Man Files Antitrust Suit Against Time Warner Over Forced Cable Box Rentals

Matthew Meeds of Fairway, Kansas, doesn’t want to pay Time Warner Cable a monthly rental fee for his cable box—he’d rather own one outright. He’s filed suit against the cable provider and its parent company, Time Warner, Inc., accusing them of establishing an illegal tying arrangement by making the box rental a condition of the subscription agreement. He’s seeking class-action status for all TWC premium customers in Kansas.

“Time Warner’s improper tying and bundling harms competition,” Meeds’ lawsuit states. “Since the class can only rent the cable box directly from Time Warner, manufacturers of cable boxes are foreclosed from renting and/or selling cable boxes directly to members of the class at a lower cost.”

Meeds told the Kansas City Star,

“I think that for most people, if they could buy the box, they would. That definitely makes more sense.”

Meeds’ attorney says that the situation is similar to the days when AT&T forced customers to rent telephones, before lawsuits helped break open the market:

“I think it’s very similar to the cases brought back in those days, where slowly but surely, the courts whittled away at that kind of protectionist activity by AT&T,” he said.

“I think the same thing is present here. You have a lot of companies out there manufacturing these boxes, and there’s nothing necessarily proprietary about them. … They only cost about $30 or $40 at most, and they’re charging around $15 a month for them.”

“Fairway man sues Time Warner over cable box rental requirement” [Kansas City Star]

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  1. seldon452 says:

    Even if he wins can’t Time Warner simply say:

    “Okay you can buy it. That will be One. Million. Dollars. MU HU AH HA HA!!!” *put pinky in mouth*

    I mean, they are able to set the price.

  2. parliboy says:

    True. But are they able to set the price of the ones I buy on the open market?

  3. Skiffer says:

    @seldon452: not quite what the suit is about…

    “manufacturers of cable boxes are foreclosed from renting and/or selling cable boxes directly to members of the class at a lower cost”

    So what’s this do for Apple and not licensing out it’s Fairplay DRM to 3rd parties?

  4. Anks329 says:

    @seldon452: Sure, Time Warner can set the price that they would sell it at. But then there are the manufactures of the boxes that you could buy directly from. And then there is Ebay where you could try to buy it from. Right now, if you want cable you have to rent the box from Time Warner, with no other choice at all.

  5. Hanke says:

    The cable company still has a hook in you for renting the security decoder that is not only required, but supported by congress. Seriously, since policy changed to require the security/decoding function seperate from the tuning/recording functions this should already be an option.

  6. ViperBorg says:

    @seldon452: You’d think the manufacturer would have more control over the price.

  7. Pylon83 says:

    Owning your own cable box is not a good idea. First off, they are very expensive ($500+ for a HD-DVR). Second, they aren’t exactly reliable pieces of equipment. Then there is a software issue. You have to make sure that any box you buy on the open market is supported by your cable operator. While I’m not against people having the option to buy them, it’s simply not a good idea.

  8. JustThatGuy3 says:

    1. you don’t have to rent the box – you can get a cablecard-equipped box on your own (i.e. TiVo).

    2. they’re a LOT more than $30-40 each. the cable operators are paying about $350 for an HD-DVR, and even the regular digital boxes are about $100-120.

  9. mgy says:

    I came in here for a story about the Sega Dreamcast. The picture threw me off :/

  10. snazz says:

    so if they are not allowed to rent the boxes anymore, they’ll make up that loss of revenue by increasing your cable fees…. fantastic!

  11. steveliv says:

    i thought that the a law had been passed last june, that the security features had to be separated from the cable box, hence why we have cablecards…

    [news.cnet.com]

  12. ivanthemute says:

    That’s funny as hell, because a few years ago TWC in my area stopped requiring a converter to have digital services. You could purchase a TIVO or cable card ready tv, then either rent or buy a cable-card and they’d synch it to the network. I wonder why that isn’t the case for Kansas.

  13. InThrees says:

    This guy is spot on.

    If the telephone rental stranglehold hadn’t been broken, there wouldn’t be 900mhz cordless phone/answering machine/hedgetrimmer/personal groomers today, there would be… boring rotary phones, with the occasional rollout of high class digital phones in certain markets.

