It’s all hands on deck for a cable industry desperate to protect billions in revenue earned from a monopoly stranglehold on the set-top box, now under threat by a proposal at the FCC to open up the market to competition.

While cable industry groups decry the proposal as a solution looking for a problem, at least 99 percent of cable customers are required to lease the equipment they need to watch pay television. That has become a reliable source of revenue for the industry and set-top box manufacturers, who share the $231 each customer pays a year in rental fees. Collectively that amounts to $20 billion in annual revenue. The FCC argues there is ample evidence cable operators and manufacturers are taking advantage of that captive marketplace, raising rental fees an average of 185% over the last 20 years while other electronic items have seen price declines as much as 90 percent.

With that kind of money on the line and a recent statement from the Obama Administration it fully supports FCC Chairman Thomas Wheeler’s proposal, Wall Street has gotten jittery over cable stocks — a clear sign investors are worried about the economic impact of additional competition and lower prices.

Wheeler

“Instead of spending nearly $1,000 over four years to lease a set of behind-the-times boxes, American families will have options to own a device for much less money that will integrate everything they want — including their cable or satellite content, as well as online streaming apps — in one, easier-to-use gadget,” Jason Furman, chairman of the Council of Economic Advisers, wrote in a White House blog post.

The proposal would coordinate the establishment of an “open standard” for set-top box technology, making it possible for multiple manufacturers to enter the market and compete.

The idea is not without precedent. The cable modem marketplace uses a DOCSIS standard any manufacturer can use to launch their own modem. Once the modem is certified, broadband consumers can choose to either rent the modem from their cable operator ($10 a month from Time Warner) or buy one outright, usually for less than $70, easily paying for itself in less than one year.

But the set-top box proposal just doesn’t add up, argues Comcast — one of the strongest opponents of Chairman Wheeler’s proposal.

“A new government technology mandate makes little sense when the apps-based marketplace solution also endorsed by the FCC’s technical advisory committee is driving additional retail availability of third-party devices without any of the privacy, diversity, intellectual property, legal authority, or other substantial concerns raised by the chairman’s mandate,” wrote David Cohen, Comcast’s top lobbyist.

The National Cable and Telecommunications Association (NCTA) — the country’s largest cable industry lobbying group, said much the same thing.

The Roku set-top streaming device.

“By reading the White House blog, you have to wonder how they could ignore that the world’s largest tech companies — which are often touted in other Administration initiatives — including Apple, Amazon, Google, Netflix and many others are providing exactly the choice in video services and devices that they claim to want,” the NCTA wrote.

Their argument is that a competitive set-top box market has already emerged without any interference from the FCC. Time Warner Cable, for example, voluntarily offers most of its lineup on the Roku platform. Comcast’s XFINITY TV app allows subscribers to watch cable channels over a variety of iOS and Android devices. Several operators also support videogame consoles as an alternative to renting set-top boxes.

But few allow customers to completely escape renting at least one set-top box, especially for premium movie channels. Others don’t support more than one or two streaming video consoles like Roku, Apple TV, or Amazon Fire TV.

In Canada, cable customers can often buy their own set-top boxes and DVRs (known as PVRs up north) from major electronics retailers like Best Buy. For example, Shaw customers in western Canada can purchase a XG1 500GB HD Dual Tuner PVR with 6 built-in tuners and a 500GB hard drive (upgradable), which supports recording up to 6 HD shows simultaneously, for under $350. With some cable companies charging up to $15 a month for similar equipment, it would take just under two years to recoup the purchase cost. Many cable subscribers rent the same DVR for as long as five years before the hard drive starts acting up, necessitating replacement (of the drive).

Endangered cable network? Minority programmers say set-top box competition will destroy their networks.

Arguing the technical issues of cable box competition isn’t apparently enough of a winning argument, so the industry has drafted the support of minority cable programmers and friendly legislators who have taken Hyperbole Hill with declarations that set-top box competition will result in “the ultimate extinction of minority and special-interest programmers.”

How?

A competitive set-top box manufacturer may decide to ignore the way cable channels are now numbered on the cable dial. With everything negotiable, many programmers offer discounts or other incentives to win a lower channel number, avoiding the Channel Siberia effect of finding one’s network on a four digit channel number that channel surfers will likely never reach.

Their fear is that an entity like Google or Apple will pay no attention to how Comcast or Time Warner chooses to number its channels, and will use a different system that puts the most popular channels first.

Fees: $34.95 for TV package, $35.90 in equipment and service fees.

