On Wednesday, FCC Chairman Tom Wheeler proposed a new technology mandate that would require satellite and cable TV providers to disaggregate or separate their services so that a few companies could repackage them as their own without negotiating for content rights like everybody else in the market does today. While the Chairman touts consumer benefits to his proposal, the opposite is the case.
The proposal, like prior federal government technology mandates, would impose costs on consumers, adversely impact the creation of high-quality content, and chill innovation. It also flies in the face of the rapid changes that are occurring in the marketplace and benefitting consumers.
As a member of the technical advisory committee that the FCC formed, I, along with others on the committee, put in an extraordinary amount of time examining these issues. The Report we produced comprehensively discussed the widely-adopted apps-based model. The Chairman ignores the less regulatory apps-based approach that is already expanding the array of choices that consumers have to access content on retail devices.
In the twenty-first century, television has been on a tear of innovation. In the 1980s, wanting your MTV became an anthem. The 1990s saw an explosion of channels and diversity of voices on television, and the beginnings of HDTV. Change has been accelerating ever since.
Netflix now has more customers in the U.S. than any traditional TV provider; tablets, smartphones, smart TVs, connected devices for accessing video are ubiquitous; and new online video services are announced all the time. There are services from online powerhouses like Amazon; from new entrants like Sony’s Play Station Vue and Dish’s Sling TV that sell packages including linear channels; and from programmers like HBO, Showtime, and CBS. Just this week, we’ve seen the influence of these new services in locking up content at Sundance.
These changes are bringing enormous consumer benefits -- the quantity and variety of high-quality programming is better than ever, and consumers expect access to content anytime, anywhere, and on devices of their choice.
Comcast is responding with our innovative X1 platform, and enabling access on a growing array of devices. Like other traditional TV distributors, online video distributors, networks, and sports leagues, Comcast is using apps to deliver its Xfinity service to popular customer-owned retail devices.
These apps are wildly popular with consumers. Comcast customers alone have downloaded our apps more than 20 million times. This apps revolution is rapidly proliferating, and we are working with others in the industry and standards-setting bodies to expand apps to reach even more devices.
Given these exciting, pro-consumer marketplace developments, it is perplexing that the FCC is now considering a proposal that would impose new government technology mandates on satellite and cable TV providers with the purported goal of promoting device options for consumers.
A little background here. Congress enacted "navigation device" legislation twenty years ago that directed the FCC to foster retail alternatives to cable set-top boxes. The FCC responded with a CableCARD mandate. Despite the cable industry’s longstanding and ongoing support for CableCARDs, consumers showed little interest in the technology; it saddled cable operators and their customers with over $1 billion in unnecessary costs; and, it was overtaken by the explosive growth in connected devices and apps.
It is strange now that the FCC is ignoring the important lesson of history that intrusive federal governmental regulatory interference in the market just doesn't work by proposing new mandates at a time when Congress’s goals are being realized in the marketplace and consumers have unprecedented device choices that go well beyond what anyone could possibly have imagined even a decade ago.
The proposal would require traditional TV distributors like satellite and cable providers – but not other video distributors – to re-architect their networks and develop an undefined new piece of customer equipment just so device companies can take apart the video service and selectively reassemble it.
Consumer costs would rise, content security would weaken, and consumer protections such as privacy would erode. It would undermine intellectual property rights and content licensing agreements. The Chairman has said that his proposal addresses these concerns, but the simple fact is that the proposal strips away the tools that video distributors use to present service in a way that satisfies security, regulatory, and licensing requirements.
As noted, the FCC’s track record on these types of technology mandates has been less than stellar. CableCARD is just one example. Another is the 1394 output mandate. The FCC required cable operators to include 1394 outputs on their set-top boxes, the mandate went on for years even after it was clear that other outputs had won out in the marketplace.
Already, a broad range of parties is weighing in to support the innovation that is occurring in the marketplace and raising concerns including Disney, 21st Century Fox, NBCUniversal, and Viacom as well as small, independent, and diverse programmers like TV One, Fuse Media, Crossings TV , Revolt, and Baby First Americas; device manufacturers like Roku, Cisco, and ARRIS; diversity organizations such as the Hispanic Technology and Telecommunications Partnership (HTTP), a coalition of Hispanic organizations; and legislators, including 30 members of the Congressional Black Caucus and the National Black Caucus of State Legislators.
As the Commission considers taking this initial step to launch a rulemaking proceeding to determine whether to impose new mandates and if so, what those should ultimately be, we look forward to studying the proposal and providing constructive input. We hope the FCC will decide to avoid this major step backward for consumers and video innovation.