Service Provider Pays


Policy efforts to achieve energy savings in set-top boxes have generally foundered on a basic problem: service providers have little incentive to invest in efficiency but make all the meaningful decisions. Methods that fix this problem may be much more effective at saving energy than alternatives, and may be less burdensome for all involved — for the providers, box manufacturers, energy policy professionals, and consumers. The "Service Provider Pays" concept is one example alternative approach that should be explored for its potential advantages.

Example Concept

Beginning a specific near-term date, all telecommunications and related service providers (e.g. cable, POTS, fiber, satellite, broadband, security systems, etc.) would be required to subtract from each customer's regular bill the estimated cost of the electricity needed to power the service-provider provided set-top boxes and other devices (e.g. cable modems, DSL modems, fiber termination). This would be based on local residential electricity rates, power measurements by mode of each device, and estimated operating patterns. Also beginning the same date, all hardware distributed by each service provider would be capable of tracking its operating patterns so as to at least monthly report back to the provider the time distribution across modes. For any box capable of reporting this information, the customer's bill discount would be calculated for their individual operating pattern.


This requirement would simply use market forces to provide service providers with the correct incentive to optimize the energy efficiency of their products. Manufacturers could use early replacement of old/inefficient products, better hardware, better software, or better configuration/operation of their networks to reduce the energy cost subtracter and so increase their profits. Customers would be insulated from electricity costs they are ill-suited to understand or affect.

Set-top boxes and similar equipment are unique in that the service provider specifies the hardware, distributes it, has detailed knowledge of its operation, through software and system operation can greatly affect its operation, always has two-way communication with it, and has an ongoing economic (billing) relationship with the customer.

This mechanism could avoid some voluntary or mandatory regulation of set-top boxes and similar products that would be potentially difficult to put into place, be cumbersome and/or burdensome for industry, and difficult to optimally keep up-to-date with fast-changing technologies. That is, the alternatives to this approach are worse for consumers, industry, and the energy efficiency community, and would likely save much less energy. Such mechanisms will likely still be needed, but they can be more targeted and limited if layered on top of the market-based system.

This type of scheme is (to my knowledge) new to energy efficiency policy, and offers a needed additional tool to achieve the large and comprehensive savings we seek.

Bruce Nordman, 510-486-7089,

(originally proposed June, 2006)

Last Modified: November 16, 2007

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