Google May Gain at Comcast Expense as FCC Mulls Cable-Box Revamp
Friday, 19 Feb 2016 10:40 AM
The cable box as you know it may go the way of VCRs and eight-track tapes.
That would be great news for tech companies devising new ways to deliver entertainment to your living room — and spell trouble for the companies that gets billions of dollars from renting the boxes that connect TVs to cable channels.
The Federal Communications Commission voted Thursday to begin drafting rules that will open cable and satellite providers’ devices to competition. “This can completely change the ecosystem, which is very delicately balanced right now,” Roger Entner, an analyst at Recon Analytics LLC, said.
There may be a two- to three-year timeline for any new set-top rules to be finalized , according to Bloomberg Intelligence analyst Brad Barker.
If the FCC succeeds, here’s how it might affect consumers and companies involved.
Third-Party Set-Top Box Sellers
There’s only upside. Tech companies including Amazon.com Inc., Apple Inc. and Alphabet Inc.’s Google all sell devices that provide video services to the living room, and new rules would allow them to create a more “holistic entertainment experience,” Josh Olson, an analyst at Edward Jones & Co. said.
Google, which recently demonstrated its own set-top box to lawmakers and regulators, would be able drive more revenue by getting into television ads, Entner said. The company would take money from both the content creator and the network operator , he said.
Consumers
Upside: Americans would no longer be forced to rent set-top boxes from their cable or satellite providers and instead could buy devices from third-parties, including Roku, TiVo, Apple and Google. Competition would drive prices lower while spurring innovation, creating a better experience, Olson said. Consumers also would be able to switch easily between over-the-top streaming and traditional cable or satellite TV services, he said.
Downside: Consumers might see a deterioration in service quality if third-party devices begin providing more TV content over the Internet, Woo Jin Ho, a Bloomberg Intelligence analyst, said. Networks in the U.S. aren’t ready to handle millions of Americans watching TV via the Internet at the same time, he said.
Many pay-TV companies’ set-top boxes also include extra features, such as on-demand and DVR functionality and the ability to support high-quality video, which most third-party devices don’t include, Ho said. To provide the same quality of service, third-party sellers would have to sell devices at more expensive prices of upwards of $300 to $400, he said. A Roku 3 Streaming Player sells for $99.99 while TiVo Mini with Remote is $112.99, for example.
Pay-TV Providers
Downside: Pay-TV providers like Comcast and AT&T’s DirecTV have the most to lose. The companies risk giving up about $20 billion in annual revenue from renting out the boxes to customers, Ho said. They’re concerned that the rules will turn them into a commodity provider of video unrecognized by consumers as any different than, say, Netflix or YouTube, run by Google’s parent Alphabet Inc.
As such, they’ve been resistant to putting applications on third-party boxes like Roku and Apple TV, Jan Dawson, an analyst with Jackdaw Research, said.
“I suspect it’s now going to come back to bite them hard,” Dawson said. Opening up set-top boxes to competition “could be much more disruptive” than the impact of third-party sales on cable modem rentals, he said.
The proposal could also harm programmers, Michael Powell, president of the National Cable & Telecommunications Association trade group, said on a conference call before the FCC voted Thursday.
“It can devalue your existing product," Powell said. Media companies like Walt Disney Co. and Time Warner Inc. and broadcasters like Sinclair Broadcast Group Inc. and Tegna Inc. negotiate such matters as channel placement and digital rights, and sell the package to advertisers. The arrangement “could conceivably be undermined if that same content were available on another platform, assembled in a different format,” Powell said.
Upside: The companies also sell broadband Internet service, with some imposing extra fees on Internet customers who use excessive amounts of data. If third-party devices begin delivering more video content over the Internet, consumers may exceed their monthly limits, yielding extra revenue to the cable and satellite providers, Ho said.
Set-Top Box Manufacturers
Downside: Some of the revenue generated by making set-top boxes for cable operators will end up lining the pockets of the likes of Google and Apple instead, Ho said. Together, Arris International Plc and Technicolor SA account for about half of the global set-top box market, and they stand to lose some of their share, he said.
Upside: These companies could benefit by selling equipment to enable paid TV cloud content, Ho said. Arris and Harmonic, for example, have been investing in multi-platform technology that moves the infrastructure to the cloud, Ho said. They can just focus on and deploy more capital to that side of the spectrum, he said.
http://www.newsmax.com/Finance/StreetTalk/cab...r=nfnyuly7
Friday, 19 Feb 2016 10:40 AM
The cable box as you know it may go the way of VCRs and eight-track tapes.
