FCC chair rolls out revised plan to jolt television box market

Federal Communications Commission (FCC) Chairman Tom Wheeler on Thursday offered rules that would require pay-television providers such as Comcast or DirecTV to build free applications through which customers could stream live programming on different devices.

In doing so, Wheeler backed away from an initial proposal to open up the market for television set-top boxes to third-party manufacturers that triggered a tireless lobbying campaign by industry opponents.

{mosads}Though the proposal, if approved later this month, will not open up the marketplace to third-party manufacturers, Wheeler said it nonetheless would be a win for consumers because it would allow them to stop spending money every month renting a set-top box.

“The choice is yours,” he said in a Los Angeles Times op-ed. “No longer will you be forced to rent set-top boxes from your pay-TV provider.”

Wheeler’s circulation of the item on Thursday followed a months-long debate over his initial proposal. Under the plan he rolled out earlier this year, pay-television companies would have opened their feeds to third-party manufacturers.

He argued that making it easier for companies — TiVo or Google, for example — to manufacturer boxes that accessed live programming would lead to more and better choices for consumers while driving down prices.

The industry, which makes billions each year renting boxes to its customers, launched a counteroffensive built on arguments that Wheeler’s proposal would endanger consumer privacy, copyright protections and minority programmers. Lawmakers — including Senate leaders from both parties and several prominent House members — were rallied to batter the commission with letters expressing worry about the plan.

An industry coalition proposed its own alternative to Wheeler’s plan. Instead of having video providers open up their feeds to the manufacturer of a new box, the big players would instead create applications for smart televisions and other devices, it proposed. The proposal had a tagline meant to take a shot at Wheeler’s “Unlock the Box” branding: “Ditch the Box.”

That proposal clearly influenced the plan Wheeler introduced on Thursday. Under the proposed rules, providers would have to create applications for devices such as smart televisions, tablets and video game consoles. Users will be able to search across programming options using the apps, allowing them to easily access both live television and streaming services like Netflix.

The commission said that its plan would protect copyrights. It will require a standard license to govern relationships between the pay-television providers and the companies that make the devices hosting their applications. The license would be developed by a body created by pay-TV providers and programmers, according to a senior FCC official.

The senior official said the FCC would have the ability to modify the license if it felt it was going to inhibit competition.

That is likely to frustrate industry representatives who have said that giving the FCC a role in developing the agreements between providers and device manufacturers would be illegal. In a statement issued through an industry coalition, Victor Cerda, a senior vice president of the Latino-owned network called Vme TV, said that the “licensing scheme also clearly exceeds the agency’s jurisdiction.”

The senior official said the commission believed that the proposed oversight of the licensing body’s work was squarely within its authority.

While the industry plan would have resulted in apps primarily built using the HTML5 standard, the FCC said that a range of standards could be used and that the applications would be required to be made “available on all widely deployed platforms.”

If approved, large providers, which the FCC says cover 95 percent of subscribers, would have to create the apps within two years, and medium-sized companies would have to comply within four years.

The commission is slated to vote on whether to adopt the new rules on Sept. 29. Both Republican commissioners have remained resistant to Wheeler’s initial proposal, so it is likely that he will need to secure the vote of Democratic Commissioner Jessica Rosenworcel, who said that his initial plan had “real flaws.”

Early reaction from those who backed Wheeler’s original plan was positive. The revised proposal was praised by Sen. Ed Markey (D-Mass.) and Sen. Richard Blumenthal (D-Conn.), both of whom supported the original plan.

“The modified approach the Chairman has described today addresses the legitimate concerns raised by these parties while preserving the benefits to the public, and fulfilling the Congressional directive that requires the FCC to ensure that viewers do not need to rent set-top boxes from their providers,” said John Bergmayer, senior counsel at consumer advocacy group Public Knowledge, in a statement.