Ending the Costly Integration Ban

Ending the Costly Integration Ban
July 26, 2014

Randolph J. May

Randolph J. May is President of The Free State Foundation in Potomac, Md. (read full bio)

This past Tuesday the House of Representatives, in a bipartisan voice vote, passed a bill reauthorizing the Satellite Television Extension and Localism Act. STELA allows satellite providers, such as Dish Network and DirecTV, to import TV signals from other markets when their subscribers cannot pick up over-the-air local stations. The current STELA authorization expires at the end of this year, and the Senate is expected to act on an extension before then.
 
A provision in the STELA reauthorization bill would end the FCC's set-top box "integration ban." This outdated, costly FCC regulation bans cable operators from integrating the security and programming navigation functions in set-top boxes. The supposed rationale for the integration ban, which was implemented in 2007, was to promote the availability of an independent retail market in set-top boxes.
 
In short, from the very beginning, in light of the competition among multichannel video providers that already then existed, it was clear that the costs imposed by the mandated separation of security and program navigation functions outweighed the consumer benefits. Consumers never took to purchasing set-top boxes enabled with the "CableCard" technology. And all the while, robust competition among video service providers has been driving ongoing enhancements and new features in the video providers' own set-top boxes, not to mention the various new innovative navigation devices used in conjunction with Internet video services.
 
Congressman Bob Latta, Vice Chair of the House Commerce Committee's Subcommittee on Communications and Technology, deserves much credit for leading the effort in the House to eliminate the integration ban. It is his bill, H.R. 3196, the "Consumer Choice in Video Devices Act," co-sponsored by Texas Congressman Gene Greene, that is now incorporated into the STELA reauthorization. Indeed, shortly after Congressman Latta introduced H.R. 3196, he delivered a keynote address at a Free State Foundation event at which he explained that the integration ban already has resulted in over $1 billion in increased costs to consumers since it went into effect in 2007. The separation mandate imposed over $50 in additional costs on each leased set-top box. Moreover, as Congressman Latta said in introducing his bill: "In today's ultra competitive video marketplace, cable operators have no incentive to make it more difficult for their customers to use their preferred devices to access their video programming services."
 
I argued against adoption of the integration ban back in 2006 before the FCC implemented the mandated separation. Since then, I, along with other Free State Foundation scholars, have argued for its elimination on a regular, some might even say incessant, basis. Here is (it's true!) just a small sampling of such Free State Foundation publications:
 
Free State Foundation Blogs:
 
The Integration Ban and Integrating DTV Transition Policy (2006); Integration Bans Then and Now (2007); National Broadband Plan: A Setback On Set-Top Box Regulation (2010); FCC Should Let the Sun Set on Its Set-Top Box Regulations (2011); It's Time to Remove the Costly Integration Ban (2013); Switching Off an Outdated Cable Rule: End the Costly Integration Ban (2014); STELA Offers an Opportunity to Clean Out Old Cable Regulations (2014).
 
Perspectives from FSF Scholars:
 
Don't Inflict Analog Era Equipment Rules On The Digital Age (2006); The FCC's Continuing, Costly Video Navigation Device Regulation (2010); AllVid Regulation Risks Harm to Next Generation Video Innovation (2012);Consumers Would Benefit from Deregulating the Video Device Market (2013); It's Time to Remove the Costly Integration Ban (2013); A Costly Affair: Retaining Outdated Set-top Box Mandates? (2014).
 
Normally, I wouldn't string-cite so much of our previous work in one piece. In this instance, perhaps you can chalk it up to celebrating the adoption of the House bill that offers the prospect of ending the integration ban and pride in our own efforts to advance this reform cause.
 
Or perhaps you can chalk it up to wanting to provide plenty of readily available substantive educational material for the Senators who will now be considering a STELA authorization bill. There is no reason that the Senate should not follow the House's lead in ending the costly integration ban. Indeed, for the benefit of consumers, there is every reason for it to do so.
 
PS - By focusing in this piece on ending the integration ban, regular readers know that, by no means, do I wish to imply that there is not a need to eliminate other outdated video regulations, many of which date back to the 1992 Cable Act or even before. Of course, twenty-two years ago the video marketplace was not nearly as competitive as it is today. Indeed, many of the Perspectives and blogs listed above, in addition to advocating an end to the integration ban, address the need for comprehensive reform of video regulations, such as, for example, eliminating or modifying retransmission/must carry, program carriage, channel placement, and basic tier "must buy" mandates.

Randolph J. May

Randolph J. May is President of The Free State Foundation in Potomac, Md. (read full bio)