Federal Communication Commission

Set-Top-Box Revisited: How does the Gateway solution increase competition?

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The FCC seems determined in revisiting and repairing the current CableCard rules fiasco in which it chose to mandate a universal Set-Top-Box for Cable, Telco, and DBS providers. Where does a solution lie, and is the FCC going down another road of improbable acceptance? See (Boucher Backs FCC Set-Top Box Effort)

The problem with a CableCard solution, in an attempt to create more competition, was the opening of current provider STB’s to access other venues, which turned out to be both technically and business concept unfriendly. Video providers are not going to share proprietary technology or a business specific customer experience to comply with such a rule. It did not make for good business economics, and led retail manufacturers down the wrong path of investment in believing providers would accept and adopt such a technology. Fast forward to today, and we are back at the same starting gate with another proposal by the FCC to create more competition within the video and broadband marketplace.

Set-Top-Boxes are uniquely provider centric, and therefore changing that concept is not going to be met with open arms. With that said, the market is moving to more of a gateway consumer experience, although it is not there yet, which should be and seems to be, the focus of the FCC in an attempt to create a better competitive landscape. However, the STB has to remain an exclusively provider experience whether you are a Cable, Telco, DBS, or Over-The-Top provider service. See (Death Row For the Integrated Set-Top)

For a wider acceptance of creating more choices within the home for consumers, the gateway must be specifically designed to accept the (Four Play concept) of phone, Wireless, broadband, and TV. The TV monitor should be accepting an STB signal to differentiate seamless and multiple internet surfing, and TV access. The competition aspect of this design lies within the Set-Top-Box. This device must be company specific and give the consumer a wide variety of choices to various information and entertainment exclusively provided by each competitor.

To clarify, each provider of entertainment would create their own set-top to interface with the gateway. The STB uses the broadband pipeline, from whatever carrier, and integrates the company specific experience to the consumer, whether it is Cable, Telco, DBS, or Over-The-Top providers. However, mandating some type of STB interface to access competitors separately or modifying STB’s to be universal, will just slow competition and go down the path of CableCard inoperability.

To reduce consumer costs, eliminate the need for multiple STB’s within the household. Use the gateway to provide an STB wireless-encrypted signal for each TV interface. Not being an engineer, this concept is predicated on a modified routing system for the STB. Competition remains with multiple providers of content and their unique STB interface. This also means TV manufacturers must be involved in the process while maintaining the integrity of the STB. This concept could reduce both consumer costs and capex requirements for STB providers. See (Analyst: FCC ‘bound and determined’ for STB ban)

FCC to “improve” CableCARD rules this month (arstechnica.com)
FCC: Will AllVid be CableCARD Part Deux? (feldmanfile.blogspot.com)
FCC’s Proposed Gateway Mandate Misses Opportunity for Alignment with Pay-TV Operators’ Incentives on Open-standard STBs – IMS Research (eon.businesswire.com)

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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.

FCC Admits That CableCARD is a Failure (siliconangle.net)
Cable Industry: at a Cross-Roads (thecablepipeline.com)
The FCC Calls for a Standard Set-Top Box: Open Box, Open Market, Open Mind? (xconomy.com)
Comcast Vs FCC: Implications in throttling BitTorrent (thecablepipeline.com)

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Comcast Vs FCC: Implications in throttling BitTorrent

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Comcast is appealing a ruling before a three-judge appeals court panel concerning the FCC’s sanctions in 2008 of the operator, and whether it has jurisdiction under current Net Neutrality rules to do so, for what has become known throughout the media as past throttling of BitTorrent. (See FCC formally rules Comcast’s throttling of BitTorrent was illegal). This could be an important decision for ISP industry operators, who have many (irons-in-the-fire) when it comes to a business model that depends on both residential Internet and business customers, in helping it pay for a broadband pipeline created with private investment.

It also has implications for consumers who are increasingly using more file sharing applications to watch video content from their Internet Service Provider connections, and Internet giants like Google (Nasdaq: GOOG)who depend on free access to its information sharing business model. While Comcast (Nasdaq: CMCSA,CMCSK) has indicated their Internet management practices have since been changed, as a result of the issue, and it no longer throttles customers, what remains is a court challenge this past week in which the court grilled the FCC on its authority to regulate ISP’s under current Net Neutrality rules without a legislative mandate. (See Comcast Scores Against FCC in Court Battle over Net Neutrality).

The wider ramifications is whether the ruling will apply to business applications, which require special and unique service agreements for much larger file sharing and speeds in offering these programs. In essence, ISP’s need the flexibility to charge differing rates depending on the requirements of certain applications, which in-turn allow for infrastructure investments to accommodate these needs. This is their (Bread and Butter) of profitability.

On the one hand the FCC is under a mandate by the current administration to have a free flowing Internet with consumers and file sharing applications having unfettered access, and on the other, private investors which have created the pipeline are mandated by economics to make a profit depending on differing needs, from both consumer and business. If the FCC loses this current battle in court, then future challenges will likely occur concerning any new Net Neutrality rules that are adopted.

