FCC wants re-engineer how the the traditional cable set top boxes work

FCC chairman Tom Wheeler just introduced a proposal that will greatly increase the choices consumers have for cable set-top boxes if it passes. The proposed framework introduces measures that would eventually allow cable and satellite customers to use whatever set-top box they want, as opposed to having to rent one directly from their provider.

Tech companies and cable companies have gone back and forth on how to authenticate cable and satellite services for years, and the cable companies have basically won: although the CableCard standard exists, it's barely used and was virtually given up last year. Now the FCC wants to create a new standard that would let basically any device in your home access video programming over cable, and it's going to be an uphill fight.

Allowing more choice in cable boxes is great but the cable companies actually have a strong counter-argument: they've been making apps for all kinds of devices that let consumers access their TV services, like Comcast's X1 app. Those apps aren't the best, however, and not every cable company offers them, particularly smaller systems. And companies like Google and Apple would love to build new kinds of integrated TV experiences, but haven't been able to offer actual television on any of their devices yet.

It's instructive to look back at CableCard to see how this played out in the past. That plan, initiated in 2007, attempted to do exactly what this proposal desires — democratize set-top boxes and make it so third parties could offer seamless cable access on their platforms through the use of a standardized CableCard. Ultimately, that endeavor failed because the cable companies controlled the platform and made it extremely difficult to use and it was eventually scrapped. The FCC's new plan is an attempt to open the cable platforms up once again.

In the set-top box market, you should have options that #competition provides. Let’s let innovators create & then let #consumers choose.

— Tom Wheeler (@TomWheelerFCC) January 27, 2016

Opening things up would also be a huge boon to big tech companies, almost all of which have tried and failed to reach a deal with cable companies in the past few years. Microsoft's Xbox One is essentially a hack on set-top boxes with a mix of IR blasters and UI built on top of them. Apple has struggled to create an integrated solution for its Apple TV and tried to directly appeal to programmers after talks with Comcast broke down, then settled on an app-based model. Google had to go and create its own broadband network with Google Fiber after its Google TV project failed. But even with Netflix, Hulu, apps, and makeshift solutions, tech companies want the cable channels, and the cable companies are holding the cards.

If the FCC's new cable ruling passes, the tech companies would get what they've wanted: a stronger foothold into consumers’ homes, which would then allow them to share their apps, gather data on users, and, perhaps most lucratively of all, control the interface on which channels are displayed. Naturally, the cable companies aren’t thrilled with the rumored FCC proposal, especially given that these box rentals generate billions of dollars in revenue. So in response, more than 40 telecom, media, and other groups plan to create a coalition to oppose the plan, The Wall Street Journal reports.

The coalition’s argument centers on the idea that a change in cable boxes could completely alter the already built system of channel positioning; some programmers pay to have their channels prominently displayed, as well as to advertise their programs. The cable companies want to retain control of the channel interface — a prime advertising hub — and counter that technology companies can simply integrate telecom companies’ apps into their devices. The coalition also says tech companies could gain access to consumers’ viewing habit data and use it to unfairly advertise against the programming.

Still, cable box rentals could be costing customers between $6 billion and $14 billion in overcharges, according to the Consumer Federation of America. Democratizing the industry would likely force cable companies to lower their box prices in order to entice customers to stay with their traditional offerings, which is precisely what the FCC wants.