Unlock The Box?

After years of fits and starts, we finally find ourselves on the cusp of a CableCARD successor as the FCC has proposed the pay television industry “unlock the box”– providing customers broader access to programming via hardware and experiences of their choosing.

As a long-time industry observer, I’ve found much of the press coverage unsatisfying – marred by a lack of situational awareness and heavily influenced by lobbying groups on all sides. Sadly, as a blog hobbyist (with a new baby), I can’t give you the polished 4000 words this topic demands. But I can provide one man’s rough yet somewhat educated and largely unbiased opinion, both textually below and via the new LPX Show podcast embedded right here – along with my pals Brad Linder and Mari Silbey.

A Very Brief Primer

We’ve been here before. In the late 90s, via Section 629, the FCC essentially ordered cable to open their content to third-party devices. It was a simpler time, with the focus squarely on security and authentication… which ultimately took the form of the CableCARD, a now archaic implementation requiring a costly PCMCIA module. This hardware-based separable security allowed a number of devices, like televisions and TiVos, to access cable programming. But it was strictly a one-way affair with no access to video on demand nor, originally, a method for handling switched digital video. Further, due to poor consumer marketing and education, across the board, coupled with insufficient support by the cable companies, CableCARD has largely been a commercial failure seeing limited uptake with only a very few consumer electronics companies still in the game.

Amidst this backdrop, while glossing over eons of machinations including DCAS, OCAP/tru2way, the integration ban, questionable waivers, STELAR, and the like, the FCC is once again exerting their influence to expand upon the original intent of Section 629 with a new proposal to Unlock The Box.

In this proceeding, we propose rules that will both empower consumers to choose how they wish to access the multichannel video programming to which they subscribe, and promote innovation in the display, selection, and use of this programming and of other video programming available to consumers. […] In the Notice of Proposed Rulemaking, we propose rules intended to allow consumer electronics manufacturers, innovators, and other developers to build devices or software solutions that can navigate the universe of multichannel video programming with a competitive user interface.

What the solution ultimately looks like and how it’s executed, should it even come to pass, will be the subject of much debate (again) – starting now, as the FCC solicits comments. But there will be much teeth gnashing, horse trading, and possibly even legal challenges, between here and there. And that’s before even getting to years of development and implementation. Assuming, once again, this moves forward.

Maybe Not Too Little, But Probably Too Late

On paper, the FCC’s wide-ranging proposal sounds great. At least for the TV-loving consumer fatigued by years of energy-hogging, poorly designed, set-top box rentals (a situation ironically exacerbated by the FCC). Who wouldn’t want all their television content from theoretically cheaper hardware of our choosing, with an also theoretically superior presentation? But while some (rightly) indicate set-top box rentals can be big business for cable, there’s also the practical matter of ongoing hardware service and support. When my TiVo remote, hard drive, or fan fail, I’m on the hook (financially) for repair or replacement. Similarly, when the next thing arrives, I’m expected to outlay additional cash to partake. Whereas in the cable environment, it’s generally a simple and inexpensive matter to replace defective hardware or upgrade to a newer model at will.

Further, as far as timing goes, I wonder if the ship has sailed. This would have made a whole lot of sense several years back, when cable couldn’t or wouldn’t properly support CableCARD and the FCC intervened with the integration ban that required the cable industry include CableCARDs in their own boxes. In hindsight, this approach (of “eating your own dog food”) was an unreasonable burden on cable that actually did very little to improve their retail CableCARD support (hey, their boxes come pre-paired) and nothing to advance Section 629 beyond the existing separable security and into more suitable content interaction.

