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Consumer electronics group calls for broad FCC set top box review

It’s been more than six years since federal regulators looked at competition in the market for video set-top boxes. And in that time, the video landscape has dramatically changed. Telecom companies AT&T and Verizon have joined cable companies in bringing shows and movies to U.S. living rooms. They are also joined by satellite companies such as Dish Network and Direct TV.

So the Consumer Electronics Association wants to make sure the Federal Communications Commission looks at the broader market for video service as it begins its review of set-top boxes.

As reported, the FCC said it is looking into competition in the video set-top box market as it figures out how to blanket the country with access to affordable high-speed Internet. The agency sees the television set--which can be found in virtually every American home--as a vehicle for delivering broadband access. As television and Web converge, the set-top box could become a medium for bringing more people online, the FCC believes.

“We think it is high time the FCC reassess the market, taking into account the current retail market and fragmented nature of pay TV platforms,” said Jamie Hedlund, vice president of regulatory affairs for CEA.

The group met with the head of the FCC’s media bureau, Bill Lake, last September to ask the agency to take a harder look at the video set-top box industry and the control the cable industry has over it (here's an exparte of the meeting.)

They see potential for the market to be structured like the mobile phone industry – an analogy made by Lake in the FCC’s national broadband plan report issued last week. There were about 14 video set-top boxes on the market in 2008, including those leased by cable, telecom and satellite providers. That compares with nearly 900 mobile devices.

Public interest groups say there is no reason why the set-top box can’t be a slimmed down device with scores of applications for videos, movies, games, and Internet content. There are currently two main set-top box makers – Motorola and Cisco – though many more device makers have expressed interest in getting into the industry, particularly as more people spend time in front of the TV (Nielsen reported recently that television viewing is at an all-time high with U.S. households spending an average of nearly five hours a day in front of the tube.) and videos become easier to get online.

In 2009, cable companies will ship about 15.8 million set-top boxes, up from 14.7 million last year. That number will continue to grow to about 16.3 million next year, according to research estimates, the CEA says.

Cable companies argue that the FCC’s criticism of the set-top box market rests with manufacturers, not them.

"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," said Kyle McSlarrow, chief executive of cable trade group National Cable and Telecommunications Association. "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."

But the agency says that because the majority of boxes are leased by cable operators, companies like Cox, Cablevision, Time Warner and Cox essentially control the market.

”It’s been a long slog,” Hudlund said. “Cable operators have been loath to give up control.”

By Cecilia Kang  |  November 24, 2009; 9:26 AM ET
Categories:  Comcast , Consumers , FCC , Online Video  
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Thanks for these articles. I've been wondering what's up with this issue. It really should be addressed head on. There should be a clear and concise response. Like how about not allowing the TV providers to lease/rent these boxes at all. That way the retail market would have to develop.

Posted by: MinCT | November 25, 2009 12:38 PM | Report abuse

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