The FCC's Perplexing Set-Top Box "Solution"

09/08/2016 05:40 pm ET

Chairman Wheeler smartly embraces an app-based approach while simultaneously proposing a cumbersome licensing regime that will harm innovation and consumers alike.

Federal Communications Commission (FCC) Chairman Tom Wheeler jabbed a sharp stick in Hollywood’s eye today via an op-ed in the creative community’s hometown newspaper, the Los Angeles Times, by announcing his new plan to obliterate the set-top box (STB) in favor of an apps-based approach. But unfortunately this welcome development of the FCC finally embracing apps as the future of TV consumption comes paired with deeply troubling news – instead of empowering open markets and innovators to invent and develop new apps and services to replace yesterday’s set-top boxes, Chairman Wheeler seems intent on creating a new government-mandated IP Licensing Board inside the FCC that dictates standards for the video app market. That is an enormous step backwards that will confound and delay the introduction of new consumer apps and put government exactly where it does not belong – in the heart of the innovative and creative process by which new products are designed, developed, and rolled out. The Wheeler Licensing Body is regulatory overreach on steroids that will freeze app innovation in place and comes out of left field as not a single public comment over a seven month period even contemplated such a bizarre conclusion to the proceeding.

The idea that an additional layer of bureaucracy will spur “speed to market” momentum is farcical. If anything, there may be a “speed to licensing body” followed by slow progress that will ultimately keep consumers waiting for the newest innovations to hit the marketplace after a tedious and clunky bureaucratic process concludes. This will set back innovation and investment, which ultimately harms the very consumers Wheeler contends he’s helping.

We would never accept this kind of “Washington first” mandate for the apps, services, and platforms that power the web, and we should not tolerate such an approach in the video space. It’s a deeply flawed double standard by an FCC that has careened far outside its jurisdictional lane into copyright standard setting and the licensing process that undergirds much of the entertainment and technology economy. We have already seen this play out in other industries, and similar regimes have only served to create confusion, impede innovation and create additional costs; there is no reason to invite these dynamics into the booming video space. The music industry is a prime example of a regulatory structure the entertainment world should attempt to avoid. CALinnovates has been an outspoken voice on music licensing issues and everyone involved in that debate would unanimously agree that music’s licensing system has been a mess and that the industry would certainly choose a far different approach if it could take a mulligan. In STBs, Chairman Wheeler intends to create a brand new licensing bureau, with a number of questions still outstanding about enforcement, process, and legality. This isn’t as easy as Wheeler says, but ultimately the devil is in the not-so-transparent details, which the public will see in late October after the FCC votes on the issue in three short weeks.

CALinnovates appreciates the Chairman’s willingness to consider alternative proposals to his disastrous Notice of Proposed Rulemaking (NPRM) that was widely panned by a bipartisan collection of hundreds of members of Congress, content creators and economists. The apps approach is the correct approach to future television programming consumption. And we support regulations needed to protect consumer choice and spur genuine competition. But the proposed additional layers of government bureaucracy here go far beyond what consumers or the market demand. And the collateral damage will be severe, as innovation and program vitality undoubtedly suffer, harming consumers and the golden age of television we currently enjoy today.

Instead of eliminating regulatory layers to unleash further innovation, competition and investment, Chairman Wheeler is looking to add an entirely new unaccountable structure that the Commission is wholly unprepared to manage. We need an approach that will lead to more consumer choices and business models, not bureaucratic layers that will shackle progress and innovation for the entire ecosystem.

Mike Montgomery is executive director of CALinnovates, a San Francisco-based technology advocacy coalition comprised of technology leaders, startups, and entrepreneurs.

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