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New FCC Vote on Set-Top Boxes Means Changes Ahead

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New FCC Vote on Set-Top Boxes Means Changes Ahead

March 08, 2016

  By Steve Anderson, Contributing Writer

Those who hate a current cable television provider are far from a small group, and those who are considering—or have already—thrown over said cable provider in favor of online sources are a likewise growing group. A new report from My San Antonio looked at a Motley Fool story and discovered that a new FCC (News - Alert) proposal regarding set-top boxes might make that shift easier.

It was regarded as the biggest news out of the FCC since its Net Neutrality stance, one that would impact a host of firms from Apple to Time Warner (News - Alert) Cable. The proposal in question called for the FCC to open up the traditional set-top box system, where the cable industry has commonly operated for decades. Since virtually all pay-TV subscribers—the FCC describes 99 percent of these—have limited choices, and commonly must lease said boxes from providers, a lack of competition has meant few choices and higher prices.  The prices have likewise been going up; where the cost of computers, televisions and mobile phone has declined by 90 percent since 1994, set-top box prices have gone up 185 percent.

That didn't sit well with the FCC, who then issued a Notice of Proposed Rulemaking (NPRM), which will allow other companies to step in and make better, lower-cost boxes. In turn, major cable firms like Comcast (News - Alert) and Time Warner Cable will likely fight to keep their turf in check, and newcomers will fight just as hard to get a slice of that turf.

That changes, of course, if the newcomers can give a reason to switch so compelling that customers will make the time to switch. Given that we're talking about proposed rulemaking only, it's likely nothing will change in the short term, and that gives the incumbents a chance to consolidate positions.

The problem here for the incumbents, meanwhile, is that even the delay represented by proposed rulemaking changes may not be sufficient to give them edge enough to actually get anywhere. Granted, if Comcast were to ramp up its repair and installation forces and remove the bandwidth cap, current users most likely wouldn't change for anything less than a higher-speed alternative; Comcast's current offerings would be pretty sound if not for the limits and extracurricular nonsense like the Ryan Block incident. Can Comcast build its system out to provide limitless bandwidth? That seems unlikely. Inertia may help keep customers in place, but inertia will likely fall to a better deal.

This represents a major problem for the incumbents—not to mention the potential disaster Project Skybender represents—and one that may well spell doom if something isn't done in short order. The FCC may well have started the beginning of the end for cable companies, and this is a development that will require careful consideration in the months ahead.

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