AT&T/DirecTV Could Be Gateway for Retail DBS Boxes, CE Officials Say
AT&T’s plan to buy DirecTV could be used to allow set-top box manufacturers to sell retail boxes for DBS customers as they do for cable, but such an initiative may not find support, said consumer electronics industry observers and communications attorneys in interviews this week. DBS companies are excepted from rules imposed by the FCC on cable companies intended to create a viable retail set-top market, and DirecTV customers can buy TiVo boxes, but there’s interest among CE companies in expanding their market, said a CE company official. Though getting the FCC or legislators to change rules or impose deal conditions or enact new laws requiring DBS companies to make retail competition with their boxes possible would be difficult, getting such rules imposed as conditions on AT&T/DirecTV would be a viable possibility, said Chadbourne and Parke technology, media and telecom attorney James Stenger.
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Since AT&T/DirecTV will resemble a cable company by offering both broadband and video, it makes sense that the same rules requiring cable companies to facilitate retail competition in set-top boxes would apply to the new company, said a CE industry official. DBS companies and retail competition for their boxes were treated differently than cable by the FCC after the Telecom Act, because at the time DBS was viewed as a nascent service, said a CE attorney. Those characteristics no longer apply, and current rules “fall short,” said Public Knowledge Senior Staff Attorney John Bergmayer to the fact that industry is treated differently than cable. To allow retail competition with DBS set-tops would make sense, he said. AT&T and DirecTV didn’t comment.
A deal condition requiring AT&T/DirecTV to make it possible for boxes compatible with its system to be sold in retail stores would not be as difficult as getting a new industry-wide FCC rule or provision in the ongoing Satellite Television Extension and Localism Act reauthorization process, said industry observers. Since companies agree to conditions, they're harder to challenge in court, and the prospective deal gives regulators leverage not available in a rulemaking, said a CE company official. Such a condition would likely face strong pushback from AT&T and DirecTV, Stenger said.
It’s not clear that rules opening up the DBS set-top box market would get enough support, said industry observers and attorneys. Set-top box makers and companies like TiVo, retailers, and tech companies interested in competing with multichannel video programming distributors might be interested in having their products work with DBS systems, Stenger said. “I would definitely support anything that promotes the ability for consumers to choose,” PK’s Bergmayer said. Associations that have supported CableCARDs, such as the AllVid Tech Company Alliance or CEA, may view retail DBS set-tops as too small of a goal, said a CE attorney. Such groups have in the past have focused on a retail solution for all MVPDs, and they could view new rules for DBS boxes as not being a good use of resources, the attorney said. TiVo and CEA declined to comment.
CableCARDs failed to create a viable retail market for set-tops, so trying to do so in DBS might not be appealing to FCC officials, Stenger said. The FCC has yet to act on a TiVo petition asking for the reinstatement of CableCARD rules. With net neutrality, the broadcast TV incentive auction and large deals on its plate, the commission may not have the time to take up such an issue, said a CE official. There’s a “lack of action” on set-top box issues at the commission, Stenger said. Though TiVo is likely to push the issue of expanding the retail set-top market, it may not be a large enough company to sway FCC officials, Stenger said. Though Apple and Google are among recent entrants into the set-top industry, they have shown a reluctance to lobby the FCC, he said. Meanwhile, companies like AT&T and DirecTV are “deeply engaged,” he said.