FCC’s cable box rules won’t prohibit extra ads around TV channels

Ban unneeded as companies like TiVo "are not disrupting advertising," FCC says.

Jon Brodkin – Mar 22, 2016 4:17 PM | 86

When the Federal Communications Commission voted for a plan to let consumers watch TV channels on more devices, pay-TV companies complained that makers of third-party set-top boxes might insert their own advertising into cable TV. As a result, the cable TV lobby claimed customers would have to watch the standard television commercials plus see extra advertising distributed by whichever company makes the device or software they're using to watch TV.

FCC Chairman Tom Wheeler dismissed these concerns, and on the day of the vote he said that insertion of additional advertising would be prohibited. But the full text of the notice of proposed rulemaking (NPRM), released after the vote on February 18, shows that there likely won't be a new rule preventing insertion of additional advertising.

The NPRM is a set of proposed rules that asks the public for comment with the goal of issuing final rules by the end of the year.

The document notes that extra advertising hasn't been a problem with CableCard, the existing regime that lets customers watch TV channels on devices that are compatible with CableCard hardware. The new set-top box rules would require a software-based replacement for CableCard, making it easier for companies to create applications and hardware that can replace the set-top boxes customers typically rent from cable companies.

"We do not currently have evidence that regulations are needed to address concerns raised by MVPDs [multichannel video programming distributors] and content providers that competitive navigation solutions will disrupt elements of service presentation (such as agreed-upon channel lineups and neighborhoods), replace or alter advertising, or improperly manipulate content," the NPRM said (emphasis ours). "We have not seen evidence of any such problems in the CableCARD regime, and based on the current record, do not believe it is necessary for us to propose any rules to address these issues."

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The NPRM seeks public comment on whether the FCC should change its view and whether the commission has "the authority and enforcement mechanisms to address such concerns." The NPRM also asks the public to comment on whether existing copyright law might "protect against [the cable companies'] concerns."

But the existing plan's lack of rules preventing replacement or altering of advertising conflicts with Wheeler's statement in a press conference after the vote (see video, about 129 minutes in). "The rule will prohibit it," Wheeler said when asked what would prevent makers of third-party apps and devices from inserting their own advertising. "You need to have the sanctity of the content. Nobody is going to insert ads into it, nobody is going to make a split screen where they are putting ads next to it, nobody is going to say there is a frame around it where you can say, 'go to Joe's Auto Repair.' It's going to require the sanctity of the content be passed through, unchanged."

When contacted by Ars, an FCC spokesperson did not say why Wheeler's statement conflicts with the NPRM. It's possible Wheeler described the rules incorrectly or misunderstood the question.

The National Cable & Telecommunications Association warned the FCC before the vote that the commission's proposal would let other companies "rearrange, exile, or drop channels and overlay ads." The proposal would also "allow tech companies like Google to take content, slice and dice and re-purpose it in any way it wants, collect and monetize customer viewing data," the cable lobby group said. (Google and other supporters of the FCC proposal created a demonstration device to show FCC staff what third-party set-top boxes might look like.)

But even without a specific rule barring extra advertising, the FCC doesn't think it will be a problem. "Rules do not exist now and third-party device manufacturers such as TiVo are not disrupting advertising," the FCC spokesperson told Ars this week.

The FCC's NPRM says the final rules should ensure that makers of third-party apps and devices "cannot technically disrupt, impede, or impair the delivery of services," which could prevent alternative navigation tools from dropping channels or ads. That wouldn't stop them from inserting more ads around pay-TV channels, but whether they actually would is a different matter.

"While we cannot predict the design or interface that device makers and software developers may come up with, they will be required to pass through all of the content the consumer is entitled to receive without disruption or degradation," the FCC told Ars. "This proposal is intended to introduce competition in devices and apps available to consumers. We know consumers dislike being flooded with ads. If a consumer does not like the interface or user experience available on one offering, they will be able to look for an alternative."