There is little doubt that all 356-pages of the National Broadband Plan will be analyzed thoroughly in the days and weeks ahead. I’ll take this opportunity to offer some commentary on the “Broadband Competition and Innovation Policy” chapter which among other items addresses how the Commission can create a true retail video device marketplace that works for consumers that subscribe to any multichannel video programming distributor (MVPD).
First, and perhaps most importantly, we are very pleased that the Plan is so clear that the only way a retail video device marketplace can fully work for consumers is if all MVPDs participate. And, as part of a proceeding to do this, we have already committed to a series of consumer principles governing video devices which we think can and should serve as the foundation for Commission and inter-industry efforts:
Our industry is committed to providing content to consumers where and when they want it, on all possible consumer devices, and for those devices to be innovative platforms for new applications. We want consumers to be able to buy video devices at retail and to know that cable content can be among their video sources.
The cable industry has consistently asked the Commission to take a fresh look at the CableCARD and navigation device rules in light of today’s market where 40 million consumers subscribe to video service from satellite and telephone providers. Most of cable’s competitors have been exempted from the rules which clearly haven’t led us to the place that Congress envisioned in the 1996 Telecommunications Act.
As far back as August 2007, NCTA called on the Commission to implement an “all MVPD” solution:
For CE manufacturers who would build devices that can operate not just across cable but across a wide variety of MVPD networks, there could be a new network interface device. Such a device could handle most of the complexities of network consumer premises equipment functionalities and deliver an MVPDs services across an interface that can also be used by other MVPD networks. This approach could offer consumers a low cost option for accessing all cable services on bi-directional retail devices, the ability to use their televisions with other MVPD providers, and the capability to access new services on the same television as new and innovative services are deployed. The cable industry could work on such a solution should the Commission bring those networks into meaningful regulation.
We renewed our call for a broad Commission proceeding last December and highlighted some of the reasons why a cable-only retail video device marketplace has failed to develop:
It may be that consumers simply prefer the option of leasing devices that are available at government regulated “cost-plus” rates (or whose rates are otherwise kept low in markets where effective competition exists) and which can be upgraded when the next model is released rather than purchasing a device at retail and assuming the risk of obsolescence. Leasing also makes it easier for customers to switch from cable to satellite to telco video services and back again, especially since today’s retail CableCARD devices are not supported by the DBS providers or many telephone-company MVPDs. It may be that the CableCARD, while well supported, is becoming outdated: AT&T’s U-verse and other IPTV services use DRM-based security methods.
The Plan also suggests replacing the CableCARD regime in favor of a “gateway” approach. As we’ve pointed out before, a gateway approach is certainly one of several approaches that should be thought through, and we are pleased that the Broadband Plan acknowledges that “functional equivalents” should also be reviewed. But, while we are committed to working constructively with the FCC on this and related issues, we still firmly believe that technology mandates should be a last resort. And to meet different consumer demands and needs, it is important that innovation be encouraged by both MVPDs and third party manufacturers. Proposals to “disaggregate” a service purchased by a customer, and provided by a MVPD, over-the-top or other service, would undercut the very premise of innovation we should want, and are likely to fail.
We also welcome an informed debate on the Plan’s proposed short-term fixes. However, the focus on cable-only changes is, to be candid, at odds with the effort to incentivize all-MVPD solutions, and its proposals to change the CableCARD regime seem inconsistent with the Plan’s overarching recognition (which we pointed out last year) that cable-centric CableCARDs do not appear to be the key path to success. We’ll make the case to the FCC that it is far better to focus on improving the marketplace for consumers in light of the exciting changes taking place before our eyes than to dwell on issues that are increasingly stale and, more important, increasingly irrelevant to the marketplace of today, let alone tomorrow.