Third-Party Set-tops That Change or Remove Ads not a Concern, TiVo CTO Says

LAS VEGAS -- Third-party set-top boxes having the capacity to strip out or overlay the advertising in a pay-TV content stream with new, different ads shouldn't concern opponents of the FCC's set-top box proposal because market forces will prevent abuse, TiVo Chief Technology Officer Joseph Weber said Monday during a contentious panel at the NAB Show.

Weber and Public Knowledge President Gene Kimmelman supported the FCC set-top plan, but AT&T Vice President-Federal Regulatory Stacy Fuller and MPAA President Neil Fried opposed it -- likely the first time the two sides have debated in public since the Downloadable Security Technology Advisory Committee. FCC Commissioner Mike O'Rielly kicked off the event and condemned the FCC set-top plan as based on a willful misreading of congressional intent. The FCC plan is really all about “taking a '90s regime and redefining all of its terms to let the commission get its hooks into all of the new technology that has developed since then,” O'Rielly said.

Though the FCC and other advocates of the set-top plan have said third-party box makers will be prevented from messing with the advertising on a multichannel video programming distributor's content stream by covenants and existing copyright law, Weber said the industry “shouldn't be scared” of advertising being replaced. Too many ads over content are intrusive, and the market will reject products that make it unpleasant to view content, Weber said. At a recent media event held by set-top opponents, NCTA President Michael Powell said TiVo overlays ads onto content, and showed a screenshot that he said depicted an ad for an ABC Network show running across the bottom of a CBS show on a TiVo system.

Market forces also will keep third-party box makers from changing the neighborhooding or channel placement on an MVPD content stream, Weber said, since market reasons likely dictated that channel placement in the first place. Fuller asked why pay-TV companies should “pull apart” their content stream to allow other companies to ignore their licensing agreements and copyrights. “Protecting copyright is really about protecting monopolies,” Weber said.

Copyright and the compensation to content creators it ensures is the reason the video industry is as large and successful as it is, Fried said. It's wrong that the FCC is requiring the pay-TV companies that it oversees to open up their content to third parties while competitors that aren't under commission purview, such as Netflix, don't have to. “Do you want the FCC to regulate more?” Kimmelman responded. Programmers require terms to license their content that are anticompetitive, Kimmelman said.

Kimmelman also criticized opponents' claim that the FCC's plan would give their content away for free. Content on an MVPD's feed already has been paid for by the MVPD, and the programming opponents of the FCC plan are seeking to be paid twice for the same content, he said. MVPDs won't evolve unless forced, Kimmelman said, crediting the specter of the set-top box proposal with encouraging an acceleration of the MVPD push to go all digital. “Their minds are exploding with this,” he said. Kimmelman said broadcasters should agree with him: “Nobody knows better than broadcasters the monopolistic tendencies of cable companies.”

Since the FCC's proposal depends on the work of standards-making bodies, it would likely take a decade for actual equipment to hit the marketplace, Fuller said. Other proceedings signaling a shift to online video would put pressure on the set-top effort to conclude more quickly, Kimmelman said. Standards-making bodies are a commonly used facet of the consumer electronics industry, he said. The length of time it takes is likely to be vastly increased because of efforts by opponents of the set-top proposal, Weber said: “The industry is fighting over things that don't matter."