The Sept. 29 Federal Communications Commission Open Meeting presented an interesting turn of events for the commission’s set-top box proceeding. After whiffing completely on the NPRM’s convoluted “three flows” approach, commission leadership recanted its opposition to an app-based approach — one that I had been advocating for months — and centered its attention on it.

An apps-based approach also was at the core of what the related industry filed as a compromise plan to achieve resolution of this proceeding. Unfortunately, the leadership did not accept yes for an answer and tried to add a multitude of unworkable provisions to a reasonable plan. In doing so, they found a way to make all interested parties essentially hate the proposal. In reality, it was not just a lack of time that led to the chairman pulling the item off the meeting agenda at the last minute. This proceeding is still plagued by major unresolved issues:

• FCC Control of the Model License and API: Some have proposed replacing provisions in earlier versions that provided explicit FCC review and approval roles with active FCC monitoring and threats of future action if progress is deemed unsatisfactory. For practical purposes, they are the same thing. Preserving any role for the commission is highly objectionable, especially to the content and MVPD communities, because it could potentially alter private commercial agreements without full knowledge or understanding of the entire negotiation and tradeoffs made.

• The Myth of Universal Search: One of the benefits of the item touted by proponents is that it will enable a competitive market in so-called “universal” or “integrated” search apps. This mandate would allow an MVPD’s over-the-top competitor access to all the proprietary information needed to undercut the MVPD’s content pricing to consumers, a truly disastrous outcome. Moreover, since the commission mandates the metadata flow only from MVPDs, not from over-the-top providers, the promise of universal search will be unfulfilled.

• Questionable Feasibility: A key component of this item is a requirement that every MVPD with more than 400,000 subscribers develop and support a native app for every widely deployed operating system. No one even knows how many apps this would be right now. Is it 10? Twenty? The only way to transform this mandate into anything resembling a manageable, realistic task would be to provide a safe harbor for particular widely adopted and available consumer apps so that MVPDs could better manage their scarce software development and support resources.

• Opening the Door to the App Tax: Today, many of the widely deployed platforms usually receive an upfront fee or cut of revenues from software developers to have their apps made available on these very popular platforms. Clearly, MVPDs should not be required to develop either full-featured or consumption-only apps for platforms demanding revenue sharing of any kind. This needs be addressed upfront, not punted to a later date.

• Competition From Pirated Content: Programmers and MVPDs have registered valid concerns that the third-party integrated search engines contemplated by the item would result in pirated content being displayed in search results alongside legitimate MVPD content.

Substantively, the only way to fix the item is to address the key problems and flaws identified above. Only by doing so would a true app-centric approach be workable for most of the affected companies.

Michael O’Rielly is a Republican Federal Communications Commission member.

In a phone conversation with the top aides to FCC Chairman Tom Wheeler, Amazon execs have warned against inserting a government committee into what should be a marketplace-driven regime.

Following criticism of his "unlock the box" set-top proposal, Wheeler last week unveiled a new, app-based plan for providing competitive video navigation, but would do so under the auspices of a standards committee over which the FCC would have oversight.

According to an ex parte filing with the commission, Amazon execs told Wheeler aides that "a well -functioning market solution—and not a government -supervised industry committee—is the appropriate solution in the first instance.  If examples  of market failure arise, then a complaint process can be used to address related concerns."

The Amazon execs said MVPDs should be able to participate in the current, existing, open, app market, rather than under a new government regime. 

"Millions of app developers already work productively within this system," they said, according to the document. "In this context, there is no need for app licensing terms to be determined by an industry group subject to Commission oversight. The process to create such a license and oversight body will delay competition and delay customers from receiving the MVPD services they already pay for on the device of their choice."

App developers have also raised concerns about having a standards body, overseen by the FCC, overseeing the apps MVPDs would supply to third parties.

Amazon said that if the FCC is concerned about MVPDS imposing unfair terms and conditions, "it could create a complaint process through which an aggrieved party could file a complaint about unfair terms and conditions."

