Study: Retail Set-Top Market Just Not There

In a new study titled "Wobbling Back to the Fire: Economic Efficiency and the Creation of a Retail Market for Set-Top Boxes," the Phoenix Center (www.phoenix-center.org) examines the economics of the set-top box market, and indicates that the FCC's new AllVid pr...

In a new study titled "Wobbling Back to the Fire: Economic Efficiency and the Creation of a Retail Market for Set-Top Boxes," the Phoenix Center (www.phoenix-center.org) examines the economics of the set-top box market, and indicates that the FCC's new AllVid proposal may do more harm than good.

The study suggests that the set-top box conveys no market power to multichannel video programming distributors (MVPDs, aka service providers), and that if the equipment can be produced more efficiently and sold at a lower price in a competitive retail market, they already would be.

"Equipment is not a profit center for MVPDs; it is a cost, and a significant cost," said study co-author and Phoenix Center Chief Economist Dr. George S. Ford in a statement. "If MVPDs could offload these costs on consumers through a commercial market for equipment without affecting the quality of the video services they offer, then MVPDs have every incentive to do so. The fact no such market has developed indicates that the commercial market option is, all things considered, relatively inefficient."

The study can be downloaded free at http://www.phoenix-center.org/pcpp/PCPP41Final.pdf.
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