More importantly, the landscape is entirely different now. While cable isn’t yet bleeding heavily (as a certain amount of breathless press has suggested) from the cord cutting phenomenon, they clearly aren’t the untouchable force they once were. And there’s a generation coming up that will never “watch television” in the ways the folks reading this blog do. Cable may have a hard time with what will be smaller margins and fewer television customers in this new era, but they’re already taking steps to improve their offerings — it’s in their best interest to keep their current customers happy … and attract new ones. As such, we see operators like Time Warner Cable floating a Roku-only cable television plan, a Comcast broadband+HBO package, and Verizon offering somewhat cheaper and customizable “skinny” channel bundles. Heck, even the operator-provided set-tops are becoming compelling – specifically: Comcast’s Xfinity X1 and (satellite’s) DISH Hopper. And then there are the apps, which cable argues absolves them of this FCC proposal, available on varying platforms. No, these improvements don’t represent a universal and consistent standard or option across all operators and platforms (sometimes due to licensing), not to mention cable exerts monopoly-like influence in most markets. But after years of apathy on packaging and presentation, cable’s upped their game.

In this context, what will the marketplace look like in several years when Unlock The Box (possibly) comes to fruition? Are we already headed to something close enough, without government intervention and in calling together a huge consortium of players for years of work?

Be Careful What You Wish For

While the FCC is proposing third-party devices have expanded access to pay television content, it’s not unfettered. They concede any solution should not interfere with the cableco’s contractual relationships, to include advertising, and are sensitive to consumer protection, specifically privacy.

It’s safe to assume the cablecos will take this opportunity to renegotiate what’s permissible, given the FCC’s marching orders, and there’s no telling what will come out the other side. What could a future TiVo look like under this scenario given their current business model of selling viewership data, selling ads, and skipping ads? As TiVo declares:

With SkipMode functionality, users instantaneously can transport themselves past commercial interruptions and back to the recorded show. The ability to skip entire commercial breaks is a breakthrough

I suspect cable will strongly argue that programatically skipping ads is effectively the same as removing them. Whereas TiVo would rebut that requiring user intervention at the time of the each and every ad break, versus Hopper’s more automated approach, represents self-determination. Who prevails? TiVo (and their customers) risk losing certain features and revenue streams.

The FCC’s proposal also “tentatively concludes” that the direct-broadcast satellite (DBS) providers (DISH, DirecTV) should be similarly held to #UnlockTheBox provisions while acknowledging a significantly different technical approach will be required along with additional hardware… at presumably additional expense, and perhaps partially negating the point of this exercise. We know that something can be architected, given DirecTV’s RVU and the Windows Media Center satellite TV integration that almost was, yet I suspect they’ll successfully lobby their way out of inclusion given undue burden and logistical challenges. However, should satellite be included in a final order, what’s then to stop cable and satellite from similarly insisting over-the-top content provides like Netflix and Sling TV also open up their streams so third parties … allowing the cable industry to deconstruct and present that over-the-top video in a manner of their choosing?

Unanswered Questions and Unintended Ramifications

The FCC has much to say on what they’d like to see from UnlockTheBox, with three information streams being made available to third parties, yet largely glosses over the critical mechanics of who bankrolls and overseas the development process… along with its ongoing management. As CableCARD is a cable-only solution, it’s been shepherded by CableLabs — a R&D organization, funded by its member cable companies. With satellite providers potentially on the hook to similarly unlock their boxes, would we need an entirely new organization or government entity (!) for standards, certification, and arbitration… should a provider take issue with a 3rd party’s implementation, like TiVo’s aforementioned ad skipping? Related, the FCC seems to be proposing a scenario in which they’re attempting to regulate (or deputize the video providers) companies, products, and services which they may not have jurisdiction over. Can you say quagmire?

