Should the FCC Unlock the Box or Ditch It Entirely?

#UnlockTheBox may not be best cure for what’s currently ailing pay-TV consumers.
By Sarah Pike ,

Controversy around proposed cable industry regulation has members on both sides of the political spectrum wondering whether opening the set-top box market to third-party developers is the right choice.

According to a 2015 study, it costs the average American household over $230 per year to rent a cable box -- a fee that spurred the Federal Communications Commission (FCC) chairman, Tom Wheeler, to propose new regulations to give third-party set-top manufacturers access to cable content, effectively unlocking the set-top box. The FCC campaign -- identified on social media as #UnlockTheBox -- aims to increase industry competition, cut consumer costs, and make it easier for pay-TV subscribers to stream online content to their TVs. Sounds like a good idea, right?

Unfortunately, unlocking the box hasn't been as straightforward as supporters originally hoped. Since the proposal passed a preliminary vote in February of this year, individuals and groups with opposing views have put the issue into the public spotlight, causing controversy among the FCC, the cable industry, and the U.S. government. Through those five months of discussion, one thing has become increasingly clear: #UnlockTheBox may not be best cure for what's currently ailing pay-TV consumers.

Conflicting Ideas About the Proposal

Despite the proposal initially receiving overwhelming support, including encouragement from President Barack Obama - certain parties, such as FCC Democratic Commissioner Jessica Rosenworcel, are wary of the long-term effects the proposal may have. Rosenworcel, who was originally supportive of the proposal when it was announced in February, has since said that the plan has "real flaws" and needs to be improved.

Other FCC members simply feel that the proposal is a waste of time, as cable boxes are already becoming obsolete. Many consumers have made the choice to cut the cord in recent years, opting for online streaming services such as Netflix and Hulu over cable subscriptions. So while a sizable portion of consumers still pay for cable TV services, figures like FCC Commissioner Ajit Pai believe the current push to unlock the box is outdated -- essentially "a 20th-century approach to a 21st-century problem."

Controversy around the proposal doesn't end with the FCC, either. Several other figures, including political leaders from both the Democratic and Republican parties, are worried about the impact the proposal may have. Industry players, including allies of the FCC and sympathizers of the cable industry, have expressed concerns over the potentially negative impact of the plan, with some even claiming that the proposal violates First Amendment rights. Senate Minority Leader Harry Reid (D-Nev.) has asked the FCC to further educate itself on the impact of the proposal before anything moves forward.

Chairman Wheeler has dismissed such comments, attributing the objections to industry bias.

Potential Repercussions for Consumers and Content Creators

On the surface, it seems easy to side with Wheeler. Encouraging third parties to offer cable TV boxes for lower rates seems like it would benefit the consumer and force cable TV companies to better adapt to the ever-changing market. However, two key issues have kept the proposal from gaining real traction: consumer privacy and content protection.

The cable industry giants that have offered their two cents on the situation say that unlocking the box would make it easier for companies like Alphabet and Apple -- corporations that are already hugely involved in consumers' daily lives -- to glean further insight into user behaviors. Allowing such powerful companies to have an even further reach may be cause for concern. It also muddies the water around which companies would be responsible for potential consumer data breaches under the new system.

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In addition to giving third-party providers greater access to consumer information, the proposal may have some negative implications for content creators. If corporations like Amazon or Apple are given access to pay-TV content and allowed to implement their own advertising structures, content creators might see decreased ad revenues. While no outlets are immune from revenue dips, networks that cater to people of color and minority demographics are likely to be hit the hardest

What's the Solution?

Given the potential negative impact of the proposal as it currently stands, there's reason to be skeptical of the #UnlockTheBox movement. At the least, the proposal will likely need some serious adjustments before hitting the final vote. Those who strongly oppose the plan, however, are calling for a different solution entirely: pay-TV apps.

The app-based alternative to unlocking the box -- called the "Ditch the Box" movement -- would require big cable and satellite TV providers to create an open-architecture HTML5 app that consumers can use on any device. This promising solution was suggested by the cable industry itself, highlighting what an impact #UnlocktheBox has made. So far, the FCC, including Tom Wheeler, appears to view "ditching the box" as a positive potential solution to the chaos of cable-box discussions, with Wheeler himself calling the cable industry's initiative "absolutely terrific."

Regardless of what happens with the proposal, holding cable companies accountable for high rental prices for set-top boxes is an issue worth caring about. Ideally, the FCC and the industry will be able to find a compromise that benefits both the economy and the average consumer, but it may take some time for a mutually agreeable conclusion to be reached.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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