A generation has passed since 1996. What did the video world look like then? NBC’s "Must See TV" drew 20 million viewers every Thursday. MSNBC and Fox News weren’t on the election trail because they hadn’t yet launched. You couldn’t get "Back to the Future" on-demand. Blockbuster was the video giant with thousands of stores across the county. YouTube wouldn’t show its first video for almost a decade — until 2005. Netflix didn’t start streaming movies and TV shows until 2007. The iPad wasn’t even a gleam in Steve Jobs’s eye — it came 14 years later.
In 2016, consumers get TV in an unbelievable number of ways – at home on smart TVs, on-the-go on tablets, PCs, and phones. You can watch your DVR shows at 30,000 feet. All made possible by the incredible amount of innovation in video delivery.
Our announcements of the Xfinity TV Partner Program and with Roku show how we, as one of many competitors in the video marketplace, are continuing to bring choices to our consumers with new apps and ways to get our services. The positive market response to those announcements has been very strong; in just the first 48-hours, we’ve already gotten inquiries from almost thirty companies interested in the new program.
Twenty years ago, when everyone was talking about Gen Xers instead of Millennials, Congress passed Section 629 of the Telecommunications Act of 1996. Two decades later, in comments filed today in the FCC’s proceeding on set-top box equipment mandates, we detail how much the market has changed, how harmful the FCC’s current proposals would be to the New Golden Age of Television we are all enjoying, and how the FCC’s current proposals exceed its legal authority.
The Commission, the Administration, content producers, and video providers – I believe we all share the same objective: how to give consumers what they demand today by providing choice in how, when, and where people watch their favorite shows, movies, and news. Fortunately, the video market is so vibrant, and so competitive, that the market is producing solutions, including an apps-based approach where customers can access their video services without the need for a set-top box or heavy-handed government regulation that is unlikely to ever keep up with innovation.
Unfortunately, the Commission and the Administration have taken a fundamentally flawed approach to this topic. The FCC’s Notice, and the White House and NTIA comments over the past week, pre-judge a very complicated issue — one that is before an independent agency. Without a record, and preempting the thoughtful administrative processes required by the Administrative Procedures Act (APA), the Notice goes well beyond the statutory authority of the Telecommunications Act — by claiming an empowerment to create competitive video services as opposed to competitive availability of retail equipment for consumers to access MVPD services.
The FCC would create a host of unnecessary harms – in the privacy context, in the protection of intellectual property rights, in violating contractual rights between programmers and MVPDs, and in other contexts.
Thus, there’s been a growing chorus of objections from a wide range of parties detailing a broad panoply of problems with the FCC’s proposal. Members of Congress (Democrats and Republicans alike), programmers and content creators like the producer of The Walking Dead and the CEO of Crossings TV, multiple diversity organizations, equipment manufacturers, and even environmental organizations worried about the adverse energy impact of the proposal have weighed in with significant concerns.
While the Chairman and his staff say "don’t worry – we can fix all this" – in fact, the proposed rules can't be fixed to address these issues, and certainly not in the rush-to-judgment time frame the FCC has unnecessarily set for itself.
The only entities that seem to support the FCC’s proposal are mostly the same companies and advocacy groups that advocated for the FCC’s long-ago abandoned AllVid proposal, which for all intents and purposes is the same proposal the FCC Chairman is now advocating. Many of these companies stand to gain from not having to abide by the same regulatory obligations and contractual provisions as TV distributors. Instead, they want the government to do their negotiating for them. But the Big Tech beneficiaries are some of the largest companies on the planet and just don’t need government help.
Ironically, the Obama Administration endorses the Notice’s heavy-handed technology mandate in the name of promoting competition, but then completely ignores the clear evidence that the apps economy is already delivering competitive device alternatives to consumers without any government intervention and the reality that the FCC’s approach is tilting the playing field in favor of one set of competitors over another. That is not pro-competition policy – it is regulatory favoritism.