Further, the FCC doesn’t give operator’s content licensing complexity the weight it deserves. For example, some channels are expected to be provided as a bundle, possibly in close proximity, while other deals prohibit certain sorts of client endpoints. With third parties being able to slice and dice content presentation at will and serve it up on basically anything, will cable providers be on the hook legally and financially for breach or contract? Will the FCC? Or will rates go up to encompass expanded licensing? And programming dropped where it can’t be done? In fact, some have raised concerns that this initiative could harm niche and minority programming:

That’s partly why some black and Hispanic organization are upset. Right now, wealthy programmers––including those that appeal to minority audiences––pay for prime listing space. In return, people see your network and watch it. But if tech companies take over, who will decide the pecking order? The worry is that tech companies would turn their boxes into vast and depthless rooms––much like the Internet is––where minority programs will lose the slight edge they can buy in the current pay-for-queue-style listing.

We’re Fighting The Wrong Battle

I’ve been beating the CableCARD successor drum longer and more consistently than most. But its time has passed. Heck, even TiVo has signaled a de-emphasis on retail cable products (although theirs is something of a catch-22, given the current CableCARD regime).The fact is, the world is different. How and where content is consumed is shifting, something recognized by even the glacially slow and arrogant Big Cable. And, beyond television, we also have myriad other forms of entertainment eating away at traditional television.

Amidst this evolving landscape, and while not mutually exclusive, the well-intentioned FCC majority has bigger fish to fry. Specifically, ongoing net neutrality and broadband-as-a-utility battles (including “zero rating“), to provide for robust over-the-top options without ISPs prioritizing their own traffic or negotiated services, punitive data caps with overages that don’t scale, and the like.

21 thoughts on “Unlock The Box?”

  1. I petered out in the last two sections, but there’s surely enough here for you to see where my thoughts take me at the moment. However – Verizon killing their Xbox and Smart TV apps, without say Roku or Fire TV replacements, actually pushes me to submit comments in favor of Unlock The Box. I’m conflicted like that. :) I think I might have also forgotten to write up my little bit about just because they build it, doesn’t mean anyone will come. Maybe that’s still in the podcast after editing.

  2. I am little annoyed about verizon killing it’s TV apps. I am hoping some replacement comes that allows the use of the quantum dvr, but until they do that, they apps have not been touched my xbox ones. The mobile device apps are great, and they need to bring them to set top boxes.

  3. Are the M$ apps dying because a lack of support from Microsoft? Or, is it that nobody accesses Verizon content/services, because that’s not how they use the device?

  4. Someone somewhere floated something about the 360 platform sharing some underpinnings with Microsoft’s old Mediaroom platform, now owned by Ericson but getting no further support. Can’t tell you if its accurate.

  5. I also wonder if maybe a UWA was going to be announced at build. But saying they were sunsetting it now would be an odd way to go if that was the plan.

  6. TWC released their limited Roku live TV app in March 2013 with a later update supporting VOD. Now 3 years later TWC is offering Roku-only live cable TV packages in TRIAL in NYC only and this is being held up as progress? Other than paying for the cable box this is how we watched cable TV before TiVo and DVRs!

    The only reason TWC is doing this is that non-DVR users require an expensive set top box that requires expensive at home support and maintenance for a small monthly fee compared to DVR users.

    Are people buying TiVo DVRs for the DVR or just to avoid cable box fees?

    2013 TWC: http://www.twcableuntangled.com/2013/03/we-have-launched-the-twc-tv-app-for-roku-streaming-players/

  7. More than one cable company would love to be out of the hardware business, it’s very expensive to keep running, and requires a lot of resources. The FCC may be giving them an out. Sure you’ll get your choice of hardware and zero tech support because the techs and the trucks will be gone. Won’t happen overnight, but in a few years… I can hear the less tech inclined calling their relatives already.

  8. I have and love TiVo, but I would not recommend it to the non-techie. Too many issues with CableCards, SDV and the often required reboots. I don’t think the CableCo supplied hardware is going away for just that reason.

  9. Bryan, not many people are buying TiVo at all. So it’s a challenging comparison given the current state of the union (as reiterated by Wes), the hardware economics, and TiVo’s poor marketing.

    MJR, I somewhat agree. But they’d most likely prefer to provide their own experience – with bundled channels, advertising, and upsell opportunities without having to share access or data rather than be forced into a more limited TBD standard.

