A funny thing happens when the Federal Communications Commission moves to introduce competition into a consumer market. The industry, once so accustomed to acting the monopoly or duopoly in its sector, must suddenly “deal with” thousands if not millions of unhappy customers and a heated public debate.
In the case of cable companies fighting the FCC’s set-top box proposal, it’s a debate they’re losing, but that doesn’t stop the cable industry from spinning creative yarns. Their latest argument, that third-party video devices connected to the Internet inevitably lead Americans down the dark path of piracy, just doesn’t stand up to history.
Let’s start by assessing the proposal itself. The FCC’s set-top box proceeding is designed to enable consumers to watch the cable content they already pay for on the device (or app) of their choosing. The idea is that cable customers should get to access cable content that they’re paying for in the most low-maintenance, seamless way possible — outside the walled garden of costly, rented cable boxes. This makes Hollywood’s claim — that consumers already paying a premium for cable content would choose to hunt down pirated versions of the same programming — very confusing.
Giving consumers easier access to their lawful cable content is more likely to reduce piracy rather than increase it. It might even win new cable converts. If consumers have better and easier access to their shows, they’re more likely to jump on the cable subscription bandwagon to access more content. That’s good news for everyone (including your favorite zombie show).
Historically, we know this approach to fighting piracy works, largely because we saw it play out in the music business. Only when iTunes, Spotify and other legal music services provided simple, paid sources for online music did many of those who were pirating abandon their Napster-sharing ways. Fortunately, we already have such a system in place for video content: paid cable and online video.
At an affordable price point, cable offered through a third-party set-top box should motivate those currently pirating episodes of The Walking Dead to return to their cable company or lawful online video provider, not the other way around. Nothing in the FCC’s plan to introduce competition into the cable box market will cause consumers to stop paying their cable bill — only the cable box rental fee, and only if they choose to buy their own box.
This debate isn’t really about piracy. It’s just a rerun of the same Hollywood complaint that applies to anything that connects to the Internet.
Upon closer inspection, it becomes apparent that this classic Hollywood gripe with technology is actually less about set-top boxes and more about cable’s inability to control all the devices that viewers use. But if we follow this line of thinking to its conclusion, we hand them control of your gaming rig, your smartphone, your Smart TV, your laptop, your PlayStation 4 and even your Wi-Fi connected blender (because you could, you know, pirate recipes).
Hollywood has taken issue with technology many times before. Every time a new technology comes along, they parade the same tales about the death of copyright — dating back to the gramophone. They argued in the 1980s that VCRs would “threaten profoundly” the film industry. The MPAA’s former president, Jack Valenti, even claimed that VCRs would “decimate, shrink, [and] collapse” the market because the technology would “[strip] those markets clean of profit potential.”
He added, somewhat famously, that “the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.” And he described cable TV itself as a “huge parasite in the marketplace, feeding and fattening itself off of local television stations and copyright owners of copyrighted material. We do not like it because we think it wrong and unfair.”
Fortunately, this fear mongering didn’t work and we witnessed the “explosion” of the home video and rental markets. We saw a similar argument play out on DVRs in the early 2000s, which Jamie Kellner, CEO of Turner Broadcasting at the time, labeled “theft.” He claimed that any time consumers skip a commercial, “[they’re] actually stealing the programming.” Of course, there are still commercials on television despite DVRs.
This brings us back to the FCC’s set-top box proposal. The industry ultimately learned to monetize these new technologies because consumers wanted the products, and there’s no reason to think they’re incapable of finding profitable opportunities on third-party cable boxes. They’ve already reached profitable agreements with video streaming services like Netflix and Amazon Video, benefiting consumers by increasing video options while bringing in capital.
Of course, there are always some bad actors pirating content in the world, but their behavior isn’t contingent upon whether the FCC approves a policy that saves cable customers up to $15 billion in overcharges and makes it easier for subscribers to control their own experience when accessing the programming they’ve paid for.
Indeed, this debate isn’t really about piracy. It’s just a rerun of the same Hollywood complaint that applies to anything that connects to the Internet, because they wish to preserve their gatekeeper control. As the Recording Industry Association of America and Screen Actors Guild put it in their comments, new technologies, including the online environment, “[have] done and will continue to cause incalculable damage” to content.
It’s time to address what the industry is really afraid of: an Open Internet and competitive markets that threaten their current reign. The comments of many opponents betray this panic over the Internet, claiming that disruptive innovation is a danger lest it undermine the industry’s current stranglehold over consumers and innovators. They are the cart-and-horse lobby railing against the Ford Model T.
And while it’s fair for the industry to fear the concept of open devices with Internet access, it’s also fair for consumers enduring the cable box ripoff to demand the FCC do something about it. Failing FCC action, it’s possible we’ll see more unlawful viewership, not less, and when (as the kids say) pirates are the new zombies, the industry will have no one to blame but itself.