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How Set-Top Rules Would ‘Lower the Tide’ for PEG

As the executive director of the public-access center serving Fairfax County, Va., I have been closely following the reaction to the Federal Communications Commission’s proposed set-top box rules and have concern regarding the likely consequences of these rules.

As many have pointed out, a set-top box provides the subscriber’s first and most immediate point of contact with the cable provider. As The Wall Street Journal reported on Feb. 3 and April 27, regarding Comcast’s greatest quarterly subscriber and revenue success in almost 10 years, Comcast CEO Brian Roberts attributed this achievement to both investment in customer service and technical innovations — giving much credit to the Comcast X1 set-top box.

Comcast’s innovative X1 box provides an “enhanced customer experience” — one significant enough to reduce churn and enable the significant net gains achieved by Comcast in the first quarter. Other MVPDs also realize the significance of the opportunity provided by set-top boxes. In fact, Cox Communications, one of our highly valued local MVPDs, will lease the X1 box from Comcast, providing it to its subscribers.

In the Feb. 3 article on the net gain in Comcast video customers, the Journal reported: “Comcast was able to, at least for now, defy the industry logic that cord-cutters are increasingly abandoning pay TV. It has been investing in customer service and in its set-top box and guide, which it says encourages customers to watch more TV and makes them less likely to cancel service.” (Emphasis added.)

As such, the FCC’s current proposal to require MVPDs to develop an open architecture for their set-top boxes, thereby allowing third-party vendors to offer set-top boxes directly to the MVPD’s subscribers, appears to pose a direct threat to the cable industry’s ability to provide enhanced customer experiences through innovation in advanced set-top boxes developed by providers. Thus, it’s a direct threat to reversing the multiyear industry decline in net gains.

Public, educational and government (PEG) access executives and leaders should recognize the need to join the creative unions (SAG, AFTRA, I.A.T.S.E.), the Directors Guild of America, the Communications Workers of America, programming copyright holders (including the major movie studios), the Congressional Black Caucus, the MVPDs themselves and others in opposing the set-top rules before the FCC issues a final order on this matter. Yes, the reduction in fees that subscribers currently pay to MVPDs for monthly set-top boxes would have an immediate negative financial impact on those PEG entities that receive a percentage of those fees; however, more importantly, if issued in a final FCC order, these rules would jeopardize the current ability of MVPDs to create the above discussed enhanced customer experiences through new, innovative set-top boxes. That would most likely result in significant damage to the cable industry as a whole, lowering the tide for all involved.

The above, coupled with legitimate concerns regarding the ability of third-party set-top boxes to secure copyrighted programming, ad overlays and the utilization of subscriber information obtained via third-party boxes, should cause concern for the very health of the cable industry.

Cable provides a unique means for PEG centers to connect with our communities — a unique means of community connection that would be terribly diminished if the industry contracted due to the proposed set-top box rules. To many in the PEG community, at first glance, the proposed “unlock the box” rules appear to be very positive, but there are negative consequences for the PEG creative community should these rules be issued in a final order by the FCC.

Chuck Peña is executive director of Fairfax Public Access in Fairfax County, Va.