U.S. telecom regulator Federal Communications Commission (FCC) is not proceeding with implementation of the revised rules for “Unlock the Box” NPRM (Notice of Proposed Rulemaking). The proposal was made by its Chairman, Tom Wheeler. In Feb 2016, FCC voted 3-2 to introduce the “Unlock the Box” NPRM. The final voting was scheduled to take place on Sep. 29, 2016 but it was postponed.
The surprising victory of Republican nominee Donald Trump as the next U.S. president is starting to show its impact on telecom policy parameters. The FCC took this decision after a group of Republican lawmakers asked Wheeler to refrain from acting on "controversial" issues during his final months in office. Notably, Donald Trump will take over charges of White House on Jan 20, 2017. Notably, a couple of day ago, the FCC abandoned its plans to reform Business Data Services (BDS) market.
Per the FCC, the set-top box market is primarily 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.
Under the “Unlock the Box” NPRM, 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 including the ability to record and TV programming to third-party device makers like Roku, Amazon.com Inc. (AMZN - Free Report) and TiVo Inc. (TIVO - Free Report) . Further, consumers can select set-top box or applications from any of these developers. The FCC said that it intends to bring down the price of software and devices to competitive levels and consequently help consumers to save costs.
In the new proposal, pay-TV operators will have to offer subscribers a free app that allows them to access the same program they have already paid for on several devices, including tablets, mobile phones, gaming consoles, streaming devices (like a Roku or Apple TV), and smart TVs. Subscribers will no longer have to pay the monthly rental fee for set-top receivers since the app will be both mandatory and free. As per the FCC, the new proposal will help subscribers to reduce their pay-TV bills by $10-$15 per month.
Major U.S. pay-TV operators have been vehemently opposing the NPRM. Their argument being that the idea of establishing a central licensing body to implement a single license for programming over applications is in conflict with today’s licensing practices. As of now, programmers do not offer uniform rights to all devices and uses.
Additionally, the new licensing policy will put a check on the innovation in the set-top box industry. Per the FCC proposal, the new 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. Pay-TV giants like Comcast Corp. (CMCSA - Free Report) , Charter Communications Inc. (CHTR - Free Report) and AT&T Inc. (T - Free Report) have taken a stand against the FCC proposal. All these three stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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