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Set-Top-Box Quandary: Let Market Forces Rule

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The FCC has just issued a Public Notice: Comment Sought On Video Device Innovation NBP Public Notice # 27, to spur innovation within the set-top-box market currently being served by individual Cable & Telecom companies as monthly rentals to consumers. First, these providers have invested in their own versions of set tops which interface their products with consumers for a wide variety of enhanced services.

The problem the FCC sees in this configuration is that it somehow stifles competition within the marketplace therefore making it difficult for consumers to delve into the now wide range of new services like Internet TV from different providers. This makes for a hodge-podge of connection/interface devices consumers must rent or purchase to experience what they want. Examples would be X-Box, Blu-Ray, Apple TV, Netflix, and others which connect consumers to Internet content through their TV’s.

The FCC moved to solve this problem through CableCards that mandated providers to modify their equipment to be CableCard Ready. It is probably in understatement to say that this mandate has failed without bringing inter-connectively any closer to the consumer than what we have today, individual provider set-top-boxes. So, where does the solution to this quandary lie?

To say that Cable-Telecom companies are not aware, stifling competitors, or not working on solutions that will take advantage of IPTV seems ludicrous within a competitive market realm. The last thing this market needs is more regulation or mandates to companies on how they should run their businesses, or how they should spend capital to give products that market forces will demand on its own.

Personally, I would like to see Home-Gateways as a solution to this problem. Each provider could custom design their own device to interface with the Gateway, therefore routing different services to each entertainment or communications platform within the home. It would be much simpler and efficient in handling the needs of consumer demand. And this should not be mandated, but left to the innovators to come up with a device which would take any companies encryption product as a plug-in; problem solved.

Being realistic, this solution is much easier said, than done. My point is that innovation, competitiveness, adoption, and lower prices do not come from mandates, they come from market forces where demand and supply rule. With unencumbered innovation the market will solve the set-top-box dilemma the FCC is delving into from a regulatory stance. In essence, let market forces rule, not the FCC.