Consumer Premises Equipment Introduction

Consumer Premises Equipment

1. Introduction

178. 
     Customer premises equipment (CPE) is the equipment that is necessary for consumers to access the services that broadcasters, MVPDs, and OVDs provide. Because CPE is an integral part of viewing video programming, CPE features, such as recording, home networking, mobile access, and user interface, are factors consumers typically consider when choosing to purchase programming services. In this section, we examine technological, regulatory, and market developments related to CPE since the last report. First, we update advancements in higher resolution video content and televisions. Next we consider the development of devices used to access MVPDs service. Finally, we review developments in devices used to access online and mobile video services.
     

1. Ultra High-Definition and High Dynamic Range Televisions

179. 
     The 17^th Report discussed UltraHD televisions in the marketplace.⁶²² The report noted that Ultra HD screens encompass higher resolutions (more pixels) for a more realistic picture and color quality than HDTV: “Currently, Ultra HD comes in resolutions of 4K (2160p) with 8.3 megapixels or four times as many as full HD (1080p) and now 8K (4320p) with 33.2 megapixels or 16 times as many as full HD.”⁶²³ In addition to the higher resolutions associated with Ultra HD, television manufacturers have recently introduced televisions that can process HDR signals. HDR allows televisions to display brightness and darkness more precisely, which produces a more vivid picture.⁶²⁴ The industry has not settled on a single standard for HDR; HDR10 is an open source standard that many large consumer electronics manufacturers support, while Dolby has developed a proprietary format that is available on a limited number of high-end devices.⁶²⁵ This battle over format, along with the bandwidth required to deliver Ultra HD and HDR content to subscribers, are potential obstacles to adoption of Ultra HD and HDR displays and content.⁶²⁶
     

1. CPE Used to Access MVPD Video Services

180. 
     Leased CPE, that is, the proprietary set-top boxes that are leased by MVPDs to their customers to access the MVPDs’ video programming, and for which consumers pay a monthly fee, is by far the most common way that consumers in the United States view MVPD programming.⁶²⁷ Even though consumers increasingly watch video programming on devices other than televisions, they spend on average more than two-thirds of their time viewing video programming on a television.⁶²⁸ Manufacturers no longer build television sets that connect directly to MVPD networks; thus, consumers must either lease their CPE from their MVPD or to purchase a device at retail. According to a July 2015 report by U.S. Senators Ed Markey and Richard Blumenthal, approximately 99 percent of MVPD subscribers rent their set-top box directly from their provider, generating nearly $20 billion in revenue per year.⁶²⁹ Despite this lack of competition from consumer-owned devices that can connect directly to the MVPD network and access MVPD video programming, MVPDs are introducing innovative services on the devices that they lease.⁶³⁰
     
181. 
     Some commenters contend that the marketplace for devices that can access MVPD video services is competitive due to the increasing availability of Internet-enabled, application-based alternatives.⁶³¹ So far, however, there is not consensus about whether consumers use the applications as a complete replacement for leased CPE, or instead use these applications to supplement the CPE they lease from their MVPDs.⁶³² While some MVPD-created applications are available on a growing number of streaming devices,⁶³³ those applications often do not provide access to MVPD service that is comparable to that available via an MVPD’s set-top box.⁶³⁴ Therefore, these commenters argue, the streaming device is typically able to complement, but not replace, the set-top box.⁶³⁵ For most MVPD customers, a leased set-top box is necessary to access the programming they have paid for, whether they own additional streaming devices or not.⁶³⁶
     
182. 
     Section 629 of the Communications Act and the STELA Reauthorization Act. Section 629 of the Communications Act directs the Commission to “adopt regulations to assure the commercial availability . . . of converter boxes, interactive communications equipment, and other equipment” that consumers use to access MVPD services.⁶³⁷ In past Reports we have provided the history of the Commission’s implementation of Section 629 via the separation of security requirements and CableCARD.⁶³⁸ Based on information provided by NCTA, it appears that consumer use of third-party CableCARD-enabled devices, i.e., those not provided by the MVPD itself, is roughly one percent of the devices used to receive cable service.⁶³⁹
     

183. 
     In February 2016, the Commission adopted a Notice of Proposed Rulemaking to propose a successor to CableCARD for device compatibility.⁶⁴¹ In the NPRM, the Commission proposed to require MVPDs to provide data in a published, transparent format that would allow an unaffiliated device or application to access multichannel video programming, and to support at least one content protection system that is licensable on reasonable and nondiscriminatory terms.⁶⁴² This proceeding remains pending.
     

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   attachmatch -> Federal Communications Commission fcc 15-77 Before the Federal Communications Commission
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