TELECOM Digest OnLine - Sorted: Re: Cable Firms Raise Set-Top Box Rates

Re: Cable Firms Raise Set-Top Box Rates

Neal McLain (
Sat, 07 Jul 2007 01:31:45 -0500 wrote:

> On Jul 5, 1:03 pm, Deborah Yao, AP <>
> wrote:

>> Cable companies are planning to charge more for set-top
>> boxes to help pay for new, more expensive versions mandated
>> by the Federal Communications Commission.

> They also are pushing more channels onto box-only reception,
> so consumers are forced to rent a box (not cheap) to get
> channels they used to deliver fine on coax.

The day is coming when cable companies will deliver all video
programming digitally. The short-term reasons for this should be
obvious: better picture quality and more efficient bandwidth
utilization. Longer term, the entire video industry -- broadcast,
cable, telco, satellite -- is going digital. And, as you well know,
the federal government is forcing all broadcasters to cease analog
transmissions on 02/17/09.

So, yeah, cable companies are "pushing more channels onto box-only
reception." They're converting them to digital before the deadline.

The day is also coming when all consumer equipment (TVs, DVRs,
whatever) will be digital. When that day comes, those not-cheap-boxes
will no longer be necessary. Unfortunately, that day is a long way
off, and in the meantime, not-cheap-boxes are the only way to
accommodate all consumers.

> We consumers either need aggressive consumer protection regulation
> or true real competition. The cable companies are fleecing all of
> us big time.

So who's fleecing whom? The cable companies or the programmers?

If you think it's the cablecos that are fleecing you, you'll be happy
to know that your basic cable rate may go up another $1.00 per month
just so you can get Univision. You'll be especially happy to be
reminded that it was *your* elected representatives in the United
States Congress that enacted (over Bush 41's veto) the law that gives
Univision the power to impose that charge (source: Fortune, 155:9,

As I've noted before in this space, if you don't like your
cable/FiOS/U-Verse/DirecTV/DISH rates, tell Congress that they don't
have to pass any new "aggressive consumer protection regulation" laws.
Just repeal some of the laws that are already on the books.

> (I'm also frustrated how they say they must pay for broadcast
> content, yet these so-called 'pay' channels are loaded with nothing
> but old reruns and a great many commercials. If they have
> commercials and so many of them, why is it necessary to 'pay' for
> them?)

Because the programming carried on advertising-supported non-broadcast
channels doesn't generate enough advertising revenue to cover the cost
of producing it and delivering it (if it did, broadcast stations and
networks would be carrying it, and advertising *already would be*
supporting it).

In order to support such programming, the producers and program
suppliers have to rely on two revenue streams: advertising and
subscriber fees. This is the same business model employed by the vast
majority of print publications.

The real significance of this dual-revenue-stream business model isn't
just the sum of the two revenue streams; it's the way in which the two
revenue streams reinforce each other:

- Consumer revenue reinforces advertising revenue. There's
an old adage in the advertising business that "paid
advertising is worth more than free advertising." A
consumer who pays for a publication (print or video)
is more likely to read/watch it than a non-paying consumer.

- Advertising revenue reinforces consumer revenue. Advertising
revenue enables the producer to provide a better product
(print or video), thus enticing consumers to spend more time
reading/watching it, and, by extension, enticing more
consumers to buy the product.

And that, of course, is why the program suppliers demand that
non-broadcast advertising-supported channels must be carried on the
basic tier.

William Warren <> wrote:

> That reminds me: does having a digital cable box mean that I'll be
> able to receive _all_ the digital channels on my analog TV, or are
> there exceptions?

What do you mean by "digital channels"?

If you mean program signals that the cable company carries digitally,
the answer is: it depends on the tiering scheme the cableco uses.
Right now, "digital cable" IS a tier, but it can be further subdivided
into two or more tiers, each subject to separate access control.
Premium signals (HBO, Showtime, etc.) carried digitally are definitely
subject to separate access control. You'll receive what you pay for.

If you mean the digital signals of DTV broadcast stations, the
situation is more complicated. Current FCC rules require cablecos to
carry one signal (the DTV primary or the analog, but not both) from
each station, and it must carried be on the basic tier. From what
I've seen, most cablecos are carrying the analog signals (subscribers
would be really upset if they had to rent a box to receive broadcast

After 02/17/09, all broadcast stations will be DTV-only, and all cable
systems will have to carry the DTV primary signals. Consumers with
DTV sets will receive the DTV signals; consumers with analog sets will
get the downconverted signals from the box. There's been some talk
about cablecos downconverting DTV signals at their headends and
carrying both versions, but I don't think that's likely to happen.

DTV secondary signals ("channels" identified ".2", ".3" etc.) may or
may not be carried. Broadcasters are lobbying hard to get Congress to
require carriage of all secondaries; my guess is that Congress won't
pass it, but who knows. Broadcasters who elect retransmission-consent
will certainly demand secondary-signal carriage in their
retransmission agreements; how successful these efforts will be
remains to be seen. Of course, as broadcasters develop new
programming, they'll undoubtedly come up with some programming that
cablecos will want to carry voluntarily. Whatever happens, the
signals will be carried digitally, and digital boxes will downconvert
them to analog.

Bill W1AC <> wrote:

> Are there TV sets that will take a cable company's card so
> that I don't have to buy a set-top box at all?

Yes, but the technology is still in what you might call primitive
beta. As Sound & Vision magazine put it, "CableCARD was a half-baked
technology, and federally mandating its adoption was a premature

The ultimate dream is downloadable security: every consumer device has
security built in at manufacture. If/when that happens (on some
distant future date), all security will be built into consumer
devices, and CableCARDs won't be necessary.

Of course, hackers will have a field day.

Neal McLain

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