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FCC to take aim at outrageous cable-box costs

Cable TV subscribers could get some relief from expensive set-top-box rental fees under a proposal from federal regulators.

The proposal, from Federal Communications Commission Chairman Tom Wheeler, would put traditional pay TV programming on a wider range of devices and apps, the Wall Street Journal reports. For instance, companies like Google and Roku could offer their own boxes that integrate cable television with Internet programming.

The Journal’s story doesn’t explain how this would work, but it sounds like Wheeler is leaning toward a system proposed last month by advocacy groups and some tech firms, including Google, TiVo, and Vizio. This group, called the Consumer Video Choice Coalition, recently met with the FCC to demonstrate its system, which displayed pay TV content from various providers using “off-the-shelf equipment and open standards,” Ars Technica reported.

Not surprisingly, the cable industry strongly opposes this plan, arguing that it would be difficult to implement and could interfere with positioning deals, in which some networks pay more to appear higher in the channel guide. (The rental fees are also a huge boost to these companies’ bottom lines.)

“They say it’s just a box, [but] it’s allowing another company to build an entirely different offering” from traditional cable service, said Michael Powell, president of the National Cable & Telecommunications Association. It’s unclear why this would be a bad thing for consumers, but the industry also raises privacy concerns, pointing out that a company like Google could gain access to cable viewing data and advertise against it.

The cable industry has its own proposal in which TV providers would build their own apps and provide them as downloads for third-party devices. In other words, providers would maintain control over the cable experience, and draw a clearer line between their content and streaming services. Some cable providers, such as Time Warner Cable and Charter, have already started offering streaming versions of their service on Roku players and Xbox consoles.

This is hardly the first time the government has tried to usher in cable-box alternatives. Third-party boxes such as TiVo and SiliconDust’s HDHomerun Prime make use of CableCard, a device that users can rent from their TV provider. But for the most part, CableCard hasn’t been widely adopted, nor has it helped bring down the cost of cable boxes. In the late aughts, the cable industry proposed an alternative called tru2way, and a couple years later an alliance called AllVid (which also included TiVo and Google) proposed its own hardware-based solution. Neither of those efforts took off.

As the Journal points out, the FCC doesn’t have a lot of time to make good on its latest proposal. With a presidential election looming, Wheeler could be out of the FCC chairman’s seat by early next year.

Why this matters: Set-top rental fees are one of the biggest downsides of cable and satellite TV service, costing the average subscriber more than $231 per year. While the cable industry didn’t have much incentive to provide alternatives in the past, times are changing as more people forgo cable TV or reduce the number of services they’re paying for. In this new world of TV consumption, perhaps a renewed effort will finally get some traction.

IDG Insider

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