TV's Set-Top Box: An Appendage That Needs Major Surgery

Wonder why you still have those seemingly antiquated set-top boxes next to your new connected/smart TV HD TV sets?  After all, do we really need those extra boxes of electronic equipment -- especially in a world of growing TV app-ware and other devices?The Federal Communications Commission is pondering thisas well -- and why 99% of satellite, telco, and cable operators still need to lease boxes to consumers, who pay, on average, $231 in a year in rental fees. In total U.S. consumers spend $20 billion a year to lease set-top boxes.

And here’s the kicker: Since 1994, according to a recent analysis, the cost of cable set-top boxes has risen 185% while the cost of computers, televisions, and mobile phones has dropped by 90%.

Most savvy TV/media consumers -- who have tracked the cost of electronic equipment down through the years -- can be found scratching their heads.



Now figure those homes in recent years also now have Apple TV box, a Roku device, Amazon Fire TV, and/or a smart TV, which features a selection (albeit, not extensive) of TV/media apps.

The FCC wants to at least “unlock” the set-top box to create some freedoms, either hardware or software changes/additions. You may ask: Why has this gone on for so long? Well, not everyone was taking this for granted.

Some years back, Apple was mulling making actual TV sets. Before he passed, Steve Jobs had effectively said that he'd “solved” the mystery of simplifying the TV experience.

In the Walter Isaacson biography, Jobs says: “'It would be seamlessly synced with all of your devices and with iCloud.' No longer would users have to fiddle with complex remotes for DVD players and cable channels. 'It will have the simplest user interface you could imagine. I finally cracked it.'"

We could only fantasize what he meant.

Perhaps Jobs also had a plan about how to navigate new business partnerships with major premium TV networks and content owners in this regard. One could also assume it included solving the software/hardware “set-top” box issue that has been a part of people’s living rooms for decades.

And maybe this might could have solved more than a few hurdles for the  scalable, addressable advertising platform many TV marketers have dreamed about.  

Not sure what the effect of an FCC decision would be. Sounds like all this is years away -- with more leasing consumer costs to come.

1 comment about "TV's Set-Top Box: An Appendage That Needs Major Surgery".
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  1. Michael Elling from IVP Capital, LLC, February 19, 2016 at 3:54 p.m.

    You're leaving out half the story.

    At the same time the FCC issued the NPRM (notice of proposed rule-making it started last September) to open up set-top boxes to competition it issued a notice of inqury about "programming diversity".  The significance of this is that it tackles the other side of the LinearTV monopoly.  Both core and edge are being unbundled simultaneously.  Few really understand these linkages and taken together they are very very transformative.

    Given the dramatic change developing through over the top (OTT) players and distribution diversity (mobile, streaming, etc...), these 2 measures will quickly drive a supply shift to accompany the enormous demand shifts and growth brought about by choice. Who would have predicted this even 6 months ago?  Fasten your seatbelts for a wonderful, real-time everywhere 4K world.  Can't wait to watch soccer the way I want to watch it!

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