03/04/2016

Cable Box Wars: The FCC Battle to Open Up Cable Navigation Devices

9:51 minutes

Last month, the Federal Communications Commission put out a proposal that would allow companies other than cable providers to create cable boxes that can connect to pay-TV service. “You should have choices in how you access the video programming you are paying for,” FCC Chairman Tom Wheeler wrote in a post on the tech website Re/code. “That’s why my proposal will pave the way for a competitive marketplace for alternate navigation devices.” WIRED reporter Brian Barrett unlocks what this proposal means for consumers and cable and tech companies.

Segment Guests

Brian Barrett

Brian Barrett is news editor at Wired. He’s based in Birmingham, Alabama.

Segment Transcript

SPEAKER 1: The cost of cable television. Cable can be pretty pricey. There is the installation fee, the service charge, the monthly rental fee for the cable box, they gatekeeper to your weekly binge watching. And those monthly cable box fees can add up. You know what I’m talking about. Cable subscribers spend $20 billion each year on those little boxes. Well, the Federal Communications Commission has proposed to crack open the cable box, and let companies outside of the big cable suppliers to build a better box. My next guest is here to walk us through what this would mean for customers, and big cable. Brian Barrett is a contributing editor for Wired. He’s based in Birmingham, Alabama, and he joins us from WBHM Studios. Welcome to Science Friday.

BRIAN BARRETT: Hi. Thanks so much for having me.

SPEAKER 1: So, tell us. The FCC put out their proposal last week, last month, and they’re now asking for comments. Tell us what their proposal said.

BRIAN BARRETT: So, in terms of specifics, we still don’t have a ton of those, but we know that what the FCC wants to do, basically, is open up competition in the cable box space. Right now, 98% or so of US cable customers get their boxes directly from the cable company that they’re subscribed to, and many of those people don’t even know that they could have an option if they wanted one. It’s a sort of a monopolistic system, in a system that’s already kind of monopolistic. So what the FCC is saying is, “Look, we want to set some guidelines to make it easier for outside manufactures, third parties, to create cable boxes. And we want to open up that market.” So they can, basically, take the content from the cable companies, and presented in a way that might be better, might be different, but basically, above all, gives options to customers.”

SPEAKER 1: So, what’s exactly inside the box. What is the box doing?

BRIAN BARRETT: The box is doing a few things. You sort of take it for granted while it’s sitting there, but there’s a lot going on under the hood. The biggest thing that it does is it takes the signal from your cable company, and basically translates it so that it can show up on your television. Beyond that, though there’s also a lot of other technology in there, a lot of software that the companies have invested in. Every time you open up the TV Guide, every time you go to an on demand station, that software, that is proprietary to the company, your cable company. And beyond that, it also has a hard drive to support your DVR most of the time. So just like your computer has a hard drive the stores all your files on it, a cable box needs to keep room for all that video that you recorded that you want to catch up on later.

SPEAKER 1: That’s how they’re doing it now at the cable company, and some of those boxes. But it’s also, I would imagine, mostly to de-scramble the signal, because they don’t want you to steal the signal. You need the cable box.

BRIAN BARRETT: Exactly. That’s right. And that’s something that the FCC has been careful to say is that solutions that come out of it will be present outside of the current arrangement, would still have all of those security systems in place. It wouldn’t impact any of the advertising deals, or the programming deals the cable companies have established. It’s basically just making sure that there is hardware that people can shop around for if they want to. so the question is, how exactly do you plan to do that? That’s what we still have to see.

SPEAKER 1: Well, if it’s a $20 billion a year business, and I don’t have to buy that box anymore from the cable company, they’re going to be fighting this like crazy, I would think.

BRIAN BARRETT: They are, and they already have been. They’ve been very aggressively going after the FCC in this. And their arguments, such as they are, makes some sense. It’s not just a strictly financial concern. From their point of view, they’re saying two things. First, basically, we shouldn’t even be regulating cable boxes in the first place. Cable boxes or an outdated technology. We should be more focused on what comes after the cable box. And secondly, they’re concerned that, some programmers are concerned, that their stations, especially ones with smaller audiences, might somehow get left out of an arrangement should a company like Google come in and say, “We’re only going to show these channels to our customers.”

SPEAKER 1: We’re in the age of cord cutters now. Isn’t that the trend?

BRIAN BARRETT: Yeah. It’s the trend, and it continues to be, and has been for awhile. But there are still millions and millions of people who subscribe to cable through traditional means. And they’re going to continue to be. A lot of people who subscribe to streaming services, like HBO now, and some of the others have come on lately outside of specific cable bundles, those people still subscribe to cable. I think the FCC’sf position is, look, yes, there will be something coming to replace the cable box. That’s already happening. But people will still be using cable boxes for at least a decade. We may as well try to protect and give those people options while it’s even around.

