CableCard Predatory Pricing - FCC Complaint

Discussion in 'TiVo Series3 HDTV DVRs' started by mkennedy96, Aug 18, 2007.

  1. mkennedy96

    mkennedy96 New Member

    Dec 10, 2003


    I believe that any cable company that is charging more than $1.95 for a CableCard and only charging $6.95 for a Set-Top box that includes a CableCard security component to be guilty of Predatory pricing. Below is a complaint that I filed with the FCC. In have read in this forum of other cable companies charging much more than I am paying.

    I encourage everyone paying more than $1.95 to file a complaint. They keep raising the prices, where will it stop without FCC intervention?

    The Honorable Kevin J. Martin
    Federal Communications Commission
    445 12th Street SW
    Washington, DC 20554

    Re: Brighthouse Networks Predatory Pricing

    Dear Mr. Chairman:

    I am writing to request an investigation and regulatory action regarding the predatory pricing activity of Brighthouse Networks in Tampa Florida.

    As you know, Section 629 of the Communications Act, as added by the Telecommunications Act of 1996, Congress directed the FCC to create rules that would allow consumers to obtain "navigation devices" -- meaning set top boxes, remote control units and other equipment -- from commercial sources other than their multichannel programming service provider. In 2007, these rules were adopted and most requests for additional waivers were denied.

    It important to note, that CableCards were developed as a result of the actions of Congress, and the FCC and not by any desire of the cable industry to offer this product. In fact the cable industry has fought the integrated security ban implementation for eleven years. Unable to win the battle on the regulatory front, cable companies are now opting for predatory pricing as a back door in their CableCard war.

    As I understand it, neither the Telecommunications Act of 1996 nor the subsequent FCC regulations require that CableCards be made available for purchase by consumers. Consumers are left in the same position they were in prior to the ban; they must rent equipment from their local cable company. There also appears to be no regulation regarding the pricing of the CableCard equipment.

    While Section 629 did not direct the FCC to incent consumers to go out to buy set-top boxes, it should be inferred that a level playing field must be established.

    Brighthouse Networks does not charge consumers that lease set-top boxes an additional fee to lease the CableCards needed to operate the security component of their boxes. Therefore, the fees that they set for the CableCards only affect consumers that choose to own their own set-top boxes. In the absence of regulation of their CableCard pricing, cable companies are free to set CableCard pricing that is anticompetitive and predatory in nature. It is my contention that Brighthouse Networks has done just that.

    As a customer of Brighthouse Networks, I recently switched from using one of their HD DVRs to the use of a Tivo Series 3 DVR and CableCards and one of their Set-Top Boxes to another Tivo Series 3 and CableCards.

    Brighthouse charges the following to lease their equipment:
    CableCard: $3.95
    Set-Top Box with a CableCard: $6.95
    HD DVR with 2 Cable Cards: $6.95

    If you break the product bundle of the cable companies and charge the $3.95 per CableCard equally to all equipment, the Set-Top Box lease rates for the Brighthouse equipment are:

    Set Top Box with a CableCard: $6.95
    Less 1 CableCard -$3.95
    $3.00 for a Set-Top Box

    HD DVR with 2 CableCards: $6.95
    Less 2 CableCards -$7.90
    -$0.95 for an HD DVR

    In order to justify the CableCard pricing in the Set-Top box example above, their cost to purchase a CableCard would have to be 31% higher than their cost to purchase the Set-Top box. While I have been unable to secure actual costs, the data I have uncovered indicates that this is not the case.

    In the HD DVR example, they are clearly pricing the DVR below cost in an attempt to disincent consumers from owning their own Set-Top Boxes (drive competition out of the market / prevent competition from entering the market).

    Their actions are predatory. Predatory Pricing is defined as an anti-competitive measure employed by a dominant company to protect market share from new or existing competitors. Predatory pricing involves temporarily pricing a product low enough to end a competitive threat.

    While both the Brighthouse HD DVR and the Tivo Series 3 have one cable connection and two tuners requiring two S-Card CableCards. The Brighthouse equipment is only charged one (1) Digital Additional Outlet fee of $0.95. The Tivo unit is charged for two (2) Digital Additional Outlet fees of $0.95. This further amplifies the predatory nature of their pricing.

    I am requesting that the FCC establish rules regarding CableCard pricing to prevent predatory behavior. I request these rules also be applied in markets where pricing is no longer regulated as their pricing is circumventing the intent of the Telecommunications Act of 1996.

    A few possible remedies could be:

    1. Force cable companies to charge all customers for CableCards and not allow them to bundle the cards into the Set-Top box pricing.
    2. Regulate the lease rates of CableCards to keep them in the same relation to equipment cost as the Set-Top Boxes they lease to “regular” customers.
    3. Require cable companies to bill connection charges for leased and customer owned equipment in the same manner to prevent additional outlet charges to customers with owned equipment that are not charged to customers with leased equipment.

    Thank you for your consideration.


    Max Kennedy

    cc: Robert Miron
    Chairman and CEO
    Brighthouse Networks
    700 Carillon Pkwy, Ste. 1
    St. Petersburg, FL 33716
  2. jfh3

    jfh3 Active Member

    Apr 15, 2004
    Denver area
    Nice letter.
  3. txagfan

    txagfan New Member

    Jul 30, 2007
    You are crying about paying $1.95 for cable cards? Are you kidding me? :rolleyes:
    One thing you don't seem to understand is that Cable is a BUSINESS. They open their doors everyday to make money. I don't think $1.95 is a big deal at all when you opened your wallet and paid $300 for a dvr. You want digital services that the cable company has to regurlarly make deals with the programmers i.e. ESPN that raise their rates every year for the cable co to broadcast, but you don't want to pay a digital outlet fee. How else are they going to raise the money for constantly rising broadcast fees other than passing it on to the consumer. They aren't just going to take a loss, they are going to make the people who want the digital services to pay for it. As for the cards in the box, an HD DVR uses one M-stream card, not two S cards.
  4. TracerBullet

    TracerBullet New Member

    Dec 17, 2004
    Then they should charge more for the actual service, not the device used to get the service.

