In comments filed on Friday in the FCC’s set-top box proceeding, we observe that, like an old general fighting the last war, this Commission seems to be making its stand for a technology that is rapidly being supplanted. As Tim Cook has said, and as almost everyone knows, the future of TV is apps. But the FCC is proposing to re-engineer MVPD networks and video business models in a misguided quest to keep the world safe for set-top boxes.
To justify its hyper-regulatory proposal, the FCC alleges that consumers are “locked into” set-top boxes, and do not have choices in how to navigate MVPD services. In fact, MVPDs are rapidly moving to make their content available on as many devices as possible through the use of applications. This trend is exhibiting the “hockey stick” kind of growth that often characterizes technology adoption. Yet, for some reason, this consumer driven move away from special purpose devices to smartphones, tablets, smart TVs, gaming consoles and streaming devices is insufficient for the FCC.
Instead of jumping on the app bandwagon, the FCC proposes to require MVPDs artificially to split their service into separate information streams. Such a division would give third parties, like Google and Tivo, access to customer viewing data that MVPDs are otherwise required to protect from disclosure. It would also allow those third parties to brand the service as their own, re-design channel line-ups and service guides, and place their own advertisements on top, underneath, or around the ads that programmers might otherwise expect to accompany their content. All without the consent of the MVPD or the rights holders.
And when MVPDs try to do away with the set-top box in its entirety, the FCC is suddenly no longer concerned about the “cost of the box,” but claims that it is not good enough because the apps are still “proprietary” (just like Netflix’s apps and Amazon’s apps) and don’t provide a “universal search” with OTT services that didn’t even exist in 1996 when Section 629 of the Telecom Act was drafted.
To try to fit its Rube Goldberg-esque proposal into the statutory framework, the FCC mangles the ordinary use of language. According to the Commission, words like “device,” “equipment,” and “converter box” actually mean “software.” And companies like Samsung, Apple, or Roku become an “affiliate” of an MVPD simply by entering into a commercial relationship with them. This is patent nonsense.
The FCC imagines that numerous technical obstacles to its proposal can be overcome in two years. In the real world, it would undoubtedly take far longer to implement this monstrosity. During that time, it seems likely, if the FCC pursues this foolishness, that a reviewing court will throw it out for violating copyright law, the Communications Act, the Administrative Procedure Act, or even the Constitution. In the meantime, MVPD service will move rapidly along the app-driven path to ubiquitous availability.