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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
Chairman
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.

Sincerely,


Max Kennedy


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