Cable’s not-Romney

Thu, 02/09/2012 - 4:26pm
Brian Santo

And now it’s Boxee versus the cable industry, which should be making cable nervous. We’ve seen this David vs. Goliath thing before, with TiVo in the Boxee role, and it didn’t end well for cable.

Here’s the recap: Cable wants to go all-digital. What’s still analog is pretty much the basic tier of channels. In the 1992 Cable Act, Congress decreed that cable’s basic tier must be unencrypted. Always a bit of an aggravation, the injunction is becoming more problematic for cable companies because if they’re going to transmit the basic tier in digital format, the content ought to be encrypted to assure content security (which includes preventing theft of service), and that directly violates the 2003 injunction.

Transmitting encrypted all-digital also necessitates that the cable operator install some sort of box (a set-top, a DTA, etc.) with a CableCard to decrypt the video. So it would be useful to have a blanket waiver – in other words, scrap the 2003 injunction.

The FCC understands the argument, and in October, it officially opened the issue to discussion with a notice of proposed rule-making.

Boxee has emerged as one of the most vocal detractors of the change, firing off one letter to the FCC after another, insisting there are no consumer benefits to changing the 2003 rule. Further, it charges that the cable industry’s only interest in seeing the rule changed is so that it can finally place boxes in those millions of cable subscriber homes that previously lacked them.

Boxee has its own interests to protect, of course. Its boxes (its own and some OEM’d by others) are designed to be single points of access for openly available content, which originally included over-the-top content, and it recently expanded to include terrestrial broadcast channels, and it could include in-the-clear cable channels – cable’s unencrypted basic tier.

That last option becomes problematic for Boxee if cable starts encrypting the basic tier. Boxee boxes are relatively inexpensive in part because they don’t include expensive CableCards. If the FCC adopts the proposed new rules, Boxee boxes get more expensive and cease to be much different from a cable set-top.

Some people hate cable because they don’t want a cable box. Boxee’s presumed appeal to many consumers is that Boxee is not cable, even though it, too, oddly enough, is based on a set-top of sorts that people who don’t want cable don’t want, but will take because Boxee is not cable (a hideous sentence, I know, but you try to parse it out any better).

Boxee brings to mind the GOP’s Bachmann-Cain-Gingrich-Paul-Perry-Santorum-Trump hydra; it’s an electronics version of not-Romney – Boxee is not-cable.

So Boxee’s appeal could be severely undermined if the Boxee box has little distinction from a cable set-top box.

For Boxee, it’s naked self-interest. Boxee’s position is weak, however, because it’s a fringe player with limited commercial appeal, especially compared to cable. For all of the consumer whining about cable companies, cable is still a pretty good deal. If it’s Boxee versus the cable industry, consumers have chosen: Cable wins hands down.

Of course, years ago, TiVo, in its incarnation as a consumer electronics (CE) company, was a fringe player, too, yet a small minority of consumers forced the FCC and the entire industry to do back flips to accommodate it. And TiVo still failed to become a CE success. That it is still around is a poor argument, seeing as it had to remake itself as a semi-official cable set-top supplier, and that took years.

On the other hand, Boxee’s position is strengthened by the cable industry itself, whose main stated justification for the new rule is that consumers won’t have to wait at home for technicians to perform service installs and terminations.

That is so weak.

Cable does have better reasons for asking for the new rules: more efficient use of spectrum, the potential to add more channels, the potential to add more services.

But a clever opponent would note that more channels and more services would ultimately translate into the potential for higher bills for consumers, and if there’s one thing that cable does not want to bring up, it’s that their fees might go up.

So we’ll be dancing around this for a long time, with Boxee not saying what it really means, and cable not saying what it really means, and a minority of consumers who hate cable companies lobbing bombs from the sidelines.

Let’s hope the people at the FCC will be able to read between the lines. Cable has a better case.


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