Cable Firms Raise Set-Top Box Rates

Cable companies are planning to charge more for set-top boxes to help
pay for new, more expensive versions mandated by the Federal
Communications Commission.

They say the price increases are a result of the government's push to
spur competition for the boxes, which are required to receive digital
programming and change channels. It's not yet clear how much the
charges will rise.

The FCC has been trying for nearly a decade to open up the set-top
market so subscribers actually buy their own and then use a
cable-company-provided card to decode their programming. The retail
market for the boxes, however, has largely failed to materialize and
millions of consumers still rent the boxes from their cable company.

As of July 1, cable companies were required by the FCC to start
shipping the new set-top boxes with detachable cable cards.

The companies have lobbied against the rule, saying the new boxes are
more expensive. Consumer groups say it's yet another excuse for cable
companies to raise rates.

And higher rates are definitely coming. Cable industry officials said
even consumers using the older set-tops will likely be hit if the
cable company decides to spread the cost to all box renters.

Cable operators won't yet say exactly how much more consumers will pay
to rent set-top boxes. It's also unclear whether the fee increases
will apply to cable cards.

Both cable trade groups have said consumers would see $2 to $3 more in
monthly rental rates for the new boxes, but that doesn't take into
account spreading the cost out to all box-renters.

Philadelphia-based Comcast Corp., the nation's largest cable operator
with 24 million video subscribers, is planning to spread out the cost
of the new boxes among all cable box renters.

The FCC cable card requirement "amounts to an FCC tax of hundreds of
millions of dollars on consumers," Comcast said in a statement.

Time Warner Cable Inc. spokesman Alex Dudley said the company agrees
with the cable industry's stance that the FCC cable card rule is a
"tax" on consumers. New York-based Time Warner is the second-largest
cable company with 13 million video subscribers.

The FCC has said that it's time for cable operators to comply with the
law, especially since the industry had already been granted
extensions.

The American Cable Association, which represents 1,100 smaller cable
operators, said their members will be charging more for set-top box
rentals.

"It's guaranteed," said Ross Lieberman, vice president of government
affairs for the trade group. "We can't absorb this cost. This rate
will be passed along to consumers."

He said the increases would likely come when cable operators typically
raise rates: in early January after an announcement in late December.

The cable industry is upset that the FCC on Friday denied its petition
for a blanket exemption to the cable card mandate and yet granted a
temporary one to Verizon Communications Inc. New York-based Verizon is
rolling out its fiber-optic television, phone and Internet service.

The FCC said Verizon provides needed competition against cable. The
agency also gave waivers to several other video providers, including
those that roll out all-digital systems by Feb. 17, 2009.

"The commission's 11th-hour action on the many long-standing waiver
requests doesn't bode well for consumers," said Rob Stoddard, a
spokesman for the National Cable and Telecommunications Association in
Washington. "There's nothing in these decisions to stave off a $600
million set-top box tax likely to affect the great majority of cable
customers while providing no benefit to consumers."

But Chris Murray, senior counsel at Consumers Union in Washington,
said it's convenient for cable companies to blame regulators when
they've stalled about complying with the FCC rule for years. Cable
operators also have had no problem raising rates regularly for various
reasons.

"They raise rates three times faster than inflation every year, for
more than a decade," he said. "Cable companies want to have absolute
control. We don't think they should have it."

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They also are pushing more channels onto box-only reception, so
consumers are forced to rent a box (not cheap) to get channels they
used to deliver fine on coax.

They advertised a box for "pennies a day". To me, that would mean at
most 10 cents per day, or $3.00 a month. No. The charge was $30.00 a
month, or a full _100_ pennies a day. To me that is disceptive
advertising.

We consumers either need aggressive consumer protection regulation or
true real competition. The cable companies are fleecing all of us big
time.

(I'm also frustrated how they say they must pay for broadcast content,
yet these so-called 'pay' channels are loaded with nothing but old
reruns and a great many commercials. If they have commercials and so
many of them, why is it necessary to 'pay' for them?)

> Cable companies are planning to charge more for set-top boxes to help

> They say the price increases are a result of the government's push to

[snip]

That reminds me: does having a digital cable box mean that I'll be
able to receive _all_ the digital channels on my analog TV, or are
there exceptions?

William

(Filter noise from my address for direct replies)

[TELECOM Digest Editor's Note: Before long, _all_ analog TV sets will
be useless; all broadcasters have been ordered to begin broadcasting
in digital only sometime during 2009 (?). PAT]

With a provider-supplied cable box you should be able to receive all
digital channels and interactive services (e.g. video-on-demand).

With Comcast, if you have a customer-supplied cable box and a cable
card, I think you can get all digital channels, but none of the
interactive services.