Wheeler has scheduled the set-top proposal for a vote at the Sept. 29 open meeting, but ISPs and programmers are pushing back--they favor and app-based approach, but not the standards body--including with Commissioner Jessica Rosenworcel, who has had issues with the proposal from the beginning. While voting for the rulemaking proposal, she said changes needed to be made and was getting the full court press from Hollywood last week with the message that changes still were needed.

WASHINGTON — Federal Communications Commission chairman Tom Wheeler will face a House Communications Subcommittee FCC oversight hearing this week (July 12), and probably some grilling on the status of his controversial “unlock the box” proposal.

Rep. Frank Pallone (DN. J.), chairman of the subcommittee and ranking member of the House Energy & Commerce Committee, is one legislator likely to be looking for progress on a “ditch the box” compromise proposal from cable operators that could potentially reunite his fractured subcommittee. FCC staffers signaled last week there are points of agreement, but also sought many clarifications.

Cable operators and other stakeholders have been meeting with Wheeler’s office after it became clear that the chairman did not have a lock on three votes for his original proposal to make set-top data and programming available to third parties.

The set-top issue continued to draw a crowd last week, particularly after Comcast and Netflix announced that Netflix would be available on Comcast’s X1 platform.

Easier access to both traditional and online fare is one of the big drivers behind Wheeler’s proposal.

Read more about the FCC's proposed set-top rules.

Pallone has a particular interest in seeing movement on a proposal that both cable ops and the FCC could sign off on, and Wheeler has said he was looking forward to engaging in a “constructive dialogue” with stakeholders.

Pallone signaled to Multichannel News in an e-mailed statement that he likes the direction set-top box compromise talks are taking, so long as the final destination is consumer-friendly and protects content.

“One thing everyone can agree on is that our set-top boxes can be clunky, bad for the environment and expensive,” Pallone wrote. “The recent proposal from industry and the reaction from the FCC has brought us closer to a positive resolution.”

The FCC-industry talks followed the introduction of an apps-focused “ditch the box” compromise proposal by the National Cable & Telecommunications Association and others, as well as the signal from Democratic commissioner Jessica Rosenworcel, whose vote is needed to pass a final order, that the FCC needs to find another route to the shared goals of competition for leased set-tops and access to over-the-top content.

Pallone is said to be focused on a couple of things: first, protecting content, and second — as ranking member — reuniting committee Democrats split over the FCC’s set-top proposal.

New York Democrat Yvette Clarke, for example, has pushed back strongly on the FCC plan, while House Communications Subcommittee ranking member Anna Eshoo (D-Calif.) has tried to marshal her colleagues’ support for the proposal.

While Comcast’s agreement to add Netflix to its video navigation platform might suggest the marketplace is already wedding traditional and online content without the thumb of government on the scale — something cable ops have been arguing — backers of Wheeler’s original set-top proposal wanted to make sure that was not the takeaway.

“We think that in a competitive market, consumers shouldn’t have to look to special deals between large companies like this just to access video programming from multiple sources all in one place,” said John Bergmayer, senior staff attorney for Public Knowledge. “A competitive market will deliver lots of video apps on many different devices.”

The Consumer Video Choice Coalition, which has been pushing for the proposal, said: “Yay, Comcast customers can now watch Netflix! Now what’s wrong with unlocking the box and letting consumers watch the rest of the Internet as well?”

Pallone is looking to the July 12 oversight hearing for some encouraging words about compromise. “I look forward to continued discussion on this topic at the FCC Oversight hearing,” he told Multichannel News.

If the FCC can work out a compromise with industry, the hearing would be a good place for Wheeler to signal it is in the works — or that at least a compromise is a possibility.

The FCC may have already signaled that there is hope. Staffers have sought answers from cable operators on a host of key points in the ditch the box proposal, and signaled there are many general points of agreement, according to a copy of staff questions obtained by Multichannel News.

“FCC staff continues to meet with a wide range of stakeholders to discuss the industry’s proposal,” said a Wheeler spokesperson. “While conversations have been constructive, there is more work to do to fully understand the scope of the proposal and clarify important details. Our goal is to find the best path forward to ensure that consumers finally have the competition and choice they deserve.”

