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Comcast Facing Lawsuit Over Set-Top Box Rentals
Multichannel News reports that a woman from California has initiated a potential class-action lawsuit against Comcast for making customers rent a set-top box without giving them the option to buy it outright. Quoting:
"The action, on behalf of Comcast Corp. customer Cheryl Corralejo, alleges that the set-top rental practice represents an 'unlawful tying arrangement resulting in an impermissible restraint of trade.' In addition to violating the Sherman Anti-Trust Act, the suit alleges the practice violates business and professions codes. ... [It also notes] that premium video and the set-top descramblers are two distinct products, yet the cable providers require that the hardware be rented from cable companies, rather than permitting consumers to purchase the set-top hardware in the open market.
While it would be antitrust if their monopoly were one formed by conglomeration, cable is a bit different; in this case, each local city grants the company its monopoly. They chose to eliminate the competition; I don't think they have any ethical leg to stand on (though they may have a legal one) in claiming that there's no competition when it was deliberately eliminated by someone other than the cable providers.
Benford's Corollary to Clarke's Law: "Any technology distinguishable from magic is insufficiently advanced."
While it would be antitrust if their monopoly were one formed by conglomeration, cable is a bit different; in this case, each local city grants the company its monopoly.
There is no such distinction in the law. In fact, back in the 70s and earlier, you HAD to rent your phone from the phone company and it remain the property of AT&T. This ran afoul of the same laws.
Streaming Media is a huge hog of bandwidth, as the ISPs in the UK are discovering with the iPlayer [wikipedia.org] and other services. The ISPs and the content providers are currently in disagreement [theregister.co.uk] as to who should pay to upgrade the network infrastructure
In the good old days, people minded their own business. If you had a hot dog stand where you sold the best hot dogs at a busy intersection, the butcher didn't come to your stand to whine and moan about how he can't produce more hot dogs unless you bribe him. He just took all the money he earned from his supply business and reinvested it to increase capacity, and you kept on selling hot dogs without worrying about anything else.
If there is more demand on ISPs to deliver bandwidth to support their customer's usage, it is their responsibility to increase capacity to meet demand. If they cannot afford to do so, then it is the business model that is flawed. If they failed to account for future upgrades and the rather obvious explosion of telecommunications, that makes them poor businesspeople. It most certainly is not the fault of the customer nor anyone else.
-Billco, Fnarg.com
It wasn't until the 1968 Carterfone decision that AT&T was forced to give up this monopoly and allow other devices to be connected to the Public Switched Telephone Network. RJ-11 jacks followed, as did the flood of third parties making telephones. Today you can buy a phone very cheaply. You wouldn't be very happy if AT&T were charging $5/month for each phone and had the exclusive right to rent them.
Comcast is following the old AT&T monopoly model, the only difference being that the manufacturing of the boxes is outsourced. Cable boxes are available only from them. You can't buy them, and they arbitrarily decide on the monthly rental charge. (For simplicity, we'll let Comcast represent the entire cable industry here.)
Someday, perhaps soon, we will have a Federal Trade Commission that will use its enforcement powers to declare this arrangement to be illegal. Comcast will fight it in the courts, as did AT&T, but eventually they will lose, and will be forced to separate the cable box business from the television service. We consumers will then have the right to either continue renting our boxes or to buy it, with or without a service contract.
The bigger threat to Comcast, however, is the competition for delivery of content, where they don't have a complete monopoly. (They do own some of the cable channels, though.) Today, we can legally receive programs over-the-air, by cable, satellite, and Internet. As more and more of us go to the Web for our video entertainment, Comcast and the other cable companies may become increasingly irrelevant and lose more and more of their market share. The Obama Administration is talking about universal broadband service, which would be a big blow to cable TV. When that happens, I'm guessing that HBO and Showtime will decide to sell monthly subscriptions to their shows over the web (or through the iTunes music store). If they are successful, it's not long until Game Over for the cable companies.