But that assumes consumers care about channel numbers and not programs. Those who argue the days of linear TV are coming to an end doubt opening the set-top box market up for competition presents the biggest threat to these minority and specialty programmers. Those that devote hours of their broadcast day to reruns and program length commercials are probably at the most risk, because they lack quality original programming viewers want to see.

Hal Singer, who produces research reports for the telecom industry-backed Progressive Policy Institute, even goes as far as to suggest competitive set-top boxes will discourage telephone companies from building fiber to the home service, because they won’t get the advertising revenue for TV service they might otherwise receive from a captive set-top box market. But Singer ignores the fact Verizon effectively stopped substantial expansion of its FiOS network in 2010 (except in Boston) and AT&T now focuses most of its marketing on selling DirecTV service to TV customers, not U-verse – it’s fiber to the neighborhood service.

But Singer may be accurate on one point. If the cable industry loses revenue from set-top box rental fees, it may simply raise the rates it charges for cable television to make up the difference.

“So long as high-value customers for home video also demand more set-top boxes—a reasonable assumption—then pay TV operators can use metering to reduce the total price of home entertainment for cable customers,” Singer opines. “If this pricing structure were upended by the FCC’s proposal, economic theory predicts that pay TV prices would rise, thereby crowding out marginal video customers.”

While cable operators continue to deny cord cutting is real, their marketing departments think otherwise and are responding with slimmed down cable TV packages showcasing premium movie channels at a non-premium price.

This week, Time Warner Cable began offering a $10 add-on video package of over-the-air major network stations for new customers in Manhattan signing up for 50/5Mbps broadband service ($39.95 a month alone on a one year promotion in TWC Maxx markets). Oh did we forget to mention that $10 also includes both HBO and Showtime — the same networks Time Warner sells to everyone else for about $16.95 a month each?

At $10 a month, the package is a steal if you are still interested in local live/linear TV and movie channels. XFINITY Stream for Comcast is comparable, but Comcast extracts $15.99 a month for almost the same thing.

Time Warner Cable is obviously targeting disinterested Millennials that might otherwise skip television or consider the $20 Sling TV package instead.

But the cable company is downplaying the package and its price.

Time Warner Cable CEO Rob Marcus likes to remind investors at least 80 percent of Time Warner customers still subscribe to the big 200+ channel cable TV package, and Time Warner has hardly been a pioneer of “skinny bundles” that cut down the TV package to just the essentials.

Despite those assertions, the number of Americans willing to drop cable television continues to increase… and fast. Convergence Consulting notes the industry lost 283,000 video customers in 2014 and 1.1 million in 2015 — a four-fold increase. Convergence estimated at least another 1.1 million will cut the cable TV cord this year in what could become “the new normal.”

Video consumers are turning instead to on-demand, online viewing, which can provide commercial-free and binge viewing opportunities. Both Millennials and Generation X viewers are trending towards shows, not channels and networks, and many would never know (and fewer still care) what channel they were watching without the identity bug perpetually attached to the lower right of the screen.

Eventually, cable television service will likely occupy a part of a fat IP-pipe free-for-all, where viewers can still watch linear programming if they wish, but are more likely going to customize a much more personal viewing experience online instead.

Stop the Cap! reader Geoff W. lives in Liberty Township, Ohio — 35 miles east of Columbus, the state capital. But he might as well live in Cuba, because High Speed Internet is a digital pipe dream for him and his immediate neighbors. Despite living just a few houses away from other Time Warner Cable customers, the cable giant has quoted him $31,885 to install broadband service at his home.

A Time Warner Cable representative told Geoff the thirty grand plus would cover installing 531 feet of overhead cable, 1,800 feet of underground coaxial cable, and three pole permits.

“It’s time to consider High Speed Internet access a utility,” Geoff said.

If you own or lease a Motorola/Arris SurfBoard 5100, 6121, or 6141 cable modem, security researchers have uncovered an annoying vulnerability that could expose you to a denial of service attack.

David Longenecker first discovered the flaw with the world’s most popular cable modem — the SB-6141, a highly recommended DOCSIS 3 model. The firmware does not password protect access to the cable modem’s configuration menu, accessible by visiting 192.168.100.1 in a web browser.

In addition to technical information about the modem and the cable system’s current cable broadband configuration, there are two user accessible reset buttons, one to reboot the modem and another to reset it to its original factory settings. Rebooting the modem will disrupt your Internet connection for under a minute, but doing a factory reset could bring the modem offline until someone reaches the cable company to request the modem be reauthorized. An individual with nefarious intent can repeatedly reset the modem, bringing the user offline again and again.