The Administration also tries to package the proposed government technology mandate as the "mascot" for its broader initiative to foster competition and the benefits of a free market economy across sectors – again, without even waiting for the public to comment. What's strangest is that the Administration’s position even ignores the FCC’s repeated findings that the video marketplace is already competitive with 99.7% of Americans having access to three or more providers.
And it’s equally puzzling that NTIA would recognize the significant harms raised by the FCC’s proposal, and yet still plow ahead with its endorsement. For example, NTIA says that the Commission should take steps to ensure that its proposed approach "does not diminish existing privacy protections" for MVPD subscribers, and notes that the Commission’s proposed certification approach "leaves important questions to be addressed." NTIA recognizes the significant harms to programmers, particularly for specialized and minority programming, if device manufacturers and apps developers can disregard programming agreements. Yet, NTIA proposes no fixes for these issues.
These harms are a direct result of the FCC’s decision to take the wrong technological path. It wants to shatter a vibrant and well-functioning marketplace into a million pieces and then try to glue it together in an entirely different shape.
The good news is that there’s a real alternative that will fully achieve the statutory goals set by Congress and create options for consumers to access their TV services without leasing a set-top box and avoiding all of the harms that will result from the FCC’s proposal. That alternative is the widely-adopted apps model that was comprehensively discussed by the FCC’s own technical advisory committee. Any objective comparison of the FCC’s proposal and an apps-based approach leads to the same conclusion – the apps approach is the best path forward.
The availability of apps on a huge number of competitive devices is already accelerating due to consumer demand and marketplace forces, not government mandates. Indeed, a mandate of the type proposed by the FCC threatens to derail this apps revolution. To eliminate any doubt about the continued acceleration of apps, Comcast’s comments put forward principles that will ensure an open standards-based app is available to any interested third-party device manufacturer on commercially reasonable terms, and for good faith negotiations on a customized app solution with device manufacturers that do not support that standard.
The government is notoriously bad at mandating where technology is heading – and this proceeding could be another disastrous example. What came out of the FCC’s original rulemaking attempts on set-top box mandates back in the late 1990s were the so-called CableCARD rules – which cost consumers over a billion dollars and did almost nothing to spur innovation or competition in television. The New Golden Age of Television we have today isn’t because of government mandates; the apps revolution is happening and accelerating without government rules.
It was disappointing to see the FCC dismiss our announcements this week and incorrectly characterize them. The Commission is wrong that our new Xfinity TV Partner App with Samsung and Roku would "only allow Comcast content on different devices." Whether on a Roku or on a Samsung TV, all the apps that consumers can currently use to access video content will still be available to them. They’ll just also be able to access Xfinity TV content through this app on popular retail devices and without having to lease a set-top box. They’ll still get Netflix, with the user interface and search Netflix has designed. They’ll still get Hulu with the interface and search Hulu has designed. They’ll still get HBO Now with the interface and search HBO has designed. In addition, they will get whatever umbrella user interface and search functionality that the device itself provides, user interfaces that Samsung and Roku already have for all of their other apps.
Our Roku and Xfinity Partner announcements are doing exactly what the statute seeks by offering our service on competitive devices available through retail outlets. The fact that Samsung and Roku have signed on, and that since our announcement we’ve had inquiries from almost 30 other companies including some of the biggest tech companies as well as new startups, is evidence that CE manufacturers want to offer these apps-based solutions to their customers to access our service. What the FCC is doing far exceeds its authority under the statute and ignores this marketplace progress.
From the FCC’s reaction to our announcement, it seems the Chairman’s real objective, which goes well beyond what the law says, is to hand control of the video ecosystem to a few favored Big Tech giants. It isn’t to provide alternatives to leased set-top boxes. Nor even to eliminate set-top boxes. The Commission’s dismissal of a no set-top box alternative that is widely supported in the marketplace makes that clear.
We hope the FCC is approaching this proceeding with a real open mind at looking at the record, including the significant concerns of the content creators, diversity groups, lawmakers, economists, and even the concerns raised by NTIA – the proposal as currently drafted can’t fix the real problems pointed out by so many commenters.