Deregulation of cable monopoly leads to more options in "black boxes"

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A set-top box is typically rented from a cable company for a few dollars a month. Because of the limited income that cable companies receive from these boxes, for decades they were constructed to be as simple as possible. Recently, however, competition from other companies has forced the cable giants to start redesigning these boxes for the demands of the computer age.

More than 10 years ago, Congress passed a law requiring cable operators to sell devices called CableCards, which enable consumer electronics like personal computers or DVD players to receive regular cable channels. Since then, the increasing popularity of video-viewing options like TiVo, YouTube, and even personal computers has made consumers increasingly dissatisfied with the limited options provided by traditional cable. Adding to the pressure on the cable companies, telephone giants including AT&T and Verizon have been investing heavily in fiber-optic cables to allow them to offer TV services. All these companies are now designing their own set-top boxes, with features that leave the old cable boxes in the dust.

Features currently available or being tested include larger hard disks for storing recorded shows, DVD players and burners, the ability to watch one show while recording three others, the ability to download and play video from the Internet, and — of course — CableCard plug-ins. The Federal Communications Commission has ruled that all cable companies must make their services work with these competing boxes by July 1. As a result, cable-box manufacturers Motorola and Scientific-Atlanta have begun introducing these new features into their own boxes.

According to Padmasree Warrior of Motorola, the changes in the industry are consumer-driven. "Enough people are experienced with [alternatives like TiVo] that there's a demand that the industry dynamics change," Warrior said.

Mike Fiddler, chief executive of the startup company Digeo, is excited by the opportunities that the new competitive environment provides. "Companies can now come in with innovative projects to change the consumer experience and bring a whole new level of enjoyment to television," he said.

But consumer advocate Mike Adams notes the irony inherent in the government's claim that competition serves consumers best. "If Congress wants to protect American consumers, it should ... end the medical monopoly on prescription drugs," he said. "Isn't it interesting how the current monopoly in pharmaceuticals is not only tolerated by government regulators, but actually enforced by them?"

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