Unlocking Pandora’s Set-Top Box

Some of us recall the 1980s, when television was “free.” Access was entirely “equitable” and supported by advertising. We could choose, purchase and manage our own hardware: 20 inch Sony Trinitrons with either rabbit ears or roof top antennas. The quality of TV content was just about what you’d expect for free. The leading dramas were Dallas and General Hospital; comedy meant Alf or Welcome Back Kotter. And, you could share these masterpieces, along with cheesy advertisements, with friends on either VHS or Betamax!

Today, we love our shows but hate our hardware. Variety reports that this “Golden Age of Television” is producing an astounding 409 scripted television series! That represents an increase of 400%, since 2002. Series like House of Cards, Breaking Bad, Mad Men and Game of Thrones became parts of people’s lives and even critics were pleased. This quality content is not free, but it is relatively affordable. We owe that to both an intellectual property regime and a regulatory environment that encourage production. This stuff is so good, that TV is one of America’s best exports and the industry provides hundreds of thousands of high-paying jobs across the country. No sane regulator would mess with that, right?

Well . . . back in February, the FCC announced approval of a proposal to “Unlock the Box.” The agency promises to free American consumers from the draconian dictates of their cable provider.  No longer will we be forced into use the cable company’s one-size fits all, “expensive” set top box. We will once again be free to own and manage our own hardware. Content will be redistributed willy-nilly as the rules compel content owners to make their material available to nearly anyone who wants to redistribute it. Third party device makers and streaming providers could then provide us with free TV, profiting via the insertion of their own targeted advertising. Picture the Disney channel “free” funded by ads for shady social media apps targeting your preteen! While this utopian vision of hardware choice and free content appeals to many– mostly those who have never actually experienced that – the box the FCC has actually unlocked is as old and as fraught with trouble as Pandora’s.

To be clear, I’m a tech junkie and a long suffering user of alternative DVRs. I was first on the block with a Replay TV in 2000. I eventually owned several TiVo’s and even a lovely box called “Moxie.” I’ve been treated like a tech pariah by cable providers. They’d rather I used their . . . (searching for polite adjective) . . . in-house DVR and getting my oddball hardware working with their cable cards and clunky signal multiplexers is challenging.

Personally, I relish technical puzzles, but the cable guy does not arrive at my home ready to share in my sense of adventure. When my wife calls for support, cable customer service is less than excited to find that they’ve got a “divergent” on the line. Of course, they must help because our TiVo is dependent on their cable system, though not fully integrated into it. Expecting cable companies to train their staff in managing these 3rd party solutions in order to please 1% of users has been very costly.

It’s as though I expected Ford to debug the Pioneer stereo I installed in my Mustang. Today, few Americans install auto electronics because factory infotainment systems are fully integrated and thankfully no gov’t agency is trying to “fix” that. Auto buyers have shown that they value music choices over hardware choices. If that wasn’t the case the hyper-competitive and “open” auto market would change. Integration wins in the marketplace.

The discussion about how much cable firm’s make leasing their black boxes at $17 a month or how consumers “suffer” from the lack of gizmo choices is similarly off target. Providers save money by standardizing their support environment and the 99% of consumers who are not pushing the limits of the DVR envelope receive an integrated experience with less headaches. TV consumers want quality television content a lot more than they desire to have a plethora of hardware options.

What the FCC should be doing is establishing incentives to get Americans the sort of fast and reliable Internet connections that Korean and Japanese consumers take for granted. Then nerds like me could choose TV “over the top” from the Internet and configure our own gear. Others could go with a satellite provider or choose old fashioned cable and the clunky box. Content producers will optimize their profits by adopting to the distribution systems that consumers prefer. The marketplace will decide wisely.

Frankly, even TiVo understands the old cable box fight is over. That is why the venerable startup recently sold-out to Rovi in a deal that suggests it will exit the hardware biz in favor licensing its technology and suing those who trespass on its patents.

The FCC’s plan to seize and socialize the intellectual property of television’s content creators in order to establish a theoretically more competitive market for some made in China hardware is a wrong-headed solution to last decade’s problem. Worse, it risks undermining a great American industry and returning us to the bad old days of “free” TV. If we do not reconsider this misguided regulatory move, we might have to resign ourselves to watching reruns of Welcome Back Kotter running on complex devices that only a nerd could love.

 

Greg Autry is a serial technology entrepreneur and an Assistant Clinical Professor with the Lloyd Greif Center for Entrepreneurial Studies at the Marshall School of Business, USC. You can find him on Facebook and Twitter.

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