Cable Companies Will Raise Set-Top Box Rates, Blaming Costs Incurred From FCC Forcing Them To Finally Comply With 11-Year-Old Law

Cable companies are using the government’s forcing them to ship new cable boxes with detachable cable cards as an excuse to raise rates on old set-top boxes, AP reports.

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.

“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.”

…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.”

The feddy gov has been trying to get cable companies to comply with more open cable box system since the passing of the Telecommunications Act of 1996.

Expect rate hikes in January, with an announcement in December.

Cable operators to raise set-top box rates [AP via Consumer World Blog]
(Photo: AP)

Comments

Edit Your Comment

  1. dbeahn says:

    Does it come as any surprise to anyone with half a brain that forcing the cable companies to buy all new boxes all at once is going to raise prices?

    Alternately, you can go buy your own box and stop paying that rent! Course, that’ll run you what? $300 or more?

  2. OnceWasCool says:

    I am reminded every year about how thankful I am to have Dish Network.

  3. CubedTech says:

    So let me get this straight:
    The FCC Forces the cable companies to use more expensive equipment, yet the consumers get mad at the cable companies for having to raise rates to be able provide the new boxes.


    News Flash: CABLE COMPANIES ARE FOR PROFIT COMPANIES, Just like EVERY Company. If the company has to pay more for something you better be sure they are going to pass that on.


    If your going to blame someone, blame the FCC. They could have made the OCAP mandates without making the cable companies use new lease equipment. Or better yet, don’t complain about the rates, and buy your own box now that you can, and don’t use cable co equipment.

  4. Thrust says:

    Govt: You cable companies gotta make it easier for customers to switch to your competitors so they aren’t stuck with you when you treat them like shit.

    CableCo: DIAF

    Govt: Lolz, I pwn joo.

    CableCo: Do not want.

    Govt: Its now law.

    CableCo: We ain’t gonna do it.

    Govt: Ok.

    ** Eleven years later **

    Govt: You made those new cableboxes yet?

    CableCo: Ummm…

    Govt: Do it now or we get pissy.

    CableCo: Fine, we switch. But the customers pay for it, we can’t afford all these hookers and blow if we buy new boxes.

    Govt: Call it a Tax. Comcast Hooker Tax.

  5. dragonpup says:

    @dbeahn: Not only that, but the FCC forced the cable companies to dispose of any new boxes they had on the July 1st cutoff. Considering a box can cost a few hundred dollars, the impending cost increase should come to no surprise.

    Instead of doing a logical solution like making it so the cable company must provide a card for customer owned boxes on request, they force the cable companies to literally throw out many millions of dollars of perfectly good equipment.

  6. Thrust says:

    @dbeahn: They’ve had what, 11 YEARS to get their shit together. If they had done anything about this in that time it would have been a small bump in their profits, but no real loss to them, but because they can put it off so long, it no longer costs THEM, it costs the customers.

    Between shit like this, and the fact nothing is ever on, I’m glad I don’t have cable.

  7. JustAGuy2 says:

    @Thrust:

    The delay just saved everybody money – fundamentally, meeting the FCC mandate costs more, but doesn’t bring any real benefit, since there’s no evidence that, given the choice between buying a $400 set top box, and paying $10/month to rent one, any material number of people choose to buy it – there are 1.7 million TiVos out there vs about 20 million cable and satellite DVRs.

  8. dragonpup says:

    @Thrust: 11 years ago the technology for Separable Security didn’t exist. It may tough to see from the outside, but in the mere 6 years I have worked in the cable industry, practically everything technology wise has changed.

    Also, if this change over did somehow manage to happen 11 years ago, the cost of equipment would still be going up for the same reason.

  9. B says:

    @dragonpup: 11 years ago, or 6 years ago, the cable companies could have changed the designs of new boxes as of that point, so any box leased from that point forward would comply with the requirements, then they’d only have to replace older boxes, which would give the consumers a tangible benefit, as the newer boxes offer digital cable and on-demand stuff.