It seems from opening arguments before the courts that the FCC may have overstepped its boundaries in taking Comcast to task over BitTorrent, and may have to back up and ask Congress for a legislative mandate in regulating broadband as an information service.

Appeals Court: FCC Can’t Make Comcast Stop Throttling BitTorrent (mashable.com)
CES: FCC Commissioners Pessimistic on Net-Neutrality Prospects? (blogs.wsj.com)
White House Backing Away from Net Neutrality? Not So Much (dailykos.com)
Comcast, FCC take net neutrality dispute to court (seattletimes.nwsource.com)

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Cable Industry: at a Cross-Roads

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Cable providers are looking at a cross-roads with the current climate brought on by a new political landscape, a Democratic Congress, with an FCC mandated to change the future of broadband, and a public viewed skepticism of the Cable Industry.

This adds up to significant changes which might threaten the status-quo of annual rate increases, tiered program blocks, and set-top-box rentals that have plagued the industry with criticism in the past. So, how does the industry change those perceptions and move forward in a new competitive landscape?

With innovations and growth spurred by deregulation of the 1980’s Reagan era, the Cable Industry began a journey starting with wire-line build-outs spurred by terrestrial satellite programming. A phenomenal market emerged for content delivered over the pipelines, which leaped forward with the advent of fiber for better quality, bandwidth, and extended reach to new customers.

This model became so successful it began to come under scrutiny from a public, and then regulators, which perceived an industry with little competition, blocks of programming tied to rate increases, poor service from a lack of forethought, and high profits.

Fast-forward to today with broadband streaming video, alternatives to traditional linear TV, increased competition from DBS and a few wire-line providers; the industry is at a cross-roads. Where do we go from here to ensure the profit model which made us successful in the past?

But the industry has its up-side, with a commercial business market largely untapped and held by incumbent phone companies for decades; a new venue of Internet Broadband viewing by an increasingly impatient consumer for change in the status-quo, therefore TV Everywhere; a Set-Top-Box market that begs for universal service across many mediums; and a mandate by regulators to increase broadband penetrations.

The industry can, if strategically focused, take advantage of these changes in the market by embracing change, letting go of the past, and moving forward to the future. Its message should be one of new innovations, a willingness to compete under a new market structure, and a helping hand in achieving broadband proliferation. These are the cross-roads the industry must face. Their message should be communicated positively, succinctly, and often.

FCC offers early peak at national broadband plan (seattletimes.nwsource.com)
FCC Takes on Cable But Not Carriers With National Broadband Plan (gigaom.com)
Cable Companies – Always the Villains (lockergnome.com)
Clearwire Supports Net Neutrality? Does No One Remember Its History? (techdirt.com)<!– ckey=”59BE5E2E” –>

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A Common Sense Approach to Net Neutrality

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There are two compelling sides to the Net Neutrality issue before the Federal Communications Commission that can be solved by cutting through the rhetoric and making a few common sense and objective decisions about what is at the crux of the problem.

First, Internet Service Providers are at the center of the debate, and rightfully so, since without the ISP’s providing the gateway for Internet usage, there is no issue. The power of discrimination lays solely in the hands of the Comcast’s, AT&T’s, Time Warner Cable’s, Verizon’s, and other providers of the ISP pipelines.

This is a huge social responsibility for private sector companies, who do not necessarily compete with each other in every market, in controlling the complexities of sharing access to all who ask. The Internet has evolved into more than just picking which provider will allow individuals or companies to link through to others; it has evolved into a massive highway of commerce and social connection. And this is where the problem with competing interests and two sides of the coin begins to emerge.

To solve the issue the FCC can take either of two paths in ensuring openness and fairness to all concerned, with both large and small stakes, in both getting where they need to go and receiving what needs to receive, via broadband. One path is to let the market sort itself out; in that encouraging competition within the marketplace between ISP providers will create less of a reason for providers to favor one entity over another or risk losing customers to the competition.

This would work well if it was easy and inexpensive to get into the ISP business while building an infrastructure to support a broadband pipe sufficient enough handle the range of users, content, and applications needed to ensure true competition. Only Verizon, to my knowledge, is able say that it welcomes all comers with its FTTH-FIOS infrastructure and with bandwidth to spare.

An alternative path would be to mandate all ISP providers open their networks to competitors and set standards for download and upload speeds, thereby ensuring everyone is treated equal. And yes, creating tiers of service for unusual traffic needs. While this could be considered a heavy-handed approach, it does take somewhat of a burden off the private sector in choosing whether to upgrade their networks for increased bandwidth, or which entity it will prefer when having to choose between conflicts of interest, protection polices, or Wall Street demands.

But a common sense approach is fraught with political mine fields. Lobbying is alive and well on Capitol Hill and the larger companies have the lawyers, insiders, and money to back up those efforts. However, in my opinion, there needs to be a compromise between public and private sectors that are willing to support an (Internet Super-Highway) which fosters innovation, competition, new businesses, and robust commerce that spreads success to all corners of our country. It is only common sense!