The FCC Tackles Settop Boxes Again

Settop boxFCC Chairman Tom Wheeler just announced a proposal that would take another shot at standardizing settop boxes. The FCC is proposing that standard protocols be developed, enabling people to then buy a box from a third-party vendor rather than pay a monthly rental to the cable companies for each box.

Chairman Wheeler says that this is different than the AllVid proposal that has been around for years and that companies Best Buy, Google, Sony and TiVo recently resurrected. AllVid would create an updated version of a cable card – a device that could be added to an off-the shelf settop box to make it work. The FCC rejected AllVid a few years ago and many engineers think it’s not practical.

This time the FCC wants the industry to develop open standards for settop boxes. Chairman Wheeler was quoted saying, “We need to have standards the same way we have standards developed for cell phones, standards developed for Bluetooth, standards developed for Wi-Fi”. If such standards were developed, then third party manufacturers could make settop boxes directly for consumers, meaning they could avoid having to lease boxes from the cable companies.

This is obviously intended to quell the complaints from consumers about having to lease settop boxes. Many of the large cable companies have crept the monthly lease prices up to $8 per month, per box. My small clients can buy settop boxes that cost between $100 and $180, and surely the giant cable companies can buy these boxes for less than that. The math is pretty straightforward and a cable company can recover the cost of a $150 box in 18 months – and the average box probably stays at a home for three of four years, often longer.

Even with open standards there would be a number of technical challenges with the idea, due to the fact that all cable providers don’t use the same technologies. The settop boxes in a standard cable system operate differently and perform different functions than a box in a fiber network or DSL network. And even traditional cable systems aren’t going to keep the same technology forever and there is already some experimentation of converting cable systems to IPTV.

The idea of some standard solution gets even murkier when you consider that cable companies have been experimenting with delivering cable on other boxes such as Roku and the Xbox. This is not something that they have been able to do casually and it apparently took years of research to make this work. And not everybody is doing this the same way and there is a lot of custom programming and unique apps written to get cable to work on a different receiver.

There are also changes underway in the industry that have to be considered. There was a time when most of the brains of the cable delivery was in the settop box. All of the functions a customer used were controlled by software loaded onto the box and which controlled hardware within the box. But the industry has been experimenting with moving a lot of these functions to the ‘cloud,’ or at least to the headend. For example, some cable companies are now offering remote DVR storage, letting customers record shows at the headend to watch later.

One just has to wonder if a standard can be created that will allows companies to offer widely different features and options for customers? It probably can be done, but the time to do this was a decade ago when settop boxes were similar everywhere and the functions that cable providers offered were similar. We are finally starting to see experimentation among providers which has to complicate any attempt to create standards.

If the main goal is to give consumers a way to escape paying too much for cable boxes there is a much simpler solution. Why not just force every cable company to sell whatever box they use to customers at cost? This would give customers a way out of the monthly rentals and would shrink the claimed excess billions of dollars of cable profits. This would also create a secondary market for settop boxes since customers would be free to sell one that they owned to others. This would allow every cable provider to continue to pursue a different technological path with their boxes while still offering a break to consumers. This could be done immediately without having to wait for a protracted period of developing standards, and then manufacturing the boxes to meet those new standards.

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