  10. The issue for many of us (the sports fans anyway) remains regional sports networks, where cable companies continue to have a virtual stranglehold on content. I still believe the “Unlock The Box” initiative is important, but we must also ensure that the 1,000s of dollars that many of us have invested in the cablecard-based TiVO regime does not go away without an alternative access capability.

  11. Needs to apply to all TV content providers.

    Right now at our mountain cabin we pay $10/month plus tax to the local telco (FTTH) to rent a cheaply made IP-based DVR.

    Searching online, I can buy the same box for around $120 – I should be able to buy it & just give the telco the serial number for activation (no need for any add’l authentication) rather than being forced to rent it forever.

  12. I had a HDHomerun Prime on Windows Media Center to avoid box fees. Gave it up on the next Comcast rate increase. Previous to that, I had a Directv TiVo with a larger drive. Fees always fluctuated. More willing to look at PlayStation Vue, just because of no contract, and there’s no box. And that’s what I hated the most about Comcast, their box.

  13. Sure Cable Co’s would love to be out of the the box business, but I’d also love to be independently wealthy so I don’t have to work. The reality is the box business is profitable and a lot like the iPod was for Apple — they didn’t have to give the handle away to sell the blades.

    If they wanted out of the box business so bad, then they would’ve come up with a solution to do that. In reality they want to own the experience, it just so happens that they aren’t able to deliver a great experience.

    I don’t believe this entire thing will result in any meaningful change. I’m afraid that the Section 629 of the Telecom Act of 1996 is ineffective legislature and the only solution is to pass a new law. Maybe you noticed that telecommunications has changed a little in the past 20 years. It’s time for our laws to reflect that.

  14. “not many people are buying TiVo at all. So it’s a challenging comparison given the current state of the union (as reiterated by Wes), the hardware economics, and TiVo’s poor marketing.”

    Ok, buy or rent TiVo. TiVo now has 7 million users who choose TiVo over renting a cable set-top box or DVR – that they buy or rent TiVo is irrelevant. What’s at issue is that there is a level playing field for choice from 3rd parties like TiVo, Apple, Google, Roku, and Amazon.

    I own a TiVo Roamio rented from RCN because it was a better deal to rent than buy. No different than people who rent their phone rather than buy the phone outright for $799+. I also bought Roamios for my parents and friends on Verizon FIOS since renting was not an option.

    “Unlock the box” would allow anyone to simply hookup a third-party box as if it were a cable owned box. As @Wes mentions due to CableCard and SDV TiVo is for techies making TiVo’s marketing job next to impossible. Which is to make techies, who are notoriously frugal, layout large amounts of cash for something they can rent.

    Just look how often cost of TiVo comes up amongst TiVo people compared to any other group.

  15. *Ahem* Excuse me…
    Primary ISP: RCN
    TiVo Premiere supplied by RCN as part of a Bundled package (50/20 Broadband, Phone & Premium TV/Movie Channels (ALL the HBO, SHO, MAX, Stars, YouTube, NetFlix*, etc., etc.,etc,….) + Taxes, Tags, License, Fees, Insurance, 1st Born, Left Testic’…etc.) ~ $290/Month

    Verizon FiOs 50/50 Broadband, Basic TV + HBO ~ $93.55/Month

    I work from home and require a redundant high speed hard wired connection. *NetFlix is an $18Month Subscription (Yes we still watch 1 or 2 Blu-Ray DVD’s each month, if we are not Chrome/GoogleCasting a Movie from The Google Play Store).

    Bottom line:
    We have been RCN customers for 14 Years now, the past Ten years TiVO leasee’s (Unit #5 and slave #3 for our two tvs).
    We Love our leased TiVo (RCN’s) and our channel lineup.
    2Years with Verizon FiOs Broadband runs circles around RCN extremely reliable, slower and steady service (TV is Meh)TV #3 – Backup rarely powered on.