WASHINGTON — After weeks of heated opposition, it appears that Federal Communications Commission chairman Tom Wheeler does not have the votes to pass his set-top box reform plan — at least as originally proposed.

The proposal, which would require multichannel video programming distributors (MVPDs) to make their programming and data streams available to third-party devices and app developers, has taken shots from all sides — now including both the Senate majority and minority leader.

Wheeler, a Democrat, has said from the outset that he was willing to tweak the set-top plan if there were a better route to his goal of a competitive market in third-party video access devices — ideally a path that allows for access to both traditional video and the over-the-top video he sees as a key new competitor.

But cable operators were unconvinced, saying they feared Wheeler’s words were more talk than action and the item would pass pretty much as proposed.

The proposal was approved 3-2, on a straight party line vote, and while Democratic commissioner Jessica Rosenworcel voted with the majority, from the outset she said she had issues the plan.

DEMOCRAT CALLS FOR CHANGES

Rosenworcel last week said she remains optimistic that the FCC and the pay TV industry can find a way forward on set-tops to promote a competitive marketplace for navigation devices, but signaled that the problems with Wheeler’s proposal have become clear, as has the need for changes.

Rosenworcel was responding to a flurry of activity that surrounded the proposal, including efforts to block it in Congress via an appropriations bill; “ditch the box,” a National Cable & Telecommunications Association-backed alternative to the chairman’s “unlock the box” proposal; and the Motion Picture Association of America’s support for working with the FCC to resolve copyright issues.

“Set-top boxes are clunky and costly,” Rosenworcel said in a statement provided to Multichannel News. “Consumers don’t like them and they don’t like paying for them.

“Kudos to the chairman for kicking off this conversation [Rosenworcel voted along with Wheeler and Democrat Mignon Clyburn to kick off that conversation], but it has become clear the original proposal has real flaws and, as I have suggested before, is too complicated,” she added. “We need to find another way forward.”

Rosenworcel wasn’t explicitly advocating for the cable industry’s “ditch the box” effort. Rather, she was supporting efforts to find some variant of a compromise proposal that addresses the Wheeler plan’s flaws.

“I am glad that efforts are underway to hash out alternatives that provide consumers with more choice and more competition at lower cost,” she said.

Rosenworcel voted to approve the notice of proposed rulemaking (NPRM) proposing the set-top unbundling, but from the outset she suggested it was a work in progress that needed more work.

The set-top plan suffered another blow when Sen. Harry Reid (D-Nevada), the Senate’s minority leader, wrote Wheeler last week to say he thought the proposal did not sufficiently protect programmer contracts or consumer privacy, points that MVPDs have been making pointedly.

OPEN TO ‘DITCH’ PITCH

Even the chairman seemed eager to seek more common ground.

In his first public statements on cable operators’ proposal to “ditch” the set-top box, Wheeler said he was glad the industry offered up the compromise, but suggested it indicated that many of the problems those same parties had with the initial proposal weren’t problems after all. In a Q&A following a speech at the National Press Club on 5G wireless broadband, Wheeler was asked about the cable-backed effort.

“I think it is absolutely terrific that the cable industry came forward with this proposal,” he said. “I have been asking them to do this, and I think that by coming forward they indicated that a lot of the arguments that had been put up against our set-top box proposal really fell by the wayside.”

But he also said that the cable proposal indicated that copyrights and privacy can be protected, that small networks can continue to thrive and that providers’ networks don’t have to be redesigned to do all that.

Wheeler said he wanted to now engage in “constructive” dialogue on how to write the specific regulations to achieve those ends.

Asked if the set-top proposal was in trouble, FCC press secretary Kim Hart responded: “Chairman Wheeler has repeatedly said he is interested in a constructive dialogue with his FCC colleagues and all stakeholders to reach the best result for consumers. He welcomes the feedback to his proposal to give consumers new options for accessing the content they pay for, and he looks forward to engaging in continued conversations to inform the final rules.”

Internet giant Google, which pushed for the set-top proposal, echoed Wheeler in calling the cable-operator alternative “a constructive effort towards the goal of more competition and consumer choice,” adding, “We hope that it sparks a dialogue between the FCC and interested parties to reach a good outcome for American viewers.”