SPEAKER 1: Let me ask our listeners what they think of a cable box. Our number: 844-724-8255. 844-SCITALK. You can also tweet us at SCI-FRI. I’m Ira Flatow. This is Science Friday from PRI, Public Radio International, talking about the FCC and coming up with a proposal that they might do away with having your cable box. Maybe other people might be able to create one for you. Brian Barrett is contributing editor at the Wired Magazine, talking with us about that. You would think that to Roku and tech companies would be on the side of the FCC proposal, but they’ve remained quiet, haven’t they?

BRIAN BARRETT: That’s right. Well, some tech companies are vocally in favor. Google has been vocally in favor. TiVo has been in favor. But, you’re right, Roku is an example of a company that has, so far, haven’t exactly come out against, but they’ve been explicitly not for. Their position is they want to wait and see what happens. And it does make sense. You would think they would be a natural fit. They already make hardware to stream. But that’s part of their concern. What Roku has said, when I’ve talked to them is, that they’re worried that the FCC’s guidelines will be too strict, and they’ll say that a set-top box or cable box or cable delivery system has to look a certain way, and that might obviate innovation that happens in other fields, in the same way that, 10 years ago, you might not have predicted that a Roku could exist at all. They’re worried that the FCC might be legislating what a cable box can be in a way that cuts off a potential for what might be a solution 10 years from now. Roku’s an interesting case, too, because they already have some deals lined up. They have a deal with Time Warner Cable, where you can stream Time Warner Cable through Roku. So, I think, from Roku’s position, they’re saying, “Look, we’ve already put in the work, and made these deals. We don’t want to open up this system to be a free-for-all when we’ve really made some aggressive plays already ourselves.

SPEAKER 1: And there are differing arguments about how the FCC proposal would affect minority groups. Go through those for us, please.

BRIAN BARRETT: That’s right. So, on the one hand, there are some the proprietors of stations that are focus on minority groups that say, “We have deals in place with these cable companies. We know for a fact that these cable companies are going to deliver our shows, and that we are going to get the ad revenue off of those shows.” their concern is that if, say, Google– Google is sort of the popular boogieman in this case– if Google comes out with a cable box, maybe Google decides, you know what, it’s easier if we just show our customers the 40 top channels that we know that, through our data, that they would like. And so, they’re worried about getting left out of a channel lineup or buried so deep in a channel lineup that they’ll never get discovered. And worried that a company like Google, which has a lot of expertise in advertising, will end up selling ads against their products surreptitiously.

On the other side of that, there are some, both on the programming side, and on the lobbying groups that are in favor of the new FCC ruling, the argument is that more opportunities is more opportunity. So more competition leads to more boxes, leads to more chances for everybody. In the way that a wave hypothetical Google Docs would put YouTube on par with NBC, potentially, a group that has a very targeted audience has a chance to get exposure outside of the traditional cable system, which would be a net good.

SPEAKER 1: And so, the SEC proposal, how soon would this take effect? It must be grandfathered in for a while, I would imagine.

BRIAN BARRETT: It is. I think they’re are a few steps ahead. So right now, as you mentioned, we’re in the comment period, and then after that the FCC has to vote again. For their even to be a ruling at all, eary– or, I guess, late summer would be an aggressive estimate. I imagine it would take longer than that. And then, from there, it would be a couple years until the rules actually kick in. So you’re right, you’re looking at a very long timeline, and throughout that timeline, as people have said, fewer and fewer people will be using cable boxes to begin with.

SPEAKER 1: Gosh. A few years from now who knows what the landscape–

BRIAN BARRETT: [INAUDIBLE]

SPEAKER 1: –would be like.

BRIAN BARRETT: That’s true, and I think that’s a valid point. But I do think, in the same way that there are still people who don’t have high definition televisions, there are still people who haven’t adopted to the latest and greatest. I think we’re going to see a ton of new options, and they’re going to be a lot of ways for people to cut the cord two years from now. I think that we forget sometimes, though, that it takes a very long time–

SPEAKER 1: Yeah.

BRIAN BARRETT: –now for a lot a high percentage of Americans to come around to those new technologies.

SPEAKER 1: Yeah, that’s true. Brian, thank you for taking time to be with us today.

BRIAN BARRETT: Thanks so much.

SPEAKER 1: You’re welcome. Brian Barrett is a contributing editor for Wired, that based out of a Birmingham, Alabama, and he joined us from WBHM Studios.

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