Boxee’s Battle

As we’ve noted before, “cord cutting” is more media myth (and marketing hype) than an actual phenomena but that doesn’t mean the term is entirely useless. In fact, “cord cutting” is often portrayed in the tech press as a heroic act of defiance by consumers and small upstart firms challenging the Goliath of Big Cable.

It’s a narrative that comes in handy, particularly when pleading your case to Federal regulators, as over-the-top set top box (STB) maker Boxee had a recent opportunity to do.
The Federal Communications Commission is contemplating a proposed rules change that would require analog basic cable signals to be digitized and encrypted. Currently, those basic channels (the same lineup you would receive over the air) travel into homes in an unencrypted form and can be viewed on TVs without a STB for free or a small fee. The cable companies want to change that, arguing that an encrypted signal will prevent piracy and, wait for it, save the environment: digital signals allow for remote diagnostics, which cable companies claim would result in fewer truck rolls and thus lower CO2 emissions (the energy-sapping set top box is conveniently left out of this eco-equation).
Yet encrypting those signals would eliminate the basic line-up of live television channels that Boxee intended to rely on for its “Live TV” dongle – an accessory to its Boxee Box Internet-connected set-top which adds live TV to its suite of Internet-delivered video content (the Live TV dongle also comes with a small antenna for over-the-air reception). In a blog post explaining his company’s protest, Boxee CEO Avner Ronen spied an ulterior motive:
“Their real motivation is to prevent you from being able to connect the cable from the wall directly to your TV or Boxee Box. You will need to rent a set-top box from your cable provider, pay an extra $5-$15 per month and it will no longer work with your Boxee Box or similar devices… At Boxee, we’ve created an affordable alternative to cable that’s more in-tune with the way people watch TV today. The cable companies don’t like the idea of increased competition and in this case they are trying to get the government to help them block alternative devices such as the Boxee Box.”
Ronen’s outcry, however passionate, is complicated by a bit of inconvenient history: the cable industry began pushing back on the requirement to send unencrypted cable signals into homes in 2009 – a full year before the Boxee Box came into existence. Of course, it’s fair to say that cable companies don’t want increased competition (which business does?) and the opportunity to put basic cable channels out of Boxee’s reach is probably an attractive bonus, but there’s obviously more to it than that.
No matter how the FCC finally decides matters, this ruling is certainly one to watch. If the commission sides with the cable industry, it probably won’t mean the death of Boxee (they’ll stand or fall on other factors) but it will be a shot in the arm for set top box suppliers, who will be called on to fill newfound demand from those consumers who had enjoyed their boxless analog cable signals.