The Federal Communications Commission is meeting on Thursday to discuss a proposal that enables consumers to swap cable boxes in return for apps. The market for television set-top boxes is estimated at $20 billion. The FCC will back the proposal when it comes to voting on Thursday. The proposal was introduced by its Chairman Tom Wheeler last month.
The interesting feature of the proposal is that it would enable customers to get video services from different service providers. These includ Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL), and TiVo Inc. (NASDAQ:TIVO). This means that consumers need not depend entirely on cable and satellite TV providers like Verizon Communications Inc. (NYZE:VZ) and Comcast Corporation (NASDAQ:CMCSA).
This is a threat to cable service providers and could lose them billions from rental charges for set-top boxes. Consumers are paying an average of $231 a year to get the set-top boxes on lease from cable firms.
Therefore, the moment the proposal was unveiled, there was frenzied lobbying effort by the tech industry. The FCC felt that opening up the market for alternative avenues like a tablet or smart TV meant that consumers could get the services at cheaper prices. The move also comes on the heels of rental charges witnessing a growth of 185% since 1994.
Cable Firms Are Not Happy
However, the cable companies were not happy with the proposal and opposed it tooth and nail. They pointed out that the video marketplace was already undergoing changes towards streaming internet video from the traditional pay TV services, known as cord-cutting. Some cable firms are already losing subscribers.
The FCC proposal requires cable and satellite TV providers to offer alternative access to cable and satellite programming. The important factor was that the cable and satellite firms slap restrictions on third-party device makers. That results in a lockup of the market. It was for this reason customers had to lease one or more set-top boxes.