by Kendal Hardison and Rachael Stelly
The Federal Communications Commission issued a Notice of Proposed Rulemaking on February 18, 2016 seeking comment on their proposed rules to unlock the set-top box.
The Glushko-Samuelson Intellectual Property Law Clinic, on behalf of the Consumer Federation of America (CFA), filed comments in the FCC’s proceeding. Our comments support the FCC’s proposed rules and argues that the rules are in the interest of all consumers. Dr. Mark Cooper, Research Director at the CFA, provided economic analysis of the cable market supporting the need for increased innovation and wrote a report to attach with the comments which describes the abuse of market power by cable providers.
The following can be attributed to Dr. Cooper:
“Cable company abuse of market power in the set-top box market has probably cost consumers over $100 billion in the past two decades, but the pocketbook impact is only part of the story. This is the most egregious example of the failure of federal policy to deliver the competition promised by the Telecommunications Act of 1996, precisely because similar markets that were competitive—like cell phones, computers and TV sets—delivered so much higher quality at a fraction of the cost.”
The cable market is in dire need of competition and unlocking the set-top box will promote innovation in the multichannel video programming distribution (“MVPD”) market. The digital programming market has innovated at a rapid pace over recent years, offering consumers a wide range of new products and services. In contrast, the set-top box market and the MVPD market, of which it is a part, has been comparatively stagnant.
The set-top box is a key barrier to the delivery of MVPD services and plays a role in perpetuating cable market power to the detriment of consumers. Without the incentives inherent in a competitive marketplace, the cable industry has had little reason to listen to user needs and adapt accordingly. Unlocking the set-top box market finally places the consumers in a more advantageous position when dealing with the cable industry.
Currently, consumers are paying $231 annually to rent a set-top box by their cable provider. This is on top of cable subscription fees. The proposed rules will open up the market for the set-top box and allow third-party manufacturers to enter the set-top box market.