    Imagine being able to buy a tivo-branded cable box, or a competitor’s version, that also had a blueray/dvd/mp3/avi player built in, as well as input selection for your ps3/xbox/pc whatever… for around $100 – $150.

  14. InThrees says:

    @Pylon83:

    I would say all the reasons you just listed for not owning a cable box are directly attributable to not many markets ALLOWING it.

    - if it was allowed all over, there would be more competition with higher production runs, allowing for more units at lower prices.
    – a standard for pushing programming / channel selection to boxes would be established.
    – as for reliability, I can’t think of a class of consumer electronics (other than some bulb-burning tvs) that came out recently that was subject to frequent hardware failures. I doubt mass-marketed cable boxes would be inherently shoddy.

  15. Anjow says:

    So will anyone do this for Sky in the UK?

  16. dieselman8 says:

    @InThrees:

    I agree. Think about it this way:
    What if your cell phone company forced you to rent a cell phone from them and telling you that you couldn’t buy or use any other cell phone?

    I’ve personally always found this practice among cable operators quite suspicious because it stifles innovation and competition for lower cost solutions.

  17. @InThrees: InThrees, sir I’d like to introduce you to mr. xbox360, and senior RROD…..

  18. LTS! says:

    He’ll lose, and here’s why:

    First, he has an option to use a CableCard. The problem is that he feels that Time Warner promotes their cable box as superior. He references that Time Warner says that CableCard does not offer the same level of service. This, he claims, make it seem as though the STB is superior.

    Well, I’m going to assume he’s in the same boat as we are here in Rochester. In order to increase channel offerings TWC has started using SDV technology. CableCard cannot handle this technology in it’s present form. There is no deception here, CableCard IS inferior in its current form.

    You can opt to buy ANY STB and that STB will allow you to tune in the channels that are not digital. The digital channels are encrypted to prevent signal piracy (DirecTV, Dish also do this). CableCard obviously was the work around to this but has failed to keep up with technology. Of course one can argue WHY that is the case but it doesn’t change the fact that it’s NOT up to speed yet.

    His reference of AT&T is irrelevant. That was a requirement to even use the service. He’s referring to “premium” content. He wants to be able to purchase the STB from TWC. This also has no precedent. Look at the REQUIRED leases of the EV1 automobile. Look at the current Hydrogen fuel cell test by Honda. You can ONLY lease the car. Why? Because you are not the owner and they don’t want you to be.

    In otherwords… STFU.

  19. mbd says:

    Why has he not gotten a cable card capable TIVO? Other than that, I am not aware of any cable boxes that are cable card ready that are sold to consumers by their manufacturers.

    I think we need more info. Unless his branch of TW Cable is not supporting cable cards, a violation of FCC regulations, then he does not seem to have a case.

  20. drftjgoj says:

    Don’t you also have to rent a box / satellite from directv or dish? How would this suit affect their policies?

    If they did open this market up, you could bet your bottom dollar cable companies would come up with ways to limit functionality of third party boxes. Kinda like how customers who use CableCards can’t access on demand programming.

  21. Methusalah says:

    @full.tang.halo: I believe you mean Señor.

  22. Bladefist says:

    The cable boxes have serial numbers, that register w/ servers back at home base. It helps prevent cable theft. So w/ ebay and direct buy, you’d be screwed. Unless the cable companies lifted those restrictions.

    The cable boxes are another source of profit. And it’s factored in. Either way the company will get that money. So, if this guy wins, and you can go out and buy a cable box, then assume cable packages will go up in price, hmm, $15?

    So this unfortunately is not going to solve anything really, and atleast whenever your cable box / dvr has issues, you just get a new one. If this guys wins, you’ll be replacing those things every few years, and still be paying the same. If not more, cuz you had to pay more upfront for the box.

  23. I have RCN and they were perfectly fine with my buying my own cable modem and I used a compatible cable box until I upgraded to digital cable. For each of those items they refunded my monthly fee on the bill.

