The National Cable & Telecommunications Association (NCTA) was among the parties proposing an alternative to a proposal put forth by the Federal Communications Commission (FCC) in February that would uncouple the cable and satellite industry’s proprietary hold on the set-top box from the information that gets fed to that box. To say that the pay-TV providers hated the FCC’s proposal is probably not putting the reaction too strongly.
Cable and satellite operators, known as multichannel video programming distributors (MVPDs) in telecommunications lingo, include Comcast Corp. (NASDAQ: CMCSA) and Dish Network Corp. (NASDAQ: DISH), as well as telcos Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) that currently offer high-speed broadband service described as “over-the-top” (OTT). In 99% of cases, according to the FCC, pay-TV subscribers lease their set-top boxes for OTT programming from the MVPDs at an average cost of $231 a year. Not a fortune per subscriber, but a $20 billion windfall for the MVPDs.
The FCC’s February rules sought an open, hardware-independent format that provides service discovery, information about what consumers can do with the content and content delivery. The agency called its initiative “Unlock the Box” and intended it promote competition in a sector that is slowly being forced to give up its local near-monopoly status.
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The NCTA and others appeared before the FCC earlier this week to pitch their “#ditchthebox” compromise. The devil is in the details, of course, but the NCTA said that its solution commits the industry to binding and enforceable “obligations” to build and deploy video apps using open HTML5 standards. The apps would then enable any retail device (think Google Chromecast/Cast or Amazon’s Fire TV sticks) to work with virtually any pay-TV and OTT provider.
According to Multichannel News, backers of the FCC proposal are not satisfied with that. They want more than app gateways to pay-TV program listings that are displayed side by side with OTT offerings: “They want the content side-by-side and searchable. Backers of the compromise say it does that and more.”
The #ditchthebox crowd argues:
This alternative proposal allows customers to ditch their box altogether, utilizes the open HTML5 standard, and will let devices search for content from both pay-TV apps and other licensed video apps through the device’s search menu.
If the NCTA-backed proposal is going to gain acceptance from the FCC, chances are that it will have to define precisely what “obligations” means. Is it the same as “required under pain of serious financial penalty” or is it a “moral imperative” for an industry not exactly famous for consistently defending the moral high ground.
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To top it off, pay-TV providers are among the most unpopular businesses in the country. Forrester analyst Harley Manning is cited at FierceCable:
Except for federal government agencies (ironically) cable has delivered the lowest rated customer experience among all the consumer-facing industries we’ve studied. … As former market-by-market monopolies, cable companies didn’t have much economic incentive to focus on customer experience. The bar was set really low by the few market players so there was little competition – and where there was competition they weren’t exactly shooting for the stars.
A U.S. Senate subcommittee is set to hear what the industry has to say for itself at a hearing set for next week. That should be instructive.
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