Battle of the box splits industry, Dems

A regulatory push that could open up the market for set-top boxes consumers use to watch television is angering several corporate giants and splitting Democrats on Capitol Hill.

Major corporate players with a lot to lose — or gain — from the proposal have flooded the Federal Communications Commission (FCC) with comments.

{mosads}Opposition is strong among video providers such as Comcast that make billions of dollars each year leasing the set-top boxes to customers. The FCC claims consumers spend $20 billion a year renting the equipment.

Video providers argue the FCC’s proposal would weaken privacy protections for consumers, hurt minority programmers and force customers to get a second box in their homes.

They say the transition away from set-top boxes is already happening, driven by the proliferation of applications that allow customers to watch video content on their mobile devices or computers. 

“The proposal would radically intervene in a successful market,” said the National Cable and Telecommunications Association (NCTA) in its comments, submitted on Friday. “There is no urgency for such reckless rulemaking.”

Supporters are singing a different tune. FCC Chairman Tom Wheeler has repeatedly said the reforms would increase competition for the boxes and lower the prices for consumers.

Wheeler has some powerful corporate allies in the fight: Silicon Valley. Several tech companies, including Google and TiVo, stand to manufacture their own boxes under the rules.

Vince Jesaitis, the vice president for government affairs at the Information Technology Industry Council, said in a blog post accompanying the association’s comments to the FCC that its member companies see “significant opportunity to bring choice, increased functionality, and new features to the video delivery, navigation, and set top box market.”

The proposal has another high-profile supporter as well in President Obama. The White House endorsed the plan this month and put it at the center of a new initiative urging agencies to promote competition.

“The Administration submits that the principal objective of this proceeding should be to maximize the potential for navigation device providers to compete on user interfaces and other complementary features and services, while respecting the security and integrity of programming agreements,” said National Telecommunications and Information Administration head Lawrence Strickling in the administration’s comments.

“Increasing choice in this market holds the promise not only of reducing costs to consumers, but also stimulating beneficial innovation in the features and functions of navigation devices.”

The administration said it hoped stakeholders would propose ways to deal with the privacy and minority programmer issues — both of which have been cited by Democratic lawmakers who have concerns with the plan.

Many Democrats have expressed skepticism about the proposal. Much of the Congressional Black Caucus signed on to a letter in December expressing dismay that the FCC was considering it.

“This would be a disaster for consumers and minority voices,” they said.

Rep. Yvette Clarke (D-N.Y.), who spearheaded the letter, reiterated her argument last week that the commission should hold off on moving forward with the reforms until an independent study can be completed on the proposal. A letter from Clarke and other lawmakers that was scheduled for release on Monday asks Wheeler for “independent, peer-reviewed studies” of the proposal.

“I believe that they put the cart before the horse,” Clarke said last week. “There are a lot of interests at stake here, and we should know what the impact will be to all of the interests involved here prior to crafting a proposed rule so that there aren’t any unintended consequences and that [there is] transparency about what this new landscape is calling for.

“It would seem to me that if we were all being honest brokers here that there wouldn’t be a problem with that.”

Several congressional opponents of the proposal said the White House did not contact them before it backed the FCC’s plan. Clarke said she feared the administration’s support could tilt sentiment during the public comment period.

“For the leader of the free world to decide before that democratic process is complete to have such a pointed opinion on the matter is highly unusual,” she said.

The White House told The Hill that it was willing to speak with members of Congress about the issue. On the question of whether the administration inappropriately moved to influence an independent agency, Council of Economic Advisers Chair Jason Furman said last week that the “law makes it very clear that the administration can comment on FCC proceedings” and noted previous administrations have weighed in on proposals before the commission.

Other Democrats approve of the plan. Rep. Anna Eshoo (D-Calif.), who is the ranking member on the Energy and Commerce Committee’s Subcommittee on Communications and Technology and represents part of Silicon Valley, led a letter in February saying that “injecting new competition into the marketplace will save consumers money and pave the way for innovative retail alternatives to set-top boxes leased by pay-TV providers.”

The FCC is now set to begin consideration of the comments it received on the plan. A round of reply comments is due in late May, and a vote on the proposal could come later this year.

But the debate is unlikely to end with that vote, with at least one industry group already threatening a legal challenge.

Last week, NCTA held a briefing with reporters featuring appellate lawyer Ted Olson and some of his partners at the high-powered law firm Gibson Dunn to discuss the “legal vulnerabilities” of the proposal.

Michael Powell, the former FCC chairman who leads NCTA, said, “If they stay on that course and insist on adopting rules and orders that attempt to put their technical design as a legal mandate, yes, we would seek legal redress in the courts, as it is our right to do.

“I have seen very few things that I am this confident contravene the expressed wishes of Congress.”

Sylvan Lane contributed.