Google wants to break cable's grip over set-top TV control box

[WASHINGTON] It's an afterthought or even an object of scorn in some homes, and it costs TV viewers an estimated US$232 per household each year.

Now the US Federal Communications Commission is considering breaking the grip cable and satellite-TV companies have over the set-top box.

Supporters of the idea such as YouTube owner Google and independent set-top box maker TiVo say competition would lower costs and improve functionality of the devices - like combining subscription channels with Web streaming services such as Netflix into one remote control.

"Decades ago we ended the practice of forcing customers to lease a black rotary dial phone from Ma Bell," said Chip Pickering, chief executive officer of the Comptel trade group with members including Amazon.com and Netflix, which favors more competition. "The archaic practice of forced leasing a set- top box from the cable company is a holdover from a bygone era." The cable industry, already reeling from the loss of subscribers to "cord cutters" who get their video over the Internet, is fighting the move. It makes an estimated US$19.5 billion a year renting the boxes and mines them for valuable data on viewing habits.

Consumers right now have little choice, with about 99 per cent of cable and satellite TV customers renting set-top boxes directly from the companies, according to Democratic US Senators Ed Markey, of Massachusetts, and Richard Blumenthal, of Connecticut, who surveyed pay-TV providers and came up with the US$19.5 billion estimate. Cable providers don't divulge revenue from box rentals.

Mr Markey called for "a new, national consumer-friendly standard that will allow consumers to choose their own video box." The change may come as part of the FCC's review of standards, including the technology that cable- and satellite- television companies use to control program access - that is, to keep signal thieves from snatching shows such as 21st Century Fox's "Empire" or "Game of Thrones" on Time Warner Inc.'s HBO.

Pay-TV companies say listing channels willy-nilly would violate their deals with movie and program providers, which typically include precise requirements for placement on a channel lineups extending into hundreds of choices. Consumers already successfully use apps from pay-TV companies to watch shows on smartphones, tablets and through game consoles, Comcast, Charter Communications, Dish Network, and AT&T, owner of DirecTV, said in a statement.

"Do we want the federal government engineering a new TV device for consumers when the marketplace is clearly working?" said Brian Dietz, a spokesman for the National Cable & Telecommunications Association trade group. "The market is working without government intervention." Consumers are able to watch video offered over devices such as Roku's video player, Amazon.com's Kindle Fire tablet, or Microsoft's Xbox, he said.

The two sides couldn't agree on technical standards when serving together on a task force convened by the FCC. Points of disagreement included whether the standards should open the way for devices to do whatever designers want with program information. If they can, then Google gets its way. If they can't, then consumers would use apps approved by pay-TV providers to get to cable and satellite-TV subscription programming.

The FCC is being asked to take sides in a "battle for control of the TV," said Richard Bennett, visiting fellow at the American Enterprise Institute policy group. "There's a business struggle going on between the vendors of these various devices," he said.

The FCC may be several years from acting, since it hasn't yet reached the point of asking the detailed questions that usually precede a proposal for new rules, Bennett said.

The agency has asked for comments through Nov 9 on what should replace the expiring standards. It hasn't decided its next steps, said Shannon Gilson, an FCC spokeswoman.

Amazon, Google Google, TiVo, Amazon and the Internet Association trade group with members including Vimeo LLC, the video distributor owned by Barry Diller's IAC/InterActiveCorp, are pushing for a new standard. Consumers should be able to choose between premium devices with advanced functions and simpler, cheaper options, the companies said in a letter to the FCC.

Today, "you can't even own it. They won't sell you a device. If that's a problem you need to change that," said Milo Medin, Google vice president for access services. "The commission needs to take action." Ty Rogers, a spokesman for Amazon, and Anne Marie Squeo, a spokeswoman for Netflix, declined to comment.

Pay-TV providers disagree.

Cutting programming into pieces that a retail device manufacturer could reassemble into a new configuration would turn pay-TV providers "into suppliers of programming for commercial use by third parties," the companies said in a joint statement.

"There is no need for FCC technology mandates," said signers who included Comcast, Charter and its takeover target Time Warner Cable, Dish and DirecTV.

BLOOMBERG