The FCC's "Unlock the Box" initiative got an attention boost last week with President Barack Obama voicing his support for greater competition in the TV set-top box market. However, the pay-TV industry isn't giving any ground on this debate, and instead continues to push hard through the Future of TV Coalition for an alternative solution that would bring pay-TV services to new devices through an apps-based approach.
Service providers and groups like the National Cable & Telecommunications Association (NCTA) argue that apps are already here today and that apps are making it easier even now for consumers to watch TV without a set-top. The government should get out of the way.
There's just one problem with that argument. The industry has a terrible track record with pay-TV apps.
There are two issues under debate with the Unlock the Box proposal. One is how to make pay-TV services accessible on more boxes. This is the issue that continues to grab headlines because proponents of Unlock the Box cite hefty monthly fees that consumers have to pay today to lease their set-tops from a service provider. The second is whether pay-TV providers should be required to unbundle video streams from their proprietary user interface guides so that competitors can create their own UI experiences without becoming content providers themselves. (See Before the FCC Vote: Set-Top Fight Redux.)
It's the latter issue that the pay-TV industry is really afraid of. But because service providers haven't effectively addressed the first issue, they're now in hot water over the second.
Despite all of the rhetoric from Unlock the Box proponents, service providers aren't terribly wedded to the leased set-top model. Set-tops are a cost center as well as a revenue driver, and if it were easy to move away from the model, many pay-TV providers probably would have done it long ago.
That said, service providers have had the means to move to an apps-based approach for several years now for TV delivery. And they've largely sat on their hands.
We've heard time and time again that apps are "the future of TV." Tim Cook may have been the first one to use that line, but traditional pay-TV operators are the ones repeating it with a vengeance. At a recent NCTA press conference, President & CEO Michael Powell not only talked about how apps are the future, but also how they are present and functioning today. He mocked the Unlock the Box proposal as an idea without proof of execution, while saying that TV apps that are accessible on multiple retail boxes are already available.
To demonstrate his point, Powell showed off the Time Warner Cable app on a Roku box. However, the TWC feed wasn't a local one. The NCTA had to get permission to stream in a feed from out of market because Time Warner Cable Inc. (NYSE: TWC) doesn't operate in the Washington DC area where the press conference was held. In fact, as far as I know, no service provider in the DC area offers an app for the Roku platform, the Apple TV, the Chromecast or any other smart TV device.
Sure, pay-TV apps are "deployed" and "real" today, but only from a couple of providers in select markets. Time Warner Cable laudably launched its Roku app back in 2013. More than two and a half years later, Charter Communications Inc. followed through with its Spectrum app in the fall of 2015 -- after the Unlock the Box proposal was first unveiled as a possibility. (See Charter Parks Its App on Roku.)
Other operators could have and should have followed Time Warner Cable's lead. But they didn't. If they really believed apps were the future of TV, why didn't they make that future happen before the FCC applied pressure? The industry's had years to make that vision a reality, and yet it's made very limited progress.
Now, instead of just dealing with the set-top issue, pay-TV providers are faced with the much scarier prospect of potentially having to unbundle their video streams and lose control of the TV UI.
You might almost say they've boxed themselves in.
Now if only somebody had a key.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading