Set-Top-BoxThe American Cable Association has joined the opposition to new proposed FCC STB requirements introduced earlier this year, arguing the proposal could force more than 200 of the 700 small U.S. cable companies out of the video business.

The FCC proposal would require cable companies to give customers the option of buying a device or software to provide set-top-box (STB) functionality. Alternatively, customers could continue to rent an STB from their video provider as they do today.

The goal, according to the FCC, is to spur innovation and to save customers average costs of $231 yearly in STB leasing charges. Typically, customers pay these every month, even after they have paid enough to cover the cost of the box. Providers count on those revenues as part of their business case, however.

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ACA President and CEO Matthew M. Polka noted in a statement that if the FCC proposal were adopted, those small cablecos that might remain in business would “be faced with having to forgo important investments in innovations and broadband expansion or pass on increased costs to their subscribers.”

If the FCC moves ahead with its proposal, the ACA argues that there should be an exemption for small cable companies. The goal would be to prevent consumers in rural areas from potentially losing competitive choices should those companies be forced to go out of business.

As for the innovation argument, the ACA points out that small cablecos already offer a range of innovative capabilities, including TiVo devices and Moxi gateways that seamlessly integrate video services with over-the-top programming. That capability was a stated goal of the FCC’s proposal.

Opposition to Proposed FCC STB Requirements
The ACA is not alone in opposition to the FCC set-top box proposal. According to ACA, other opponents include larger cable companies, broadcasters, content creators and providers, civil rights advocates, labor unions, legal and economic experts, not for profit groups, think tanks and “hundreds of thousands of consumers.”

The FCC’s STB proposal, which came in the form of a notice of proposed rulemaking adopted earlier this year, is the commission’s most recent attempt to inject competition into the STB market. Previous attempts have been largely unsuccessful, in no small part because the STB market is dominated by two companies that are in no hurry to alienate their key cable company customers.

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7 thoughts on “ACA: 200 Small Video Providers Could Shut Down Due to New FCC STB Requirements

  1. So, I wonder what would be the real impact? I can't tell if this will be a good thing for consumers with increased competition for the STBs and no rental charges, or if the law of unintended consequences kicks in. That could mean less competition at the provider level if operators go out of business, driving up broadband and video costs. Or, if the operator is losing revenue from CPE rental, maybe they will have to raise prices on services to make that up. Rick Yuzzi – http://www.ZCorum.com.

  2. Individual, small-town cable systems have been dead and gone for years, the only cable systems left are in larger cities and towns. The definition of a "small" cable system is now upwards of 5-10,000 subscribers or an MSO with a whole bunch of systems aggregated together in some manner, where just 10 years ago it might have been 100-1000 subscribers. The economics of HD, mpeg4, retransmission consent and the associated absolutely ridiculous carriage requirements, killed small-town cable deader than a doornail.

    1. This is not totally true (except of course for re-trans and carriage issues). I work for as rural Telco that provides service to 22 small communities over a 10,000 square mile area and we are constantly innovating with what we do regarding our TV service. Dollar for dollar, we offer a better package than any of the "Big Players" out there and seem to hold our own just fine. We have never charged for an STB rental and have only increased our rates once in the last 8 years. Being in TV is about looking forward and not sitting on ones laurels or current technology. We are working towards eventually offering a skinny bundle on a ROKU box that takes advantage of our main profit center, which is broadband services. This would go hand in hand with our legacy service (which older folks tend not to want to give up).

  3. this is a utopian view of competition, but as is often the case, the FCC is a day late and a dollar short and will end up doing more harm then good

  4. Hate to disagree with Glenn, but I personally manage a rural system with only 400 subs. There are eight of us regionally that utilize a shared headend. I know of several other similar companies beyond that. Open set top box regulations would put us out of business. Just the final nail in the coffin, along with the higher retrains and programming costs we've had to endure.

  5. @Glenn are you speaking metaphorically? The organization, ACA, that put this out has 800+ small-town cable system members. There are challenges, but to make a sweeping statement like they are ALL dead and gone isn't very accurate.

  6. Glenn, we provide managed services and diagnostics for independent cable operators, and like "Fedup" says, there are a good number who have fewer than 1,000 subscribers. They tend to be in rural areas that have fewer customers per mile. I do agree that 5,000 to 10,000 subscribers is a small provider, but there are smaller. Rick Yuzzi ~ ZCorum.com

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