Why Obama's encouraging the FCC to 'unlock the cable box

On Friday, the Obama administration announced it would support an effort intended to give consumers more choice over the TV service they receive, as part of a broad effort to improve competition.

First Look

President Obama will offer a show of support to "unlock the box" efforts to give consumers more choices over their television services, letting them abandon pricey cable boxes leased from cable companies in favor of a broader array of options to control what TV channels they watch. 

On Friday, the White House said it would support a proposal introduced by Federal Communications Commission (FCC) Chairman Tom Wheeler to open up competition in the market for set-top TV boxes.

"You could have a set [of] standard such that anyone could connect any box to their cable and those boxes could compete for lower prices and greater innovation," Jason Furman, who chairs the Council of Economic Advisers, told reporters in a Friday teleconference.

The FCC says renting the boxes costs consumers an average of $231 a year, a figure that balloons to $20 billion spent on the boxes each year overall.

In February, the agency voted on a plan to open up the market, including allowing consumers to potentially purchase streaming video services from companies such as Alphabet (the holding company that includes Google), Apple, and Tivo, instead of leasing a box from cable giants such as Comcast and Verizon.

But as the proposal entered a 60-day comment period, cable and TV companies immediately railed against it, saying they have already built apps to support third-party services.

"The Chairman's proposal is another disappointing example of an FCC that thinks it's smarter than highly competitive markets," AT&T said in a January statement. "By once again putting its thumb on the scale, the FCC will discourage the very investment it claims to want," the company added. 

Companies' concerns about holding onto customers, as many people increasingly abandon cable TV for services such has Netflix and Hulu, have prompted their own efforts to rival popular streaming video services.

Beginning with a trial in New York last fall, Time Warner Cable has been exploring efforts to replace set-top boxes with a streaming video app that includes the same channels consumers get using the physical box.

Comcast hasn't yet given up the physical boxes, but is working on its X1 DVR service, which combines content from live TV and the Internet together in a Netflix-like grid, the Monitor's Jeff Ward-Bailey reported in November. The service can be controlled using a remote control that doesn't need to be in the line of sight of the box or a mobile phone app.

Mr. Furman, from the Council of Economic Advisers, said the president doesn't frequently weigh in on the FCC's rulemaking process. "When the President personally gets involved is when it's of real great importance, in his mind, to consumers, to competition, and to the economy more broadly," Furman noted. 

In a blog post, he likened the lack of competition for cable boxes to the landmark decision in the 1980s to break up AT&T's monopoly on phone service, in which consumers often rented their phones directly from the company.

But Ajit Pai, one of the FCC's five commissioners, has repeatedly decried Mr. Obama's previous stance to support the FCC's net neutrality rules that prohibit companies from blocking and slowing online traffic.

"Left to its own devices, the FCC never would have married utility-style regulation to the Internet," Mr. Pai said in a speech at the right-leaning Heritage Foundation in February, calling the decision a "product of raw political power."

That move gave the FCC far more influence over cable companies, and has led to a court challenge by broadband providers.

The Obama administration's show of support for the "unlock the box" proposal comes as part of an executive order the president is expected to sign Friday, calling for federal agencies and departments to report on areas where more can be done to open up competition.

The order gives them 60 days to do so, though it's unclear if Obama's efforts will impact the FCC's proposal before he leaves office in January.

"This is going to be a whole of government effort to empower consumers, workers and small businesses," Furman said on Friday.

This report includes material from Reuters.