FCC Notices Flaws in the Video Device Market
FCC Notices Flaws in the Video Device Market
FCC Notices Flaws in the Video Device Market

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    In recent days, the FCC and the Broadband Task Force have started paying attention to video devices. Today, the Commission released a Public Notice which encapsulates some of their thinking.

    There is much to commend in the video devices market. Home theater PCs are becoming more accessible as the living room and the PC converge. Innovative DVRs that interact with your cable or satellite company's services, such as the TiVo and Moxi, find ways to bypass cable gatekeepers and market directly to consumers. But these examples are rare, and can face significant barriers. In some cases, instead of just being able to control the set-top box (STB) with the DVR, the DVR has to fool the STB by pretending to be a remote control, using an infrared repeater. Devices such as the Apple TV and Roku that do not even attempt to access traditional video programming, instead relying on downloads or streaming, show that markets that are not controlled by cable or other gatekeepers can create innovative devices that are a pleasure to use. But the main event–accessing subscription video programming–remains locked up in dreary devices that, compared with their more Internet-savvy brethren, are technological laggards.

    It wasn't supposed to be this way. The 1996 Telecommunications Act required that the Commission take steps to “assure the commercial availability” of competitive video devices (at the time, converter boxes and VCRs). More than a decade has passed since the 1996 Act. DVD and Blu-Ray players, DVRs, and home theater PCs have replaced VCRs. Yet, as FCC Media Bureau Chief Bill Lake recently observed, “[t]he 1996 Act fostered innovation of set-top boxes, but that market has failed to materialize…Data suggests this has not fostered innovation and a variety of boxes.”

    The FCC has just released a Public Notice that follows up on these comments. The Notice is part of the FCC's ongoing information-collection effort as it seeks to formulate a National Broadband Plan. We at Public Knowledge have often argued that the lack of real choice in the market for set-top boxes stunts innovation and harms consumers by making them pay high prices for limited capability devices–and have pointed out that video competition issues should be considered as part of the National Broadband Plan. In the Notice, the FCC acknowledged some of these concerns. For example, it noted that “Consumers can choose from a plethora of devices that are able to access Internet video, but it appears that none of these devices is able to access all types of video content, and few of them are able to access MVPD content.”

    As part of the National Broadband Plan, however, the Notice has another concern: broadband adoption. The FCC believes that “video devices are an important part of developing a National Broadband Plan.” Following up on Chairman Genachowski's recent remarks that the use of set-top boxes for Internet access could drive broadband adoption, the Notice asks whether “a retail market for network agnostic video devices [could] spur broadband use and adoption and achieve Section 629’s goal of a competitive navigation device market for all MVPDs.”

    Public Knowledge is eager to provide its answers to the FCC's questions. Yes, a competitive market for video equipment, enabled by an agnostic standard that is able to access cable, satellite, Internet, and all other forms of video delivery would spur broadband adoption. As the iPhone and other smartphones have demonstrated, well-designed devices lead to increased network use. Such devices are most likely to be developed in competitive markets. Yes, such a standard, if accompanied by the appropriate framework, would be likely to finally achieve the policy goal that Congress enacted back in 1996: that video devices become more like other consumer electronics, like televisions, that are acquired through retail outlets, instead of specialized, arcane devices that must be rented from your cable company.

    The FCC's current set-top box rules are badly in need of reform. This Public Notice will be an important venue for demonstrating that, in addition to promoting innovation and consumer choice, the adoption of a standard for accessing video services, regardless of technological underpinning, is an important strategy “for achieving affordability and maximum utilization of broadband infrastructure and services.”