Public Knowledge Aims To Break 'Cable Broadband Stranglehold'; Set-Top a Key

Public Knowledge is pushing the FCC to promote cable set-top competition, uphold broadband privacy, investigate online video, and protect against anti-competitive pricing/data practices and market concentration, PK staff said. Telecom special access, spectrum, the tech transition, Lifeline USF, copyright and international issues are also on the group’s agenda. NCTA had no comment.

With an election approaching, the FCC should “lock down” as many gains as possible before a new chairman arrives who could change course, particularly if a Republican, said PK Senior Vice President Harold Feld. “The FCC can do these things, but it is very easy to throw up roadblocks and throw them off schedule,” he said, citing congressional hearings and other actions. “There are a lot of ways in which the opponents and allies can try to throw sand in the gears. Our job is try to figure out where the sand is going to come from and try to keep the gears moving.”

PK is pressing the FCC for a rulemaking to stimulate competition to cable set-tops, which provide industry with upward of $20 billion a year in rental fees, said Chris Lewis, vice president-government affairs. The set-top helps cable play a “gatekeeper” role, he said. Kimmelman said “this is probably, in the electronic space, the biggest consumer rip-off in the current world.” Feld said cable wants to charge consumers “ridiculous amounts of money” and control boxes. He said the mobile device industry had “basically” consolidated into two large players because of FCC inaction, which left manufacturers and carriers to carve up profits. “You have one cartel versus the other cartel, negotiating with each other, and consumers lose whoever wins,” he said. “We don’t want that same thing to happen in the set-top box world.”

The "real issue" for cable "is they just like controlling the interface, because that provides them a lot of control and opportunity,” said Senior Staff Attorney John Bergmayer. “If you control the user interface, you control what competing services people can access. You can make it so Netflix is visible or not when people are searching.” He said the “virtual head-end proposal” of PK and allies is less burdensome than past CableCARD and AllVid set-top solutions and proposals to "determine" cable set-top design. “Right now, we’re not doing that,” he said. “If you [cable] want to do your own proprietary thing, go ahead. Nothing changes for anything that you want to do with your own plans, for your own box; you don’t have to change any of your technology. All we’re saying is that for third-party devices, you have to make content available in a standard way that is uniform nation-wide.” He said the proposal “applies fundamentally” to traditional pay-TV programming, but, if successful, could help spur online video.

Kimmelman said industry was attacking an earlier version of the proposal to scare people. “The old 20th Century cable entertainment giants, who are afraid of the digital age, are coming together to create a boogeyman argument that isn’t real,” he said. The establishment players “are doing everything they can to prevent this proposal from seeing the light of day.” He said the FCC should give device makers, apps developers and independent programmers a rulemaking opportunity “to come forward and say there’s another way to do this.” He said the FCC should also open an inquiry into online video practices that raised concerns in Comcast's foiled plan to buy Time Warner Cable.

PK officials questioned where video industry consolidation would end. Distributors and programmers keep getting bigger to combat each other in content battles, with each deal making business sense to the companies but creating a market form of “mutually assured destruction,” Bergmayer said. “At some point, you do need someone to come in from the outside and have a SALT Treaty to prevent the constant arms race on both sides,” he said. He said Charter’s proposed buy of TWC and Bright House Networks creates "monopsony" concerns and could create anti-competitive “coordinated effects” between the combined company and Comcast where they have similar motivations and “can effectively act as one company." The FCC must remedy potential harms by blocking the deal or imposing conditions, he said.

Feld said Comcast hit consumers with a $15 monthly surcharge to receive unlimited streaming of content from online competitors such as Amazon and Netflix: “That’s straight up anti-competitive.” Comcast had no comment. Feld said AT&T and Verizon experiments with sponsored data were “more complicated” issues, and he called T-Mobile’s Binge On service “the most complicated for the commission to deal with” because of all the “genuine” policy questions.

PK wants the FCC to open a broadband privacy rulemaking soon. Feld said if an NPRM isn’t issued by the end of Q1, it could become hard for this commission to complete the rulemaking, given political resistance.

On special access, Feld said telcos had been very successful in stretching out the FCC data-collection proceedings. “The ILECs know they only have to stretch it out another couple months to make it impossible," he said. "The game here is: can the FCC stick to its schedule?” He said the commission should act by late spring or summer to avoid political heat closer to the election.

Feld said the incentive auction, if successful, could spark Congress to replicate the effort in other bands and invite other countries to try the approach. He urged the FCC to get going on a trial in the 5.9 GHz band to see if unlicensed operations can coexist with smart car technology. He suggested the agency was being “too collegial” with the Department of Transportation, which is “shilling” for the auto industry.