One MVPD executive said all that activity points to more than just more dialogue.

“I’ll let you determine whether chairman Wheeler’s proposal is dead,” said the executive, who asked to speak not for attribution. “But Google is now giving up the fight, Senator Reid’s letter was pretty strong and Commissioner Rosenworcel from the get-go called it too complicated and recently said it has real flaws.”

WASHINGTON — The battle over the future of video navigation devices, and the “one ring to unite them all” approach of combining traditional and online video via a single device or app, played out in the FCC’s set-top docket last week — with a definite tilt toward pausing or punting on the proposal.

The Federal Communications Commission received hundreds — perhaps thousands — of pages worth of reply comments on the proposal. The bulk of the commenters clearly appeared at least to have concerns with the plan, and many had much more than that.

Read more about the FCC's set-top box proposal.

FCC chairman Tom Wheeler has signaled the proposal, which would make set-top content and data available to third-party navigation device and app developers, needs to be enacted. But he has also said the proposal is a work in progress and its details may change.

Multichannel video programming distributors (MVPDs), though, are skeptical any changes will be made.

PROCESS COULD BE LENGTHY

The FCC’s Democratic majority has only approved a notice of proposed rulemaking, not an order. And the agency could take its time in voting on a final version, which even then won’t take hold for another year or two.

That timeline is cold comfort to MVPDs that face the prospect of giving up data and content to third parties with essentially only promises that their contracts, and their content providers’ copyrights, will be protected from hackers or pirates, or that competitors can’t monetize their content at will and without compensation.

AT&T was representative of those wielding hammers rather than red flags. The DirecTV parent company called the proposal “indefensible as a matter of law and nonsensical as a matter of public policy,” and an unnecessary, harmful and deeply flawed “scheme.”

The National Cable & Telecommunications Association raised a hammer and a flag: Specifically, it likened the set-top plan to the “broadcast flag” receiver-technology mandate approved by the FCC a decade ago. That mandate was thrown out by a federal court, which ruled that the agency’s reach did not extend past transmissions.

Foes of the set-top proposal were using supporters’ past opposition to that broadcast-flag proposal against them.

The NCTA noted that Public Knowledge, which supports the current set-top plan, opposed the broadcast flag, quoting the public-interest group’s statement at that time: “The market for delivering content digitally over new technologies is working. Consumers can watch and listen to the content they purchase anytime and anywhere they want. All of these great developments happened without government intervention,” which shows that “government intervention in the free market [in this case is] unnecessary.”

Gigi Sohn, then-head of Public Knowledge and now a top adviser to the FCC’s Wheeler, said at the time the flag would give the agency unprecedented power to dictate product design and would cause consumer confusion and cost.

After the flag was thrown out, the NCTA said, “Public Knowledge’s prediction of market successes unshackled by technical mandates came true … The current commission should not make the same mistake again.”

Public Knowledge senior staff attorney John Bergmayer told Multichannel News last week, “The broadcast flag case doesn’t really apply because FCC authority over MVPDs themselves can get to the functionality of competitive devices.”

MVPDs have enlisted, or been joined by, an unusual cross-section of interests, including unions, Congressional Democrats and diversity groups. House Republicans last week launched an effort to block the box proposal via the appropriations process, though it is unlikely to succeed.

OUTDATED TECH MANDATE

While few argue that the set-top market is competitive — 99% of boxes are leased from MVPDs — pay TV providers have described the FCC’s solution as yesterday’s technology mandate for tomorrow’s app-driven navigation marketplace, ignoring the trend away from provider-issued set-top boxes.

Now that replies are in, the next move is the FCC’s, though it is under no obligation to vote on an order.

For example, the FCC voted unanimously in December 2014 to propose classifying some over-the-top providers as MVPDs. The idea was to help promote online video as a competitor to traditional cable and satellite providers.

But after Wheeler got some major pushback, the proposal was put on the back burner and remains there.

Pay TV providers are hoping for a similar result.