    I think that for basic cable, a few companies still let you use compatible boxes or pre-wired televisions, but upgrading to any digital tiers is going to need specialized (and often expensive) equipment that isn’t necessarily portable from one service provider to another. It doesn’t seem worth it in the long run. But I own a TiVo unit that accepts cable cards, so I’m getting off pretty cheap these days.

  24. battra92 says:

    @mgy:DC forever! Man how I miss my little noisy box. :(

    It is probably the most unreliable console I ever owned but I still loved it.

    As for the Cable boxes … well I just wish the boxes didn’t cost me like $7 a month for rental.

  25. metatr0n says:

    I’m all for renting a cable box if only because I’ve been renting one from TWC in Kansas City (I live a mile from Fairway) and have replaced the rental unit FIVE times since becoming a customer in 2007. They are total crap and I would never want to invest hundreds of dollars in something like that. I had even considered building my own HD-DVR only to find out that even with a cable card, a PC-based DVR requires a special, industry-sanctioned BIOS on the machine for it to tune premium (i.e. NOT OTA) HD content.

    Clearly, there’s something wrong with this picture, and TWC may truly be evil, but I like the convenience and insurance I get by renting a cable box that I can replace or upgrade at will.

    Like some of the other posters have said, even if this were to be opened up to third parties, TWC would find a away to make up the difference. Bet on it.

  26. MadameX says:

    @mbd: The CableCard HD TiVo units have massive problems in my area. There is a known glitch between the Scientific Atlanta cards and the TiVo. If not for that, I would have bought one by now.

    I hope this guy wins. Cox here in Arizona just raised the rental fee on cable boxes. It’s $12 a month for a non-DVR HD cable box. That’s just too much, in my opinion.

  27. CharlieInSeattle says:

    Umm, Tivo + Cablecard.

  28. warf0x0r says:

    @seldon452: Actually there are plenty of third party cable boxes that you can get that will work. Other civilized worlds enjoy this privilage.

  29. GearheadGeek says:

    @InThrees: Actually, if it had been left to the Bells, we’d have gone all-touchtone by now, but only because their mechanical switching hardware would’ve worn out and would’ve been cheaper to replace with digital COs. Now, lots of people would still have rotary phones in their house because they’d still work… I have a phone made around 1950 (bakelite cover, metal chassis, handset that could double as a home-defense weapon) that works perfectly. When I bought (for $5) it 10+ years ago, it only needed a new handset wire because the old carbonized-thread conductors had worn out.

  30. GeoffinAround says:

    I just want to express how much more I enjoy these articles about ridiculous experiences with Time Warner or Comcast when they are coupled with advertisements by Google in the left margin for the very same companies.

  31. GearheadGeek says:

    The Cablecard is an intentionally-crippled “technology” developed under duress by the industry to give them enough plausible deniability to keep running their operations like they want to for as long as possible. CableLabs is slow or resistant to certifying hardware as CableCard compliant, and as far as I know there aren’t any commercially-available 2-way CableCard hosts, which is what would be required for switched-digital to work correctly.

    Now, NEW cableboxes actually have CableCards locked into them. They’re behind a cover, inserted from the back of the box but the CableCard is what’s providing the security. It’s a federal requirement that new boxes work that way, so that in theory the industry would have to allow 3rd-party manufacturers of CableCard hosts to build hardware that could use a CableCard to access all features. Maybe this will eventually happen, but it ain’t happening today.

  32. TheCardCheat says:

    @ Charlie in Seattle and everyone else on TiVo…

    I’m in Fairway as well and on Time Warner. I have one Time Warner set top box and one HD TiVo with cablecards.

    The Time Warner set top box is a piece of crap… Rebooting at random times, not properly recording, etc. We’ve heard it all before. And as many of you suggested, I decided to bypass TW and go for the HD Tivo. It was with great pleasure for me to tell TW to take one of their crappy boxes and shove off. Then…

    The TiVo has a whole other set of problems when working in conjunction with TW. First, the cablecards are a huge pain in the ass. It should be so simple, but there’s not a single person at TW who can figure out how to get these configured in a manner that is both functional and stable. After months on wrangling, I finally got everything set the way it was supposed to be. Then…

    The second issue: switched digital… TW in the Fairway area is slowly moving their channels to the switched digital technology. So while my TW box gets everything, my TiVo is limited because they don’t offer the compatible cablecards. Of course, we’ve heard about an adapter that was supposed to hit the market in the second quarter that would allow TiVo with cablecards to view switched digital. And now we’re in the third quarter and there is no sign they’re close.

