pay tv penetration

The war is on. On Thurs, FCC chmn Tom Wheeler is set to circulate an NPRM designed to pave the way for software, devices and other solutions to compete with traditional set-tops. The proposal will be voted on Feb 18 during the agency’s Open Meeting, senior FCC officials said during a background briefing Wed. Then the agency will open the item up for comments. Shortly after the proposal was unveiled, cable responded with the launch of the Future of TV Coalition consisting of 47 founding members including NCTA, ACA, major and mid-sized pay-TV ops, as well as programmers and civic groups. The group, led by co-chairs Alfred Liggins, CEO of TV One, and Nomi Bergman, pres of Bright House, seeks to “celebrate and promote the thriving innovation” that already exists in the pay-TV space. It said a few tech companies (including Google and TiVo), want the FCC to replace innovation with government regulation, often referred to as “AllVid.”

One of the several proposals made by the FCC’s Downloadable Security Technology Advisory Committee, AllVid allows consumers to use a device other than a set-top to access video services. Consumers groups like Public Knowledge also back this approach. “AllVid would force programmers and TV providers to dismantle their shows and services for these companies to repackage, reuse, and exploit without negotiating for the rights like everybody else in the market does today,” the Future of TV coalition said. Moreover, it would increase the equipment in consumer homes by requiring a new “AllVid” adapter in the home to deliver programming to a set-top box or video device purchased at retail, further escalating consumer costs. Cable, in general, prefers a hands-off, app-based approach that would allow ops to provide their own apps and user interfaces. Wheeler is framing his proposal as consumer friendly and not a huge blow to the pay-TV industry. The goal, according to a proposal summary, is to “unlock the set-top box.” Nothing in the proposal changes an MVPD’s ability to bundle and price its programming, senior FCC officials said during a press briefing. It also doesn’t require consumers to purchase any new devices if they are satisfied with their pay-TV provided set-tops, they said. The proposal identifies 3 main information streams that must pass from MVPDs to the creators of competitive devices or apps. They are Service Discovery, information about what programming is available to the consumer like channel listing and VOD lineup; Entitlements, information about what a device is allowed to do with content such as recording; and Content Delivery, which is the video programming itself.

In terms of standards for these 3 information flows, Wheeler’s proposal recommends they be made available to the creators of competitive devices using any “published, transparent format that conforms to specifications set by an independent, open standard body.” Since there is little technical difficulty, standards can be developed in a short time frame, meaning devices and apps can hit the market soon, senior FCC officials said. The agency said the average charge for a set-top box is $7.43 per month, an increase of 185% since 1994—more than three times the increase in the Consumer Price Index (CPI) over that same period. While it’s still too early to estimate potential cost savings, the proposal seeks to provide options with a variety of price points for consumers, senior FCC officials said.

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