Comcast And Cable’s Two-Front War For Survival

Whenever Tom Wheeler and the Federal Communications Commission come up with the slightest piece of legislation over regulating Internet service providers, the discussion usually revolves around the free nature of information and the government’s role in preserving that ideal over in-home Wi-Fi. However, the FCC’s most recent piece of legislation has big cable singing a much different tune in protest — one that cuts more to the financial heart of things.

Wednesday (Jan. 27) saw the FCC issue a proposal aimed at dismantling the monthly rental fees on cable set-top boxes charged by cable companies, like Comcast, Time Warner and AT&T. Citing figures that support the oft-made claim that big cable has a practical monopoly in the industry, Wheeler explained in an opinion piece to Re/code that, with fee-locked cable boxes in particular, 99 percent of pay TV consumers are subject to this industry standard practice. And in the same vein that healthy regulation allowed the smartphone development sector to flourish, Wheeler called for an end to cable set-top box rental fees as a way to spur more competition.

“In 2007, the commission opened up wireless networks to non-carrier-provided devices,” Wheeler wrote. “You can now choose which smartphone or tablet you want to use. Similarly, you’ve been able to choose your own cable modem and Wi-Fi router for years. Should pay TV continue to be an exception? I believe, and Congress has made clear, the answer is no.”

As if the statements had already been written, Comcast, et al., strongly condemned the FCC’s proposal in no uncertain terms. However, instead of the worn-out First Amendment usually trotted out, cable companies took a different tactic: claiming that eliminating the cable set-top box would open the way for Amazon, Netflix, Google and other digital platform owners to turn the cord-cutting movement into a full-blown revolution. In fact, an anonymous member of the cable industry told Fast Company that many in his camp believe that Google is pulling the strings behind the entire regulatory effort.

Why so much angst from big cable? In more ways than one, The Wall Street Journal explained how removing something as simple as the set-top box from the cable-based entertainment ecosystem could have ripple effects that Comcast and others very much should be concerned about. Aside from losing out on an estimated $6 billion to $14 billion in revenue per year, big cable also cedes some important conceptual ground to digital media companies with the passage of the FCC’s proposal. After all, once consumers begin to understand that the already massive selection of à la carte digital media platforms (i.e., Netflix, Hulu, YouTube) can replace and enhance their usual TV viewing habits with nothing other than the free hardware they already own, Comcast, AT&T and Time Warner lose some of the industry inertia that has kept them at the top of the heap for so long into the digital media revolution.

In that sense, it’s easy to see Wheeler as some kind of champion for consumers’ rights in the electronic age. While getting rid of set-top box rental fees is sure to win the FCC chairman a few friends in residential America, it’s more appropriate to look at this as a transfer of power rather than a redistribution of it. After all, the current digital media landscape is dominated by just a handful of major platform owners, and at the moment, it’s only their juxtaposition against stereotypically evil cable providers that casts Google, Amazon, Netflix and others in a benevolent light.

Once the balance of power shifts from the hands of the masters of the airwaves to the masters of Wi-Fi, higher fees and consumer ire can’t be far behind.