Innovation may move at the speed of light, but the agency charged with overseeing much of that innovation, the Federal Communications Commission (FCC), simply does not.

That hasn’t changed since 1998 when I was chief of its Cable Services Bureau charged with drafting the first cable set-top box order. At the time, the FCC voted to “unlock the box” by requiring companies to separate the security feature that protects encrypted, copyrighted content from the box itself. The hope was that separating security and the box would spur lots of different companies to build boxes consumers could buy from Circuit City, Radio Shack or Crazy Eddie.

Here’s the problem: The FCC policy never really took with consumers.  Only a few thousand cable customers ever bought a box with the FCC's fix. Finally, in 2015, Congress got rid of the integration ban. Over the years there were various failed attempts at a better solution to making the box commercially available, but the box ceased to be a high priority on the FCC’s agenda.

Now, in an inexplicable bout of déjà vu, a lame-duck FCC chairman, Tom Wheeler, is making another run at creating a market for set-top boxes through a catchy sales pitch, “Expanding Consumers’ Video, Navigation Choices—Commercial Availability of Navigation Devices.”  The cable industry and Hollywood say this FCC proceeding is a giveaway to Silicon Valley. It requires programmers to allow behemoths like Google access to their proprietary content that can be streamlined, repackaged, and wrapped around new packages of advertising.

Breaking with the tradition of not commenting on pending FCC matters, President Obama made a bold televised announcement on April 15 declaring the unlocking of the box one of his core competitive priorities. The White House boldly claims the proposal now pending before the FCC “will promote innovation and lead to positive results for consumers” such as lower costs. Unfortunately, the FCC and this administration have missed an important development: innovation has already evolved beyond anything the FCC could mandate.

I, for one, would prefer big pharma as a core competitive priority because my Advair prescription costs substantially more than a monthly set-top box fee -- and that’s not something I can cut.

Internet-edge providers such as Netflix, Hulu, Roku, Apple TV and others have become disrupters in the video marketplace. Cable subscribers are cutting or shaving the cord in droves. The set-top box is no longer the gatekeeper of video in the home. The future of TV will be tablets, smartphones, smart TVs and other devices that today are unimaginable. In fact, Comcast just announced a deal with Roku where it will offer InfinityX video streaming through Roku devices without a box.

So what does the FCC’s rulemaking actually do for consumers? In the near term; nothing-In the long term, probably nothing good. When the dust settles, the government has no ability to forcibly lower the cost of the box.

A close look at the president’s pledge reveals neither the White House nor the FCC offers any real proof that anyone other than the Googles of the world will benefit from new rules. The FCC’s rules are at risk from a lengthy court challenge, so consumers shouldn’t rush to Best Buy, HH Gregg or Target stores anytime soon to purchase streaming devices enabled by new FCC rules.

Furthermore, the box has a hidden price. The president’s intrusion into this regulatory matter threatens public confidence in the FCC, which Congress established as an independent expert regulatory agency. Clearly, just as every citizen has the right to participate in public proceedings, so, too, does the president. But he is no ordinary citizen. Highly charged public comments by him may unduly influence the FCC’s rulemaking process, thereby subjecting the agency to charges of bias. This is especially true, given this administration's close ties to the main beneficiary of the order -- Google

By highlighting this issue in an election year as a component of his core competition agenda, Obama has politicized it. Scoring political points through a pending regulatory matter weakens the FCC’s stature as an independent expert agency.  It also places FCC commissioners, who are appointed by the president, in a precarious position.

The three Democrats on the commission who hold the majority must decide whether to obey the White House or exercise their independent judgment and expertise that their oath of office requires. If their opinion is not in accord with the president’s, do they disobey him and risk jeopardizing their careers or do they obey and violate their oath? This is a quintessential Hobson’s choice that a commissioner should not have to make. The damage to the agency’s reputation and resulting loss of consumer trust is too high a price to pay for a set-top box.

Deborah Lathen, former senior executive at the FCC, is an independent telecommunications consultant, a member of the District of Columbia Board of Ethics and Government Accountability and a former non-executive director of BT (British Telecom).