Barry Margolin, bar...@alum.mit.edu Arlington, MA
*** PLEASE post questions in newsgroups, not directly to me ***
*** PLEASE don't copy me on replies, I'll read them in the group ***

> They also are pushing more channels onto box-only reception,

The day is coming when cable companies will deliver all video
programming digitally. The short-term reasons for this should be
obvious: better picture quality and more efficient bandwidth
utilization. Longer term, the entire video industry -- broadcast,
cable, telco, satellite -- is going digital. And, as you well know,
the federal government is forcing all broadcasters to cease analog
transmissions on 02/17/09.

So, yeah, cable companies are "pushing more channels onto box-only
reception." They're converting them to digital before the deadline.

The day is also coming when all consumer equipment (TVs, DVRs,
whatever) will be digital. When that day comes, those not-cheap-boxes
will no longer be necessary. Unfortunately, that day is a long way
off, and in the meantime, not-cheap-boxes are the only way to
accommodate all consumers.

So who's fleecing whom? The cable companies or the programmers?

If you think it's the cablecos that are fleecing you, you'll be happy
to know that your basic cable rate may go up another $1.00 per month
just so you can get Univision. You'll be especially happy to be
reminded that it was *your* elected representatives in the United
States Congress that enacted (over Bush 41's veto) the law that gives
Univision the power to impose that charge (source: Fortune, 155:9,
92-98).

As I've noted before in this space, if you don't like your
cable/FiOS/U-Verse/DirecTV/DISH rates, tell Congress that they don't
have to pass any new "aggressive consumer protection regulation" laws.
Just repeal some of the laws that are already on the books.

Because the programming carried on advertising-supported non-broadcast
channels doesn't generate enough advertising revenue to cover the cost
of producing it and delivering it (if it did, broadcast stations and
networks would be carrying it, and advertising *already would be*
supporting it).

In order to support such programming, the producers and program
suppliers have to rely on two revenue streams: advertising and
subscriber fees. This is the same business model employed by the vast
majority of print publications.

The real significance of this dual-revenue-stream business model isn't
just the sum of the two revenue streams; it's the way in which the two
revenue streams reinforce each other:

- Consumer revenue reinforces advertising revenue. There's
an old adage in the advertising business that "paid
advertising is worth more than free advertising." A
consumer who pays for a publication (print or video)
is more likely to read/watch it than a non-paying consumer.

- Advertising revenue reinforces consumer revenue. Advertising
revenue enables the producer to provide a better product
(print or video), thus enticing consumers to spend more time
reading/watching it, and, by extension, enticing more
consumers to buy the product.

And that, of course, is why the program suppliers demand that
non-broadcast advertising-supported channels must be carried on the
basic tier.

William Warren <w_warren...@comcast.net> wrote:

What do you mean by "digital channels"?

If you mean program signals that the cable company carries digitally,
the answer is: it depends on the tiering scheme the cableco uses.
Right now, "digital cable" IS a tier, but it can be further subdivided
into two or more tiers, each subject to separate access control.
Premium signals (HBO, Showtime, etc.) carried digitally are definitely
subject to separate access control. You'll receive what you pay for.

If you mean the digital signals of DTV broadcast stations, the
situation is more complicated. Current FCC rules require cablecos to
carry one signal (the DTV primary or the analog, but not both) from
each station, and it must carried be on the basic tier. From what
I've seen, most cablecos are carrying the analog signals (subscribers
would be really upset if they had to rent a box to receive broadcast
signals). http://www.ncta.com/IssueBrief.aspx?contentId=2716&view=3

After 02/17/09, all broadcast stations will be DTV-only, and all cable
systems will have to carry the DTV primary signals. Consumers with
DTV sets will receive the DTV signals; consumers with analog sets will
get the downconverted signals from the box. There's been some talk
about cablecos downconverting DTV signals at their headends and
carrying both versions, but I don't think that's likely to happen.

DTV secondary signals ("channels" identified ".2", ".3" etc.) may or
may not be carried. Broadcasters are lobbying hard to get Congress to
require carriage of all secondaries; my guess is that Congress won't
pass it, but who knows. Broadcasters who elect retransmission-consent
will certainly demand secondary-signal carriage in their
retransmission agreements; how successful these efforts will be
remains to be seen. Of course, as broadcasters develop new
programming, they'll undoubtedly come up with some programming that
cablecos will want to carry voluntarily. Whatever happens, the
signals will be carried digitally, and digital boxes will downconvert
them to analog.

Bill W1AC <bh15...@comcastQRM.net> wrote:

> Are there TV sets that will take a cable company's card so
> that I don't have to buy a set-top box at all?

Yes, but the technology is still in what you might call primitive
beta. As Sound & Vision magazine put it, "CableCARD was a half-baked
technology, and federally mandating its adoption was a premature
mistake." http://tinyurl.com/22taxv

The ultimate dream is downloadable security: every consumer device has
security built in at manufacture. If/when that happens (on some
distant future date), all security will be built into consumer
devices, and CableCARDs won't be necessary.

Of course, hackers will have a field day.

Neal McLain