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CableCard Predatory Pricing - FCC Complaint

6K views 34 replies 27 participants last post by  sfhub 
#1 ·
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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#27 ·
captain_video said:
I mean, all the effort that's going into your letter writing campaign has the potential for saving you what, about $10 a year or maybe slightly more? You'll probably burn up more than that in postage and trips to the Post Office unless you have your congressman's e-mail address, which no doubt is freely available.
You're missing the big picture. First of all, from the personal viewpoint it is not important how much money the consumer (him in this case) might save, it's about his ability to continue to make reasonable choices and obtain superior services should he so choose. If the CATV companies are successful in undermining the manufacturer's attempts to follow the spirit of the FCC rulings, that freedom will be lost. Secondly, from an impersonal viewpoint, unethical practices are not acceptable. One person should not receive the same services for less cost than another, let along the same services *AND* the use of leased equipment, and no company should be allowed to injure the revenue stream of another company by predatory pricing practices. While it saves some money up-front, it is bad for the consumer in the long run. Not only will the "winner" raise the rates gluttonously to recover their losses and more once the competition has been eliminated or at least crippled, but there is a very real chance the unethical party will bankrupt themselves and perhaps others as well. This will put hundreds or even thousands of employees out of work. Believe it. Our competition tried the same tactic, and the smaller ones are all bankrupt now. The big ones are still alive, but they have now gone on their gorging binge and consumers are paying the price.
 
#28 ·
lrhorer said:
You're missing the big picture. First of all, from the personal viewpoint it is not important how much money the consumer (him in this case) might save, it's about his ability to continue to make reasonable choices and obtain superior services should he so choose. If the CATV companies are successful in undermining the manufacturer's attempts to follow the spirit of the FCC rulings, that freedom will be lost. Secondly, from an impersonal viewpoint, unethical practices are not acceptable. One person should not receive the same services for less cost than another, let along the same services *AND* the use of leased equipment, and no company should be allowed to injure the revenue stream of another company by predatory pricing practices. While it saves some money up-front, it is bad for the consumer in the long run. Not only will the "winner" raise the rates gluttonously to recover their losses and more once the competition has been eliminated or at least crippled, but there is a very real chance the unethical party will bankrupt themselves and perhaps others as well. This will put hundreds or even thousands of employees out of work. Believe it. Our competition tried the same tactic, and the smaller ones are all bankrupt now. The big ones are still alive, but they have now gone on their gorging binge and consumers are paying the price.
For years Comcast has offered their cable internet service at a price higher than they offer the same cable internet service plus the basic level of cable television service. Few seem terribly bothered by that.
 
#32 ·
For years Comcast has offered their cable internet service at a price higher than they offer the same cable internet service plus the basic level of cable television service. Few seem terribly bothered by that.
What you failed to mention that although the package price is less expensive on paper in reality it actually costs about the same as getting the internet all by itself. I had Comcast for years and kept just the basic service for my locals prior to DirecTV adding them to their lineup. I also had their wideband internet service. When DirecTV offered my locals I dropped the basic cable package and just kept the internet. As expected, my monthly costs rose to $57.95 per month (I forgot what the actual monthly cost for the internet was prior to that but it was only about $42.95 or so). The basic channels may have only cost about $10-11 but you had to include the cost of renting a cable box on top of that, bringing the total back up to around $55-57 for my internet plus the local channels. If I added the basic service which allowed me to get my locals without a box then it would have cost me more than the internet service by itself.

The box was configured to block out anything other than the local channels and you couldn't connect the cable from the wall directly to the TV because they placed an RF switch in the line that would only stay closed if the converter box was in the signal path. Fortunately, the installer found it was better for him to install the switch inside the house rather than outside in the plastic dome by the street. When he left I removed the switch and stuck the converter on a shelf. I got all the basic channels in addition to my locals but since I had DirecTV I never watched them anyway.

If you're like me, you'd rather have a setup configured without all the extra set-top boxes sitting around. I'm still trying to understand why people are griping because they only have to pay a couple of bucks for a cablecard that eliminates the need for a more costly cable box that does the same thing and eliminates the clutter. The non-standard rates charged for cablecards is the real issue that needs addressing, IMHO.

FYI - Comcast has forever lost me as a customer due to their ridiculous pricing structure. I'm with FIOS now and have never been happier to cut the cord.
 
#33 ·
mkennedy96 said:
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

<snip>
Nice letter. FWIW, Brighthouse in Tampa does not charge me the additional outlet fee of $0.95. You may want to call back on that one and ask them to remove it since you are using only one outlet for two cards.

In Tampa, I may be on the verge of successfully acquiring an M-Card for my TiVoHD which supports M-Cards. It was a roundabout method I used. I started with a complain to the City Of Tampa via the TampaGov Cable TV Service Complaint Web Site. Shortly after the complaint was filed, I was contacted by a gentlemen named Erin in the Brighthouse customer service organization after a City of Tampa employee transferred my complaint to them. I voiced my problem with lack of M-Card availability for my TiVoHD and the cost of S-Card's... very similar to your letter.

He called me back today and said that the M-Card's will soon be available to the general public. They are in the warehouse and he will be provisioning me one very soon. He tentatively scheduled an appointment for this coming Saturday for an M-Card installation. He said that I will likely be the first recipient of an M-Card in the Tampa Bay area. They are so new that he doesn't even know what the pricing on the M-Card will be.

I will post after my install on Saturday or if any other developments take place.
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#34 ·
sbiller said:
FWIW, Brighthouse in Tampa does not charge me the additional outlet fee of $0.95. You may want to call back on that one and ask them to remove it since you are using only one outlet for two cards.
I've tried that here in Pinellas and have never had any luck. I suspect the reps don't know how to do that in the billing system (2 cards, 1 outlet). It's been a few months though, maybe I should try again.
 
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