Worse Than a CableCARD?

“We are getting away from set-tops,” points out Matt Polka, president and CEO of the American Cable Association. Speaking at last week’s WEC 2016 conference, Polka was referring to the migration of his MVPD members’ licensed programming to IP set-top boxes, TVs and hand-held devices through the magic of Apps. He expresses concern that the proposed FCC changes (PDF) – that would require the decoupling of service discovery, entitlements and content delivery so they could be reassembled by a third-party device – would be especially costly to the smaller operators the ACA represents.

The concern is that proposed rule-making would require modifications in the headend and/or new gateways in the home that would be difficult for smaller operators, with relatively small customer bases, to amortize the common costs. Implicit in his comments is that costs would ultimately be passed through to the subscriber or it could mean operators dropping out of the video distribution business. So, although there might be savings from the annual $231/household the FCC reports is spent leasing set-tops, there will be costs associated with any savings.

Polka calls the FCC’s last attempt at creating an open market for set-tops a failure, which Congress recognized in its 2014 decision to end the CableCARD mandate, Congress didn’t give up on the idea of an open market for set-tops and commanded that the Chairman of the FCC

“…shall establish a working group of technical experts representing a wide range of stakeholders, to identify, report, and recommend performance objectives, technical capabilities, and technical standards of a not unduly burdensome, uniform, and technology- and platform-neutral software-based downloadable security system designed to promote the competitive availability of navigation devices in furtherance of section 629 of the Communications Act of 1934 (47 U.S.C. 549).”

The February 18th vote for Notice of Proposed Rulemaking is an output of the above process. Stay tuned and read the various comments on the FCC web site.

[Disclosure: The questions in the above video were mine, but the above video was made available courtesy of NCTC, producer of WEC 2016. Further, ViodiTV will be covering next week’s 2016 ACA Summit, courtesy of the ACA. See the first part of the above interview with Matt Polka to get a preview of that event].

4 responses to “Worse Than a CableCARD?”

  1. Infostack Avatar

    Everyone is talking about the set-top box (aka the access edge, or termination point) of the network. No one is talking about discriminatory programming practices. What the govt takes away, it grants elsewhere.

    These two off-setting steps can be viewed in the context of Carterfone (opening the Bell system to 3rd party vendors) and equal access. Much of the resulting growth could be termed “unintended consequences”. But we are still benefiting from the resulting generative boom in more ways than could be predicted; much like today.

    Instead of decrying the actions, look at all the opportunity that can result in new ways that video can be consumed and networks used.

    1. Ken Pyle Avatar
      Ken Pyle

      Thanks for the comment. When you talk about discriminatory programming practices, are you talking about things like bundling of programming where operators have to license multiple channels that they might not necessarily want to take?

      My take on this is that any operator costs will be passed through to the consumer in one form or another; perhaps as some sort of “unbundle charge”. For the smaller operators, it might be easier to drop video altogether or offer a very skinny package, which might be just a local content channel on an app.

      1. Infostack Avatar

        Ken, there are 3 things at work:
        1) a distribution shift on how video can be consumed
        2) a demand shift in when and how video is consumed
        3) monetization model changes

        The WSJ just picked up on the program discrimination issue raised 10 days ago by the FCC and hidden by the set-top ruling. So expect more discussion this week. But yet no one has really put the two together. It’s a 1-2 punch (edge and core) if ever I saw one that will facilitate rapid change by virtue of the above 3 forces acting simultaneously and in unison by 3rd parties.

  2. Ken Pyle Avatar
    Ken Pyle

    It seems like the FCC could achieve its desired results of more competition by focusing on the application layer (e.g. the creation of MVPDs, whether real or virtual), instead of trying to peel apart the application. It also concerns me that their present approach result may result in simply trading a content distribution oligopoly for an advertising monopoly. In the meantime, given their track record of 11 years to implement CableCARD, they could be introducing a great deal of uncertainty into the market.

    My extended comments are in the article penned by Alan Weissberger:

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