NFLX Netflix Inc

By John D. McKinnon 

Federal Communications Commission Chairman Tom Wheeler on Thursday released his plan to open up the market for television set-top boxes, setting up a showdown with large cable and other pay-TV companies.

The FCC is scheduled to vote on Mr. Wheeler's plan on Sept. 29. Meanwhile, consumer advocates will try to drum up support for it, while cable and media companies appear likely to try to stop it.

Mr. Wheeler's plan aims to end the cable industry's powerful lock on the lucrative market for set-top boxes. The devices have long been used to fashion cable signals into TV programming, but more independent suppliers are coming up with new devices that could offer more, including integrated search of cable subscriptions and online streaming-video services, including Netflix and Hulu.

Mr. Wheeler's plan would require cable companies to provide their subscription feeds free to those device-makers through apps. Regulators believe the third-party devices could save consumers money over the cable industry's rented boxes, and FCC officials say some consumers might even be able to access the cable app through devices they already own.

The move also could give a boost to Internet-based media, including small independent producers, FCC officials believe.

It is already "a golden era for watching television and video," Mr. Wheeler said in an op-ed article published in the Los Angeles Times on Thursday. "By empowering consumers to access their content on their terms, it's about to get cheaper -- and even better."

The plan was scaled back significantly from Mr. Wheeler's original proposal and borrows heavily from an alternative put forward by the cable industry.

Still, pay-TV firms, and particularly cable companies, appear likely to put up a significant fight. Those companies worry that details of Mr. Wheeler's approach could erode some barriers that have protected their lucrative business.

One provision, for example, could give the FCC more say over the exclusive licensing arrangements between cable and media firms by setting up a new government licensing process for the new apps.

More broadly, some people in the industry fear the potential added competitive posed by an integrated search system, whether from independent, user-generated or pirated content.

Cable giant Comcast Corp. on Thursday termed Mr. Wheeler's proposal "tortured" and "flawed," complaining of its "overly complicated government licensing regime and heavy-handed regulation." It also said the proposal exceeds the FCC's authority.

The FCC said the licensing process would be run by pay-TV representatives, though the agency said it would retain oversight to prevent them from setting licensing conditions that are anticompetitive.

Media companies won some fresh concessions in the plan that could soften their opposition, such as protections for their own apps.

Consumer and high-tech groups praised the plan.

Sen. Ed Markey (D., Mass.), a leading critic of the current arrangement for set-top boxes, said: "Consumers have been waiting for 20 years for a truly competitive and robust set-top box marketplace that puts an end to exorbitant cable-box rental fees, and the FCC's order represents the dawn of a new era."

It has been unclear whether Mr. Wheeler has the necessary three votes to pass his plan. He is hoping Commissioner Jessica Rosenworcel will end up supporting the proposal, despite bipartisan opposition to it in Congress at a time when her own renomination is pending.

Write to John D. McKinnon at john.mckinnon@wsj.com

(END) Dow Jones Newswires

September 08, 2016 18:45 ET (22:45 GMT)

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