Big Cable threatens to sue FCC: You can't stop us ripping off customers

Common standards for set-top boxes? Ha ha ha

The US National Cable & Telecommunications Association (NCTA) has threatened to sue the Federal Communications Commission (FCC) if it pushes ahead with plans to open up cable boxes.

Speaking at a press conference Thursday, the NCTA's president – and former FCC chair – Michael Powell said that the plan to force cable companies to adopt common standards for data and provide them to third parties was illegal.

A three-page "legal white paper" [PDF] provided five reasons why. Several of them question whether the FCC has the legal authority to make such a change. But the NCTA also argued it would break agreements on consumer privacy and intellectual property rights, and that the proposal would infringe on TV programmers' "free speech rights."

"The proposed rules are riddled with gaping holes and leave unresolved major legal problems that the rules themselves would create," railed the paper. "The FCC may not adopt rules that create such problems and then leave the industry to sort out the mess."

Legal claims aside, Big Cable is making two main arguments. First, that the proposals would force it to come up with new boxes and that would be prohibitively expensive and require millions of consumers to get new boxes. And second, the proposal isn't needed anyway because apps mean that cable boxes aren't really needed anymore.

It also raises the same concern as raised by the Commerce Department: that third-party box makers not be allowed to replace advertising with their own.

Money

The reality, of course, is that cable boxes are a huge profit center for the cable companies. The boxes are often ancient, use old technology, and consumers have little or no choice but to "rent" them at prices vastly higher than their real worth.

As FCC chair Tom Wheeler pointed out when he first proposed opening up the boxes, the average American household now pays $231 a year in rental fees for their cable box – which equates to $20bn a year. The box fees have also gone up three times faster than inflation.

With that much money at stake, it is no surprise that the NCTA is threatening to drag the issue into the courts.

If the proposal goes ahead as planned, it is all too easy to see the next AppleTV or Roku streaming box doing everything that your current cable box does – and at a fraction of the price.

The NCTA arguments that it would face extraordinary costs to comply with the rules seem fanciful at best, and box exchanges could be made in the same way that they currently are – at the end of the two-year contracts.

Times are a changin'

What is notable is how Big Cable has lost much of its influence in the current FCC leadership. Once FCC chair Tom Wheeler was forced to go head-to-head with the lobbyists over net neutrality rules, he and his staff have seemingly pulled out every issue that should have been tackled by the FCC in the past but was mothballed due to Big Cable's overwhelming influence.

One month it was this cable box plan; the next month, control of subscribers' personal data.

With the arrival of the internet and big beasts such as Google, the FCC is no longer solely the preserve of Comcast and AT&T. And they don't like it.

It is remarkable that the NCTA's president is a former chair of the FCC. But that's not all. Earlier this week, the NCTA published a study that claimed "the proposed rules, far from promoting a competitive marketplace, are likely to artificially distort competition to the detriment of consumers." It was written by the FCC's former chief economist Stephen Wildman.

What the NCTA sees as untouchable credibility in the people making the arguments against the current FCC's plans, the rest of the world sees as a sign of just how much the regulator used to be in the pocket of the companies it oversees. ®




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