    Since 1999 till present we have owned 5 Dell pcs – We still own thdm, they all have well over 100,000 hard driven miles and all still work (Win98 just ain’t what it used to be).

    We are Surprised at the TiVo hardware failures, each one requiring replacement. We always get brand new boxes and they typically die for whatever reason after Two years like the slide remotes. Glad we lease.

  16. Forgot the most important part:
    Nice work on this, TeleCom. Has changed, O think us X generation cable box kids will be the last. The y generation kids don’t care about a tv &cable box, for them it needs to be on their phone and/or ChromeBook.

  17. Dave, I agree with you—years ago!:). I had come to that conclusion a long time ago. You have said it all better than I ever could. Further, this is NOT a civel rights issue. The notion of 3rd party boxes is something the affluent and rich can afford, and TiVo is an excellent example: and excellent and superior “cable box” with its superior high pricing to match. Making such a great box aint cheap, and such a company deserves to make money.

    The far more simple and practical solutition is to allow subscribers to pay retail for the cable co provided boxes (an option that exists for both DirecTV and Dish at reasonable full retail price) if that affluent individual can shell out the money and reap the savings (by the way Dish supports even OWNED boxes with replacements, should they fail, that are still OWNED by that subscriber). But then again, here comes the monthly box fee for both cable and sat. It seems the FCC is uninterested in doing anything about that cost to consumers because wit would take it away from its “hands-off” policy. Let us also remember that what makes it so cheap to get “FREE” equipment from either cable or sat is that those companies have full control and rights and COSTS for such equipment and can afford to “give them away” to entice new customers. That model, is far more pro-consumer than the contrived 3rd party option that might even see cable and sat cos. forgo their own devices and let the consumer pay the sky high retail from some other souorce–and still charget the subscriber the monthly access fee.

    Let’s forget about all that 3rd party stuff, and I’ve only heard TiVo users ever bring the subject up, and, of course, TiVo is the primary entity that kept the NON-issue alive. The current model works more than well enough for the consumer.

    So, that does lead us to the far more important matters to fight such as “net neutrality.” Now, one could make a sound argument that net-neutailty and this awful model of ONE price (often high) for cable ISP services IS a civil rights issue. Whys should an elderly individual pay $60 per month for ISP services with 60 or more mps speed when all they do is check email and look at web pages? There are more issues just as important and far more relevant to the consumer. Agreed, the old fight for 3rd party boxes is pointless and does little for consumers. There is a new fight, and that is where we are best putting our efforts.

    Well said, Dave. Very well written and I could not detect any peetering out.

  18. I forgot to add one more thing the FCC can do to help current cable and sat cos. subscribers: let subscribers use the apps with no charge for viewing beyond their 1st TV. This montly fee per client box or even for using the app itself is nothing but revenue stream, and not good for the consumer. That would have a far more immediate impact for the average family than attempting the long and winding road of making 3rd party boxes avialable, and boxes cost real money and even might justify a monthly charge, while the apps have lower costs.

  19. “3rd party boxes is something the affluent and rich can afford”

    In the USA we have 90+ million households who pay for cable/satellite. All looked up to 55″ HDTVs. They get new smartphones every 2 years – the lowest priced iPhone 6S starts at $649. They drive SUVs costing 35K+. They buy $5 coffees at Starbucks and $9 burritos at Chipotle.

    All paid over time by monthly payments (credit cards, car loans/leasing, subsidized upfront costs).

    The cheapest TiVo is $299 with one year free subscription. $150 a year after that or 10 burritos and 12 cups of coffee.

    The problem is TiVo includes a lifetime option which for some makes it look expensive – but is only $140/yr over 5 years. TiVo should have never offered a lifetime – just monthly.

    There is no client fees on any applications with monthly cable subscription AFAIK. No cable box – no fees. TWC even tosses in a Roku 3.

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