Most pay-TV customers use some sort of set-top box, and many of us are paying anywhere from $1-$15/month on top of our programming packages, and that doesn’t include additional fees for things like HD service, DVR service, or whole-home access. Now it looks like FCC Chair Tom Wheeler is set to propose rules aimed at giving consumers more options — and hopefully lowering their cable bills.
The Wall Street Journal reports that Wheeler is set to propose a rule change that would likely require pay-TV providers to allow third party device makers to sell competing set-top boxes.
Earlier this year, a group of U.S. senators sent questionnaires to the nation’s biggest pay-TV providers, asking them for data on how many of these boxes they lease and how much money they make off them. To say that the cable companies were hesitant to respond would be an understatement.
Using what little data they could glean from the pay-TV biggies, the senators calculated that the average cable customer was paying $89/year for a single set-top box, with the typical household being dinged for $232 annually. That comes out to around $20 billion per year, all of which goes to the cable companies. And even if the customer “leases” their box for long enough to pay off the full sticker price, that monthly fee doesn’t go away.
Consumer advocates have said that consumers have too few choices for set-top boxes, which allows the pay-TV providers to continue charging these high lease prices.
Last week, the Consumer Federation of America and Public Knowledge pointed out that prices for set-top boxes have increased by 185% since 1994, while prices for computers, TVs, mobile phones, and other devices have dropped significantly during that time. As a result, consumers are overpaying by anywhere from $6 billion to $14 billion annually for devices that should be less expensive.
The Journal notes that the cable industry is already planning an offense against Wheeler’s upcoming proposal, with more than 40 telecommunications and media groups expected to announce a coalition as soon as today.
They are expected to claim that pay-TV companies will lose billions in revenue if they have to let third parties sell competing set-top boxes. But maybe they should have thought of a business model that didn’t involve forcing customers to pay too much for boxes that other companies could have provided at a more affordable rate?