  10. reviarg says:

    Why not just disconnect your cable? You will save at least $40 per month. I cut my cable 2 years ago and am very happy with the local stations I pick up with my “rabbit ears.” Cable companies can care less if you complain. Complaining doesn’t do anything to their profits. Once enough people stop using their product then they will finally start listening more to their consumers.

  11. Trai_Dep says:

    The whole reason for the mandate is to provide consumers a choice besides the cable companies keeping their subscribers as their imprisoned, locked-in serfs.

    Funny when people are backing the companies on this… “But these chains are light! And Massa good to me! And he don’t whip me too hard or that often!”

  12. dbeahn says:

    @JustAGuy2: Let’s not forget that I can take my “rental” box BACK to my cable provider for the new one with new features. If I’d BOUGHT the thing, I’d have to spend ANOTHER $599 (HD Tivo) to move to HD content. With my cable box I just took it back to the office, swapped it out, and went on with my life.

    You have to keep a cable box for 3.3 years (at the price the cable company pays to by a box OEM and in huge quantities, not the retail price) before you save anything. If the box breaks, or you decide you want a new box with better features, or you want to go HD, or whatever, then this law costs you more.

    Personally, I think this is a good example of a great idea made bad by consumer groups that are too eager to “stick it to” the cable companies.

    Not to mention all the hi-tech waste (lots of it toxic) that will now be headed to landfills as cable providers retire every single box in their inventory in order to deploy the new boxes that add zero functionality.

  13. dbeahn says:

    @trai_dep: “The whole reason for the mandate is to provide consumers a choice besides the cable companies keeping their subscribers as their imprisoned, locked-in serfs.

    Funny when people are backing the companies on this… “But these chains are light! And Massa good to me! And he don’t whip me too hard or that often!””

    No, you miss the point. Cable cards were ALREADY available from the cable companies. I have a TV with the card slot built in. My friend has a Tivo that can use 2 cable cards. We have the cards already, so we have a “choice” on what boxes to use.

    Now, I only have ONE cable company in my area, and this law doesn’t make ANY provisions for me to be able to choose a new cable company. So now I have a higher rate, and STILL have ZERO choice in cable companies.

    How is that making me less of an “imprisoned, locked-in serf”? It’s NOT.

  14. Trai_Dep says:

    @dbeahn:

    Leave them. Satellite, AppleTV or BitTorrent. Let them know the dumb charge is among the one of many reasons you’re cancelling.

    And, just b/c you’re the unfortunate victim of a monopoly doesn’t mean that everyone else should have their choice removed. Think big. :)

    Question for everyone out there. Is this thing about mandating that people can use cards instead of being forced to rent the boxes? I’m cheerfully ignorant on this, since I avoid cable. But I’m glad to be educated.

  15. JustAGuy2 says:

    @dbeahn:

    Just to be clear, very few boxes are going to be thrown out – if a box was deployed in a customer’s home prior to July 1st, it’s grandfathered in, so the company can continue to use it in that customer’s home or in another customer’s home.

  16. LTS! says:

    Why do people mention satellite as being so great? You know what you get for that “free box”? An 18-month commitment or more. Sounds awesome to me.

    As far as AppleTV and BitTorrent goes. That’s all well and good, until the major ISPs (read the same companies that carry your cable signal) decide that since you aren’t using their cable service to watch television you’re Internet service to alternative providers will be slower or cost more. Because, you know, they’ll need to subsidize the loss of cable customers.

    And the CableCard is no great feature. In Rochester, certain stations are not compatible with the current CableCard standards and so you cannot get them unless you have a TWC box.

    I suppose on the other hand, the cable company could stop providing the boxes for free up front and begin charging consumers for them or locking them into a commitment. That might go over better than an increased rate because the new cable boxes are going to cost more.

  17. XopherMV says:

    To be clear, the fault here lies with the cable companies. The FCC gave them ELEVEN YEARS to get their act together and follow this LAW. What other federal agency, besides Immigration, gives you the choice to ignore a law that you don’t like for ELEVEN YEARS?

