TiVo Blames Big Cable for Blocking Set-Top Innovation

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TiVo, in response to an FCC request for comment on “video device innovation” yesterday, pointed to abuse by cable companies that put their own business considerations ahead of the best interests of consumers, and in so doing, have stifled creativity in the digital device realm. (A hearty hat tip to Dave Zatz for bringing the response to our attention.)

It’s easy to see why TiVo might be bitter at the cable industry. After all, with the launch of its first DVR, the company introduced a revolutionary technology¬† that cable companies copied, co-opted, and used to create a whole new revenue stream for themselves. And now, TiVo says, those same companies are leveraging control of their networks to block it and others from innovating on that technology.

The response, attributed to Matthew Zinn, TiVo senior vice president and general counsel, claims that “innovators like TiVo…are put at risk” by cable companies that ultimately control the design and functionality of devices that compete with their own set-top boxes and DVRs. Because cable companies can disallow certain features from working with their conditional access networks, TiVo says many features that it would like to implement are either barred by cable companies, work inconsistently across different networks, or are “subject to being disabled or made less useful by MPVDs [Multichannel Video Programming Distributors — in English, cable companies] at any time.”

At the top of the list for innovations blocked by MVPDs is the ability for TiVo and others to show Internet video and interactive applications alongside traditional cable programming. TiVo would like to incorporate interactive content into a unified user interface, but says that “tru2way products are forbidden by license from (1) providing any choice in user interface when accessing interactive services, and (2) including non-MVPD programming services, such as Internet-delivered content, in the user interface that displays the available cable programming.” As a result, TiVo says, consumers don’t have access to all the content that’s available to them, because gaining access to that content would interfere with traditional cable business models.

By blocking access to interactive applications in the user interface, TiVo says cable companies are not just protecting their pay TV business, but also limiting the ability of it and other device manufacturers to compete with leased DVR offerings. “The cable industry obviously knows that, when faced with the choice of buying or leasing a set-top box that performs exactly the same functions, in the same way, with the same user interface, consumers will opt to lease set-top boxes,” TiVo said. But by not having access to all of a cable company’s content in addition to other sources, TiVo says device makers can’t create a competitive product that people will buy instead of lease.

TiVo may have a point; after all, the company has been hemorrhaging subscribers over the last several quarters, as more consumers take to leasing DVRs from their incumbent cable providers. Without a way to provide a more compelling product or service to consumers, it’s unlikely that trend will be reversed anytime soon.

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