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FCC's Wheeler Proposes Circumventing Set-Top Box Rentals

8 Sep, 2016 By: Erik Gruenwedel

Federal Communications Commission chairman Tom Wheeler Sept. 8 issued an industry proposal that, if implemented, would require pay-TV operators to offer free app-based video distribution alternatives to the set-top box.

Wheeler, in the proposal, said the average American spends $231 a year renting a set-top box to access pay-TV — a $20 billion windfall to multichannel video program distributors. The FCC seeks to offer consumers another choice how they access video entertainment.

The commission will vote on the app-based proposal Sept. 29. If adopted, the largest pay-TV providers, who serve 95% of households, would have two years to comply with the rules.

Specifically, Wheeler wants to up video access via free apps — controlled by pay-TV operators and downloaded from the Internet. The apps would be applicable to a variety of devices, including tablets, smartphones, video game systems, streaming devices (Roku, iOS, Android, Windows, etc.) or Internet-connected TVs.

“While consumers will still pay their monthly subscription fees for the service, they will be able to download an app to devices they purchase or already own to access pay-TV service, so they are no longer forced to rent boxes from their provider. Of course, a consumer may choose to keep their set-top box and enjoy their pay-TV programming as they do today,” read the proposal. 

The chairman said the proposal, if passed, would spur competition in the marketplace to develop new competitive products like next-generation streaming devices, smart TVs and tablets.

Notably, Wheeler said an app-based ecosystem would aid independent and minority programmers no longer beholden to cable, satellite and telecom operators for distribution.

“Their content will be easily searchable on the same device as pay-TV content,” read the proposal.

Indeed, the new rules would also outlaw pay-TV operators from influencing content searches or favoring one app over another — an interesting mandate considering content recommendations remain a hallmark of over-the-top video.

Robert Johnson, chairman of RLJ Entertainment, hailed the proposal as a boost for consumer choice and innovation in the video marketplace.

"The decision will benefit millions of minority consumers who will be released from paying exorbitant monthly rental fees for access to this new era of minority programming. I congratulate Wheeler and particularly commissioner Mignon Clyburn, the only African-American commissioner, for their commitment to providing an equal playing field for minority programmers who are looking to start their own distribution channels to entertain and inform the 13 million African-American households," Johnson said in a statement.

Comcast Cable, sensing the government’s action, in April for the first time made its programming available on Roku and connected Samsung TVs — rather than a proprietary set-top box.

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