The Cable Industry Is Either Incredibly Stupid, Or Thinks You Are Really Gullible

Image courtesy of Robert S. Donovan

The Comcast-connected faux grassroots group created to protect the cable industry’s $20 billion annual revenue stream of set-top box rental fees is now claiming that it caught FCC Chair Tom Wheeler in a real “gotcha” moment, proving that there is indeed no need for competition on these devices. But either this group has no idea what it’s talking about, or it thinks the American consumer is incredibly gullible.

Yesterday, Wheeler testified before a Congressional subcommittee regarding his agency’s various ongoing efforts, including the recent decision to draft rules that would allow new players into the set-top box market that is currently controlled by the individual pay-TV providers.

The idea is that new players in this market could offer devices or apps that give consumers access to the same live-TV content as their current cable company-provided boxes, but possibly with additional features, and hopefully at a better price.


Opponents of the idea — like the industry-backed, hilariously named Future of TV Coalition — have made unsubstantiated claims about this proposal, saying these competing devices would be “poaching” content for free (they wouldn’t), or that makers of these new boxes will rearrange channel listings to exile smaller and minority-focused channels to the bottom of the channel guide (that wouldn’t be allowed).

Speaking to Congress on Tuesday, Wheeler pointed to existing devices like the Google Chromecast — which allows users to stream services like Netflix, Hulu, Google Play, and others to their TV sets — as an example of a product that “allows you to pull things off of the web, does not violate copyright, does not overlay commercials, does not do all of the horrible things everybody says a set-top box like that would do.”

Wheeler noted that Chromecast and similar products are effectively “the equivalent of competitive set top boxes,” a sentence that the Future of TV Coalition pounced all over as some sort of definitive vindication for the industry’s argument.

“If the classic Washington definition of a ‘gaffe’ is to accidentally tell the truth, Chairman Wheeler’s comments at today’s hearing are a whopper,” reads the statement. “He admitted, plainly and clearly, that app-powered devices like Chromecast and Roku offer consumers an alternative to traditional set-top boxes and are readily available in the marketplace. Which begs the question — why is the Chairman so desperate to solve a problem that he admits does not exist?”

Perhaps Wheeler should not have used the word “equivalent,” but nothing in his statement can reasonably be construed to imply that Chromecast is currently the same as a cable box. Yes, it provides video services. Now that Sling TV and PlayStation Vue are available nationwide, streaming device users can indeed get access to some live TV feeds.

But that’s not the same as a cable box. For one thing, while live TV streams may be in HD, they may also — thanks to congestion, weak WiFi connections, and data caps imposed by broadband providers — come in significantly downgraded. That doesn’t generally happen with TV service coming over a cable line into a set-top box.

And speaking of data caps, the existence of a monthly limit has the effect of restricting just how much video one can watch. This would be especially problematic in a household with multiple users all trying to stream live HD TV simultaneously in different rooms. You don’t hear about Comcast charging TV viewers extra just because they watched too many episodes of Big Bang Theory.

Since many Americans get their Internet and cable from the same company, replacing that pay-TV service with an over-the-top streaming option like Sling or PS Vue also means you’re likely giving up the financial benefit of bundling your cable and broadband services. So you’re paying a higher price for broadband and using more of it, putting you at risk for hitting the aforementioned data cap.

Most pay-TV providers do offer apps that allow you to stream live TV both in your home and away from your house, but you’re still generally required to have — and pay for — at least one set-top box somewhere in the world.

If anything, it’s the Future of TV Coalition that makes a gaffe in its statement, noting that “Chairman Wheeler correctly points out that apps-driven innovation is already allowing consumers to watch video on a wide range of devices — without hurting small and independent programmers, invading privacy, or undermining copyright protections.”

A reductive reading of that sentence, in combination with the Coalition’s assertion that Chromecast is already the equivalent of a set-top box, would seem to indicate that the very concerns raised by the industry — privacy, piracy, damage to small programmers — have already been addressed by existing technology and therefore there is nothing for pay-TV companies to be worried about.

We still don’t understand the industry’s eagerness to prevent competition in the set-top box market. Yes, it might mean the loss of some revenue for those customers who switch to a new device and stop paying to lease or rent one from the pay-TV provider, but it could also be a boon to the industry.

If some people are cutting their cable cord because they are sick of paying monthly fees for renting remotes and boxes, a lower-cost option may keep them from getting rid of cable or satellite altogether.

For the cord-nevers — that younger generation that has grown up on streaming, on-demand video and hasn’t ever considered a cable contract necessary — they may be tempted to try a pay-TV service if it’s available from the same device that brings all their streaming content to the TV.

And besides, as one industry analyst bluntly pointed out, “If [set-top box] revenue stream is threatened, we assume the cable industry will simply shift the revenue from boxes to service as they go through their annual rate adjustment process. After all, box revenues just go to help pay rising content costs.”

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