Search DC to White Light

Wednesday, February 24, 2016

FCC and Cable Set Top Boxes. Big Deal?

My exposure to cable began in college.  Yes, cable was around then.
When I moved off campus, we figured out that a Yagi or LP antenna pointed at the [what was then twinlead] cable trunk could get a decent signal. 

Cable was wide open – any subscriber (or Yagi owner) could watch all the channels on the line.  About that time, on the tech side, they switched to coaxial cable, forcing us to cough up our $1.25 a month and, on the program side, the FCC flew in the face of cable’s original raison d'ĂȘtre – providing over-the-air television to homes outside the reception area of any existing station.  This change in philosophy – more like a 180 degree flip – said that, at that point, cable operators were no longer barred from originating programming, they were encouraged (shortly to be required) to do so.

Up to that point, cable was, in fact, an extension of broadcast television stations’ coverage areas.  But as the townies said where I first experienced it, “Not na-more.”  Local operations began originating programming.  Most of it was shows like “Furls and Twirls,” a half-hour weekly feature of the local girls’ pompon group, a painful-to-watch single camera production – and I mean single “edit-in-the” camera production where the titles were inserted by panning to signs held by one of the kids and swish pans got you from one angle to another. 

Down the road, though, Time-Life would try Home Box Office (1972) in Allentown – well, actually Wilkes-Barre, – PA.  Telstar had been up for 10 years but even with the succeeding communications satellites, prices for transponders were beyond reach of all but the biggest companies.  That meant HBO was local. 

Down the road a little farther came the satellite-delivered channels and by 1983, when a battalion of cable rules forced all sorts of changes, these channels were solidly entrenched and looking for local cable systems to carry them. 

All the while, those cable systems were looking for programming that would attract more subscribers…and some system of making sure only subscribers could avail themselves of cable’s products and services. 

