March 18, 2016
“Contradiction contradiction contradiction,” rather than “competition competition competition,” would be a more accurate description of what the FCC’s apparent arbitrary AllVid set-top-box proposal produces.
Contradiction #1: FCC rules cable competitive in 2015, but not in 2016.
In June 2015, the FCC ruled “that cable operators are subject to… “Competing Provider Effective Competition”” exempting cable from regulations, but in the spring of 2016, the FCC tentatively concludes that the ancillary cable set-top-box market is not competitive warranting maximal regulation.
In 1996, when Congress passed the Telecommunications Act, with a Sec. 629 provision requiring “competitive availability of navigation devices,” cable was an effective monopoly, so section 629 assumed a monopoly at first with competition forthcoming as a result of the pro-competition Telecom Act.
And assuming monopoly cable operators in 1996, it was more understandable for there to be a push for competitive availability of navigation devices for cable, given the lack of underlying competition for the underlying cable service at that time.
However, in the twenty years since 1996, cable’s share of the market has fallen from 98% in 1996 to about 53% today, with over a third of American households subscribing to a DBS service and over an eighth subscribing to a telco TV wireline service.
A drastic change in the underlying predicate of the Section 629 provision, from monopoly to the FCC’s 2015 ruling that cable services face effective competition throughout the U.S. via DBS, means there is also effective competition for set-top-boxes.
In other words, by extension logically the FCC already ruled last year that like cable services, their ancillary cable set-top boxes effectively, faced effective competition in the U.S.
Contradiction #2: FCC claims 99% of users have no set-top-box choice when the obvious facts refute that foundational FCC fact predicate.
The FCC initially framed the FCC’s AllVid proposal this way: “Ninety-nine percent of pay-TV subscribers are chained to their set-top boxes because cable and satellite operators have locked up the market. Lack of competition has meant few choices and high prices for consumers…”
However, the Free State Foundation’s great, fact-filled info graphic provides a reality check; we know over 200 million Americans watch their video content on smartphones and tablets, and even more do if one includes laptops and desktop computers.
And now that over half of all households with Internet access have online video connected to their TV in one way or another, Americans have a rapidly-growing, wide variety of choices of different devices that serve as “competitively available navigation devices:” Smart TVs, Roku 4, Roku Streaming Stick, Amazon Fire TV, Amazon Fire TV Stick, Google Chromecast, Google Nexus Player, PlayStation 4, Xbox One, Western Digital Media Player, Wii U, Netgear, NeoTV, Vizio, CoStar LT, Asus Cube, Hisense Pulse, NeoTV Prime, TiVo Bolt, Nvidia Shield… thank you FSF for this helpful listing of over twenty “competitively available navigation devices.”
Contradiction #3: The law has a sunset provision for competition, but the FCC assumes the market hasn’t changed much since 1996.
What many don’t know is that this section 629 authority is not permanent, it has a strong sunset provision that says 629 regulations “shall cease to apply when the Commission determines that:” the market is fully competitive and it would be in the public interest.
To reach its desired outcome of more regulation and more regulatory authority here, this FCC looks at the navigation device world through a static 1996 lens, not the dynamic modern lens that the FCC has so often claimed so important to justify their justness and reasonableness in most all of their other major rulemakings.
If the FCC looked at this market fairly and factually and through a dynamic modern 2016 lens, they would see that this market is competitive, just like they found the cable market to be competitive last year.
In sum, rather than trying to “unlock the box” for more “competition competition competition,” the FCC would do better to “unlock the docs” so everyone can see the arbitrary “contradiction contradiction contradiction” between the FCC’s messaging and the reality of what the facts say in the FCC’s own documents and the law.
Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.