    Yet, like two year olds, the cable companies whined and dragged their feet and refused to do what they were told until the FCC put its foot down.

    These cable companies would not be in this problem and would not have to invest the money for all these changes now had they actually been replacing their old technology and distributing this technology, as they should have been for the last ELEVEN YEARS.

    Instead, the cable companies invested in digital cable, on-demand video, digital video recorders, cable internet, and other technologies that were NOT REQUIRED under law.

    This is no tax. This is a payout to the cable companies to fix their own stubborn stupidity.

    The outrage shouldn’t be that the cable companies will have to raise rates. The outrage SHOULD be that the cable companies BROKE THE LAW FOR ELEVEN YEARS just because they didn’t like the law and the government did nothing until now.

  18. JustAGuy2 says:

    @XopherMV:

    What essentially happened here is that the FCC told the cable companies: we want you to implement technical changes that aren’t cheap, and provide minimal consumer benefit. The cable companies tried to avoid it for as long as they could. Now that they can’t avoid it, they’re passing on the cost to consumers. It’s comparable to the government telling automakers that they have to gold-plate the bumpers.

  19. Trai_Dep says:

    The more open a system is, the cheaper it is for consumers and the more (often unexpected) benefits accrue to them.

    The people that are defending the cable companies to open their systems are brow-beaten, corporate b*tches. They’re also ignorant of the most fundamental of economic concepts.

    That’s fine. You want to pay $120+/mo to Comcast, go at it! Enjoy. But don’t preclude other, smarter consumers from choice. Because we’re proud Americans believing in free markets, informed choice and consumer rights. Geez.

    To those that say there’s only one cabler, or that haven’t checked out DSL, that’s your own dumb fault for not telling your local reps to change things. So change things now. Get politically active to progressive causes like this and you’ll see your life improve.

    To those that say service providers will apply a tax on content providers, or extort them, get involved in the fight to ensure Net Neutrality. Call your rep. Get involved.

    Really. Honestly. You’re behaving like children. Doing nothing until the conglomerates own you like chattel. Then complaining that they’ve locked you in. Stop being a victim and change things.

    Or continue to be a house nig— um, slave. Enjoy that.

    But don’t stop everyone smarter than you from increasing choice for all of us. :)

  20. dragonpup says:

    @XopherMV: Yea Xopher, I mean who wants high speed internet, video on demand, or digital video recorders? No consumer would ever want those. Instead we all want 56k internet, VCRs and 70ish channels with no new niche channels having little chance of getting on the air.

    And look at it this way, if the cable companies let you buy your own boxes 11 years ago, they’d all be obsolete and have a fraction of what box’s today can do. :p

  21. mac-phisto says:

    i think some ppl are missing the point here. the fcc mandate allowed certain advancements (like tivo) to enter your living room. w/o the mandate, cable cos. could have prevented you from using a third party provider (such as tivo) for a service that they provided themselves.

    does this law benefit the providers? of course not, b/c it benefits you by providing you with the right to seek equipment elsewhere. but it is in the best interest of the provider not to get too up in arms about it for two reasons: 1) if you get a third party box, you are most likely not paying the cable company for a service that they would normally provide (such as dvr). 2) with the deregulation of virtually every other utility in many states, cable is one of the few left on the list with monopolistic controls, & the desire for direct competition is growing.

    so, if i were a local cable co., i’d keep my mouth shut & contemplate how good i already have it. i’d continue to provide the technology i already provide for free w/ the hopes that consumers will continue to use my service despite other options. i’d even be able to take a little more money to the bank b/c some consumers would only need a tiny card instead of an entire box unit.

  22. Thrust says:

    @reviarg: I’m on the same wavelength as you, sans rabbit ears. There are many cables plugged into my TV (NES, SNES, N64, Gamecube, Wii, PS2, and DVD) but not one of them connects to that damnable cable jack on the wall. Buy your TV on DVDs, no commercials (or at least, none during the show), no monthly cost, and you don’t get screwed over missing episodes because you weren’t home when Jack Bauer broke Salazar outta prison and Boomer shot Commander Adama twice in the chest…

  23. XopherMV says:

    I don’t care who you are or who you think you are, you don’t break the law for ELEVEN YEARS.

