If Comcast's plan takes off, it could lead to huge savings for cable viewers — not to mention big profits for these device manufacturers and any others that decide to partner with the company on its terms. And it will probably save Comcast some money as well, as it will no longer have to produce the equipment in the first place and pass the associated costs on to the consumer. These changes promise to benefit some TV viewers — and Comcast, too.
Comcast’s announcement comes at a time when the Federal Communications Commission has proposed rules that would open up the market to allow third parties to create set-top boxes, much as the government once broke the telephone companies’ hold on selling phones.
Cable officials are pointing to Comcast's box-less solution as a reason that Washington should back off. As one industry spokesman put it after Comcast's announcement:
To understand just how big a deal this is, we have to talk about the proposed regulations and what they would do. The rules would mean anybody — Apple, Google or even an app developer working from his or her garage — could design alternative remote controls, search functions and user interfaces for cable that didn't have to be authorized by your cable company. The goal, regulators say, is to give consumers more choice and greater competition.
While Comcast's box-less vision of the future gets at that somewhat, the FCC believes it isn't enough, because at the end of the day this ecosystem would still be orchestrated by a cable company seeking to protect its own interests. Agency officials said Wednesday that even though Comcast's offering seems to provide new ways to watch TV, it simply amounts to a walled garden of pre-approved interfaces and equipment from Comcast's sanctioned partners.
"While we do not know all of the details of this announcement, it appears to offer only a proprietary, Comcast-controlled user interface," the FCC said Wednesday in a statement defending its proposal.
Comcast said in a blog post that in addition to coming up with novel and innovative products such as its app, it is willing to work with any company to install the cable app on their devices.
But if announcements such as Comcast's reflect a carrot-based approach to warding off unwanted regulation, the cable industry is also waving a very large stick.
Mixing threats of litigation with a sustained lobbying effort, the industry hopes to keep the FCC proposal from ever bearing fruit. Beyond their own appeals to the agency not to move forward, cable and TV content officials are also attempting to persuade members of Congress to apply their own pressure on the FCC. The result is a sophisticated, multi-headed Washington strategy that seems to be as much about power politics as it is about the future of television.
In a media briefing on Thursday, a top cable trade group warned that it would almost certainly sue the FCC if it went ahead with its current plan.
"Yes, we would seek legal redress in the courts," said Michael Powell, who leads the National Cable and Telecommunications Association and is a former FCC chairman.
Many of the cable industry's allies, including Hollywood producers and the Walt Disney Co., have been writing op-eds and meeting with policymakers in an attempt to peel support away from the agency's proposal.
Others aligned with the industry — particularly content companies representing U.S. minorities — have helped persuade some federal lawmakers to say the rules should be scrapped.
This pressure could make it harder for some FCC officials to stick with the agency plan, analysts say.
If this strategy succeeds, the cable industry will be able to ensure that the TV content it provides will remain largely under its control and not subject to rearrangement or repackaging by outside firms such as Google.
The cable industry has argued that the FCC adopt rules that lay out an "app-based approach" similar to what Comcast announced this week that would rule out the possibility of third-parties independently developing their own cable interfaces.
Embracing apps could benefit cable companies in more ways than one. In addition to being able to control which app developers get access to their content, cable firms may be able to exploit a feature of their own technology in ways that ultimately give them a leg up on companies such as Netflix.
Whereas the online video industry relies on the Internet to deliver YouTube videos, "Orange is the New Black" and "The Man in the High Castle" — meaning viewers' consumption counts against their monthly Internet data caps — cable companies' video apps run over the traditional cable pipe. Because their video doesn't technically travel over the public Internet, cable companies can preferentially exempt their TV content from their own data caps, a strategy that could yield long-term benefits for the industry as it seeks to reclaim customers who have defected to streaming video providers.
This tactic has raised questions among regulators at the FCC who are trying to figure out how to implement the agency's net neutrality rules, which are designed to keep the playing field even. A few months ago, officials met with Comcast and others to discuss the practice, though the FCC was quick to say that the inquiry did not amount to an investigation or a prelude to punishment.
The agency has been loath to announce any conclusions from its interviews, but if the FCC finds that apps such as Comcast's risk unfairly disadvantaging Internet-based streaming apps, it would be a blow to the cable industry in Washington.
This helps explain why the cable industry has taken such a multi-pronged approach.
"I think they're trying to throw everything imaginable at the wall here and see what sticks to find some political pushback," said Gene Kimmelman, chief executive of the consumer group Public Knowledge, "without addressing the fundamental issue: That they are trying to prevent any form of direct competition for video streaming."