Editorial: Set-Top Showdown

FCC chairman Tom Wheeler has proposed goosing the market in alternate video access devices—i.e., set-tops or apps or dongles or something not yet invented. In doing so, he has stirred up a hornet’s nest among multichannel video programming distributors who see it as putting a thumb on the scale of competitors.

Wheeler also did nothing to assuage MVPDs in presenting his proposal, doing so while hammering them for the lack of competition in the set-top market and the price of those leased boxes.

Cable operators counter that the marketplace is already creating an app-dominated world in which both traditional and over-the-top signals can be increasingly accessed side by side.

They also suggest in private that the price of, say, a TiVo box plus monthly subscription is a chunk of change. They will concede a leased box is definitely an expense, but one MVPDs are also moving away from, given all those apps.

Cable operators fear the FCC wants to blow up their business model by disaggregating their channels and turning them over to the Googles and the TiVos of the world to reassemble without compensating programmers, or preserving the tiers and bundles that have been negotiated.

Wheeler has said the move does not, in his view, threaten copyrights or privacy protections, and is all about open vs. closed standards.

A vote on the proposal is set for Feb. 18, but that will only be the beginning of a months-long process including comment followed by reply comments, leading to a standards-setting body dealing with the details if the item passes. In the interim, MVPDs and studios need to make their case for a lighter hand.

Not every FCC notice for proposed rulemaking translates into an order, as witness the agency’s vote to reclassify some over-the-top providers as MVPDs. And these are all just proposals, as an FCC official pointed out last week, with comment being solicited from all sides about all points.

We will be watching the proceeding with interest.

If MVPDs are right that the market is already innovating its way out of a leased-box-dominated video access regime, the FCC should back off.