A $20 BILLION INDUSTRY

The FCC has moved closer to letting Americans dump their crappy cable boxes

Obsession
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Obsession
Glass

Cable boxes might be about to get a whole lot better.

Today (Feb. 18), the Federal Communications Commission (FCC) voted to approve new rules that would open the cable box to third-party competition, thereby releasing the cable companies’ stranglehold on the device through which hundreds of millions of Americans access TV.

Nearly every American who subscribes to cable TV is forced to use a bulky, slow, and outdated box that the company supplies. According to a US senate study, subscribers spend an average of $231 a year—or $19.25 a month—just to rent these boxes from their cable companies. That amounts to roughly $20 billion spent on boxes every year.

In January, FCC Chairman Tom Wheeler proposed to change all that. His proposal (pdf) would allow Americans to buy boxes through third-party companies instead of through their TV providers. Not only would this lead to better devices and more consumer choice, Wheeler argued, but it would drive down the exorbitant costs to rent them.

That proposal passed 3-2 in a vote of the FCC commissioners today. It will now move into a comment period, where supporters and critics will be able to publicize their arguments. A final vote is expected by the end of the year.

If it’s ultimately implemented, a lot of American TV-watchers will be thrilled. And tech companies, like Apple and Google, would relish the opportunity to get into consumers’ living rooms. Google is said to be already testing what could eventually become its version of the cable box.

The cable companies, though, aren’t happy about any of this. And why would they be, when a $20 billion industry hangs in the balance?

One counterargument is that cable providers, like Comcast and Time Warner Cable, are moving away from cable boxes in favor of apps. Indeed, Time Warner Cable’s app is quite good, and Comcast’s innovative X1 cable box works more like an Apple TV or Roku than a traditional, cumbersome set-top box. If the proposal goes through, it could be several years before there’s truly an open cable box marketplace—and by that time, the cable companies could already have moved on from physical boxes altogether.

Critics also argue that more government regulation of the cable box will hinder innovation—even though the proposed regulatory measures are designed specifically to do the opposite.

Some are worried that the proposal would allow third-party companies to subvert existing agreements between networks and cable companies by changing or rearranging channel lineups or by putting in their own advertisements.

During today’s vote, Wheeler assured that would not be the case: “There is nothing in here that allows third parties to disaggregate cable content or sell advertising around it,” he said. “It takes the same system that goes to the cable box today with the same structures and moves it through a different box.”

On Wheeler’s side are Google, TiVo, consumers groups, and several newspapers, including the New York Times. “Americans have waited long enough for more and better choices than the cable box,” the Times editorial board wrote last week. “It is important to remember that Mr. Wheeler’s proposal doesn’t require consumers to make any changes. Anybody who is happy renting a cable box, can keep doing so.”

Wheeler cites the FCC “unlocking” the telecommunications industry 20 years ago as evidence that his plan will work. When competition on phones was opened, technology evolved (leading to advancements like the answering machine) and prices went down. Consumers were happy.

We still have months to go until anything changes, but it’s abundantly clear that the days of being required to pay for a crappy cable box are numbered.

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