US Senators decry lack of STB choice and competition
July 31, 2015
By Colin Mann
Findings gleaned by two US lawmakers suggest that consumers have little choice in their pay-TV set-top boxes, with the average household spending $231 (€254) a year on STB rental fees.
With some 99 per cent of customers renting their set-top box directly from their pay-TV provider, the set-top box rental market may be worth more than $19.5 billion per year, according to the findings from Senators Edward J. Markey (D-Mass.) and Richard Blumenthal’s (D-Conn.) query of the top-ten pay-TV multichannel video programming distributors (MVPDs).
The Senators, members of the Commerce, Science and Transportation Committee, sent letters to the major MVPDs in November 2015 asking them to provide information on their video box practices, including the number of customers, costs and choices for consumers.
Passed by Congress in December 2014, the STELA Reauthorization Act of 2014 repealed the set-top box integration ban, which enabled consumers to access technology that allowed use of a set-top box other than one leased from their cable company. Without the integration ban, by the end of this year, cable companies will no longer be required to make their services compatible with outside set-top boxes, such as TiVo for example, bought directly by consumers in the retail marketplace.
“Consumers should have the same range of choices for their video set-top boxes as they have for their mobile phones,” said Markey. “When Congress last year regrettably removed the requirement that cable company services be compatible with set-top boxes purchased in the marketplace rather than rented directly from the provider, we doomed consumers to being captive to cable company rental fees forever. We also endangered a competitive set-top box marketplace, replacing consumer choice with cable company control. We need a new, national consumer-friendly standard that will allow consumers to choose their own video box irrespective from their pay-TV provider. Consumers should not be forced to rent video boxes from their pay-TV provider in perpetuity,” he stated.
“Consumers deserve protection against hidden, hideously vexing fees for set-top boxes,” said Blumenthal. “The average household is forced into fees of more than $200 a year on set-top boxes – an expense that is unjust and unjustifiable. As the world becomes increasingly connected and technology advances, new innovations must be able to break into the cable marketplace and provide the vigorous competition that drives down prices for consumers. Consumers deserve competitive options in accessing technology and television – not exorbitant prices dictated by monopoly cable companies.”
Additional findings include:
Most American consumers rent their set-top box from an MVPD. The responses to Senators’ letters show that approximately 99 per cent of customers rent set-top boxes directly from their MVPD.
American MVPD subscribers spend, on average, $89.16 a year renting a single set-top box. The average set-top box rental fee for each company was used to calculate an overall set-top box rental cost average across companies: $7.43 a month, or $89.16 per year.
The average household spends $231.82 a year on set-top box rental fees. The responses to Senators’ letters indicate that the average number of set top boxes leased to a household is approximately 2.6. That number, multiplied by the average cost of a set-top box, totals $231.82.
The set-top box rental market may be worth more than $19.5 billion per year. According to publicly available information, there are approximately 221 million installed set-top boxes that are leased from MVPDs (including cable, satellite and telecom operators). Using this data, the average yearly fee for a single set-top box was multiplied by the total number of set-top boxes leased from MVPDs to determine that the industry generates $19.5 billion in revenue.
The Senators sent letters to Comcast, DirecTV, Dish Network, Time Warner Cable, Charter Communications, AT&T U-Verse, Verizon FiOS Video, Cox Communications, Cablevision Systems and Bright House Networks.
All ten companies responded to the Senators’ inquiries, however, some companies, including Dish Network, DirecTV and Time Warner Cable declined on proprietary grounds to answer many of the questions, including questions about the number of their customers leasing set-top boxes. However, other companies such as Comcast, Charter and Verizon answered the same questions and did not cite the same concerns.
The National Cable and Telecommunications Association, responding to the findings, suggested that the Senators failed to look at all consumer choices for video.
“American consumers have a growing number of choices of video providers and ways to access video content on multiple devices in and out of the home. Retail devices including TiVo, Roku and Apple TV have been purchased by tens of millions of consumers. Pay TV and content providers have embraced the mobile marketplace and offer robust apps that have been downloaded 52 million times on Apple and Android devices.”