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The Federal Communications Commission approved on Thursday a proposal to let consumers swap pricey cable boxes for cheaper devices and apps, a change that would boost competition in the $20 billion television set-top box market while delivering a blow to major cable companies.
The new rule, unveiled by FCC Chairman Tom Wheeler in January, would allow customers to obtain video services from providers such as Alphabet Inc, Apple Inc and Tivo, instead of cable, satellite and other television providers such Comcast and Verizon.
Comcast is the parent company of NBCUniversal and NBC News.
The proposal passed in a 3-2 vote, with three Democratic commissioners including Wheeler in favor and two Republican commissioners dissenting.
Wheeler said the proposal is the beginning of an "information-gathering process” in which the FCC will allow cable providers and other stakeholders a 60-day comment period. If implemented, the industry would then have two years to comply with the rule.
"Technology allows it, the industry at one point proposed something similar to it and the consumers deserve a break and the choice," Wheeler said at Thursday's FCC meeting.
The proposal has set off a frenzied lobbying battle pitting a tech industry eager to tap into the lucrative market against cable and TV companies, which could lose billions of dollars in rental fees for set-top boxes. Many of those industry providers spoke out against the measure after the vote Thursday.
"While consumers are embracing an apps-based approach that offers a variety of content on more than 450 devices, the FCC has chosen to go down a path that threatens the very competition and innovation that has led to this vibrant marketplace," said Bob Quinn, AT&T's senior vice president of federal regulatory.
Stanton Dodge, general counsel of Dish Network Corp, said: "It is really not clear to us that any new regulation is needed to encourage innovation and in fact would actually hinder it."
The FCC says 99 percent of U.S. customers now must get their boxes from their cable companies, and they pay on average $231 a year to lease the devices.