    Further, after you’ve been forced to follow THE LAW, you don’t go blaming the government by calling the law a tax, which it is not. That’s especially true when it would have cost you almost nothing to make those changes over those ELEVEN YEARS instead of all at once.

    The cable companies certainly could have worked on this technology WHILE they were working on video on demand, digital video recorders, and cable internet.

    But no, the cable companies decided to wait until the very last minute and force THEMSELVES to make these changes all at once – far more expensively than if they had been working on this from the beginning.

  24. JustAGuy2 says:

    @XopherMV:

    No, actually, they couldn’t have. Mandating CableCard slots increases the complexity and cost of set top boxes. Period. If they had gone ahead and implemented the FCC’s ruling (btw, there was no violation of the law at any point, the FCC didn’t require the cable companies to actually implement the rule until this year) earlier, then a larger percentage of the set top boxes out there would be the pointlessly costly CableCard boxes.

  25. mac-phisto says:

    @JustAGuy2: Mandating CableCard slots increases the complexity and cost of set top boxes.

    really? accomodating a pcmcia card with a java program on it costs that much more? we’re talking about a physical medium that typically retails in ce stores for

    considering at&t (back when they made the mistake of entering the cable business) charged me $400 for a box that i failed to return, i’d imagine they could produce a box of similar quality for a similar price pretty easily.

  26. JustAGuy2 says:

    @mac-phisto:

    Yup, the increased cost is about $50 per box (includes the cost of the CableCard itself).

  27. mac-phisto says:

    @JustAGuy2: ok. $50/box. now let’s see…dvr nets the cable cos. $60/yr (or more) per unit. ondemand, pay-per-view & game rentals net billions in revenue every year.

    i think the big problem is cable cos. looking at this as a cost & not an opportunity. here’s an opportunity to provide all of these services to every tv in the house for a measly $50. 1 box free (if so desired), additional boxes $5 or $10/month (which is pretty standard already), but the card itself is free & required for every tv (as opposed to now, where i can just jack into the wall to get basic on any tv).

    this is untapped revenue. there are literally thousands of households that only have one box b/c they’re too cheap to pay for additional units, or they don’t even know they can get additional units. allowing them to access these services free is just good business.

    or, charge ppl more for equipment they don’t understand, get them pissed off, & watch as they take their money elsewhere. seems like kid stuff to me.

  28. JustAGuy2 says:

    @mac-phisto:

    No, that $50 is the _increased_ cost per box. So, whereas in the past deploying three additional boxes in the house (assuming there’s already one on the TV in the living room) would have cost $210, it will now cost about $360.

  29. mac-phisto says:

    @JustAGuy2: right, but what i’m saying is that many households operate multiple tvs in a home w/ only 1 box. they are operating 2 or more tvs by just jacking into the wall (& picking up basic). cable cos. can use the card as a method to require (thru verification) that each additional tv is connected w/ at least a card (for free) or a box (for a monthly fee…which most cos. already do).

    the point is, whereas many households typically had only one tv source for lucrative “additional” services, now they can mandate its availability on every tv & deploy it for less – $150 (card only – free for subscriber**) vs. the old $210, or $360 (with boxes – $60/yr/box).

    **in case you’re missing it, the assumption is that in this case, the consumer has an alternative to purchasing an additional box, such as a tivo unit or a tv that can accommodate the card.

  30. JustAGuy2 says:

    @mac-phisto:

    Won’t affect that, though. If you don’t have a box on a TV today, the introduction of CableCard won’t require you to have one on the TV tomorrow. The ONLY impacts of the separable security mandate are:

    a) increase the cost of new set top boxes by about $50, which will be passed on to consumers

    b) enable customers, if they want to, to buy devices, such as DVRs or TVs, that take CableCard, so the customer doesn’t have to use a cable company-provided set top box.

  31. milty45654 says:

    Trai_dep – I couldn’t agree with you more….tell em how it is….

