The Federal Communications Commission wants TV viewers to have more alternatives to their current set-top boxes.
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Today, nearly all subscribers to cable, satellite and phone-company TV services rent a box from their service provider that allows them to watch the programming they're paying for. Cable viewers can buy their own box, but it's an expensive option that few have chosen. To spark more competition, the FCC has proposed that a technology standard be developed—a so-called open standard—that would allow anyone to create and sell boxes or apps that would give these pay-TV subscribers access to their shows.
Proponents say competition could drive down costs and encourage innovative features. And consumers could use a single box or app to view pay-TV shows and the rapidly expanding menu of Internet programming.
Detractors, though, see the proposal as an unnecessary and harmful government intervention in a market already being driven by competition to give viewers more choices.
John Bergmayer, senior staff attorney at Public Knowledge, a nonprofit based in Washington, D.C., argues in favor of the FCC's proposal. Randolph J. May, president of the Free State Foundation, an independent free-market-oriented think tank in Rockville, Md., makes the case against it.
YES: It Would Benefit Both Consumers and Programmers
By John Bergmayer
Government regulation helped create the uncompetitive pay-TV market consumers are saddled with today. Now it's time for the government to start to undo the damage.
Specifically, the government should make it easier for subscribers to cable, satellite and phone-company TV services to watch the programming without having to rent a set-top box from their content provider.
The FCC has a proposal to do just that, and if adopted, it would be a win for both viewers and programmers.
The proposal would create many new choices for viewers, by allowing them to replace the boxes they currently rent from monopolistic cable companies with devices supplied by a competitive market.
When companies have to compete for consumers, they have the incentive to provide the best experience. In this case, competition would provide viewers with the features they want, such as interfaces that combine cable programming with online programming from sources like Amazon or Vimeo.
Competition also would produce options at a variety of prices, from simple devices for those who just want to watch TV more easily to more-advanced options for those who want a lot of interactive features.
The proposal also would ensure that viewers could avoid using a set-top box at all, and just use a smart TV with no extra hardware, or watch the full menu of cable programming on game consoles like the PlayStation 4, streaming devices like the Apple TV, or smartphones or computers.
Programmers also would have more choices. Currently, the best way for a programmer to reach viewers is cable, because it is still the single most popular way people watch programs. But getting your programming carried by a cable provider can be challenging. Some cable companies make their own programming and have no incentive to carry competing channels. Or they might require that a programmer give them exclusive access, cutting the content off from online platforms.
The FCC proposal would allow for content carried online to get equal billing with cable programming, by making both accessible through a single box or app. Programmers would still find cable valuable. But getting on cable shouldn't be a life-or-death issue. And there should be viable options for programmers that find getting on cable impossible because they cater to niche interes ts or minority audiences.
What about the various initiatives cable companies are taking to make their programming available through smart TVs or boxes like Roku's streaming device?
They don't make the FCC proposal unnecessary, because they don't achieve the competition it envisions: They all make sure the cable industry retains control over the user experience.
As for concerns some have voiced about piracy, the FCC proposal would allow for the same level of content-protection technology the cable companies use now in their own devices. And concerns that the content presentation that cable companies negotiate with programmers will be bypassed by search functions in third-party devices or apps sounds like an objection to competition. Cable companies can still offer their own devices or apps featuring their programming however they like, and consumers can decide what they prefer.
The FCC proposal has garnered support from independent programmers, consumer groups, and app and device makers. Any proposal that introduces competition is bound to be opposed by those who benefit from the status quo. But the best way to ensure that viewers have access to devices, apps and services that meet their needs is through competition, not the government-fostered cable monopoly.
Mr. Bergmayer is senior staff attorney at Public Knowledge, a nonprofit based in Washington, D.C. He can be reached at reports@wsj.com[9].
NO: Competition Is Coming Without New Regulations
By Randolph J. May
The FCC's proposal for a new technology standard for cabl e, satellite and phone-company set-top video boxes is a solution in search of a problem. That may be a cliché, but it has never been more apt.
For starters, consumers already can provide their own set-top cable boxes. The FCC's website refers to the agency's rule permitting consumers to "use your own set-top box without extra charge." All you have to do is slip a CableCard—a smart card about the size of a credit card that identifies you as a subscriber—into your own box to gain access to your cable programming.
But that option usually isn't any cheaper than leasing a box from a cable company. A TiVo box, which can be used to access cable programming, retails for about $300 to $400, plus monthly service fees of about $15 to $20. Consumers, though, will soon have more alternatives. The video market is changing rapidly without the need for government mandates, and all in the direction of greater competition and more consumer choice.
For example, last month Comcast[15] [16] announced plans to make its Xfinity content accessible on Roku TVs and Roku streaming devices and on new Samsung smart TVs. Time Warner Cable has a trial program allowing Roku subscribers to access TWC's cable services. In these cases, you won't need to lease a set-top box from the cable operator. And you will have access to both cable programming and online programming.
Moreover, over the next several years cable operators and other multichannel video distributors such as satellite and phone companies will continue to improve apps that allow subscribers to access their services from any device, including smartphones, tablets, laptops and smart TVs. Cable operators Charter Communications and Time Warner Cable (now merging) both have developed new apps that eliminate the need for a traditional set-top box. Others, such as AT&T, recently have announced plans to do so.
The FCC admits it will take several years before the new technology standard it envis ions can be developed, approved and brought to market. By that time, it will be pointless.
Even worse, the FCC proposal would create problems. For one, it jeopardizes the intellectual-property rights of video programmers.
One crucial aspect of this issue is the packaging of programs. Programming typically is offered by cable companies in various bundles that have been carefully negotiated with the programmers. But if that programming is provided through a third-party device or app, instead of a device or app controlled by the multichannel video distributor, those agreements can easily be rendered moot. If the third-party device simply offers a search function or menus that allow viewers to look for programs across the video universe—including online programming—the negotiated program lineups will be undone.
There's also the related threat of theft. Giving a multitude of device and app makers the ability to access the multichannel video providers� �� content greatly increases the opportunities for piracy. The vast amount of pirated programming available online today attests to regulators' inability to counter this threat.
Another problem created by the FCC's proposal is the potential loss of programming produced by minorities and small independent programmers. Many of these programmers are concerned that it would be harder for them to negotiate acceptable licensing agreements with multichannel video distributors if their programs have to stand on their own because bundling is no longer effective.
It's troubling that the FCC has initiated what surely will be a costly, contentious and lengthy process to design a technology standard that won't do consumers any good. The commission's proposal is not just a solution in search of a problem. It's an imagined solution that would create real problems.
Mr. May is president of the Free State Foundation, an independent free-market-oriented think tank located in Rockville, Md. He can be reached at reports@wsj.com[17].
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