In an op-ed for The Washington Times published
on May 15, House Communications
Subcommittee Vice Chairman Bob Latta, R-Ohio, and Republican Federal
Communications Commission Commissioner Ajit Pai jointly advocated an end to the
integration ban. In the piece, Vice Chairman
Latta and Commissioner Pai educated readers on what the integration ban is, why
it was implemented, and how it negatively affects the video marketplace, as
well as consumers’ cable and energy bills. It is important that other members
of Congress, the Commission, and the public understand the harms caused by the
integration ban and that all parties work toward removing the integration ban
and other unnecessary and burdensome video regulations.
As Vice Chairman Latta
and Commissioner Pai reported in their piece, the integration ban is an
FCC-implemented technological mandate that is not required by the
Communications Act. It requires cable companies to use a CableCARD or other
technology to perform the security function of a set-top box. However, the
CableCARD is not necessary because set-top boxes and other navigation devices –
mobile applications, tablets, computers, and gaming consoles – can perform the
security and navigation functions without the CableCARD. The reason the FCC
instituted the integration ban was to help third-party retailers compete with
cable companies in the set-top box market. But the mandated integration ban,
and specifically the CableCARD regime, clearly have not accomplished this goal.
In addition to being technologically and
statutorily unnecessary, the integration ban adds about $56 to the cost of each
set-top box, increasing the monthly rental fees charged to customers.
Additionally, CableCARDs increase cable customers’ energy consumption by 500
million kilowatt hours each year, enough to power all the homes in Washington,
D.C. for about three months according to the Environmental Protection Agency. Despite
the incurrence of these costs, only 606,000 CableCARDs have been deployed for
use in third-party retail devices. In other words, less than 1.4 percent of
customers are choosing to purchase their set-top boxes through the retail
market despite the FCC’s attempts to push consumers that direction. In
contrast, cable companies have supplied 45 million of their own
CableCARD-enabled set-top boxes to their customers.
And the
video marketplace has developed in ways that offer consumers many choices in
how and when to access video content, many of which bypass the CableCARD mandate. Major providers like Comcast, Time Warner Cable, and Cox are
among those that have made their services available through these new platforms
and devices. Additionally, various online video providers including Netflix and
Hulu and other set-top box, IP, and cloud-based technologies have all
experienced major growth in recent years. All this in spite of not because of the Commission’s integration ban as I explained in a February
2014 Perspectives from
FSF Scholars.
Many cable subscribers
are likely unaware of this technological mandate and its effects on their cable
bills. But Free State Foundation scholars have been focused on reforming
consumer-harming video device regulations for years. For example, in an October
2010 piece FSF Adjunct Scholar Seth Cooper urged the Commission to eliminate
the integration ban and to employ the sunset provision contained in Section 629
according to which, the FCC shall cease to apply regulations when
it finds the multichannel video programming and video navigation device markets
are fully competitive and the public interest favors eliminating such
regulations. Even nearly five years ago, the rapid growth of DBS, telco video
services, video gaming devices, broadband-enabled smartphones, and PCs with
broadband Internet showed that the video market was highly competitive. FSF
scholars have frequently echoed the need to remove legacy video device
regulations in other Perspectives as new developments continue
to render technological mandates and regulatory intervention increasingly
unnecessary and improper. And in March of this year, FSF reiterated the competitive state of
the video marketplace and proposals to reform outdated regulations in comments to the FCC.
Thankfully, Vice Chairman
Latta has been focused on this important issue as well. In September 2013, he
introduced legislation that would remove the costly integration ban. That legislation
has since been included in one Satellite Television Extension and Localism Act bill, HR-4572, which cleared the Commerce Subcommittee on Communications and Technology in
March 2014. At the Free State Foundation’s October 2013 seminar, Vice Chairman Latta delivered a keynote address explaining that Congress cannot keep up with the rapidly
changing video marketplace. He enumerated the harms the integration ban causes and
provided reasons why eliminating the ban and reforming other outdated
regulations of the video market would benefit competition and consumers.
Hopefully, Vice Chairman
Latta and Commissioner Pai’s piece will spur Congress and the Commission to
implement long-overdue reforms of video regulations. The authors concisely
explained the clear reasons why now is the time to remove the costly
integration ban:
By ending the integration
ban, we can kill two birds with one stone. We will take a step toward reducing
consumers’ cable and energy bills. We will recognize the marketplace as it is
today, not how the government theorized and planned it to be more than a decade
ago. That’s something that everyone in Washington should support.
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