07.09.2007 08:00 AM
In response to FCC mandate, cable operators to raise rates on set-top boxes

As a result of a government mandate, cable operators are planning to charge more for the set-top boxes they rent to customers.

For more than a decade, the FCC has been trying to create an open marketplace for set-top boxes by separating the electronic component from system security. It finally succeeded with a mandate, which went into effect July 1, requiring cable operators to provide smart cards to unlock their encryption for subscribers who purchase generic boxes.

The reality has been, however, that few such generic set-top boxes are actually on the market and available to consumers. As a result, most cable subscribers find it easier to rent the box from the cable operator.

The cable operators have argued that a new generation of digital boxes with card slots are more expensive and say they will pass the increased cost to customers. Consumer advocates say operators are using the FCC mandate as another excuse to raise rates.

Cable industry officials told the Associated Press that even subscribers using older set-top boxes would likely be hit if they decide to spread the cost to all box renters. The industry, however, won’t yet say exactly how much more consumers will pay to rent set-top boxes. It’s also unclear whether the fee increases will apply to cable cards.

Cable trade groups have said consumers would see $2 to $3 more in monthly rental rates for the new boxes, but that doesn’t take into account spreading the cost out to all box-renters.

Comcast is planning to spread out the cost of the new boxes among all cable box renters. The FCC cable card requirement “amounts to an FCC tax of hundreds of millions of dollars on consumers,” Comcast said in a statement.

Alex Dudley, a spokesperson for Time Warner Cable, told the AP it agrees with the cable industry’s stance that the FCC cable card rule is a tax on consumers.

The American Cable Association, which represents 1100 small cable operators, told the AP that its members would charge more for set-top box rentals. “It’s guaranteed,” said Ross Lieberman, vice president of government affairs for the trade group. “We can’t absorb this cost. This rate will be passed along to consumers.”

Late last month, the FCC denied a cable industry petition to delay the mandate. The commission, however, did grant a temporary delay to Verizon, which is deploying its fiber-optic television, phone and Internet service.



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