Comcast, Time Warner sued for anti-competitive prohibition on set-top box purchases
The cell phone companies like providing subsidized handsets because the long-term contracts are worth more to them than the subsidy they provide on the hanset. Cable companies use their oligopoly position to provide hardware through an entirely different model. They "rent" consumers the hardware customers need for digital and enhanced services (movies on demand, information services, etc.). Customers can't buy the set-top box on the open market and still receive the full set of services from their cable provider. Those fees add up when a customer has multiple televisions on which enhanced services are desired.
As it turns out, consumers are challenging this scheme as an illegal tying arrangement, alleging Sherman Act violations, among other things. In August 2008, class action lawsuits were filed in, among other states,
California and
Kansas, challenging Time Warner's practice of preventing customers from purchasing their set-top boxes. You can read some background on those suits
here.
Now Comcast is in the crosshairs. Ars Technica reports, via Multichannel News, that Comcast was sued in late November for similar anti-competitive practices. (Nate Anderson,
Comcast sued for not selling set-top boxes, Cable-CARDs (December 26, 2008) arstechnica.com.)
Let me just add, on a personal note, that I can't think of a more deserving industry. Earlier tonight I spent some time unplugging (to reset) the pathetic set-top box that I received from Time Warner after they took my beautiful MOXI boxes from me (while I sobbed uncontrollably). As I noted in a June 4, 2008
post, Time Warner acquired Adelphia in my part of Southern California. Time Warner then set about pushing their junky boxes with their junky menu systems on anyone that had Adelphia equipment. The conspiracy theorist in me thinks that they intentionally fried my two boxes, which both "failed" within a month of each other. Of course, it could have been bad luck. But since I can't go out and
buy the control box I want, I'll never know.
Suits like these broke the AT&T phone monopoly (back when you couldn't buy a home telephone of your choosing). If these suits have any effect on the cable industry and its anti-competitive behaviors, I'll be a big fan.