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Apple's Dream of Revolutionizing TV Got the Nod from the FCC

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Earlier this month we posted a report titled "Are we on the Cusp of a Revolutionary Shift in Television?" We noted that "two possible major television properties are saying that they're getting ready to offer online programming away from the cable subscription model that's been holding back a la carte programming choices for consumers. It seems like we're on the cusp of a revolutionary shift, even though we can't fully see it yet." With the advances of 4.5G coming to market over the next 3 or 4 years that will be able to deliver 3D Movies, video games in real-time and many other advantages, the FCC has now stepped in to get ahead that curve to allow companies like Apple, Aereo and others to offer TV programming once locked by cable companies. This will allow for the revolutionary shift in TV that we described in our earlier report to take place.


Late yesterday the FCC Chairman Tom Wheeler formally stated that "Consumers have long complained about how their cable service forces them to buy channels they never watch. The move of video onto the Internet can do something about that frustration – but first Internet video services need access to the programs. Today the FCC takes the first step to open access to cable programs as well as local television. The result should be to give consumers more alternatives from which to choose so they can buy the programs they want.


In 1992 Congress realized that the then-nascent satellite industry would have a hard time competing because much cable programming was owned by cable companies who frequently kept it from competitors. Congress mandated access to cable channels for satellite services, and competition flourished. Today I am proposing to extend the same concept to the providers of linear, Internet-based services; to encourage new video alternatives by opening up access to content previously locked on cable channels. What could these over-the-top video providers (OTTs) supply to consumers? Many different kinds of multichannel video packages designed for different tastes and preferences. A better ability for a consumer to order the channels he or she wants to watch.


So-called linear channels, which offer the viewer a prescheduled lineup of programs, have been the largely exclusive purview of over-the-air broadcasting, cable, and satellite TV. But these kinds of packages of programming are coming to the Web as well. DISH has said that it intends to launch an online service that may include smaller programming bundles. And it has already begun offering foreign language channels online. Sony, DIRECTV, and Verizon are also in the hunt. Recently, CBS announced a streaming service that includes linear channels, separate from cable subscriptions; and the new HBO service may as well." This was covered in our earlier report.


Wheeler further noted that he has asked "the Commission to start a rulemaking proceeding in which we would modernize our interpretation of the term "multichannel video programming distributor" (MVPD) so that it is technology-neutral.


The result of this technical adjustment will be to give MVPDs that use the Internet (or any other method of transmission) the same access to programming owned by cable operators and the same ability to negotiate to carry broadcast TV stations that Congress gave to satellite systems in order to ensure competitive video markets."


Wheeler later noted that "In our Open Internet proceeding, we seek to assure open access to broadband delivery. In this proceeding, we will address access to programming for those taking advantage of that open access. These new business models can bring new choices and advantages to consumers."


Taking advantage of this rule, new OTTs may offer smaller or specialized packages of video programming, so consumers will be able to mix-and-match to suit their tastes. Aereo recently visited the Commission to make exactly this point – that updating the definition of an MVPD will provide consumers with new choices. And perhaps consumers will not be forced to pay for channels they never watch.


In closing Wheeler stated that "We have passed from an era where it was necessary to build a purpose-specific pathway to deliver video. The innovation of Internet Protocol (IP) has freed video from these closed pathways and single-purpose devices. The proposal put forth today will update FCC rules to recognize this new reality and, as a result, expand competition and consumer choice."


In September Apple's CEO Tim Cook talked up Apple TV with Charlie Rose as he did in March of this year with NBC's Brian Williams.



Cook's consistent message has been that the way we watch TV today is archaic, and he wants to change it. Cook has hinted that Apple has some things up its sleeve when it comes to radically improving the television-in-the-living-room experience. Cook continually states that TV viewing technology is "stuck back in the '70s," adding that "'the interface is terrible. I mean, it's awful."


We posted a report yesterday about Apple's R&D spending this year was the highest since 2007 when Apple released the iPhone. Some of this R&D is no doubt behind Cook's enthusiastic topic of Apple TV.


A recent Apple patent filing showed us that Apple is going to be bringing the Apple TV interface to iOS devices like the iPhone and iPad over time and that will eventually allow for Apple TV to become a cloud service for devices on the go. Today's FCC announcement will allow Apple to expedite such a project and allow them to negotiate with content providers for new programming like never before. For all intents and purposes, the FCC has basically given Apple the green light to take us out of the '70's television experience and take TV to the next level.


While it may take a little time yet, the regulatory barriers are about to come down and when they do, we could fully expect to see Apple's next revolution begin to unfold.


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