The Paradox of Thinking Outside the (Set-Top) Box

[Commentary] For the average consumer, the biggest immediate impact of the National Broadband Plan could come from its proposal to replace traditional cable set-top boxes within two years with simple "gateway" devices that handle conditional access and tuning but leave all other functionality to other devices or services.

The FCC hopes to create more breathing room for device makers by forcing cable operators to segregate essential functions like access and tuning from other features like DVR capability and Internet connectivity. As with CableCards, however, more boxes won't necessarily translate into meaningful competition for the incumbent service providers-the commission's ultimate goal. Cable operators, in fact, already face powerful incentives to look beyond the set-top box for delivering new services and functionality to subscribers. Ironically, the commission's new rules could end up bolstering cable operators' competitive position by accelerating the shift from local, set top-based services to network-based services.