The Death of the Cable Box and What that Means for the Consumers

In the late 1940s, John Walson bolted an antenna to a utility pole, ran the signal through a booster and strung it all together with coaxial cable; that moment was the birth of cable television. The booster later became known as the cable box. Walson extended this service and began to charge locals $2 a month for this television service. Cable television continued to evolve over the decades with the launch of HBO in 1975. The evolution of cable led to Ted Turner creating the first 24-hour cable super-station now known as CNN. In 1979, Walson was recognized by 96th Congress of the United States and the National Cable Television Association as the founder of cable programming. Throughout the years, there has been one synonymous object with cable television located in many American homes – the cable box.

The cable box itself has evolved throughout its tenure. Its original function was similar to an antenna. It served as a booster box to intercept waves and provide clear television programs. However, more recently the cable box allows the viewers to gain access to thousands of stations, record shows, and request previously aired shows through an “on demand” feature while still telling the time. These features are very appealing, but while something change others things stay the same.

Photo: Wikimedia Commons

The motto of the customer paying for the cable box has not changed, despite the fact that digital service are rapidly available and the cable box is not necessary in order for the customer to have access to these features. According to the Leichtman Research Group, 82% of homes with a television are subscribing to a pay-tv service. This subscription rate is down from five years ago; however, the monthly description average price has increased by 39% between 2011 and 2015.  With prices varying between providers, the monthly price for the set-top cable box alone can range between $8 – $15 dollars and to add on the digital video recording (DVR) capability can be an additional $20 on top of the fee for the cable box. Platforms such as Netflix and Hulu challenge cable television by offering a new way to watch TV. These apps provide access to hundreds of programs that can be watched on a television as well as mobile devices. The viewer no longer has to set a reminder and all tune in to the favorite program at the same time. These applications allow the users to pay a monthly subscription and can watch programming on any device at anytime without having to pay extra for a transmitter  such as the cable box.

The rising cost of cable subscriptions and development of new technology has caused the Federal Communications Commission (FCC) to take a deeper look into the purpose of the cable box. Tom Wheeler, FCC Chairman, argues that the fees for the set- top box are charging consumers to watch content that they have already paid for when they subscribed to the service. Wheeler proposed a plan to create flexibility for the consumer and a competitive marketplace. Throughout 2016, the FCC has been reviewing proposals centered on the removal of the set-top boxes. In February of 2016, the FCC voted 3-2 for a tentative proposal that would have forced cable companies to provide video and programming information to makers of third-party hardware or applications. Under that plan, makers of other software or devices could have created their own software and user interfaces. This new software would function similarly to a mobile application. This concept is partially generated due to programming applications such as Netflix, Hulu, Apple TV and Roku TV.

Many cable providers argued that the FCC plan was too difficult to comply with and pitched and alternative – to create their own applications. However, the cable company’s proposals would strip consumers of the ability to record programming which is accessible through the DVR feature on the cable box. There was also a debate between the FCC and cable companies regarding the type of platform the application would be built upon and its ability to transfer to operating systems like Windows, iOS, Android, and MacOS. It is apparent that cable companies are trying to maintain their grip on the market and continue their economic flow through the fee insured by the cable box, while the FCC is pressing for a change that will push new innovation and definitely challenge cable companies’ traditional mottoes.

On September 29, 2016, the FCC decided to delay the vote to rid consumers of the cable box. The FCC will continue to review proposals and plans that will decide the fate of the set- top boxes that have been around since the inception of cable. The change will push cable programming further into a competitive bracket with mobile television applications. Will cable companies survive in this market if the cable box becomes a relic of the past?

Back to Blog
 

Latest insights and trends on market research and surveys

close
Facebook IconYouTube IconTwitter IconVisit Our LinkedInVisit Our LinkedInVisit Our LinkedIn