When the nation's top TV regulator officially unveils his long-awaited proposal next week to disrupt cable set-top boxes, it'll contain a set of privacy provisions aimed at making sure new cable-box manufacturers don't abuse the data they collect on viewer behaviors.
The proposed privacy rules would affect all firms who are looking to build alternatives to the traditional set-top box, said Tom Wheeler, the chairman of the Federal Communications Commission, in a recent interview. Under the rule, even companies that have made behavioral data a big business would have to obey privacy rules that are similar to those that govern the cable industry today, if they were to start making set-top boxes of their own.
"The cable companies are collecting information on you today, and they have a set of rules they have to live by," said Wheeler. "There are rules for device manufacturers and service providers at both the federal and the state level, and what we're going to do in our rulemaking is say [to new entrants], 'You have to have the same kind of rules that cable companies have.' "
Federal rules prohibit cable companies from collecting "personally identifiable information" on consumers without first getting their consent. They also prevent cable companies from sharing that data with third parties without subscribers' written or electronic consent, except when it is necessary for providing cable service.
Under Wheeler's proposal, third-party set-top box makers could be subject to similar requirements, though not necessarily the same exact ones.
Right now most people rent their boxes directly from their cable or satellite TV providers to the tune of about $20 a month, a congressional probe found last year. That fee generates $20 billion a year for cable companies, according to the FCC. Mounting complaints about the fee — as well as a lack of choice among set-top box providers — have prompted the FCC to take action.
The agency is expected to propose new rules this month that could encourage the tech industry to design new set-top boxes. These new devices would hook into your existing cable connection, enabling you to watch all the same content that you currently get with your cable TV package, but perhaps with better search features, menus and other ways of navigating through your bundle. The result could be lower prices and more competition for set-top boxes, agency officials say.
If the Googles of the world were to build a third-party set-top box, they would gain an unprecedented, Netflix-like visibility into customers' viewing habits that they could then attempt to use for advertising purposes, according to consumer groups such as the Center for Digital Democracy. It's part of a wider arms race that has the cable and telecom industries doing the same thing.
"All the phone and cable companies have upgraded their data collection abilities," said Jeffrey Chester, executive director of the Center for Digital Democracy. "They want to create the same kind of real-time, data-driven business model that's at the heart of Google and Facebook."
Although the FCC announced Wheeler's proposal last month, it won't be officially revealed until Feb. 18 when the public will have an opportunity to respond. Even then, the rules won't be finalized until the entire commission votes on them at a future date.
Update: This post has been updated to clarify that third-party cable box makers may be subjected to similar privacy rules as the ones that govern the cable industry, not necessarily the same exact ones.