- 'Mission-critical' proceeding at FCC threatens incumbents
- FCC's Wheeler says he wants to fix lack of competition
Cable companies say a U.S. bid to wrest away their control of the set-top box is a ploy cooked up by Google that will harm their business as online rivals unfairly profit by selling ads and viewer data from shows.
“This is mission-critical,” Michael Powell, president of the National Cable & Telecommunications Association, said on a conference call Tuesday. He said the change is backed by “a handful of public interest advocates and a very small number of technology companies, primary among them Google and TiVo," the independent set-top box maker.
The Federal Communications Commission votes on Thursday on a proposal from its chairman, Tom Wheeler, to set technical standards for new devices or software to compete with the set-top boxes that most consumers lease today from their pay-TV provider. Wheeler wants to spur more options for consumers in much the way wireless customers select phone models made by competing manufacturers. The vote, at the agency where Wheeler leads a three-member Democratic majority, would begin a formal rule-making process leading to another vote before a change is final.
“Congress mandated that consumers should have options,” Wheeler said in a Twitter message. “But for 20 yrs since that mandate, they haven’t. I want to fix that.”
U.S. cable providers, including the two biggest -- Comcast Corp. and Time Warner Cable Inc. -- may be unhappy about losing the monthly set-top box rental fees that U.S. senators calculate net them $19.5 billion annually. They’re also terrified that Wheeler’s proposals will turn them into a provider of video unrecognized by consumers as any different than, say, Netflix Inc. or YouTube, run by Google’s parent Alphabet Inc.
“The commission’s proposal is very consciously aimed at turning traditional pay-TV providers into dumb pipes, and forcing them to compete on a pure commodity basis for the delivery of content” without any branding, Craig Moffett, senior research analyst at MoffettNathanson LLC, said in an interview.
Since Wheeler offered his proposal last month, big media companies have pressed their concerns upon the FCC. Representatives of Rupert Murdoch’s film and TV company 21st Century Fox Inc., ESPN owner Walt Disney Co., broadcaster CBS Corp., MTV owner Viacom Inc. and premium cable channel HBO owner Time Warner Inc. held a series of meetings last week with FCC officials including Wheeler. They argued that any rules need to make sure third-party boxes “honor the sanctity” of programming agreements with pay-TV providers, according to a filing.
Powell devoted more than an hour in a call with reporters to argue that FCC’s proposal would stifle viewing technology by locking in boxes as the norm instead of letting the industry progress to using online applications. He said it also would let Google profit from selling ads against cable’s shows. The FCC has said its proposal sets standards and doesn’t specify devices or software.
The Motion Picture Association of America, representing Hollywood studios owned by Viacom, Disney, Fox, Time Warner Inc. and Comcast, “and essentially the entire programming industry, in particular, is very concerned,” Powell said.
“If you spend close to $4 million an episode producing a quality drama you’re not anxious to see another major commercial distributor get access” without paying, Powell said. “This is government assistance to allow one set of big tech commercial interests to get access to the intellectual property that belongs to others.”
“They’re trying to do everything to keep other people out of the business,” Rich Greenfield, an analyst with BTIG LLC, said in an interview.
AT&T Inc., owner of direct-satellite broadcaster DirecTV that offers viewers a proprietary box, in a blog post referred six times to Wheeler’s plan as the “Google proposal.”
Google, the leading search engine owner, has backed the FCC action, along with a coalition that includes independent set-top box maker TiVo Inc. and Incompas, a trade group with members including Google, Netflix and network provider Level 3 Communications Inc.
Lauren Barriere, a Google spokeswoman, declined to comment.
“Nothing in the proposal favors one company,” said Kim Hart, an FCC spokeswoman. “This proposal lets innovators create -- and then lets consumers choose.”
No ‘Google Proposal’
It’s "inaccurate” and “wrong” to characterize the proposal as Google’s, said Chip Pickering, chief executive officer of Washington-based Incompas. “It is a very broad-based coalition.”
“This is about whether you have a competitive market,” Pickering said.
Congress already is looking over the FCC’s shoulder, with some lawmakers expressing apprehension.
“Any new FCC rules in this area must not harm the production and distribution of video content,” Senator Bill Nelson, the top Democrat on the Commerce Committee, said in a Feb. 12 letter to Wheeler.
In December, 30 members of the Congressional Black Caucus led by Representative Yvette Clarke of New York said FCC action could harm minority programming by letting third parties “relegate it to the bottom of the pile.” Wheeler in a reply letter said more competition will give customers greater ability to find minority and special-interest programming.
Others are urging Wheeler on.
“The set-top box issue needs to be opened up,” Representative Anna Eshoo, a California Democrat and leader in technology policy, said in an interview. Eshoo and 12 other Democrats said in a Feb. 16 letter the FCC should act to give consumers “an alternative to having to rent a set-top box from their pay-TV provider every month.”
Eshoo identified the core issue behind the TV incumbents’ opposition.
“I don’t blame them for fighting hard because this is, cha-ching! cha-ching! cha-ching!" Eshoo said.