The FCC is set to vote Thursday on a proposal by Chairman Tom Wheeler to create a framework for a more open set-top box market. Using the handy moniker and hashtag #UnlockTheBox, Wheeler is hoping to institute a system that will give consumers the ability to view pay-TV content on third-party devices and within third-party apps. In all likelihood the proposal will pass in a party-line vote, with Democratic Commissioners Mignon Clyburn and Jessica Rosenworcel backing Chairman Wheeler. However, opposition groups have already turned out in force to protest the proposed rulemaking, which would start a new process designed to hash out how a market framework for set-top reform might be implemented.
On one side, Google (Nasdaq: GOOG), TiVo Inc. (Nasdaq: TIVO) and others believe the Federal Communications Commission (FCC) is doing the right thing by trying to regulate the set-top business in the face of a continued lack of market competition. On the other side, pay-TV operators and programmers have formed a group called the Future of TV Coalition and adamantly contend that further regulation would only hurt consumers.
Here's what's at stake.
Hardware issues Pay-TV operators argue that any new technology mandate imposed on the set-tops they lease to subscribers will inevitably add cost and complexity to the video services business. They also assert that trying to open up the set-top market through regulation is more likely to short-circuit the evolution of apps-based video delivery already in progress. Cable companies have experience with mandates from the FCC. They lived through the era of the integrated security ban, which launched CableCARD technology and forced operators to spend money on new types of boxes with bolted-in CableCARD security modules.
However, proponents of the FCC plan say the new proposal is different, and that new set-top requirements could be implemented entirely through existing equipment and software updates. While operators claim they would need to create new adapter devices, Brad Love, a senior software engineer with technology company Hauppauge Digital Inc. , says he's proven in demonstrations that it's possible to implement the full FCC proposal quickly and with minimal effort through software development work. Love is a credible expert. He's one of the authors of the technical plan underlying the FCC proposal. (See How the FCC's Set-Top Plan Could Work.)
Beyond the box Despite the very real hardware considerations in the Unlock the Box initiative, the heart of the current set-top debate centers on an even bigger issue: whether or not pay-TV providers should be forced to unbundle their video content from the user interfaces they offer. Third-party technology companies don't just want to create new hardware for TV viewing. They want to create new user experiences. And that's where service providers have a major problem.
Next page: A political minefield