Removing the Cable Box Integration Ban Would Be a Win for Consumers

December 04, 2013

By Kuper Jones

New technologies, like Hulu and Netflix, are changing the way people access video content. Thousands of hours of programming are available with a couple clicks of a mouse –providing alternatives to broadcast and cable. However, these new technologies are not hindered by the same unnecessary regulations like the integration ban. The integration ban is a costly regulation affecting set-top cable boxes adopted long before the age of online video. Times change and so does the relevance of regulations –the integration ban is no exception. The ban is an unnecessary burden in today’s modern era and should be removed.

Cable boxes essentially have two main components: the physical cable box that allows users to navigate channels and a removable security card that detects which channels the consumers are subscribed. The FCC bans cable box manufacturers from building or “integrating” security into their boxes. Due to the ban set-top boxes must have the removable security card. This requirement is unnecessary as the same level of security could be achieved without the card. Moreover, the card requirement increases production costs which are passed on to consumers.

The intention of the ban was to make the cable box market place more competitive and spur third-party manufacturer involvement –providing consumers with a variety of lower cost options while also preventing cable companies from having monopolies on the set-top box industry. But like so many other regulations, the integration ban is having exactly the opposite result. Cable dominated the video market in the 1990’s, but its market share is declining rapidly –from 68 percent in 2006 to 55 percent in 2012. Third-party manufacturer involvement is discouraged due to the costly security card standard. According to the National Cable & Telecommunications Association (NCTA), only 600,000 cards have been requested by third parties, well short of the 42 million cable boxes that have been leased to consumers by cable companies. The cost of the security card is simply not worth the cost to third parties. This regulation requires all manufacturers to meet an unnecessary standard. Boxes can be produced at a cheaper price without it while also providing the same security.

The ban was intended to create a standard that would pave the way for innovation in the set-top box industry. Instead, the ban has left cable boxes in the dust as new innovative technologies provide alternative platforms for obtaining video content –many of which do not face the same regulations. These new technologies were created in response to increasing consumer demand for video content giving them more affordable options while allowing them to bypass cable boxes. The free market has allowed these new technologies to successfully compete in the video content arena. Removing the outdated ban would even the playing field while providing more options for cable consumers.

The integration ban is a prime example of why government meddling in the video market place is harmful. The intrusion has resulted in increased production costs that are passed down to consumers –approximately $1 billion overall according to NCTA. Without the ban the same level of security could be achieved at cheaper prices. Government regulation hinders more than it helps. Technology will always evolve much faster than bureaucracies. Although the ban may have been well intentioned, its goals would be more achievable with its removal. Fortunately, within the law is a sunset provision. The only way the sunset provision can happen is if the FCC finds the market to be “fully competitive.” The market is undoubtedly competitive and the sunset should be implemented.

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