The FCC is finally breaking the stronghold that cable companies have on the set-top box market. That’s good, as long as it’s not just a giveaway to Google.
ENDING the cable-box racket that burdens millions of Americans is a good proposal by the Federal Communications Commission.
There are several reasons to proceed cautiously, however. It’s troubling that the agency apparently cozied up with Google as it developed the new rules.
The idea, floated by FCC Chairman Tom Wheeler, is that all sorts of companies should be able to build and sell set-top boxes. People should be able to buy their own boxes, instead of having to lease them from cable providers.
This is appealing. Americans pay an average of $231 annually to rent cable boxes, with costs increasing 185 percent since 1994, according to the FCC.
FCC action is overdue. For the last 20 years, the agency has struggled to comply with a congressional directive to open up the market for set-top boxes. In recent years, it seemed to go the opposite direction, authorizing cable companies to mandate that each customer’s TV use some form of set-top box to access channels.
In proposing to finally “unlock the box,” Wheeler cited the FCC’s 2007 decision to let people buy their own cellphones instead of having to use hardware provided by phone companies. A remarkable period of innovation and choice ensued.
Expectations for a set-top-box revolution should be tempered. This hardware should eventually be displaced by apps running directly on Internet-connected “smart” TV sets. If that happens, consumers wouldn’t want or need additional devices or services just to watch their shows.
As the technology and rules evolve, cable companies will find ways to make up for lost hardware revenue, just as phone companies have done since 2007.
Companies like Comcast may find ways to charge fees for devices that receive their signal, whether it’s a smart TV or set-top box purchased elsewhere. “Device billing” is an area where the FCC is now seeking public comment on how to proceed before it finalizes the rules later this year. Device fees could make the medicine worse than the disease.
Cable companies might also respond by stepping up efforts to meter data — including digital video — which is delivered over their networks. This could mean stricter caps on how much can be streamed monthly and charging overage fees, like wireless companies.
Another lesson from the wireless industry is to be wary of Google.
Nine years ago, when the search giant entered the phone business with its Android platform, the talking points were similarly about giving consumers and device makers freedom and options.
Now Android has a dominant 83 percent share of the world smartphone market and has generated $31 billion in sales for Google, according to a recent lawsuit. The software is free, but Google profits immensely by using the platform to sell ads and media, and pull users to other Google properties.
This prompted a European Commission investigation into complaints that Google gets an unfair advantage from services it bundles with Android.
Google fares better with U.S. regulators. It lobbied the FCC to open the set-top market to competing devices. Then it apparently received early word of Wheeler’s proposal — after his announcement, it reportedly had a prototype box ready to demonstrate in Washington, D.C.
This schmoozing raises questions about whom the new rules really benefit. It also gives credence to cable companies’ argument that the proposal basically gives their content to Google.
It would be nice to pay less and have more choice when it comes to cable boxes.
But the FCC needs to be sure that it’s not trading one monopoly for another, with an additional layer of ads on top.