Programming was growing.  Bill Rasmussen and Getty had launched ESPN so, if you were, at the time, interested in the local high school swimming championships from Bristol, CT, well, you had reason to subscribe.  Then again, if you liked old movies and reruns, WTBS out of Atlanta run by that Turner guy was perfect. 
As the programming grew, so did the price.  Along with that came the impulse to, well, “share” a cable connection where someone paid for it and, after Larry left, they immediately installed splitters and amps feeding neighbors and, in a couple of cases, more distant friends.
The cable folks took steps to protect their investment.  They didn’t/don’t want siphoning of their services.  They have to protect the copyright of their content providers. So they created encryption which protected the distributed signals.  They also created tiers of service – packages that particular demos of consumers might pay for.  You can imagine the discussion: 
“OK, here’s one we can sell.  Let’s link all the ESPNs, OLN, NFL, NBA and the other sports networks in a tier.”
“Sure.  But add in Baby Channel and OWN.”
“Why?  If you have to ask why, you’re fired.  Harrumph.  If we do that, we can generate more per-subscriber billing.  Good for us even with a fraction of it going back to the content provider.”
And that conversation basically brings us to today.  Sure, Michael Powell is in there with a la carte proposals.  And “must-carry” and associated retransmission rules have taken punches from all sides, but, as far as access, cable has evolved the way the cable industry pushed it.
About the only “innovation” that could allow for more consumer control of the set top is the commission’s ruling in August of 2011 which ordered cable companies to adapt to CableCARD encryptionThis would allow receiver manufacturers to produce products that – through an inserted CableCARD – could display all of the content provided by a cable company without an additional set top box. 
We’re free!  We’re free!  Well, not so fast.  The cable company still controls the CableCARD and your access to their system.  Oh, and receiver manufacturers haven’t adopted CableCARD universally.
So, cable users are, by and large, captive to their systems, including the set top boxes which decode and display the selected channels.  Even the DVR’s are integrated for the most part with add-ons like TIVO still depending on the cable subscription to operate and using the CableCARD decoding in order to operate.
It’s a bit ironic that a former cable guy, Tom Wheeler  is moving forward with the separation of cable and the set top box.  The intent this go-‘round, put forth on February 18, is not to give the consumer free run of a cable company’s product.  Instead, it is simply to break the stranglehold that the cable systems have on set top boxes and, hopefully, reduce set top box costs to consumers.
It’s a good thing, if not an easy one.  Not too many years ago, the cable topology was different.  All of the channels the system supplied appeared at your end of the cable.  The cable box was then programmed to allow reception of the package you paid for.  (Remember when you changed the channel and it was there?  When you changed it?  Not 5 seconds later?) 1  They were addressable by the cable company and the package could be changed by them.  New systems are constructed so that only the channels you are watching are sent down the line to you.  What a bandwidth savings!  They’re encrypted, of course but you get them.  Nonetheless, it requires some really fancy integration to allow outside products to be employed as the go-between in the cable/receiver chain.
It’s back to basics – ensuring that you pay for what you get and that copyrights are protected.  It’s just a little harder to do.  In reality, though, the chip, once developed is only a few cents.  That, and the competition among suppliers, should bring consumer costs for set top boxes way down.
Well, then, why would the cable guys want to stop that?  First, take a look at your cable bill.  Are you paying a monthly fee for DVR’s or other set top boxes?  There’s reason number one.  But number two is the big one.  Third-party set top boxes can integrate cable content with Internet and other locally-originated programming.  To cable, this is pulling on that snag in a Banlon® shirt…possibly unraveling the whole sleeve.
Here’s how:  The box puts cable product on the same plane as a Hulu, Sony, and other independent and “over-the-top” (OTT) content providers.  If manufacturers make access to any given channel, say Netflix, Amazon, USA Network and CBS equally easy, the wheels start turning in the heads of the cable content providers.  “Why?  Why am I providing content to cable companies?  I can deliver direct to home.”  If I’m CBS, I don’t need affiliates feeding cable systems.  If I’m PBS, I can self-fund.  Seriously, do the math on 5¢ per view of Sesame Street country-wide.
Schedules go out the window.  Mozart in the Jungle launched when it’s released and gets watched whenever.  It may be pay-per-view, an all-you-can-eat subscription or sponsored but you make the decision.  I’ll go with my line one more time – no one cares what kind of car brings the pizza.  They care about the pizza.  And people are pretty good at finding the best pizza.  (Ray’s Famous Pizza, 7th Avenue, NYC and Pizano’s Pizza, West Division St., Chicago.   LA?  Sorry. I don’t do sushi pizza.)
For cable the ruling’s a nightmare.  Being forced to help enable your competition.  Sorta like CBS and the NFL network.  How do they keep control?  Price cuts?  No- or low-charge set top boxes?  A la carte?
For the consumer, once we figure out the boxes, we can have a lot of choices, and the price will probably come down, or at least not rise so quickly.
Hey, for promotion departments, it’s a godsend.  Those who figure out how to grow tune-in will rise to the top and there’ll be a lot bigger promotion departments for content providers getting the word out.
A quick word about one other group who stands to lose:  Advertisers.  There should be a lot fewer ad units available inside programming.  Maybe that’s wishful thinking but millennials specifically and Internet users in general don’t like the intrusions of standard in-program advertising.  They will certainly not abide by a pay business model that also supports the current level of broadcast/cable of non-program material (16+ minutes per hour). 
So look for this:  Advertisers (or agencies) develop their own programming distribution systems.  Note to large packaged goods guy:  We told you to do this in 1985.  You didn’t listen.  Now it’s going to cost you by a factor of 100.  Some other guys were a little smarter and stuck their toes in.  You may have to go big time – free “channels” – with advertising.
The available third-party boxes haven’t sold well.  But that’s because they really haven’t been promoted heavily and the cable systems have made their installation unnecessarily complicated.  Combine those reasons with the level of Internet-provided content and it’s understandable that third-party boxes haven’t taken off.  But hang in.  This ruling may help.  Internet-distributed content is on the rise.  And I’m sure there’s at least one entrepreneur out there willing to design a box that meets consumer expectations.  With that and the cooperation of cable operators in attacking their own industry, this might just take off.  Did you read that last sentence?
 1 To be fair, this is a combination of the request/fulfill and the digitization process