David & Goliath, Boxee v. NCTA


Consumer choice is at the heart of the current feud being waged in Washington between Boxee, a 45 person, Hair Bender roast loving customer of ours, and a posse of large cable operators that includes Comcast, News Corp., and Walt Disney Co. As reported by Mark Milian of Bloomberg News in an April 4th, 2012 article entitled, "Big Media Tussles With Tiny Boxee Over the Future of TV," the FCC is currently considering a proposal put forth by the media industry that would allow them to encrypt TV transmissions that they deliver to US homes. If approved, these transmissions would appear as static on Boxee's $180 device which enables customers to watch movies, TV, and clips from the internet or your hard drive on your TV.Boxee.tv logo Piracy prevention is the stated reason for the necessity of the proposal currently being considered. That said, I think we can all agree that fear of 'cord-cutting' is as much, if not much more the motivating cause; the availability of legally streamed on demand content over the internet at the price of an internet connection has led more and more Americans, especially younger Americans, to reconsider the "necessity" of cable TV (for more on this issue, visit "Nielsen: Cord Cutting And Internet TV Viewing On The Rise" by Sarah Perez published in February on TechCrunch.com.

The proposal in question, then, would make it seem as though cable companies were themselves not entirely convinced that their most lucrative service, cable television, is worth the associated subscription costs. (Did you know, for instance, that around $5 of your monthly cable bill goes directly to ESPN, which means sports fans are being massively subsidized by cable subscribers who don't watch sports.)

And while the outcome of this David & Goliath contest remains undecided, one thing is for certain; Boxee was very close to altogether missing the opportunity to contest the rule:

"Nick Miller, a 26-year-old intern who managed Boxee’s social-network feeds, learned of the FCC rule through a message posted to the company’s Facebook page in December. Miller, Ronen and Melissa Marks, Boxee’s only lawyer, took a train to Washington to meet with FCC Chairman Julius Genachowski on Feb. 1. Ronen maintained the startup aura by wearing a Boxee hoodie rather than a suit."

Now you might read this and come away with the opinion that Boxee's oversight is irresponsible. Ronen, Boxee CEO, explains it a different way:

"Technology companies are often ignored in regulatory and legislative discussions," Ronen said. "Startups don’t get involved with lobbying because they’re more concerned about attracting millions of users quickly and they’re on a tight budget. Boxee has more than 2 million users."

I, however, would put it another way: Boxee almost missed the bus because they were 100% focused, God forbid, on their business, rather than Washington bureaucracy. Technology companies are the engines of our new economy because they are focused on innovating and broadening consumer choice, or otherwise put, minding their own business. The success or failure of a venture, every entrepreneur knows (or, at least, hopes), ultimately rests on the quality of your product/service and its success at meeting consumer needs and aspiration, regardless of whether they were previously even known to exist.

The same cannot be said of the cable companies in this case. They see their future success as depending on their ability to perpetuate the status quo. And the easiest way to do this, since convincing customers that fewer choices is in the customer's best interest is obviously a hard sell, is to go to Washington.

So there you have it: a real life David and Goliath story unfolding today. On one side you have a 45 person, New York startup and on the other you have The National Cable & Telecommunications Association. Thematically juxtaposed: innovation versus status quo, startup versus establishment, the choices of the consumer versus a the product of a lobbied bureaucracy, New York versus Washington.

We still don't know what they outcome is likely to be, though the cynic in me can't get past another comparison that Mark Milian includes in his article, and with which I leave you:

"Boxee only has about $50,000 to spend on lobbying, Ronen said. Compare that with the combined $30.6 million spent by Comcast, News Corp. and Disney last year, according to the OpenSecrets.org site of the Center for Responsive Politics, though that includes lobbying on a wide range of issues."