FCC Appears to Pivot on Set-Top Box Plan

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By Kyle Daly

Aug. 19 — The Federal Communications Commission may be plotting a significantly different course on pay-TV set-top boxes than it originally intended, according to several recent agency filings from top content companies.

In separate filings, CBS Corp. and 21st Century Fox Inc. described talks with FCC officials on the agency's proposal to open the set-top box market to third parties. The descriptions suggest FCC Chairman Tom Wheeler is considering a plan that would hew far closer to an app-based cable industry approach than the FCC's original proposal to require pay-TV providers to supply raw programming information streams to third parties.

The agency appears to be retrenching its high-profile effort in response to a firestorm of criticism from the cable industry and Capitol Hill.

Fox reported meeting with FCC officials who “indicated that they were seriously considering a revised approach” to the plan that would keep all pay-TV programming restricted to apps developed exclusively by pay-TV providers. Third parties could then incorporate these apps into their own platforms as long as they “honor and abide by all of the terms and conditions set forth in programmers’ licenses with MVPDs,” the company said in a filing released Aug. 18.

CBS, in a filing released Aug. 15, reported talks along the same lines. Both companies said the FCC initiated the conversations, inviting them to learn “the Chairman's latest views,” as Fox said in its filing.

The agency advanced its set-top box plan on a 3-2 party-line vote earlier this year. That proposal would have pay-TV providers, or multichannel video programming distributors (MVPDs), deliver three information streams — programming information, programming permissions such as the ability to record and TV programming itself — to third parties that make hardware- or software-based alternatives to traditional set-top boxes (2016 TLN 6, 3/1/16).

Lawmakers, the cable industry and the copyright community have hammered the FCC on the plan, saying it could undercut copyright by circumventing the terms of copyright agreements and potentially opening the market to devices that facilitate pirated content. An alternative proposal from the National Cable and Telecommunications Association and AT&T Inc. would, like the plan outlined in the CBS and Fox filings, lock all content behind an MVPD-controlled app that could then be incorporated into third-party devices from companies such as Google Inc., Apple Inc. and Roku Inc.

Wheeler told reporters after the FCC's latest open meeting that he expected to incorporate NCTA-AT&T suggestions into the plan as the FCC works to finalize it (2016 TLN ???, 9/1/16).

An FCC spokesperson declined to comment to Bloomberg BNA Aug. 19, saying the company filings speak for themselves.

Shifting Winds

While the shift would represent a stark departure from the controversial initial proposal, engaging with its critics doesn't necessarily mean the FCC will ultimately opt for the new path. John Bergmayer, senior staff attorney at Public Knowledge, which backed the FCC's original proposal, told Bloomberg BNA, Bergmayer said the FCC is still considering “multiple options.” He cautioned that filings “from interested parties are not the best window into what the FCC is thinking.”

SNL Kagan cable industry analyst Michael Paxton told Bloomberg BNA that the change in tone coming out of the FCC may signal that it's giving up on its original vision.

“Really, the political and contractual headwinds seem to be pushing the FCC away,” he said. “I think the FCC is realizing that they’re going to have to compromise a little bit. They were prepared for the MVPDs to push back, but maybe they didn’t think it through or talk to enough people before they pushed [the original proposal] out. Maybe they’re finding out now, we need to do something to assuage Hollywood and the content developers.”

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

For More Information

The CBS filing is available at: http://src.bna.com/hTr

The Fox filing is available at: http://src.bna.com/hTs

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