The Federal Communications Commission’s plan to make it easier for cable TV subscribers to buy their own set-top boxes could not only lead to lower costs for consumers, but also a burst of attractive new offerings.
“It is going to spur innovation, and I think it is a good kick in the posterior for the pay TV companies,” said Mukul Krishna, the senior global director for digital media with Frost & Sullivan in San Antonio, Texas.
On Wednesday, FCC chairman Tom Wheeler unveiled a proposal that would require cable and satellite companies to open up their systems, so that consumer electronics firms could build compatible boxes and sell them directly to consumers. Currently, the overwhelming majority of cable subscribers rent their set-top boxes from the cable companies.
The FCC estimates the average household pays $231 a year in rental fees, up 185 percent over the past 22 years.
For instance, few of today’s set-top boxes integrate standard TV networks with Internet video streaming services.
Under Wheeler’s plan, which will be put to a vote of the five-person commission on Feb. 18, a consumer could purchase a box that could be used with any cable service. The one-time purchase could save consumers hundreds of dollars. It might also hasten the deployment of new features that complement the changing tastes of TV viewers.
“Consumers today would like to mix live television like CBS and NBC with Netflix and Hulu,” said Ken Plotkin, president of Hauppauge Inc. in Hauppauge, NY., a company that makes cable TV hardware for personal computers. But to watch Internet video, the viewer must usually shift from the cable box to a separate set-top box or to software stored on the TV. Under the FCC plan, a maker of Internet streaming boxes like Apple Inc. or Amazon.com could combine cable TV and online video, for a seamless viewing experience.
Such a service could be a major boon for video producers that target niche audiences, ranging from racial and ethnic minorities to religious groups.
“That kind of stuff tends not to make it to popular ratings-based channels,” said Matthew Zinn, general counsel of the set-top box maker Tivo Inc. in San Jose, Calif.
Instead, it’s mostly streamed over the Internet, where many potential viewers might never see it. Set-top boxes that combine streaming with standard TV could make these shows available to millions more viewers.
Zinn said cable operators have no incentive to help viewers find Internet video streams, which generate no revenue for them. However, if the FCC opens up the set-top box market, manufacturers could offer boxes with advanced user interfaces and personalization features that could detect a user’s tastes and interests and suggest other programs he or she might like, whether from the Internet or cable.
Cable companies aren’t happy about the FCC plan.
“The proposal, like prior federal government technology mandates, would impose costs on consumers, adversely impact the creation of high-quality content, and chill innovation,” said a blog posting by Comcast Corp. senior vice president Mark Hess.
And cable industry analyst Brett Sappington, of Parks Associates in Dallas, said that companies like Tivo already offer third-party cable set-top boxes, but few consumers purchase them.
“Many don’t even consider the option of buying a set-top box somewhere else,” Sappington said.
But Parks Associates estimates a third of US homes with broadband Internet access have purchased Internet video-streaming devices, so a box that could deliver both Internet video and cable TV might find an audience.