In 3-2 Vote, FCC Moves Ahead With Proposal to Change the Set-top Box Game

Back in January, the FCC chairman Tom Wheeler proposed a rule that would allow cable and satellite TV customers to use any set-top box they want, not just the one provided to them. The proposal immediately fell under attack from the industry, claiming this would (somehow) reduce innovation. Today, in a 3-2 vote, the FCC will proceed with the process that includes the public comment period.

It's been a bit of a war of words so far. Chairman Wheeler has noted that while the cost of computers has gone down dramatically, the cost of these set-top boxes, typically DVRs, has not, and the customers are paying hefty annual rental fees of about $200. And if the customer wants to cancel service before the contract period is up, they must pay a hefty penalty as well as turn the set-top box back in to the provider. And that device is then typically recycled again to other customers, garnering yet more revenue.

The FCC argument says that because the cable and satellite companies lock the customer into their ecosystem, they don't have a choice, prices are kept high, and innovation, according to Wheeler, doesn't really happen.

The 3-2 vote amongst the commission members paves the way towards a period of public comment. It's not likely many of the public will side with the cable/satellite providers in this. For years, monthly bills have steadily risen, there's been little real innovation, according the FCC and customer service horror stories are legendary.

While the fight is just starting, if implemented, it means that companies that sell their own set-top boxes, like Apple, could configure their offerings to substitute for the set-top box typically provided by the provider. Of course, this isn't as easy as it sounds. There may be technical issues or proprietary information related to cable/satellite dish signals over coaxial cables. And DVRs have a recording and operational technology that must be licensed.

Customers will have to consider, perhaps initially, the loss of DVR capability.

So far, with streaming, pay per view offerings, Apple hasn't had to deal with any of these issues in a pure Internet/Ethernet/streaming (and not recorded) mode. Even so, if the FCC order is eventually implemented, the door at least will be open to many more companies who wish to have that favored status as the primary, integrated box driving the big screen TV.

It could end up a lot like what happned to the wireless carriers. Customers buy their iPhone (set-top box) and chose their wireless carrier (TV provider) as a monthly service.

Finally, except for attached Blu-ray and UHD Blu-ray players, a next generation set-top box, integrating cable and Internet, eliminates the need to switch between input sources—a constant cause of aggravation for many customers.

There's no doubt that with Apple (and others) looming as a potential competitor, the cable and satellite providers will have to up their game. That's good for everyone and exactly what Chairman Wheeler and his colleagues are trying to promote.