FCC Moves To Revise Set-Top Box Rules

On February 18, 2016, the Federal Communications Commission (FCC) released a Notice of Proposed Rulemaking (NPRM) and Memorandum Opinion and Order (MO&O) proposing a number of changes to the FCC’s set-top box rules that, if enacted, could reshape the video device market. The move by the FCC is the latest in a long line of actions—dating back nearly twenty years—to implement the goals of Section 629 of the Communications Act, which directs the FCC to enact regulations to ensure a commercial market for multichannel video programming devices. The FCC Commissioners voted on the proposal along partisan lines, with the three Democratic Commissioners voting in favor and the two Republican Commissioners dissenting.

Comments on the NPRM are due on or before April 22, 2016, with reply comments due on or before May 23, 2016.

I.          The Reasoning Behind the Proposed Rules

In the NPRM, the FCC tentatively concludes that the Section 629 aim of a competitive market for navigation devices has not been achieved, and that as a result it should adopt new regulations to further this goal. The FCC seeks comment on this conclusion, noting that while streaming devices like Amazon Fire TV, Apple TV, and Roku are widely used by consumers, they are generally not consumers’ sole means of accessing Multichannel Video Programming Distributor (MVPD) programming. The FCC also seeks comment on MVPDs’ profits from leasing set-top boxes, as well as the extent of consumers’ use of MVPD’s proprietary applications on unaffiliated devices.

While Direct Broadcast Satellite (DBS) providers are currently exempt from existing set-top box rules, the FCC proposes to apply any new regulations to DBS, as well as other MVPDs.

The FCC identifies seven objectives for the proposed new rules:

1. Consumers should be able to choose how they access MVPD programming to which they subscribe.

2. MVPDs and unaffiliated vendors must be able to differentiate themselves so that they can compete based on user interface and complementary features.

3. Unaffiliated vendors must be able to build navigation devices, including applications,¹ without needing approval from MVPDs.

4. Unaffiliated vendors must protect the security of MVPD services and respect licensing terms for programming.

5. The rules should be technology neutral and permit both software and hardware solutions.

6. The rules should allow the same device to be used with different MVPDs throughout the country.

7. The rules should not prescribe a specific solution that may impede technological progress in the MVPD industry.

II.         The Proposed Rules

A.            Required “Information Flows”

First, the FCC proposes requiring MVPDs to offer three “flows of information,” that would allow unaffiliated companies to design and build their own competitive navigation devices:

1. Service Discovery (information about what programming is available to the consumer, such as the channel listing and video-on-demand lineup, and what is on those channels),

2. Entitlements (information about what a device is allowed to do with content, such as record it), and

3. Content delivery (the video programming itself, along with information necessary to make the programming accessible to persons with disabilities).

Under the proposal, these three “Information Flows” may be provided using any published, transparent format that conforms to specifications set by open standards bodies, and MVPDs may use different standards for their own equipment and applications. The FCC intends for this approach to provide each MVPD with the flexibility to choose a standard that works best with its system architecture. MVPDs would be required to provide these Information Flows in a manner that does not restrict competitive user interfaces and features. The FCC seeks comment on this approach, as well as proposed definitions of the three Information Flows. The FCC also asks for comment on whether providing the Information Flows would require changes to MVPDs’ networks, or whether it would give MVPDs the discretion to decide whether to modify its system architecture.

B.            Security

Recognizing the need to provide sufficient security, the proposed rules would allow MVPDs to use multiple security systems, so long as they support at least one content protection system that is licensable on reasonable and nondiscriminatory terms by an organization that is not affiliated with MVPDs. According to the FCC, this approach can allow for a competitive market for innovative retail navigation devices, that also affords MVPDs flexibility to protect their content and respond to security concerns in an evolving manner. An MVPD would be required to make available the three Information Flows to devices using one of the compliant security systems chosen by the MVPD. The FCC asks for comment on this approach.

C.            Ensuring Parity

The FCC also proposes three requirements to ensure that MVPDs provide parity of access to content to all navigation devices, and that competitors have the same flexibility as MVPDs in developing devices, including applications. The three proposed requirements are:

1. If an MVPD makes available an application that allows access to its programming without the need for additional MVPD-specific equipment, then it shall make Service Discovery Data, Entitlement Data, and Content Delivery Data available to competitive Navigation Devices without the need for MVPD-specific equipment.

2. At least one compliant security system chosen by the MVPD must enable access to all resolutions and formats of its navigable services with the same Entitlement Data to use those services as the MVPD affords navigation devices that it leases, sells, or otherwise provides to its subscribers. In addition, Entitlement Data must not discriminate on the basis of the affiliation of the Navigation Device.

3. On any device on which an MVPD makes available an application to access its programming, it must support at least one compliant security system that offers access to the same navigable services with the same rights to use those navigable services as the MVPD affords to its own application.

D.            Licensing and Certification

The FCC asks for comment on various licensing and certification issues related to protection of content, prevention of theft of service and harm to MVPD networks, and consumer protections in the Act and the Commission’s rules. Among other things, the FCC asks for comment on a proposal that would require MVPDs to choose compliant security systems that validate only devices that are sufficiently robust to protect content and honor the Entitlement Data sent by the MVPD. In addition, the FCC proposes that MVPDs be required to authenticate and provide Information Flows only to navigation devices whose developer certifies that they will adhere to privacy protections, pass through Emergency Alert System messages, and adhere to children’s programming advertising limits.

E.            Removing the Integration Ban

As part of the same release, the FCC also issued an MO&O removing the so-called “Integration Ban” from its set-top box rules. The Integration Ban previously prohibited cable operators from deploying new set-top boxes that performed both conditional access and other functions in a single integrated device. Congress, in the 2014 STELA Reauthorization Act of 2014, directed the FCC to remove this ban by June 1, 2016.