For as much rancor as the net neutrality debate has generated in the US, the FCC's "Unlock the Box" initiative has now arguably risen to near-equal levels of contentiousness.
Over the last year and a half, pay-TV operators have battled it out with Internet companies and device makers -- fronted largely by Google (Nasdaq: GOOG) and TiVo Inc. (Nasdaq: TIVO) -- over how pay-TV services should be delivered. On the one side, multichannel video distributors (MVPDs) want consumers to be able to watch their shows on a wide range of devices, but always through an MVPD-provided app. On the other side, many Internet and consumer electronics companies want the flexibility not only to deliver pay-TV video streams on third-party devices, but also to use their own user interfaces (UIs) to do so. (See Ditch the Box? It's Code for Keep the UI.)
In the latest round of debate, the Computer & Communications Industry Association (CCIA) -- which includes members such as Amazon.com Inc. (Nasdaq: AMZN), Google, Samsung Corp. and TiVo -- has responded to a pay-TV industry compromise proposal calling it "light in detail and heavy with loopholes." The CCIA has a counter-counter-proposal and plenty of arguments for why the pay-TV industry's approach doesn't do enough to make room for competition in the retail market.
First, the CCIA points out that even if using an MVPD-provided app were a reasonable solution, the pay-TV provider proposal, known as "Ditch the Box," doesn't promise any DVR functionality and doesn't make allowances for the advantages of using a native app versus an HTML5-based app. On the latter point, so-called native apps, which are optimized for a particular operating system, can deliver more features and may also be more efficient. Roku Inc. made this same argument in July noting that HTML5 can require "third-party device manufacturers to include additional processing power and memory," which in turn can lead to higher device costs. (See Roku: HTML5 No Panacea for TV Apps.)
Second, the CCIA argues that digital certificates could be used to counter MVPD concerns that allowing third-party UIs would create new problems with regard to programmer contracts, content security and consumer privacy. According to the CCIA, a digital certificate could be "tied to contractual language pertaining to advertising, channel number preservation, and privacy compliance," some of the issues MVPDs have cited as critical for their business and for consumers. The organization says a digital certificate could also be used to ensure content security in the same way that certificates online indicate a secure website.
The CCIA also references back to the original Unlock the Box proposal, calling for three "information flows" that would open up service discovery and entitlement information as well as actual content delivery from an MVPD offering to a third-party company. The group proposes that an MVPD-provided app could control the user interface for authentication, entitlement, on-demand content and critical messaging, but that a third-party manufacturer should be able to link in to that information as needed in order to provide an alternative primary consumer-facing UI.
Once again, the arguments over "Unlock the Box" have veered away from actual discussion of third-party retail set-tops. Instead, the debate is focused on third-party user interfaces, which is where the stakes may be highest. Pay-TV providers don't want to be the equivalent of a "dumb pipe" for delivering content. They want to be in charge of the user experience, and the revenue that comes from packaging content with their own features and services.
CE and Internet companies want the same opportunity.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading