FCC Postpones Vote on Set-Top Box Reform in a Blow to Chairman Wheeler

The Federal Communications Commission on Thursday postponed a vote on its highly-anticipated proposal to increase competition in the video “set-top box” market after the chairman of the agency failed to secure the necessary votes to approve the plan.

The delay amounts to a humbling setback for FCC Chairman Tom Wheeler, who had made reforming the $20 billion set-top box market a centerpiece of his pro-consumer agenda. With 40 days to go before a presidential election that will determine the makeup of the FCC going forward, the fate of the reform measure is now in doubt.

As recently as Thursday morning, the vote was still scheduled, but Wheeler was ultimately unable to come to an agreement with his fellow Democratic commissioner Jessica Rosenworcel, who had previously raised concerns about his plan, and who represents the key swing vote at the five-member agency.

“Commissioner Rosenworcel came to Chairman Wheeler’s office with a bunch of edits on the order, and those edits were unacceptable to his office,” according to a person familiar with the matter. “And that led to an impasse. As of 8 a.m. this morning the vote was on, and then by 9 a.m. the vote was pulled.”

Wheeler’s proposal would have required cable and satellite operators to provide software “apps” allowing consumers to access content like ESPN or HBO on the device of their choice, including Android, iOS, and Amazon phones and tablets, without the need for a clunky set-top box. Millions of pay-TV subscribers pay an average of $231 dollars per month to rent these antiquated set-top devices, pouring an estimated $20 billion annually into the coffers of Big Cable.

“We are still working to resolve the remaining technical and legal issues and we are committed to unlocking the set-top box for consumers across this country,” Chairman Wheeler said in a statement.

The delay underscores the ferocity of the opposition to Wheeler’s proposal from the cable industry, which doesn’t want to give up its set-top box cash-cow, and Hollywood, which raised concerns that the plan could undermine the intellectual property rights of content creators. Dozens of lawmakers had urged the FCC to delay the vote, in order to address concerns over the legality of Wheeler’s proposal.

I am extremely disappointed that the majority of the FCC Commissioners have not yet come to an agreement.

Sen. Edward J. Markey, the Massachusetts Democrat who has fought to increase competition in the pay-TV video market for more than two decades, blasted the FCC’s failure to approve the set-top box reform measure.

“Today’s vote delay is an unequivocal loss for the tens of millions of Americans across the country who are forced to spend their hard-earned money on overpriced set-top box leases that cost them hundreds of dollars a year,” Sen. Markey said in an emailed statement. “I am extremely disappointed that the majority of the FCC Commissioners have not yet come to an agreement to provide relief for consumers for these bloated set-top box rental fees and certainty to companies who wish to innovate with new products.”

The Telecommunications Act of 1996 included a mandate requiring federal regulators to ensure a competitive marketplace for video navigation devices. But over the ensuing two decades, the FCC has failed to carry out this mandate, thanks to sustained pushback from the cable industry and its political allies.

Not surprisingly, cable giant Comcast practically gloated at the FCC’s failure to vote on the proposal. “The FCC made the right decision this morning to delay its vote on the set-top box item,” David L. Cohen, Comcast’s top tech policy honcho, said in a statement. “Heavy-handed government regulation, based on questionable legal authority in a fast-moving marketplace will stop the apps revolution dead in its tracks, and delay consumer choice.”

Public interest groups, meanwhile, were dismayed by the FCC’s failure to act.

“This issue has been under consideration at the FCC for two years now, and the benefit of further delay is unclear,” John Bergmayer, senior counsel at Public Knowledge, the DC-based consumer advocacy group that has championed the set-top box reform proposal, said in a statement.

“Opponents of unlocking the box will continue to shift from one manufactured concern to another in an attempt to keep consumers renting the controlled, locked-down set-top box, costing consumers billions and holding back innovation and video competition,” Bergmayer added.

Matt Wood, policy director at Free Press, another DC-based public interest group, said the decision to push back the vote “shows the substantial obstacles to making any progressive communications policy that benefits diverse content creators and paying customers alike in the face of organized opposition from monopolies and corporate lobbyists.”

“Unlocking the box is a chance to curb cable’s gatekeeping power and confront the lack of competition that has allowed companies to rip people off for far too long,” Wood said. “But now that the vote has been delayed, the FCC should focus on strengthening this proposal — and that means standing up to an industry that will never stop trying to kill competition and keep prices high.”

The set-top box reform measure could be brought up at the next FCC open meeting, if Wheeler obtains the necessary votes. Or the measure could be placed into what’s known at the FCC as “circulation,” and be voted on at any time. But it’s worth noting that “circulation” is viewed by many telecom policy experts as a kind of “purgatory,” where politically sensitive items go to die.

This story has been updated with additional information since its original publication.

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