FCC Picks a Big Fight With Cable Over the Future of Set-Top Boxes

In lobbying to get rid of the CableCARD, the cable television industry shot itself in the foot. Now, FCC chairman Tom Wheeler has taken the lead in using their misstep to loosen the industry’s monopoly on cable set-top boxes. It is all shaping up to be a huge fight with billions of dollars at stake.

Wheeler’s move to break cable’s stranglehold on cable set-top boxes is aimed at allowing new technology that will allow television users to address the channels they want to watch. The cable industry — who is fighting it tooth and nail — stands to lose an estimated $20 billion a year from its sweet deal renting subscribers set-top boxes with closed-door technology.

It all began in 2014 when Congress was working on passage of reauthorization of the satellite television law. The cable giants — in the form of the Na­tion­al Cable and Tele­com­mu­nic­a­tions As­so­ci­ation (NCTA) — saw that the legislation might actually pass the nearly gridlocked body.

So they jumped into action and lobbied the lawmakers to repeal the requirement that required they include a CableCARD in each box. The credit card-sized descrambler was originally supposed to make cable boxes more competitive, but it failed on that front. Now, virtually everyone agreed it was a waste. There wasn’t a lot of argument for keeping CableCARDs and the measure passed.

But the cable companies had opened a can of worms — allowing a provision in the legislation that the FCC produce a report that would find ways to make the cable box market more competitive. Nobody took it seriously or thought much of it — except Tom Wheeler, the FCC chairman.


CableCARD. The technology was never widely adopted, with fewer than one-half million devices used in retail devices. Today, few consumer devices are capable of the required two-way communications needed to support the use of a CableCARD.

CableCARD. The technology was never widely adopted, with fewer than one-half million devices used in retail devices. Today, few consumer devices are capable of the required two-way communications needed to support the use of a CableCARD.

Wheeler was tired of the cable company monopoly on set-top boxes and used the report to propose a rulemaking that would break it. The full five-member FCC plans to vote on new rules next month.

“You should have op­tions that com­pet­i­tion provides. It’s time to un­lock the set-top box mar­ket — let’s let in­nov­at­ors cre­ate, and then let con­sumers choose,” Wheeler wrote in a recent op-ed published in Re/Code.

In response to Wheeler’s proposal, the cable industry launched the "Future of TV Coalition" to opposed Wheeler’s plan and to “celebrate and promote the thriving innovation that is revolutionizing the video viewing experience.”

The cable companies cited members of Congress who have warned Wheeler’s proposal would unravel the modern TV ecosystem, doing particular damage to small, independent and diverse programmers and the communities they serve.

Rep. Bob Latta (R-Ohio) said “The elimination of the integration ban was intended to rid the marketplace of an outdated technological mandate and to foster greater competition and innovation. However, the latest FCC proposal replaces the failed CableCARD regime with yet another government-dictated standard that will force Multichannel Video Programming Distributors (MVPDs) to dismantle their services for third-party use."

Wheeler, who got wide support from many members of Congress and consumer groups, was undeterred by the industry criticism. He said 99 percent of pay television customers lease set-top boxes from their cable, satellite or Telco providers and spend an average of $231 a year to rent these boxes because there are few meaningful alternatives.

“Historically, issues like security and copyright have made opening up the set-top box market a challenge,” Wheeler wrote. “Fortunately, advances in technology have made meeting those challenges and fulfilling this mandate achievable. For example, today’s smart TVs prove that we can preserve all the security and copyright protections of the set-top box without that actual box.”

Wheeler said his proposal will pave the way for a competitive marketplace for alternate navigation devices could even end the need for multiple remote controls, allowing users to have only one remote for all their video sources.

“Innovation will drive more options for user-friendly menus and search functions as well as expand access to programming created by independent and diverse voices,” he said.

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