    TW has its customers by the proverbial short hairs.

    And please, don’t tell me satellite or another service. In my area, cable (and TW) is my ONLY choice.

  33. synergy says:

    I’ve been saying this for decades. Also, the same thing happens with internet companies renting out modems. You can a modem for cheap just about anywhere.

  34. synergy says:

    I’m poor and old-fashioned to boot, so I have no experience with Tivo. So here’s my question: don’t you have to pay a subscription fee to use a Tivo? From what I understand it works like a VCR used to, but unlike a VCR you have to pay to use it. Am I right? Or are there digital recorders that don’t require subscription to digitally record?

  35. LincolnK says:

    or he could take his business to a competitor, instead of assuming he’s entitled to whatever he feels like and suing for it.

  36. doctor_cos wants you to remain calm says:

    Tuning adapters for SDV to allow cable card equipment (i.e. TiVo) to receive these channels is supposedly imminent.
    Try investigating [www.tivocommunity.com] for more information.

    This is another compromise by the cable companies to conform to FCC regulations which require separable security (cable cards) as opposed to hardwired (linked to the decoder in the box). However, many companies took advantage of the fact that the FCC allowed them to grandfather in any boxes in use or boxes that had been in use prior to the start date (I think it was last July).

    Thanks in large part to cable industry disinformation, most folks either don’t know what a cable card is or would rather not have them.

  37. CrazyMann says:

    After the law passed last year allowing you to own a cable box. I tried to find one and could not(except for Tivo) He should win this case. California are you watching, we need a class action here too.

  38. ztop says:

    I have TWC in New York and I recently bought a Tivo. It’s been mostly fine but what I’ve run into recently is that when I gave them back my cable box to run on only my Tivo it managed to break my agreement with them.

    So I previously had the Double Play (Cable & Internet) package for about $97 a month including the box, but once I gave the box back and went Cablecard only they started itemizing my services and it is now $110 a month for the exact same services.

    I am actually going to call them and try to get the box back so I can restart the Double Play price point even if I just throw the box in the closet.

    Seems pretty ridiculous to me.

  39. BrianDaBrain says:

    @drftjgoj: For the record, the inability to offer VOD services to a cable card customer is not a decision of the cable companies. Rather, it is due to the limitations in the technology of cable cards. His suit claims that TWC claims that STBs are better than cable cards… well no shit. And the lack of VOD support from a cable card is one of those things. Once you find a cable card that can handle everything a STB can handle, then talk to me about this kind of frivolous lawsuit. Go buy a Tivo.

  40. johnva says:

    @BrianDaBrain: And who do you think is responsible for cable cards not being capable of performing the same functions? It’s the cable companies that are responsible for that. It’s not just “one of those things”. It’s an intentional decision made by the cable companies who control CableLabs in order to cripple the nascent market for third-party STBs and digital cable functionality built into televisions. They wouldn’t have even made the cable cards if the government hadn’t forced them to.

  41. chrisexv6 says:

    @drftjgoj:

    Im a DirecTV customer, and Im a little on both sides of this argument.

    It used to be that you paid a “mirroring fee” for every box that you owned (you bought the box from DirecTV or a retailer). Now, you “lease” the box from DirecTV or a retailer (or some boxes can be bought at full price), on top of paying for the box up front.

    I “bought” one of their HD-DVRs for 99 bux, and I pay a lease fee on it every month. I DONT pay a mirroring fee anymore, so technically I could call my “lease” fee a mirror fee, if it werent for the fact that after Im done with my service, DirecTV gets the box back (because I never officially owned it). I dont like it, but thats the way it is.

    My local cable co rents the boxes out to you. As far as I know there is no way to buy a box, other than getting a series 3 tivo with cable cards. Then, even, the cable co rents the CABLE CARDS to you anyway, so you are still somehow tied to them. And cable cards are working horribly around here……..they usually cant get ONE working without trouble……a dual cablecard Tivo is next to impossible to get running.

