The Federal Communications Commission approved a plan today that would allow consumers to buy cable boxes from third-party companies. The proposal, which passed by a 3-2 vote, will now enter the public comment phase where businesses and consumers can voice their opinions before a final vote is reached later this year.
Proponents of the plan claim it will benefit consumers by giving them a choice they don't currently have. If third-party companies can sell cable boxes that can work for any television provider, consumers won't necessarily have to rent cable boxes from their specific TV provider like they have to now, which could reduce the cable bill costs.
A recent U.S. Senate study showed 99 percent of cable customers rented their equipment and the average American household pays $231 per year just on renting cable boxes, making renting cable boxes a $19.5 billion industry. Television providers like DISH Network and Comcast also have apps that allow consumers to watch television on-the-go. Steps like these might be indicating that television providers are moving away from cable boxes.
The proposal would essentially do the same thing to cable boxes as the 1968 Carterfone decision did to telephones. Before that decision, AT&T customers used to have to lease phones to have a landline. When the FCC ruled that the third-party device Carterfone was allowed to connect to the AT&T Network, the ruling opened the door for innovation, like new advanced phones and telephone systems. Today, consumers can buy routers, modems and other equipment from third-party sources that are essential to using the Internet.
However, opponents of the plan claim it would have several negative consequences. A recent report from the FCC suggests that most consumers who chose not to rent cable boxes would face IT difficulties that would require a large amount of research, time and expenditures up-front. Some also say it would allow third-party businesses to undermine the power and authority of contracts between networks and cable companies by inserting their own advertisements or changing channel lineups.
The biggest issue with this plan, according to USC professor Jonathan Taplin, revolves around Google and its relationship to the television market.
"This is really a power-grab by Google, essentially," Taplin said. "Google totally dominates the Internet advertising market. [It] has 86 percent share of Internet search advertising and everything."
Taplin went on to suggest that Google hopes to extend their reach into the $170 billion, television market.
"The way they're doing it is by getting the FCC, and there's lots of Google employees that work close to the FCC, to open up the set-top box so that it looks like a computer," Taplin said. "Then, Google can, essentially, dominate the advertising business inside the set-top box."
This will allow Google to obtain a large amount of information of consumers and result in targeted advertising like we experience on the Internet.
"It can scrape all the data from your set-top box, just like it scrapes all the data from your computer, and it will be able to deliver customized advertising on top of your TV," he said. "It's one of the most unbelievable power-grabs I've ever seen."
Taplin noted that cable companies will remain strong when it comes to live programming, but one area that the FCC's plan could really affect negatively is minority programming.
"It will be horrible," Taplin said. "It will essentially do to the TV business what Google has already done to the newspaper business. Newspaper revenues have fallen from $70 billion a year to $17 billion a year since Google has come in business."
One positive change that could result from the FCC's plan is the improvement of devices. People who support the proposal claim it will improve the cable box devices by integrating more video sources in addition to traditional cable TV service.
It would be like taking what you can get on the Roku and combining it with cable TV service consumers receive from set-top boxes all in one device that would cost only a one-time fee. Taplin agreed that a change to the current system would be helpful and that it's happening now.
"The TV set-top box that's given to you by the cable companies is a crappy piece of gear," Taplin said. "It has no power; it has no decent interface. So, I'm not saying you couldn't improve the interface, but Apple is already doing that without having the FCC create this open window for Google to grab all your data."
Still, Taplin believes consumers should take a second look past personal gain and consider what is really at stake in terms of the big picture.
"Quite honestly, nobody is really paying any attention," Taplin said. "People think it's just, 'Oh, I'd like to have a[n] Apple TV-like box instead of a clunky, old set-top box. Or maybe I'll save some money or something.' But that's not what this is about. This is about Google scraping all the data off your TV in order to sell you more advertising and know who you are better… It's just one more part of their surveillance marketing system."
Taplin said consumers can also think about the situation like this:
"How much do you want Google to know about your life? Or have you just accepted that? Have you just accepted the fact that Google knows more about you than your mother does?"
Annenberg Media