Cable companies say a US bid to wrest away their control of the set-top box is a ploy cooked up by Google Inc. that will harm their business as online rivals unfairly profit by selling ads and viewer data from shows.
“This is mission-critical,’’ Michael Powell, president of the National Cable & Telecommunications Association, said on a conference call Tuesday. He said the change is backed by “a handful of public interest advocates and a very small number of technology companies, primary among them Google and TiVo,’’ the independent set-top box maker.
The Federal Communications Commission on Thursday votes on a proposal from its chairman, Tom Wheeler, to set technical standards for new devices or software to compete with the set-top boxes that most consumers lease today from their pay-TV provider. Wheeler wants to spur more options for consumers in much the way wireless customers select phone models made by competing manufacturers. The vote, at the agency where Wheeler leads a three-member Democratic majority, would begin a formal rule-making process leading to another vote before a change is final.
“Congress mandated that consumers should have options,’’ Wheeler said in a Twitter message. “But for 20 yrs since that mandate, they haven’t. I want to fix that.’’
US cable providers, including the two biggest — Comcast Corp. and Time Warner Cable Inc. — may be unhappy about losing the monthly set-top box rental fees that US senators calculate net them $19.5 billion annually. They’re also terrified that Wheeler’s proposals will turn them into a provider of video unrecognized by consumers as any different than, say, Netflix Inc. or YouTube, run by Google’s parent Alphabet Inc.
“The commission’s proposal is very consciously aimed at turning traditional pay-TV providers into dumb pipes, and forcing them to compete on a pure commodity basis for the delivery of content’’ without any branding, Craig Moffett, senior research analyst at MoffettNathanson LLC, said in an interview.
Since Wheeler offered his proposal last month, big media companies have pressed their concerns upon the FCC. Representatives of Rupert Murdoch’s film and TV company 21st Century Fox Inc., ESPN owner Walt Disney Co., broadcaster CBS Corp., MTV owner Viacom Inc., and premium cable channel HBO owner Time Warner Inc. held a series of meetings last week with FCC officials including Wheeler. They argued that any rules need to make sure third-party boxes “honor the sanctity’’ of programming agreements with pay-TV providers, according to a filing.
Powell devoted more than an hour in a call with reporters to argue that FCC’s proposal would stifle viewing technology by locking in boxes as the norm instead of letting the industry progress to using online applications. He said it also would let Google profit from selling ads against cable’s shows. The FCC has said its proposal sets standards and doesn’t specify devices or software.
The Motion Picture Association of America, representing Hollywood studios owned by Viacom, Disney, Fox, Time Warner Inc. and Comcast, “and essentially the entire programming industry, in particular, is very concerned,’’ Powell said.
“If you spend close to $4 million an episode producing a quality drama you’re not anxious to see another major commercial distributor get access’’ without paying, Powell said. “This is government assistance to allow one set of big tech commercial interests to get access to the intellectual property that belongs to others.’’
Google, the leading search engine owner, has backed the FCC action, along with a coalition that includes independent set-top box maker TiVo Inc. and Incompas, a trade group with members including Google, Netflix, and network provider Level 3 Communications Inc.
