The FCC proposal to deregulate cable and satellite television set-top boxes is facing heavy headwinds as powerful interests line up in opposition. The current proposal is itself a compromise to its original proposal to require providers to give access to their information streams to other set-top box makers. In response to powerful opposition, the proposal was modified to require content to be delivered through apps instead, which the FCC says will give providers end-to-end control over their content. The change does not, however, seem to have mollified the proposal’s opponents.

woman-girl-remote-watchingCharter Communications, a leading cable and broadband provider, issued a statement that the current proposed rules would force it to charge customers a fee to rent their broadband modems. In a blog post, the company, which identified itself as the only major broadband provider that doesn’t charge modem rental fees,  said that “deep within” the FCC proposal is a requirement t
hat internet providers charge a modem rental fee and include it as a line item in customers’ bills. The blog continues, “This bears repeating–even if Charter doesn’t currently charge a modem fee and does not want to charge a modem fee, the FCC would require us to do so.”

Also weighing in were the AFL-CIO and the Association of National Advertisers (ANA). The labor organization repeated the criticism that the proposal amounts to a compulsory copyright license that will give third parties access to copyrighted content without having to pay for it. The ANA’s concern was that any proposal “must ensure that advertising is transmitted whole and intact, so that contractual terms can be honored and enforced.”

Perhaps the biggest dog to come out against the proposal is Texas Republican Senator John Cornyn, who asked the FCC to hold off on adopting the regulations until the Judiciary Committee, of which he is a member, has a chance to consider their effect on privacy and copyright law. In a letter to FCC Chair Tom Wheeler, Cornyn expressed concern that third parties delivering content would not be subject to the same regulations that limit cable providers’ access to user data. Cornyn also suggested that the FCC was exceeding its authority, including by creating what appears to be a compulsory copyright license, which is something only Congress has the power to do.

This battle over set-top box deregulation shines a spotlight on one of the most dramatic disruptions in the entertainment ecosystem as a result of the transition to digital delivery. The current system is deeply entrenched. Transition may be inevitable, but it will also be necessary for the FCC to treat existing players with respect so as to retain a rational balance of their economic incentives with the consumer benefits it seeks.