FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
OFFICE OF
THE CHAIRMAN
September 7, 2016
The Honorable Debbie Stabenow
United States Senate
731 Hart Senate Office Building
Washington, D.C. 20510
Dear Senator Stabenow:
Thank you very much for your letter regarding how the Commission's proceeding for
better fostering competition in the set-top box and navigation app marketplace might impact
small pay-TV providers. I take your input on this issue seriously and assure you that it will
receive careful consideration.
Section 629 of the Communications Act, adopted by Congress in 1996, requires the
Commission to promote competition. Yet, unfortunately, the statutory mandate in section 629 is
not yet fulfilled. The lack of competition in this market has meant few choices and high prices
for consumers. In a recent Rasmussen Report Study, 84 percent of consumers felt their cable bill
was too high. One of the main contributing factors to these high prices is the no-option, add-on
fee for set-top box rental that is included on every bill, forcing consumers to spend, on average,
$231 in rental fees annually. Even worse, a recent congressional investigation found that the
price of most equipment fees is determined by what the market will bear, and not the actual cost
of the equipment. I With the lack of competition in this market, it should come as little surprise
that fees for set-top boxes continue to rise.' Clearly, consumers deserve better.
This February the Commission put out for public comment a proposal that would fulfill
the statutory requirement of competitive choice for consumers. This action opened a fact -fmding
dialog to build a record upon which to base any fmal decisions. Our record already contains
more than 280,000 filings, the overwhelming majority of which came from individual
consumers. FCC staff is actively engaged in constructive conversations with all stakeholders-
content creators, minority and independent programmers, public interest and consumer groups,
device manufacturers and app developers, software security developers, and pay-TV providers of
all sizes-s-on how to ensure that consumers have the competition and choice they deserve. I am
hopeful that these discussions will yield straight-forward, feasible and effective rules for all.
1 U.S. SENATE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENT AFFAIRS COMMITTEE, MINORITY STAFF REPORT, INSIDE THE Box: CUSTOMER SERVICE AND BILLING
PRACTICES IN THE CABLE AND SATELLITE INDUSTRY, 17 (Jun. 23, 2016).
2 One recent analysis found that the cost of cable set-top boxes has risen 185 percent since 1994 while the cost of
computers, televisions, and mobile phones has dropped by 90 percent during that same time period.
Page 2-The Honorable Debbie Stabenow
Ishare your goal of ensuring that pay-TV subscribers in all parts of our country can enjoy
the benefits of consumer choice without unduly burdening small providers of pay-TV.
Recognizing the important role that small pay-TV providers play in many rural communities, the
Notice of Proposed Rulemaking (NPRM) adopted in February seeks comment on how this
proceeding could affect these providers. Notably, the NPRM proposes to exempt all analog
cable systems from new requirements while also seeking comment on the American Cable
Association's proposal to exempt all pay-TV providers serving one million or fewer subscribers
from any rules. The NPRM further asks how the Commission can ensure that any rules adopted
are not overly burdensome to pay-TV providers. We are continuing to engage with all
stakeholders on this issue, including small pay-TV providers. Customers of providers of all sizes
deserve choice and innovation, and Iam confident that we will be able to find a balance that
accurately reflects the technology and resources available to truly small providers.
The record we are developing will help us avoid overburdening small pay-TV providers
while delivering American consumers meaningful choice. Thank you for your engagement in
this proceeding, and Ilook forward to continuing to work with you on this important consumer
Issue.
zs:
Tom Wheeler