Set-top Competition is the Medicine Cable Needs

The FCC has been trying, after last decades attempts fell flat, to open the set-top box market to competition. Cable companies make a lot of money off of forcing subscribers to rent boxes, which are often underperforming and ill-equipped to serve the modern video consumption habit.

Cable is in a bad position as streaming continues to expand, with advertising and subscriber revenues expected to continue falling. The one thing that could help the market transition smoothly, the advent of the all-comer hardware device, is being actively resisted by the industry that needs it the most.

The proposal was already corrupted in a switch from an API-based model where access comes to the companies to an App-based model where the companies go to the devices. Now it is stalled completely.

The cable company is protecting its box rental revenue and its subscriber revenue at a time when it has enough of both to take a hit and resettle its place in the content delivery field. Instead, as entrenched industries are wont to do, it is fighting against the inevitable. It will see its revenues dwindle anyway, and its corpses (or at least the cable-related appendages; the ISP parts may survive) will then be swallowed by the new generation of media companies.

It is the same sort of short-sighted behavior that threatens our planet when major energy conglomerates don’t buy into the next generation of renewable energy. We may not see the pattern repeated with the auto industry, but that will likely depend on how fast they can merge as fleets of autotaxis become the norm.

What is clear is that the Republican seats on the FCC are actively blocking competition, which is antithetical to the Republican charge that free markets rule. The anti-regulation strain of so-called conservativism is stronger than the free market strain, when the two principles find themselves in opposition.

The lack of easy, integrated media devices will continue to drive consumers away from cable, as most streaming services are available through a single device. Media consumption is largely a social behavior, with people watching content those around them also watch. A generation is growing up without caring about traditional content delivery, and cable is basically ignoring that and fighting against a shift that’s already happening.

The best choice for cable would be to embrace the FCC’s original plan, lobby for the door to be two-way (allowing them to support streaming content on their own hardware offerings), and fight to make the best interface they can at the best price they can. They could even try to strike some subscription deals with streaming services, offering their subscribers the ability to add streaming packages in exchange for a finder’s fee.

Unfortunately, the bigwigs in the cable companies think that this is a very different year, where they can afford to weather the storm. They are betting that the unfathomable will come to pass and their ship will magically right itself. They are foolish for thinking this.