FCC Set-Top Box Proposal Given Thumbs Down at NAB Show (MESA)

By Paul Sweeting

LAS VEGAS — The Federal Communications Commission’s controversial proposal to “unlock” the pay-TV set-top box to third party developers was a frequent topic of conversation during the National Association of Broadcasters (NAB) convention here, but not in a good way.

Apart from a couple of panelists invited in for the express purpose, it was hard to find anyone at the show with anything good to say about the proposal.

Some of the sharpest criticism came from one of the FCC’s own. In a speech laced with sarcasm and sharp jabs, FCC commissioner Michael O’Reilly blasted the proposal put forth by FCC chairman Tom Wheeler as a dishonest power-grab meant to extend the commission’s jurisdiction beyond its statutory authority to claim the power to regulate new technologies such as apps and digital video delivery.

“You might think from hearing it that the Commission is merely tweaking the current rules on set top boxes. But in fact, this initiative is really all about taking a 90’s regime and redefining all of its terms to let the Commission get its hooks into all of the new technology that has developed since then, outside of the Commission’s authority,” O”Reilly said. “What we are dealing with here can only be described as a much more flexible approach to logic and reasoned thinking. The argument is this: people are sometimes using apps now instead of devices. Therefore, an app is a device. And under section 629, the FCC can do whatever it thinks necessary to promote the development of more competitive apps. I can think of a few choice words to describe this lunacy, but I’ll settle for fatally flawed.”

Under the proposal, which the commission adopted in a 3-2 vote in February, cable and satellite providers would have to make three distinct “information flows” available to third-party device makers and app developers: a “content discovery stream” consisting of metadata about the programming available on the pay-TV service, including VOD and PPV programming; an “entitlement data stream” including information on what content an individual subscriber is entitled to access; and the programming itself.

Although aimed ostensibly at pay-TV providers, the loudest objections have come from content owners, who claim it amounts to giving their content to third parties for free and without any contractual relationship with the rights owner.

“The proposal forces the pay-TV provider to turn over all their licensed content,” Motion Picture Association of America senior VP for government and regulatory affairs Neil Fried said during a panel discussion. “Our content is given to third parties without any input from us. And those those parties are not required to abide by any of the provisions of the licensing agreement we have with the operator.”

Many, if not most of the provisions in those licensing agreements, Fried noted, concerned issues of content security. The FCC proposal says content must be adequately protected on any third-party device, but it leaves the protection method to the discretion of a future standards-setting body.

“How will the billions and billions of dollars-worth of video content be protected from theft?,” O’Reilly asked, rhetorically. “Well, it turns out you don’t need to worry about that at all. Some other people are going to figure that out. Which other people? No one quite knows. The Commission proposes the security system to be used by every MVPD will be created by an organization that is not affiliated with MVPDs.” This magical all-knowing benevolent organization may not, and probably does not, even exist yet. Some people have suggested a couple of existing standard setting organizations but there is no evidence that they can or will serve this purpose. What type of security system will it come up with? No one knows. Are you feeling comfortable yet?”

For all the criticism the proposal took, Major League Baseball Advanced Media VP of media playback Joe Rice saw at least the possibility of a silver lining.

“When you look at the proposal – and we have a lot of experience working in a fragmented space – the proposal could make things both easier and harder,” Rice said. “It could lead to even more fragmentation of devices and services. But it could also add weight to the effort to come up with a common media format” for streaming services. “If we had a common encrypted media format it would make it easier to deal with multiple DRMs. There’s no question we’re in a multiple-DRM world now.”

The FCC’s proposal won’t take effect until a period of public comment and reply comments is completed, and final rules are written and approved by the commission. The drive toward approval got a major push on the eve of NAB, however, when President Barack Obama weighed in forcefully in support of unlocking the box.

The White House, in fact, made the proposal to unlock the cable box the poster child for a broad new initiative designed to spur greater competition across multiple sectors of the economy.

“In many ways, the set-top box is the mascot for a new initiative we’re launching today,” Jason Furman and Jeffrey Zients of the White House Council of Economic Advisors wrote in a blog post last week. “That box is a stand-in for what happens when you don’t have the choice to go elsewhere—for all the parts of our economy where competition could do more.”

The FCC is expected to vote on final rules before the end of the year.