices, while freeing themselves from the excessive equipment costs that clutter up their cable bills. Removing this market friction might also help stem the tide of "cord cutting" that's starting to cut into the mass audience that some cable networks like ESPN count on to support their revenue models.
Wheeler's proposal must still go before the full FCC. Needless to say, the cable companies like Comcast, TimeWarner Cable, and their allies are not thrilled and are mounting a concerted effort to protect their perch on the commanding heights of the market.
Which side will prevail? Stay tuned. This revolution will be televised.
