Award Winning Blog

Saturday, February 20, 2016

So Set Top Box Competition Victimizes Incumbents, Harms Minorities, Enriches Google and Increases the Number of Set Top Boxes Consumers Have to Use??????

            Opponents to cable/satellite set top box competition have come up with creative and outlandish rationales for maintaining the status quo.  I didn’t see a claim that competition will kill jobs, but I have seen remarkable and irresponsible predictions of scenarios impossible to occur.

            Let’s consider three of the most outrageous claims.
 
            1)         Google hegemony

            AT&T, Comcast and the major trade association for the cable industry (among others) have strongly implied that big, bad Google is behind the FCC’s initiative and of course this means that the FCC has catered to the company’s ever growing needs for free content which it can offer as its own and monetize through advertising.  See, e.g., http://www.attpublicpolicy.com/privacy/exposing-some-myths-aboutgoogles-set-top-box-proposal/. If this is true, what took Google so long to achieve success?

            This assertion gains traction only for people who have never heard of the Aereo Supreme Court case and lack the time or inclination to read the FCC’s Notice of Inquiry; available at: https://www.fcc.gov/document/fcc-proposes-unlock-box.

First, the FCC document constitutes a request for comments on a set of initiatives and conclusions the FCC tentatively proposes.  There are no specific rules and regulations forthcoming, but that does not prevent incumbent stakeholders from offering a parade of horribles.

            The FCC clearly states that it has no intention to interfere with existing and future commercial arrangements relating to channel placement, advertising, intellectual property law, etc.  The Commission also notes that the much ignored CableCard option has had no impact on such arrangements.  I saw nothing in the NOI that somehow empowers new set top box competitors to preempt such commercial arrangements, to steal programming and to eviscerate existing commercials and insert their own.

            Bear in mind that set top box manufacturers do not qualify for a compulsory copyright license conferred to multichannel video programming distributors (“MVPDs”), like cable and DBS.  The Aereo case precedent sets a high standard for a venture to qualify as an MVPD: using thumb-sized antennas did not work, nor would a set top box.

            The FCC simply proposes that cable and satellite content distributors come up with one open interface specification that will enable set top box manufacturing by others lacking a direct commercial relationship with an incumbent.  An open interface does not suddenly render video content vulnerable to piracy, nor does it authorize the competitive set top box manufacturer to “repurpose” content by asserting ownership and complete freedom to replace existing advertising.

The Commission notes that existing CableCards don’t impact the content stream, nor do they provide set top box manufacturers the opportunity to subvert copyright and contract law.  Future competitive set top boxes will not confer such power to Google, consumers or anyone else.  Plain and simple.

        2)         Proliferation of set top boxes

             Ignoring the remarkable rents they have captured, year after year, incumbents brazenly imply that the FCC will increase consumers’ costs given the need for duplicate set top boxes.  So with all the engineering expertise in the world, there is no possible way for a single set top box to perform all necessary functions?  This assertion does not pass the smell test, much like the inability of the cable industry to complete its work on technical specifications for television sets that can talk to a cable headend and receive content from it.  The cable industry never finalized “true twoway,” because it did not want to do so.  If FCC Commissioner Pai wants an ecosystem where consumers do not have to use a set top box, he can blame the cable industry for deliberately stifling such an initiative.  See https://apps.fcc.gov/edocs_public/attachmatch/FCC-16-18A5.docx.

            Incumbents do not want set top box competition, or a return to “cable ready” televisions requiring no set top box, because the rental revenues are massively lucrative.

             3) Set top box competition hurts minorities
 
            Incumbents attempt to bolster their arguments with a clever and cynical strategy: claiming that set top box competition will harm minorities by making it easier to ignore minority programming.  So a more sophisticated search process harms minorities even though obviously it represents a more sophisticated set top box?

            Are we to infer that it’s better to have expensive and unrefined set top boxes, instead of more powerful and customizable devices that might reduce the serendipity of channel-surfing?
            What a remarkable exploitation of minorities!

2 comments:

Jim Earley said...

Very accurate assessment of the
Current climate. We need every one
To be alert to this struggle.

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