FCC’s STB Plan Has Big Potential To Disrupt

When I sit down to watch TV on my FiOS system here in DMA No. 1 with no particular show in mind, I immediately go to ch. 502, which is WCBS in HD. From there, I scroll up through the other broadcast HD channels  that are bunched together in the low 500s on the pop-up grid that appears below the picture.

I sometimes keep going and get into some of the big basic cable networks clustered just above the broadcasters in the channel lineup.

If I still haven’t found anything, I move to the DVR function and perhaps check out last night’s Late Night with Stephen Colbert.

I share my TV habits not because they are interesting, but because they are not. They are commonplace. Despite all the on-demand and OTT options, plenty of people still spend a lot of time surfing around the linear TV world until something catches their eye and click in.

In other words, channel positions still matter — very much so. Of course, everybody in TV knows this and everybody in TV will do what they can to make sure their particular network is in the best possible channel neighborhood. Often, channel positions are baked into carefully negotiated retransmission consent and cable carriage agreements.

Well, there’s a problem.

As you have read about here and probably elsewhere, the FCC has proposed allowing third parties to offer cable and satellite subscribers alternatives to the system-supplied set-top box, other apps or boxes for navigating the expanding TV universe.

Such third-party devices would not only disrupt channel positioning, but also put the supplier of the devices in a position to undermine program promotions, to direct viewers to whatever programming they want and to piggyback their advertising on programming belonging to others.

Not incidentally, the wall between conventional TV and broadband TV would fall, exposing the former to still more competition.

The FCC proposal is the TV equivalent of letting the fox in the hen house. Feathers would fly and the foxes would have names like Google, Amazon and Apple.

Broadcasters are sufficiently alarmed that they are participating in the FCC rulemaking, arguing for additional safeguards against third-party navigation devices undermining the existing ecosystem.

“If navigation devices are not required to operate in a manner that passes through the terms of broadcasters’ agreements with MVPDs, program suppliers, advertisers and others; if the devices can manipulate the format or presentation of content or advertising, then the development of a competitive device marketplace will result in serious harm to what is now the beating heart of a flourishing marketplace for video programming,” the NAB says in comments filed with the FCC last month.

In particular, the NAB says, the FCC should “require that  all relevant aspects of broadcaster agreements with MVPDs must pass through — without alteration — to commercially available competitive navigation devices and applications.

“Similarly, competing devices and applications cannot be permitted to dilute the value of advertising by modifying the presentation of  advertising purchased on stations or displaying other advertising as part of the user interface.”

The FCC should also prohibit the device makers from messing with stations’ promotion of their programming with snipes, bugs, clips or other promotional matter, the NAB says.

Such safeguards are vital, the only practical way to police the third-parties, the NAB says. “It is unreasonable to expect content providers to shoulder the logistical and economic burden of monitoring many competing consumer device and application options, litigating to protect the value of their content with third-parties in ‘whack-a-mole’ fashion.”

If broadcasters are alarmed, cable operators are freaking out. In its comments, the National Cable & Telecommunications Association throws around words like “reckless” and “deeply flawed” in describing the FCC proposal.

It “jeopardizes the entire ecosystem that is producing a Golden Age of Television,” it says.

Cable has more at stake than broadcasting. It makes a lot of money from leasing set-top boxes in a marketing sleight of hand, which they would hate to lose. Plus, they have additional concerns about loss of control over how they market their services. Tiering, packaging and pricing are all functions of the set-top box.

The proposal, cable claims, puts third parties in the worse possible place, between the cable operators and their customers.

“A third-party device manufacturer could ignore the choices made by copyright owners for distribution, packaging, presentation, protection and funding of television content; block, replace or overlay advertisements; and delete a disfavored network or change its channel position or neighborhood to favor itself or a high bidder,” NCTA says.

The FCC has framed the set-top box proposal as consumer protection. And in some ways it is. Those monthly charges for the boxes are egregious. The FCC claims that 99% of cable and satellite subscribers are currently leasing set-top boxes, with the average household paying $231 a year in rental fees — a collective total of some $20 billion a year.

But protecting consumers from some price gouging does not justify disrupting broadcasting and cable and their painstakingly balanced business relationships. If rental fees are truly the target, there must be less intrusive ways to fix them.

I don’t believe that fees are the target. The real impetus, we’re told, comes from Google, which is desperate for access into the real TV business and has considerable sway with the Obama Administration and its willing appointee at the FCC, Chairman Tom Wheeler.

Wheeler has yet to tell a congressional committee that “what’s good for Google is good for America,” but I wouldn’t be surprised if he does. That’s certainly the way he has run the agency.

Let’s take a look at the game clock: There are six months until Election Day, and then another two until Inauguration Day.

Regardless of who wins, The Donald or The Hillary, tradition dictates that Wheeler step down around the inauguration and allow one of the other commissioners to run the agency until a new chairman is appointed or named.

Let’s hope the bureaucracy runs more slowly than the clock.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.