    I think everyone is just going to start having to get used to the fact that the incoming signals in our house need to be decoded, one way or another. The way I understand it, even if you have a cablecard tv, you still need to rent the cards from the cable co. And chances are a TV will have less features than a cableco rented box (especially a DVR), so you end up renting something even MORE inferior than whats on the open market?

  42. JustThatGuy3 says:

    Honestly, Time Warner would LOVE it if you’d buy your own cable box. The tru2way effort currently going on is designed to both bring new vendors into cable boxes (so it’s not just Motorola and Scientific Atlanta) and encourage people to buy boxes at retail. The cable companies currently have to buy boxes, inventory them, recondition them, replace them, etc. etc. They’d love for the CUSTOMER to lay out the hundreds of $ Time Warner spends on boxes for a customer.

  43. lingum says:

    I agree with everyone from the area. The settop boxes here in the KC area are GARBAGE.

    My solution is to not have one.

  44. JiminyChristmas says:

    @synergy: I have this issue with Comcast. Yeah, I know, but there are no other good options. Of course, they say you are free to supply your own modem and not rent one from them. However, owner-provided modems are “not supported.”

    Comcast being what it is, I assume “not supported” to mean that if I have any sort of problem whatsoever with my internet connection they will either: 1) say, “Sorry, can’t help you.”, or 2) Not help with troubleshooting unless I am willing to pay for a service call. I’m just assuming that if I had my own modem they would screw me regardless of whether or not the modem were at issue.

    Ergo, even though I could have bought three modems outright for what I have paid in rental fees so far I think it’s worth the $3/month to be able to just pick up the phone and tell them to fix it whenever there’s an issue. Then again, what makes it worth it is the presumption that Comcast will find a way to screw customers with their own hardware.

  45. scottywz says:

    @synergy: You have to pay ~13/month for TiVo service. But it’s well worth it compared to the crappy boxes Time Warner rents out. You can also prepay for a year of service.

    @all:
    I have a TiVo HD with CableCARDs with Time Warner in Temple, TX. It took them a week to get the (Scientific Atlanta) CableCARDs working. First they sent a couple of subcontractors who didn’t know jack about CableCARDs. They tried a few, said that one of them worked, and left it in. It didn’t.

    Then, a few days later, they sent two techs who actually worked for TW, and they tried a lot of cards. When they were calling in the fifth or sixth card, at 10:15 PM they were told by the automated system that the call center had closed at 10! (It’s nice to know that TW screws with their own employees as well as their customers.)

    The same techs came back two days later and FINALLY got the CableCARDs to work. They left 2 M-cards (the ones that can decrypt two channels at once) in there in case one of them decided to do something stupid.

    The moral of this story is that although the cable companies provide CableCARDs because the FCC tells them to, they do little to make sure the cards they send out actually work, and the techs usually have to go through A LOT of cards just to find one that works.

    Although, as I said earlier, it’s well worth it compared to their piece-of-fertilizer $cientific Atlanta boxes that have horrid lag (e.g. when browsing the guide with the remote), go to half-volume whenever you reboot them, lock up all the time, etc. And the CableCARDS only cost about $1/month.

  46. As others have mentioned, you can go the Tivo route or get a TV that allows the use of cable cards. Only down side is the fact they are still only ONE WAY which means if you love your Movies/Programming on demand you’re usually out of luck.

    And yes from my days out in the field as a tech the failure/compatibility issues with both single and multi-stream cards is pretty annoying. I used to carry 3 at all times knowing 1 or 2 wouldn’t work or the TV wouldn’t like it.

  47. dragonpup says:

    The funny thing is that many cable companies are going to start moving to customer purchasable boxes with the so called tru2way standard.

  48. njtrout says:

    So is this the same as DirectTV charging me $199.00 US for a HD DVR and $4.99/month lease fee for the same box then add $9.99/month for HD service?

    Lack of competition really takes a bite out of the wallet.

    NJTrout

  49. pallendo says:

    @drftjgoj: I own my DirecTV-TiVo series 2. If that box ever dies, I don’t know what I would do. Current DVR boxes SUCK, and you cannot get a cablecard option for DirecTV. If I could, I would have an HD-TiVo so fast you would see black streaks on the street all the way to my local electronics store.

