FCC Chairman Tom Wheeler proposes to end a ten year old inquiry into cable/satellite set-top boxes (STB) by requiring all TV providers to provide AllVid, a standards-based open STB interface that meets the following goals:

To ensure a competitive marketplace as required by the Telecommunications Act of 1996, the proposal identifies three core information streams that must pass from MVPDs to the creators of competitive devices or apps:

• Service discovery: Information about what programming is available to the consumer, such as the channel listing and video-on-demand lineup, and what is on those channels.
• Entitlements: Information about what a device is allowed to do with content, such as recording.
• Content delivery: The video programming itself.

A Flexible Plan for a Pointless Order

Rather than mandating a specific technical solution, like the outdated cable card, Wheeler proposes to allow each MVPD to choose a technical solution that meets certain broad parameters:

• Instead of mandating a government-specific standard for these three information flows, which might impede innovation, the Chairman’s proposal recommends that they be made available to the creators of competitive devices and navigation solutions using any published, transparent format that conforms to specifications set by an independent, open standards body.
•  The proposal identifies five characteristics that must be met by an independent standards body: openness in membership, a balance of interests, due process, an appeals process, and consensus.

The AllVid proposal would have been defensible ten years ago, when the flaws of the cable card mandate had become apparent. Cable card is a very prescriptive and highly constrained technical approach to user authentication and content de-scrambling that didn’t hold up well to the unrelenting pace of change in consumer electronics; it required the use of PCMCIA, an old PC interface that was once used to add Wi-Fi networking capability to laptops that lacked the built-in Wi-Fi circuits in today’s laptops, tablets, smartphones, and TVs. It’s best thought of as a distant precursor to today’s ubiquitous USB interfaces.

And consumers didn’t want cheaper STBs, they wanted DVRs so they could skip commercials.

The Trouble with Cable Card

Just as USB has evolved from versions 1.0, 2.0, 3.0. and C, PCMCIA was superseded by higher performance and lower cost devices. While it’s possible to find cable card devices today, such as TiVo and Silicon Dust HDHomeRun Prime, they have always represented a very small market and the firms that make them have never been profitable. The Silicon Dust product is in major trouble today because it relies on Windows Media Center to store and view the content it decrypts, and Microsoft has dropped WMC from Windows 10 (much to my dismay because I own one.)

TiVo continues to limp along, but only by adding access to video streaming services such as Netflix, Amazon Instant, Hulu, and some of the cable company video-on-demand services. I’ve been a TiVo user since 2001, and see no need to upgrade from my current model, the Roamio, to the newest model, the Bolt.

It costs about $233 a year to own a TiVo when you add up the costs of the hardware and the program guide service and divide the sum by the number of years of useful life you can expect: $400 for the TiVo Bolt with 1 TB of storage and one year of the TiVo service, and $300 for the service in years two and three. This comes to $20/month, not a favorable comparison to a cable company STB at $7.43 per month according to the FCC.

Of course, this is comparison of a bare-bones STB and a full-function DVR, so it’s inherently unfair. But the HD DVRs offered by Comcast are $1o/month for a basic model and $20/month for the upgraded one. So the choice between a TiVo and a Comcast X1 DVR is a matter of personal taste rather than cost. Nothing in the FCC’s proposal changes this because TiVo is not going to lower its prices; they can’t, since they have consistently lost money ever since going public. Like many tech companies, they get by on license fees for their patents.

The Mystery of the Vanishing STB

So the mystery in this proceeding is exactly what the FCC hopes to gain. The agency’s information sheet stresses greater consumer choice and lower prices:

More Choice: More choices for innovative ways to access the programming they pay for on the device or app they prefer. Just as consumers shop at retail for a smart phone today, and they can choose to purchase a wireless router instead of leasing one from their provider, consumers will have the same choice to use a competitive device with a third-party app if they choose.

But it’s extremely doubtful that this will happen for two reasons: it didn’t come about as a result of the first cable card order, and more importantly consumers really don’t care about third-party DVRs, not to mention STBs. The future of television is on-demand streaming video; some would argue that this isn’t just the future, it’s the present as well because millennials tend not to watch cable TV at all.

For those of us who still have cable TV subscriptions the big draw is sports, and most of that is already available via streaming with the exception of markets where old cable TV contracts prohibit it. I can watch every game my Oakland A’s and Golden State Warriors play via streaming from MLB and NBA, so I don’t have a sports channel cable package; and I can also watch the hometown Denver Broncos over the air.

Where’s the Competition?

It should be clear that we have robust competition among streaming services for eyeballs and content and an increased willingness of networks that have historically been bound to cable to stream direct to consumers.

Since streaming is the locus of competition in television programming distribution, why does the FCC even want to bother with updating the cable card order at this stage, long after TV sets have dropped support for cable card and added Ethernet and Wi-Fi ports?

This transition has been coming for a very long time: back in 2003-5 I worked in an applied research lab run by a major TV manufacturer and heard the rhetoric about cable card.  Even then my managers considered cable card a mistake; we were working on adding Ethernet, Wi-Fi, and Internet Protocol to the company’s TV sets. Smart TVs succeeded and cable card failed.

So why does the FCC want to turn back the clock to 2002 and pretend it needs to create a highly competitive market for a vanishing device?

Oh snap, this is the same agency that turned back the clock on Internet Service Provider regulations to 1996. Pardon me, I must have forgotten that.