  32. milty45654 says:

    @dbeahn:

    BRILLIANT. IF that is the case, then it would be true of Televisions as well. There are companies that rent TVs, yet you don’t see people renting them and returning them in for newer featured ones. People buy something and they keep it for a long time..until it breaks. I would buy my cable boxes instead of renting them.

  33. bohemian says:

    There is supposed to be a way to put a cable card adapter into a PC or media center style PC. Then you can have Tivo style dvr, pull internet video and the interactive TV stuff from cable all out of a box you built.

    This actually was enough to get us fired up about finally getting that media PC finished that has been sitting in parts.

    We are switching cable companies tomorrow. Better deal for the money, hopefully less crappy service. If they stink horribly also our next option is going to be get broadband only and buy one of those new styled big sat. dishes. You can still buy your cable channels ala carte from those places and they have digital decoder boxes. No big contract like the small dishes.

  34. mac-phisto says:

    @JustAGuy2: correct me if i’m wrong, but isn’t there a verification gateway built into the card? couldn’t the cable company require user verification for signal, thereby requiring a box (or card) on every tv connected to the signal?

    that would certainly nip a bud in those “billions of dollars lost every year to cable theft”.

  35. JustAGuy2 says:

    @mac-phisto:

    The cable company could definitely require a Cable Card for every TV, just as it could require a set top box for every TV. In some parts of the country (particularly those with high levels of cable service theft), the cable company does exactly that (require a box for every set). In most of the country, though, customers who just want basic or extended basic service can just plug their TV’s into the cable jack.

  36. Geekybiker says:

    I think cable card is more about innovation than anything. More and more channels are going digital. Digital means that 3rd party devices generally can’t work without authorization. Cable card enables 3rd party developers to get in the action and deliver new and innovative products to watch tv. Do you think DVR’s would have ever gotten off the ground if it had been solely up to the cable co to develop them? Even with 3rd party devices like tivo pushing them on the analog front, the cable co’s devices are shoddy imitations that consumers only accept because they are cheaper or simply dont know better. Dont forget that we are poised to go completely digital soon and cable card will ensure that 3rd parties are still able to compete in the future.

  37. mac-phisto says:

    @JustAGuy2: well, therein lies my argument for opportunity. here’s a chance for cable cos. to have more control over their signal, at the same time extending their opportunity for advanced services to every tv in the house (not just the one in the living room hooked up to the set top box) & give the consumer the ability to do it for free (with the required cablecard standalone – external compatible device needed), or at a nominal fee ($5/mo. for set tops after the first one). their deployment costs would quickly be offset by the ability of a household to independently order pay per view (or games, or ondemand) on multiple tvs at the same time.

    it would be advantageous for subscribers to utilize & cable cos. to promote the standalone card as it would provide access to additional content for no additional cost to the consumer, & less cost to the cable co. (cost of card deployment @ $50/card

  38. mountainguy says:

    Choice of boxes will be a good thing. Doesn’t anyone think that the price of new set-top boxes will come down quickly, akin to what happened to phones when the ATT/Western Digital monopoly was broken up?
    I think the great fear and resistance on the part of the cable companies is that the cards COULD make it that much easier to demand A-LA-CARTE programming on the card.

  39. n1ssan_gxe says:

    quick reminder!! Cable Cards are items that you rent from cable companies. so with this new law you can purchase a box from another company aside from your cable provider and you will most likely still have to pay to rent a cable card to make that box work. In addition that cable card won’t have the features you would get with a regular digital box like On Demand Movies. In regards to support, someone having trouble with their cable box will have to call their cable company for card issues and their box company for box issues as these new boxes are phased in. It seems to me the fcc isnt really looking out for the consumer with this new law but more likely one of these box manufacturers has them in their back pocket like so many nickels and dimes.

  40. JDBarrington says:

    you do know how SHITTY cable cards are, right? I work for TWC and personally know how much more complicated this OCAP b/s has made writing and supporting software for these boxes. They do NOTHING to help customer services, only make it cost more to provide.