  50. pallendo says:

    @TheCardCheat: The only reason that satellite would not be viable would be if you could not see the south sky from anywhere on your property.

  51. TwoScoopsRice says:

    I’ll be taking our Scientific Atlanta 8300 to our local TW office after the Olympics are over for the 5th equipment exchange this calendar year. Between the software issues (having to step down from an 8200 last year to an 8100 because the operator was releasing new boxes without having updated the software) and both live and recorded “skipping” it is very frustrating.

    Although we look longingly at HD/Dish, we are effectively stuck with TW because it is the only way to get live telecast subscription of our hometown football team’s away games. Sad, really.

  52. ILoveVermont says:

    All the more reason to re-regulate the cable industry. They and satellite operators form an oligopoly and need to be regulated.

    The hardware problems/issues would be resolved in the marketplace if consumers were permitted to buy them on the open market, and the competition would also force prices down.

    Long Live Senator Sanders!

  53. Leiterfluid says:

    The FCC already has regulations in place that says that you can buy your own equipment, and the cable companies are required by law to support it. The problems are:

    None of the major cable box manufacturers (Motorola, Scientific Atlanta) sell directly to the public.

    CableCard was intended to allow consumers to buy their own equipment, with full support from the service provider, but CableCard (OCUR 1.0) is one-way only. Subscribers can’t buy on-demand programming or access interactive guides.

    OCUR 2.0 is being stalled in development because of a lack of interest (from both consumers and providers). This guy will lose his lawsuit for two reasons:

    CableCard devices that meet the FCC requirements are commercially available, and the cable companies cannot charge you to rent CableCards.

    The providers will argue they’re not in the business of selling hardware. It is not a market they have ever, nor ever wish to enter into.

  54. FLConsumer says:

    “modified” Free-to-Air satellite box

  55. doctor_cos wants you to remain calm says:

    @FLConsumer: I did not know those were still around. Is it 4DTv?

  56. razremytuxbuddy says:

    I’m glad this guy is taking on TWC for this practice. It takes guts and an attorney willing to go the distance with him.

    However, I can’t resist making my other cable TV comment: I don’t have cable, and can’t imagine ever paying a monthly fee just to watch TV. You can get a cheap indoor/outdoor antenna and from most homes, you’ll get great reception of all of the major networks and some others you probably didn’t know you could get. Cable and satelite TV subcriptions are completely unnecessary for the vast majority of locations.

    Forget the “premium” services, the box rentals, and all of the other tack ons in the one-sided cable subscription gotcha game. Most subscribers don’t even need the basic subscription.

  57. @Pylon83: agreed.
    i rent 2 HD DVRs from time warner, and wind up swapping at least one out each year

  58. plonk420 says:

    seconded on Cable Boxes being more than “$30 or 40″. what a dumb freakin’ assumption. also, there ARE CableCARDS capable of 2 way communication, (M-Cards, or multistream(?)) i just haven’t seen devices they will work in yet…

  59. newfenoix says:

    Fios

  60. ThePantsParty says:

    First of all, why does everyone in this country think they are entitled to have everything exactly the way they want it? This is not a life-sustaining service, it is a luxery item. If you have a problem with what they do, don’t buy their service.

    If there was a company that sold champagne enemas, and they required you to rent the funnel from them instead of bringing your own, do you have a right to sue them for that??? The answer is no, because you don’t need a fucking champagne enema in the first place, so why should you have the right to tell them how to give it to you.

    Having cable is optional, and you have no right to make demands for crap to entertain yourself with. It’s not like cable is a human right or something.

  61. InThrees says:

    @full.tang.halo:

    I actually thought about the XBox360, but then realized it doesn’t really count. The XBox360 is sold at a loss, which means they have every reason to cut as much cost as possible. (And hence, there may be some longevity issues there.)

    If they were willing to accept a smaller market, they could produce a more robust model for a higher charge.

    Just like if it was up to the subscriber, you could rent the cheap box from the cable company or buy your own, and you could buy from within whatever quality range was allowable.