That would be great news for tech companies devising new ways to deliver entertainment to your living room — and spell trouble for the companies that gets billions of dollars from renting the boxes that connect TVs to cable channels.
The Federal Communications Commission voted Thursday to begin drafting rules that will open cable and satellite providers’ devices to competition. “This can completely change the ecosystem, which is very delicately balanced right now,” Roger Entner, an analyst at Recon Analytics LLC, said.
There may be a two- to three-year timeline for any new set-top rules to be finalized , according to Bloomberg Intelligence analyst Brad Barker.
If the FCC succeeds, here’s how it might affect consumers and companies involved.
Third-Party Set-Top Box Sellers
There’s only upside. Tech companies including Amazon.com Inc., Apple Inc. and Alphabet Inc.’s Google all sell devices that provide video services to the living room, and new rules would allow them to create a more “holistic entertainment experience,” Josh Olson, an analyst at Edward Jones & Co. said.
Google, which recently demonstrated its own set-top box to lawmakers and regulators, would be able drive more revenue by getting into television ads, Entner said. The company would take money from both the content creator and the network operator , he said.
Consumers
Upside: Americans would no longer be forced to rent set-top boxes from their cable or satellite providers and instead could buy devices from third-parties, including Roku, TiVo, Apple and Google. Competition would drive prices lower while spurring innovation, creating a better experience, Olson said. Consumers also would be able to switch easily between over-the-top streaming and traditional cable or satellite TV services, he said.
Downside: Consumers might see a deterioration in service quality if third-party devices begin providing more TV content over the Internet, Woo Jin Ho, a Bloomberg Intelligence analyst, said. Networks in the U.S. aren’t ready to handle millions of Americans watching TV via the Internet at the same time, he said.
Many pay-TV companies’ set-top boxes also include extra features, such as on-demand and DVR functionality and the ability to support high-quality video, which most third-party devices don’t include, Ho said. To provide the same quality of service, third-party sellers would have to sell devices at more expensive prices of upwards of $300 to $400, he said. A Roku 3 Streaming Player sells for $99.99 while TiVo Mini with Remote is $112.99, for example.
Pay-TV Providers
Downside: Pay-TV providers like Comcast and AT&T’s DirecTV have the most to lose. The companies risk giving up about $20 billion in annual revenue from renting out the boxes to customers, Ho said. They’re concerned that the rules will turn them into a commodity provider of video unrecognized by consumers as any different than, say, Netflix or YouTube, run by Google’s parent Alphabet Inc.
As such, they’ve been resistant to putting applications on third-party boxes like Roku and Apple TV, Jan Dawson, an analyst with Jackdaw Research, said.
“I suspect it’s now going to come back to bite them hard,” Dawson said. Opening up set-top boxes to competition “could be much more disruptive” than the impact of third-party sales on cable modem rentals, he said.
The proposal could also harm programmers, Michael Powell, president of the National Cable & Telecommunications Association trade group, said on a conference call before the FCC voted Thursday.
“It can devalue your existing product," Powell said. Media companies like Walt Disney Co. and Time Warner Inc. and broadcasters like Sinclair Broadcast Group Inc. and Tegna Inc. negotiate such matters as channel placement and digital rights, and sell the package to advertisers. The arrangement “could conceivably be undermined if that same content were available on another platform, assembled in a different format,” Powell said.
Upside: The companies also sell broadband Internet service, with some imposing extra fees on Internet customers who use excessive amounts of data. If third-party devices begin delivering more video content over the Internet, consumers may exceed their monthly limits, yielding extra revenue to the cable and satellite providers, Ho said.
Set-Top Box Manufacturers
Downside: Some of the revenue generated by making set-top boxes for cable operators will end up lining the pockets of the likes of Google and Apple instead, Ho said. Together, Arris International Plc and Technicolor SA account for about half of the global set-top box market, and they stand to lose some of their share, he said.
Upside: These companies could benefit by selling equipment to enable paid TV cloud content, Ho said. Arris and Harmonic, for example, have been investing in multi-platform technology that moves the infrastructure to the cloud, Ho said. They can just focus on and deploy more capital to that side of the spectrum, he said.
http://www.newsmax.com/Finance/StreetTalk/cab...r=nfnyuly7
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