Pay-TV biz lashes out at 'obscure' FCC set-top proposal

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Unhappy with what they see as an "obscure" proposal from FCC Chairman Tom Wheeler that sounds an awful lot like the "AllVid" scheme they've been stridently resisting for months, the pay-TV industry united Wednesday in a rhetorical show of strength. 

"This is a solution in search of a problem," said the Future of TV Coalition, a group of 47 pay-TV companies and constituents, shortly before Wheeler issued his proposal to replace CableCard. 

The group, which includes every major pay-TV company, plus industry bodies such as the National Cable Telecommunications Association (NCTA) and the American Cable Association (ACA), said product innovation opening the pay-TV ecosystem to third-party devices -- the core goal of Wheeler's proposal -- is already occurring in the form of multiscreen apps. 

"Multichannel (MVPD) apps already support twice the number of retail consumer video devices as there are set-top boxes, including the most popular retail set-top box, the apps-based Roku, which outsells TiVo's 'unbundled' box 10:1. Apps ARE software running on consumer owned devices — the market has already delivered," the coalition said in statement. 

Wheeler said his proposal would keep intact packaging conditions agreed upon in licensing deals between operators and programmers, a notion the group also resists. 

"Under the proposed framework, content providers ARE NOT assured their agreed-upon channel location or how they will be packaged, they ARE NOT protected from third party ads and marketing that compete with or dilute the advertising agreed to with that programmer, ARE NOT provided the audit and ad verification reports that advertisers depend on, and ARE NOT provided the technical tools for the interactive enhancements they have added to their programming," Future of TV added. 

Among a litany of other issues, the group also disagreed with Wheeler's assertion that the industry is making as much as $14 billion a year in set-top leasing.

"MVPDs pay significant sums to buy and maintain boxes from third party manufacturers, then discount the price in packages and promotions," the group said. "MVPDs are not wedded to the box — that is why they have poured resources into making apps work on third party devices that consumers actually use."

Wheeler's said his proposals are aimed at opening the $20 billion revenue business of pay-TV companies leasing set-tops to customers to outside set-top manufacturers, reducing consumer costs.

Releasing its own statement through its blog, the NCTA said his proposal is essentially AllVid, a technology that places a device on the operator network to "decode" encrypted signals for third-party devices. 

"It looks like the FCC is attempting to move forward with a technology mandate that would replace app innovation with government regulation – often referred to as 'AllVid,' which the FCC wisely decided not to pursue in 2010," the NCTA said in a statement. 

"AllVid would force programmers and TV providers to dismantle their shows and services for companies to repackage, reuse, and exploit as they see fit and without paying for the content," the NCTA added. "And they want to do it by forcing additional hardware into the home of viewers who want fewer, not more devices. This all comes as quite a surprise as today, apps are re-inventing how we access programming on what seems like a daily basis."

For its part, the ACA stopped short of calling Wheeler's proposal "AllVid." But it said it has "many flaws," and that the FCC should have learned more from the failure of CableCard, another technology mandate intended to open up the pay-TV ecosystem to third-party device manufacturers.

"ACA is especially troubled by the agency's one-size-fits-all approach that will disproportionately burden smaller cable operators," said ACA President and CEO Matthew Polka. "Incidentally, many ACA members have responded to the new media environment rich with apps and devices by deploying TiVo set-tops boxes, which integrate Netflix and other popular OTT services that consumers can access from a single remote. The FCC's experience with the CableCard, a costly failure recognized by the FCC itself, suggests that some humility is in order when the justification for government intervention seems at best tenuous amid so much head-spinning change occurring in the multichannel pay-TV environment."

For more:
- read this NCTA blog post

Related articles:
FCC proposes set-top rules overhaul; operators and programmers form coalition to oppose plan
Public Knowledge: Pay-TV customers overpaying on set-tops by $6 billion to $14 billion
AT&T to FCC: AllVid would destroy carefully orchestrated channel placement agreements

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