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A setback on set-tops for the pay-TV industry.
January 27, 2016
It's been several months since an advisory group submitted its report to the FCC with recommendations on how to open up the set-top market and give consumers more choice around how they watch pay-TV services.
Today, the Wall Street Journal reports that the Federal Communications Commission (FCC) is ready to rule on those recommendations with a decision that will cheer open set-top advocates like Google (Nasdaq: GOOG) and TiVo Inc. (Nasdaq: TIVO), but greatly anger the pay-TV operator community.
The FCC has not yet responded with comment, but word from the WSJ is that Chairman Tom Wheeler will announce a proposal that demands pay-TV providers unlock their video streams from the current boxes they run on. That in itself is not a major problem for operators who argue they're already creating apps that run on third-party devices to accomplish the same goal. However, the implication in the WSJ report is that pay-TV providers will also have to separate their video streams from the program navigation guides they're currently tied to. On that point, operators are vehemently opposed. (See Content Security Battle Threatens TV Upheaval.)
Pay-TV providers argue that their services are composed of more than just video streams, and that separating the navigation component from the video content itself would both invalidate existing contracts with programmers and put an unfair burden on operators needing to meet a new regulatory mandate. On the contract front, operators say that how content is positioned in their guides is a major part of program licensing negotiations. On the issue of creating undue burden, operators point out that they would need to develop a new hardware adapter to support the proposed FCC mandate in some consumer households, which would inevitably raise costs both for themselves and for consumers.
For more on TV technology trends, check out our dedicated video services content channel here on Light Reading.
In rapid response to news that the FCC is ready to hand down its ruling, a new group called the Future of TV Coalition announced itself and stated its intention to fight any mandate seeking to implement what has become known as the AllVid proposal. Leading the coalition of 47 members are Alfred Liggins, CEO of TV One , and Nomi Berman, President of Bright House Networks .
The great set-top debate has its roots in content security technology, which for years limited who could successfully make and sell set-tops. The FCC formed the Downloadable Security Technology Advisory Committee (DSTAC) in early 2015 with the hope of finding a content protection solution that would make it easy for third parties to innovate on the pay-TV experience. The DSTAC debate, however, quickly moved beyond security and toward the issues of both proprietary hardware and proprietary user interfaces. By the time the DSTAC group disbanded, there were two very different proposals on the table and clear evidence that any decision by the FCC was bound to create ire.
There is further context for the current debate in the history of the CableCARD and the FCC's 2007 ban on integrated set-top security. That regulatory mandate was supposed to create a thriving retail set-top market, but while it proved highly beneficial for TiVo, it did not succeed in creating much of a competitive set-top environment. Technical and operational challenges both contributed to CableCARD's failure, and the cable industry is still bitter about the money operators had to spend to comply with the FCC's rules.
Light Reading has written many, many times about the pay-TV set-top saga. For more background and analysis, see these stories:
— Mari Silbey, Senior Editor, Cable/Video, Light Reading
Senior Editor, Cable/Video
Mari Silbey is a senior editor covering broadband infrastructure, video delivery, smart cities and all things cable. Previously, she worked independently for nearly a decade, contributing to trade publications, authoring custom research reports and consulting for a variety of corporate and association clients. Among her storied (and sometimes dubious) achievements, Mari launched the corporate blog for Motorola's Home division way back in 2007, ran a content development program for Limelight Networks and did her best to entertain the video nerd masses as a long-time columnist for the media blog Zatz Not Funny. She is based in Washington, D.C.
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