FCC Chairman Tom Wheeler is circulating a proposal that would “tear down anti-competitive barriers and pave the way for software, devices and other innovative solutions to compete with the set-top boxes that a majority of consumers must lease today.” The proposal is up for vote on February 18.
According to the FCC, the set-top box (STB) business costs consumers $20B per year. The intent of the proposal is to open the market to competition, giving consumers the option to buy STBs from third-parties, presumably at a lower price.
But we’ve seen this movie before – a few times, actually. Previous FCC mandates following similar proposals has resulted in the cable industry implementing CableCard, OpenCable (OCAP) and, most recently, Tru2Way. In all of these cases, the so-called solutions fell short in one way or another as the status quo prevailed. This begs the question: can a new FCC-mandated approach be successful or does this movie have the same old ending? Let’s take a deeper look at what the FCC actually wants to accomplish, the proposed solutions and new approaches that could make this time different.
A Closer Look At Requirements Of The FCC Proposal
The current FCC proposal references three different information streams that must be passed from MVPDs to third-parties to facilitate a competitive marketplace. They comprise service discovery, entitlement and content delivery. Each brings unique challenges.
Service Discovery: The FCC defines service discovery as “information about what programming is available to the consumer, such as the channel listing and video-on-demand lineup, and what is on those channels.” TV listing data is widely available from entities such as Tribune TV Data, Rovi Corporation and FYI Television. However, MVPDs would now be required to publish up-to-date VOD listings and metadata for access by third-parties. In addition, MVPDs will also likely be expected to share real-time data on subscriber network DVR storage, which could present new challenges, including privacy issues.
Entitlement: The FCC defines entitlement as “information about what a device is allowed to do with content, such as recording.” MVPDs have been successfully sharing entitlement data with OTT services such as HBO-Go. It’s unclear, however, whether these systems can handle package, tier and device-level entitlements. Also, are these systems capable of scaling to handle real-time channel surfing volumes? Can a third-party device be configured to recognize a subscriber’s cable modem boundaries, which is necessary given that MVPDs are restricted in some cases to distributing content only within the home?
Content Delivery: The FCC defines content delivery as “the video programming itself,” implying that the MVPD would be the sole distributor of the programming under the open system, and need to allow third-parties to identify content sources within the MVPD network. This implies that MVPDs will have to publish content sources in real time and at large scale. Other aspects of content delivery, such as blackouts and EAS, will need to be addressed too.
In short, the latest FCC proposal will require new platforms, new standards and new operating models to mirror the same TV viewing experience that traditional set-top boxes provide.
To handle large-scale information exchange, MVPDs will have to expose many backend functions through APIs, in real time, with 100 percent accuracy. Keeping the associations intact between content sources and subscriptions, in real time, while delivering fast channel-surfing experience is an engineering feat that MVPDs are still working to accomplish for their own cloud TV implementations. Any new platform would need to overcome these challenges while also exposing these interfaces to third-parties through a public API. This would be an industry first.
On the standards front, CableLabs has been steady at work, certifying devices for MVPDs. The FCC proposal calls out five characteristics that must be met by an independent standards body: openness in membership, a balance of interests, due process, an appeals process and consensus. Will CableLabs be able to address this challenge for industries that expand beyond cable or will device makers make a push towards other standards?
MVPDs manage the network, devices and apps today, giving subscribers a fully-integrated service with a single point of contact. Opening the STB is likely to shift the customer support model from a single operator to a fragmented experience across multiple operators. In this scenario, the customer would be stuck trying to distinguish which entity may be responsible for trouble issues. Who does a customer call when their guide is malfunctioning and how do they troubleshoot problems that span multiple fragments of the solution?
A Better Path Forward?
Previous rulings, which resulted in initiatives like CableCard and OCAP, did not have such far-reaching impacts on MVPDs, yet they still failed to take off. The breadth of the FCC’s latest proposal would impose many changes that not only come at considerable expense to the MVPDs, but in some cases, require unprecedented engineering feats. But maybe there is a middle ground that would best suit all stakeholders? IBB Consulting has identified three key trends that should be evaluated as a new approach is considered:
IP-Unicast delivery model: Many of the aforementioned content delivery challenges can be resolved with an IP-unicast delivery model, which may not be too far out in some MVPD roadmaps. IP-unicast delivery would make it easier to support IP streams on any device, with two-way authentication through relatively simple API calls. A realistic solution can be built around this delivery model, with advanced compression to offset unicast bandwidth requirements.
Emergence of IoT: The Internet-of-Things is evolving fast. It is not a stretch to imagine a day when the STB is simply another “thing” to be connected. IoT BaaS solutions (Backend-as-a-Service) could make it simpler for MVPDs to expose back-end APIs for entitlement and content delivery. While there is no unitary standard, there are already several platforms and ecosystems to choose from, such as Apple HomeKit and Google Brillo. Alternatively, MVPDs may want to utilize their own home automation platforms to connect the STB to the cloud, through IoT platforms.
Emergence of Cloud TV: Many functions of the STB are software-driven. Increasingly, more of those functions are being migrated to the cloud. It could be feasible to have each MVPD provide a base layer of software downloadable on third-party devices. This could help separate tuning and decompression functions (hardware-based) from security, guide and content delivery functions (software in the cloud), resulting in a happy medium where MVPDs and third-parties can co-exist.
This is unchartered territory for all parties involved, including the consumer. In less than a week, we’ll have a better sense of where the industry must go next. With the right strategies in place, this time we could very well get there.
Sanjay Iyer is a Principal with IBB Consulting Group, helping cable operators design, develop and launch new products.