Specifically, it recommends that pay-TV providers be required to deliver three core information streams: service discovery, with 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; entitlements, including information about what a device is allowed to do with content, such as recording; and content delivery, the video programming itself.
To protect pay-TV providers and their own licence agreements, the rules do not mandate a single security system but simply require providers to offer at least one content protection system that is openly licensed on reasonable and non-discriminatory terms. This gives providers the ability to create their own content protection system to prevent theft and misuse, while ensuring that manufacturers will be able to build devices that can access protected content from a variety of pay-TV operators.
Content providers would maintain the same agreements with pay-TV providers and full copyright protection, while basic rules such as children’s programming advertising limits and emergency alerts would apply regardless of whether the consumer leases the pay-TV operator's box or a competing service for accessing video programming.
The FCC's proposal will be open for public comment before the final rules are adopted. The regulator also adopted at its latest meeting other decisions impacting the pay-TV market, including a tightening of rules on providing closed captioning for deaf and hearing-impaired people and starting a broader public consultation on ensuring diverse programming on TV. The latter seeks comment on the principal challenges independent video programmers face in gaining carriage of their content on both traditional and emerging distribution platforms. This will help the Commission assess the current state of video programming diversity and determine whether further action is needed to promote independent programming sources.
The American Cable Association called the FCC's proposals "troubling" given that the market was already in a process of change due to the emergence of new OTT video providers and was likely to look much different in the next few years. "It is best for consumers to let this marketplace continue to evolve unimpeded by backward-looking regulations," the industry group said. It also warned that the proposed rules would create an excessive and costly burden for smaller pay-TV operators.
The US Telecom group was equally dismissive over the FCC's proposals, saying they will stifle innovation in the sector. Noting the already wide range of choices available to consumers for accessing video services, the industry group said that "the FCC’s thumb on the scales will inevitably straightjacket innovation and harm competition, neither of which will serve the public interest".
Set-top box maker Tivo was more positive on the proposal, saying it's "hopeful that this proceeding results in a competitive environment that increases choice, both for consumers and operators". Tivo said this could also offer a successor to the CableCard, an earlier system required by the FCC for cable operators to offer a way to bypass the set-top box in order to access video programming on other devices. However, the CableCard system offers limited functionality, and the industry has been unable to reach agreement on an update to the system.
The largest cable operator in the US, Comcast said the CableCard system had proven ineffective and cost consumers over USD 1 billion. The company said it supported the idea of more choice for consumers, but found the FCC was making a mistake by trying again to impose its technical decision. "The Commission’s divided action is flawed because it ignores the FCC’s own technical advisory committee report and instead puts the Commission’s thumb on the scale by endorsing a government-mandated technology solution," Comcast said in a statement. The company prefers the advisory committee's suggestion of a market-driven, apps-based approach to increasing consumer access to different types of video programming.
Comcast added that the FCC proposal "strays well beyond" the regulator’s authority under the Communications Act, and would violate copyright and other statutory and constitutional protections. The company said it will participate in the regulatory process and hopes to see the final FCC vote reject the proposal.
