Game, Set and Match: How the Cable Industry Generated Billions by Making Their Set Top Boxes Irreplaceable

             This week the FCC tacitly admitted that it lacked the willpower, intellect and courage to mandate a competitive market for cable set top boxes.  See https://www.fcc.gov/document/fcc-closes-navigation-device-proceeding.  The Commission could not get a grip for nearly two decades, despite a congressional mandate (Communications Act of 1934, Sec. 629, codified at 47 U.S.C. § 549(a)) and a longstanding Carterfone policy clearly favoring the sovereign right of consumers to attach electronic device like telephones, modems, fax machine, and Wi-Fi routers.

            The cable industry managed to differentiate set top boxes from other consumer electronic devices.  Somehow, someway, these kludgy, heavy, power hungry devices were so, so complicated and so, so vulnerable to copyright piracy that the typically, much heralded marketplace could not be trusted to offer alternatives.  Instead, the cable industry, in league with an overly trusting FCC, came up with an oversized computer chip that would provide the basis for one-way consumer access to some, but not all of the functions the lionized set top box could provide.  Adding insult to injury, the cable industry initially insisted that a company technician had to insert the CableCard and consumers had to pay a monthly fee for the privilege of renting the card.

            Predictably, cable subscribers took the path of least resistance and continued to rent set top boxes.  Even now, the cable industry has over 190 million set top box installations in the U.S.  That substantial installed based—even diminished by churn and broadband-delivered options—tells us that the multi-decade rip-off continues. 

            The FCC emphasizes that technological innovation and changes in video consumer behavior supports its surrender. Perhaps cable subscribers do not even know they have to pay monthly rentals for set top boxes.  I do not know anyone pleased with the interface, with the exception of recent Comcast options.

            The lesson here: use every tactics to stall, delay, obfuscate and complicate to prolong the status quo.  Even FCC Chairman Ajit Pai, 2016, wanted to see competitive alternatives to a cable industry monopoly, but alas, he never got around to acting, instead thwarting an earlier Democratic initiative. 

            I wonder what he meant by the following:

As someone with three set-top boxes in my home, I share the frustrations felt by millions of Americans across this country. These boxes are clunky and expensive, and I feel the pain each and every month when I pay my video bill. And as an FCC Commissioner, I know that the current set-top box marketplace is the product of an intrusive regulatory regime. Something has to change. What should that change look like? What should our aim be when it comes to this marketplace? What would be best for consumers? My view is pretty simple. Our goal should not be to unlock the box; it should be to eliminate the box. If you are a cable customer and you don’t want to have a set-top box, you shouldn’t be required to have one. This goal is technically feasible, and it reflects most consumers’ preferences—including my own. https://docs.fcc.gov/public/attachments/FCC-16-18A1.pdf (p.61).