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Will FCC's "Unlock the Box" Plan for Pay-TV Fall Apart?
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Major U.S. pay-TV operators are vehemently opposing the Notice of Proposed Rulemaking (NPRM) issued by Tom Wheeler, the Chairman of the U.S. telecom regulatory body Federal Communications Commission (FCC). In Feb 2016, the FCC voted 3-2 to advance the “Unlock the Box” NPRM. The proposal is likely to go for final voting on Sep. 29, 2016. Pay-TV biggies like Comcast Corp. (CMCSA - Free Report) , AT&T Inc. (T - Free Report) , Charter Communications Inc. (CHTR - Free Report) and industry trade group National Cable & Telecommunications Association are taking a stand against the FCC proposal.
Unlock the Box Plan
According to the FCC, the set-top box market, dominated by pay-TV operators, is currently valued at about $20 billion annually. Meanwhile, lack of competition has resulted in higher rental fees for consumers. At present, an average consumer spends around $231 per annum to lease set-top boxes. According to a recent study by the FCC, the cost of cable set-top boxes has risen 185% while the price of computers, televisions and mobile phones has dropped 90% since 1994.
Thus, the FCC has proposed to set terms for licensing new devices that would pose competition to traditional set-top boxes. According to the regulatory body, pay-TV operators have to provide three information streams – programming information, programming permissions such as the ability to record and TV programming to third-party device makers like Roku, Amazon.com Inc. (AMZN - Free Report) and TiVo Inc. . Consumers can select set-top box or applications from any of the developers. The FCC said that it intends to bring down software and devices prices to competitive levels to help consumers save costs.
Pay-TV Operators Disagree
Major pay-TV operators have argued that the idea of establishing a central licensing body to enforce a single license for programming over applications is in conflict with today’s licensing practices. As of now, programmers do not offer uniform rights for all devices and uses. In addition, the new licensing policy will put a check on the innovative initiatives that are being undertaken in the set-top box industry. Per the FCC proposal, new innovative feature of any device has to be approved by the licensing body and reviewed by the commission. This will eventually slow down the approval process.
The Bottom Line
Since 2015, the FCC has been actively enforcing stringent measures to implement free and fair pricing and instil competition. The adoption of Net Neutrality laws and a proposal to control the Business Data Service (BDS) markets are fitting examples. The proposed “Unlock the Box” NPRM is a step forward in the same direction. Nevertheless, pay-TV operators have garnered strong support ranging from the Congress to the programming industry. Already one FCC Commissioner Jessica Rosenworcel, who voted to advance “Unlock the Box,” has called for withdrawal of NPRM. Therefore, the future of Tom Wheeler’s proposal is cast into uncertainty.
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Will FCC's "Unlock the Box" Plan for Pay-TV Fall Apart?
Major U.S. pay-TV operators are vehemently opposing the Notice of Proposed Rulemaking (NPRM) issued by Tom Wheeler, the Chairman of the U.S. telecom regulatory body Federal Communications Commission (FCC). In Feb 2016, the FCC voted 3-2 to advance the “Unlock the Box” NPRM. The proposal is likely to go for final voting on Sep. 29, 2016. Pay-TV biggies like Comcast Corp. (CMCSA - Free Report) , AT&T Inc. (T - Free Report) , Charter Communications Inc. (CHTR - Free Report) and industry trade group National Cable & Telecommunications Association are taking a stand against the FCC proposal.
Unlock the Box Plan
According to the FCC, the set-top box market, dominated by pay-TV operators, is currently valued at about $20 billion annually. Meanwhile, lack of competition has resulted in higher rental fees for consumers. At present, an average consumer spends around $231 per annum to lease set-top boxes. According to a recent study by the FCC, the cost of cable set-top boxes has risen 185% while the price of computers, televisions and mobile phones has dropped 90% since 1994.
Thus, the FCC has proposed to set terms for licensing new devices that would pose competition to traditional set-top boxes. According to the regulatory body, pay-TV operators have to provide three information streams – programming information, programming permissions such as the ability to record and TV programming to third-party device makers like Roku, Amazon.com Inc. (AMZN - Free Report) and TiVo Inc. . Consumers can select set-top box or applications from any of the developers. The FCC said that it intends to bring down software and devices prices to competitive levels to help consumers save costs.
Pay-TV Operators Disagree
Major pay-TV operators have argued that the idea of establishing a central licensing body to enforce a single license for programming over applications is in conflict with today’s licensing practices. As of now, programmers do not offer uniform rights for all devices and uses. In addition, the new licensing policy will put a check on the innovative initiatives that are being undertaken in the set-top box industry. Per the FCC proposal, new innovative feature of any device has to be approved by the licensing body and reviewed by the commission. This will eventually slow down the approval process.
The Bottom Line
Since 2015, the FCC has been actively enforcing stringent measures to implement free and fair pricing and instil competition. The adoption of Net Neutrality laws and a proposal to control the Business Data Service (BDS) markets are fitting examples. The proposed “Unlock the Box” NPRM is a step forward in the same direction. Nevertheless, pay-TV operators have garnered strong support ranging from the Congress to the programming industry. Already one FCC Commissioner Jessica Rosenworcel, who voted to advance “Unlock the Box,” has called for withdrawal of NPRM. Therefore, the future of Tom Wheeler’s proposal is cast into uncertainty.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>