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Television last frontier of innovation?

In just one year, the hottest cell phones went from the flip Motorola Razor to mobile computers like the iPhone. Lightening-fast innovations are taking place throughout technology, except for one area: the television.

That was a concern voiced by officials at the Federal Communications Commission yesterday, who identified a lack of competition and innovation in the television set-top-box market as a key hurdle to the adoption of broadband Internet.

In its charge to blanket the country with affordable Internet access, the FCC is looking broadly at problems throughout the communications industry. It's already upsetting telecom and cable companies whose businesses are being scrutinized as it reviews a federal fund for phone service and the potential use of broadcast spectrum for mobile Internet use.

Yesterday, they got under the skin of the cable and satellite industries with a critique of their use of set top boxes, which the agency said are not embracing the convergence of online video with regular old television models.

Please take a look at this post from yesterday on the FCC's take on set-top-boxes. In it, FCC Chairman Julius Genachowski talks about how nearly every home in America has a television, which is an opportunity if that box in the living room were also used for broadband Internet access.

Kyle McSlarrow, CEO of trade group National Cable and Telecommunications Association, said in a statement that the manufacturers making those boxes are to blame.

"Our industry continues to support and encourage consumer electronics makers to produce TVs and other devices that allow consumers to access the Internet," McSlarrow said. "Moreover, we were the first in the industry to publicly propose that consumers should be able to access the video offerings of cable, telco and satellite providers with any device purchased at retail. Such a solution would spur the kind of innovation at retail that we and the commission believe would meet consumer demand. In that regard, we welcome the opportunity to explore repealing the counterproductive rule that requires a cable card to be inserted in all leased set-top boxes which impose unnecessary costs on consumers."

Marvin Ammori, a professor of law at the University of Nebraska at Lincoln and adviser to public interest group Free Press, disagrees.

He said cable and satellite companies lease the majority of boxes to its customers -- the FCC said the same thing in its presentation yesterday -- so to say there is choice at retail doesn't address the fact that most consumers find it convenient to take the box provided by their service provider.

The FCC said there are only about 14 set top boxes available today either through service operators or at retail, compared to hundreds of mobile devices. The FCC has said applications and content will be a large driver of broadband adoption, and public interest groups say the set top box is being held back from the same applications and content boom taking place on wireless phones.

"Because the cable industry has controlled the cable set top box, it's hard to create a device like Boxee that can incorporate in one interface, online TV and Cable TV," Ammori said. "The idea for the cable industry is that they want everyone to go to their channel box and the platform they control because if content were to be available online in the way consumers want, they would cut their cable subscription."

He said the cable set top box should be viewed in the same way as AT&T's old black phone, which it leased to consumers as the sole choice for users until Carterfone rules opened up phone lines to other devices like the fax machine.

There's no reason why the set-top-box can't be a slimmed down device with lots of applications, akin to the iPhone. Users could access whatever content they want through any device, without having to be strapped to a particular cable or satellite carrier for certain shows. And they could choose from scores of applications for what shows they want to watch and use the television in the same way they use their home computers to research and browse the Web.

Brian Dietz, a spokesman for NCTA, said his industry is competitive. He said consumers have many options to choose from -- cable, satellite and telecommunications service providers. They can get subscription services like Hulu, iTunes and Netflix for online streaming video.

He said Ammori's argument is "akin to saying you can't go into Target and purchase products that are only sold at Walmart. The type of packages, different channels and services is what differentiates providers."

By Cecilia Kang  |  November 19, 2009; 9:30 AM ET
Categories:  Broadband , Comcast , FCC , Online Video  
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