SB6141 is a DOCSIS 3 modem

The Houston Chronicle explains how this could become a widespread problem:

Included within this interface is the ability to reset the modem. A user can be tricked into clicking on a simple link that will reboot the SB6141, and you can see a proof of concept here. Note that if you have one of these modems with this flaw, and you click the link, your modem WILL reboot.

Normally, you’d have to be sitting at a computer on the same network as the modem to trigger a reboot. But the link above takes advantage of the fact that you can mask a local Web page address as an image file. As Longenecker describes it:

Did you know that a web browser doesn’t really care whether an “image” file is really an image? Causing a modem to reboot is as simple as including an “image” in any other webpage you might happen to open – which is exactly the approach taken on the RebootMyModem.net proof of concept:

<img src=”http://192.168.100.1/reset.htm”>

Of course it’s not a real image, but the web browser doesn’t know that until it requests the file from the modem IP address – which of course causes the modem to reboot. Imagine creating an advertisement with that line of code, and submitting it to a widely-used ad network…

Advanced users can go into their router’s configuration page and block access to the IP address 192.168.100.1 (the modem’s configuration page) for anyone inside their network. That step prevents you or anyone else on your network from accidentally clicking a link that tricks your modem into rebooting. But most users will probably wait until Arris has distributed firmware updates that cable operators will eventually apply to correct this vulnerability. The upgrade will occur in the background and most users will never notice it.

Charter Communications is in talks with Amazon.com about joining Comcast to pitch cable service to the online retailer’s giant customer base.

Unlike Comcast, a Charter spokesperson told the Wall Street Journal the company wasn’t necessarily ready to jump in with both feet and was undecided.

One reason for that apparent reluctance may be the scathing reviews Amazon customers are writing about Comcast, which as of today has managed 1.2 out of 5 stars with 452 published reviews. Comcast probably rates even lower because most of the 5-star reviews are purely tongue-in-cheek:

• 5 Stars for Being Soulless Corporate Demons. Comcast feeds on the weak. In all seriousness, they are awful…. Anything for a profit….
• Hitler highly recommends Comcast: Adolf Hitler was quoted saying this about Comcast: “Beeindruckend, das ist böse.” Rough translation: “Wow, that’s evil.”
• Trump Should Send Them To China: Amazing, amazing product that would do very well in China.

The “one star” reviews, which represent more than 95% of the reviews, are decidedly less charitable:

• Having Comcast has been the worst experience of my life. You are better off with anything else: FiOS, Google Fiber, Carrier Pigeon, anything.
• I’m getting third world internet service at top dollar prices which go up if I’m stupid enough to remain a customer.
• Jumping into Comcast is like jumping into a pool, only the pool isn’t filled with water; it’s filled with lies, stress, hate and death.
• Capitalism at its scummiest.
• Worst company on planet – Comcast is proof there is NO god…only chaos.
• False advertising, hidden fees, incompetent customer service…and that’s just for starters!
• Burn in hell!
• Investing with Bernie Madoff would be better choice.
• Dealing with this company is akin to having your fingernails removed with pliers on a regular basis.
• Worse than that burning feeling when urinating.

But the reviews weren’t all bad.

“The speeds and services in my area are awesome,” wrote Tracey Fobia. “Xfinity is a game changer.”

A quick Google search revealed Mr. Fobia (coincidentally) is employed by Comcast as a facilities supervisor.

Comcast’s head of its cable division Neil Smit hoped Amazon’s reputation for excellent customer service might rub off on Comcast. To test that premise, Comcast is trying something new only for Amazon customers – delivering something approaching tolerable customer service:

A Comcast spokesman said it has set aside customer call centers in Tucson, Ariz., and Spokane, Wash., employing about 90 representatives trained just to receive inquiries about Comcast sales made through Amazon. The customer representatives’ goal is to “answer your call in 60 seconds or less,” with no waiting, according to Amazon’s landing page.

The Amazon site provides an easy link to help customers know how to “avoid leasing fees” by buying their own compatible modems and Wi-Fi routers. The site also promises that people can cancel Comcast subscriptions within 30 days or select a no-term contract to downgrade or disconnect whenever they wish.

“We’re partnering with a company that’s so good at the customer experience — I think that’s really what excites me,” Smit told the Wall Street Journal.

Amazon receives a commission for each Comcast sale, according to the newspaper, but based on the hostility of the reviews, it isn’t likely Amazon has earned enough to buy anyone lunch.