    I should be able to go out and buy a cablecard, just like I can go out and buy a phone. Being forced to rent the device from the same company that provides the service is just asking to be reamed. We learned this years ago with the phone company.
  5. shizle

    shizle New Member

    Jul 31, 2007


    Well worded letter. The irony is that we are paying a fee for a security (decryption) device that benefits the service provider, and not the consumer.
  6. boywaja

    boywaja Well-Known Member

    Sep 30, 2001
    No he is complaining about being charged more than $1.95. reread the first portion of his post.

    no kidding.

    actually we dont want to pay two digital outlet fees for one box.

    If ESPN raises their rates, the cable company should raise the programing costs, not the hardware costs.

    As I understand it the TiVoHD does support an M card. If cable companies have M-cards they should make them available to all not just in their own set top boxes.
  7. gschoen

    gschoen Member

    Jan 27, 2002
    Chicago, IL
    The letter isn't about the $1.95, it's about companies trying to push cablecards out of the market by predatory tactics.

    Excellent letter, great writing!
  8. GoHokies!

    GoHokies! O2->CO2 Converter

    Sep 21, 2005
    Very well written letter.

    Maybe bunches of these letters will actually make a difference (also, pigs may fly). ;)
  9. ajwees41

    ajwees41 Well-Known Member

    May 7, 2006
    What were the prices before the fcc ban went in to effect?

  10. jazmaan

    jazmaan New Member

    Aug 30, 2002
    You should send a copy to your Congressman. In fact, we all should.
  11. Stainless Steele

    Stainless Steele Wake-Maker!

    Feb 2, 2004
    Columbus, OH
    I believe WOW told me that they charge $3.xx per month for a second card. You get 1 with the service. Not Mcards Scards
  12. painkiller

    painkiller Painkiller

    Jun 22, 2005
    Seems to me I've seen folks in this site mention (complain) about both card prices as well as installation fees.

    Someone should scour the site and collect all that info.

    With this letter, such data could be even more persuasive.
  13. dianebrat

    dianebrat wait.. I did what? TCF Club

    Jul 6, 2002
    You have to consider that there is tremendous variation too, even though I'm stuck with Comcast, my first card is free, my 2nd is $2.50. In my region there are no 'outlet fees' and I had a whopping $15 installation fee, yes, they tried to charge me 2x the install fee for 2 cards until it was pointed out they were in the same device.

    As much as I think cableco's are the scurge of the media world, and deserve either heavy regulation OR free market competition, there are regions where they do follow the rules, and are generally fair to cableCARD customers.

  14. dswallow

    dswallow Save the Moderatоr TCF Club

    Dec 3, 2000

    IMS Research estimates that the average semiconductor bill of materials cost for set-top boxes dropped 37% from 2004 to 2006, going from $59 to $37. This precipitous drop was caused primarily by rapidly falling prices for MPEG-2 core decoders chips in preparation for the transition to MPEG-4 AVC (ITU-T H.264) – both in HD and SD segments. However, IMS Research is forecasting that due to a number of factors, this trend will change, and from 2007-2011 the overall average cost of a set-top box semiconductor BOM will stay near $41.
  15. vstone

    vstone Active Member

    May 11, 2002
    What's the estimate on the cost of the software inside the box, some of which have the unused ability to allow viewing from another STB on the premises (sort of like client server, not peer-peer like Tivo)? What's the monthly cost for software support?
  16. jbjust

    jbjust New Member

    Jan 26, 2007
    In antitrust law, the term "predatory pricing" is usually understood as describing a situation in which a monopolist will charge below-cost prices to drive out competition, only to raise prices once the competition is gone. I think that you should maybe consider just complaining of their "anticompetitive pricing" and not use the term "predatory."
  17. windracer

    windracer joined the 10k club

    Jan 3, 2003
    St. Pete, FL
    Don't forget the additional digital outlet fees. For my S3 (Brighthouse, Pinellas) it costs me $3.95x2 for the CableCARDs and then $0.95 for the "additional" digital outlet (which is the second CableCARD).

    If I were to get a second S3, the two extra CableCARDs would really cost $4.90 each ($3.95 + 0.95 A/O). I don't think they do that for their own set-top boxes. :mad:
  18. GoHokies!

    GoHokies! O2->CO2 Converter

    Sep 21, 2005
    Actually, that sounds like exactly what the cable companies are doing. They are a monopoly (where else are you going to get cable cards), and you can easily say that they are pricing their alternative abnormally low (from the OP's example it certainly appears to be below cost) in an attempt to drive a competitor out of the market.
  19. jbjust

    jbjust New Member

    Jan 26, 2007
    You're right -- I had thought the complaint was largely about the high cost of the cable cards, but now see that the complaint really is about the artificially low price of boxes in comparison.
  20. cdp1276

    cdp1276 Member

    Mar 24, 2003
    Portland, OR
    Agree, nice letter and glad to see so many people doing something about the CableCard issues. I recommend people use to send in your letter and all will be tracked. Great, free, service!

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