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It's Time to Unlock the Set-Top Box Market

Let's let innovators create, and then let consumers choose.

Comcast Infinity

Thanks to advances in technology, American consumers enjoy unprecedented choice in how they view entertainment, news and sports programming. You can pretty much watch what you want, where you want, when you want. But there’s one glaring exception in the competitive video marketplace: The “set-top box.”

Today, 99 percent of pay-TV customers lease set-top boxes from their cable, satellite or telco providers. Pay-TV subscribers spend an average of $231 a year to rent these boxes, because there are few meaningful alternatives.

Over the past 20 years, the cost of cable set-top boxes has risen 185 percent while the cost of computers, televisions and mobile phones has dropped by 90 percent.

If you’ve ever signed up for a $99-a-month bundle for cable, phone and Internet and then wondered why your bill is significantly higher, this is a big reason. Even when the company has recovered the cost of the box, you must continue to pay for it. Altogether, U.S. consumers spend a whopping $20 billion a year to lease these devices. In fact, according to a recent analysis, over the past 20 years the cost of cable set-top boxes has risen 185 percent while the cost of computers, televisions and mobile phones has dropped by 90 percent.

It doesn’t have to be this way.

Twenty years ago, Congress mandated that when consumers connect to a pay-TV service they should have the same ability to choose their equipment, just as they do when signing up for phone service. The Federal Communications Commission did in fact issue regulations to open the market, but they are woefully out of date and based on 20-year-old technology. As a consequence, consumers have limited choices for commercially available set-top boxes, so an overwhelming majority of consumers lease a box from their pay-TV service that doesn’t interface well with the wealth of video content online. To receive streaming Internet video, it is necessary to have a smart TV, or to watch it on a tablet or laptop computer that, similarly, do not have access to the channels and content that pay-TV subscribers pay for. The result is multiple devices and controllers, constrained program choice and higher costs.

Historically, issues like security and copyright have made opening up the set-top box market a challenge. Fortunately, advances in technology have made meeting those challenges and fulfilling this mandate achievable. For example, today’s smart TVs prove that we can preserve all the security and copyright protections of the set-top box without that actual box.

My proposal will pave the way for a competitive marketplace for alternate navigation devices.

This week, I am sharing a proposal with my colleagues to tear down the barriers that currently prevent innovators from developing new ways for consumers to access and enjoy their favorite shows and movies on their terms. The new rules would create a framework for providing device manufacturers, software developers and others the information they need to introduce innovative new technologies, while at the same time maintaining strong security, copyright and consumer protections. Nothing in this proposal changes a company’s ability to package and price its programming to its subscribers, or requires consumers to purchase new boxes.

We’ve been here before.

Decades ago, if you wanted to have a landline in your home, you had to lease your phone from Ma Bell. There was little choice in telephones, and prices were high. The FCC unlocked competition and empowered consumers with a simple but powerful rule: Consumers could connect the telephones and modems of their choice to the telephone network. Competition and game-changing innovation followed, from lower-priced phones to answering machines to technology that is the foundation of the Internet.

In 2007, the Commission opened up wireless networks to non-carrier-provided devices. You can now choose which smartphone or tablet you want to use. Similarly, you’ve been able to choose your own cable modem and Wi-Fi router for years.

Should pay-TV continue to be an exception? I believe, and Congress has made clear, the answer is no. You should have choices in how you access the video programming you are paying for, as well.

That’s why my proposal will pave the way for a competitive marketplace for alternate navigation devices, and could even end the need for multiple remote controls, allowing you to use one for all of the video sources you use. Innovation will drive more options for user-friendly menus and search functions as well as expand access to programming created by independent and diverse voices. Just as online searches today lead consumers to a breadth of information, so, too, can improved search functions lead consumers to a variety of video content that is buried behind guides or available on video services you can’t access with your set-top box today.

The proposal is about one thing: Consumer choice. You should have options that competition provides. It’s time to unlock the set-top box market — let’s let innovators create, and then let consumers choose.

Tom Wheeler is chairman of the Federal Communications Commission (FCC). For more than three decades, he has been involved with new telecommunications networks and services as a policy expert, advocate and businessman. As an entrepreneur, he started or helped start multiple companies offering innovative cable, wireless and video communications services. Prior to joining the FCC, Wheeler was managing director at Core Capital Partners, a venture capital firm investing in early stage IP-based companies. He was president and CEO of the National Cable Television Association (NCTA) from 1979 to 1984, and president and CEO of the Cellular Telecommunications & Internet Association (CTIA) from 1992 to 2004. Reach him @TomWheelerFCC.

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