How Much Does a Cable Box Really Cost? The Industry Would Prefer You Don't Ask (latimes.com)

The FCC chairman insists that he is driven by a market-based approach to regulation. In a story, published Tuesday, an LA Times columnist uses the simple example of set-top boxes to argue the agency has, instead, been captured by the industry it regulates. From the story: Spectrum TV and internet customers will see their rates go up again in November. Among other increases, the broadcast TV surcharge will rise to $9.95 from $8.85 a month, and the monthly fee for a set-top box will jump to $7.50 from $6.99. It was that last charge that got my attention -- and got me thinking about the economics involved. How much do cable boxes actually cost? Why do their monthly fees keep going up when the cost of similar technology, such as TVs and computers, goes down over time? Not surprisingly, my attempts to answer these questions were met with stonewalling from industry players.

Spectrum, owned by Charter Communications, the dominant pay-TV company in Southern California, clammed up real fast when I asked how much they pay for the boxes they lease to subscribers. Nor would it comment on how much cash flow the boxes generate, or why fees keep rising even as the number of residential TV subscribers dwindles (down 66,000 more in the third quarter). Dennis Johnson, a company spokesman, said only that the 7.3% higher box charge in November -- more than three times the inflation rate -- represents a "modest increase" that is "comparable or even lower than our major competitors."

Comments

Re:I used to work for Comcast.

[bobbied]

No one really knows but it's between $750 and $1200 per box.

I call BS on this.

If Apple can sell a 64GB Apple TV 4K for $199 and make a nice profit on it, there's no way it costs Spectrum $750 - $1200 per box.

Ummm ... Actually..

The CableCard (tm) thingy runs about $500 retail and you need one of those in there to decode the cable video. So I'm guessing they are paying around $400 for the hardware in bulk and have to provide their own branded software on top of that. I'm *sure* they have a bunch of people who get paid license fees for the various off the shelf software components as well. Remember this thing does all sorts of things that the Apple TV doesn't try to but it does pretty much everything the AppleTV does. The QAM tuner decoding isn't on that AppleTV box, but the streaming part they share, then there is the encryption stuff that AppleTV doesn't do.

However, they pay way too much.

I use a network CableCard (tm) tuner that gets me 3 channels, then I use an old windows 7 box to run Media Center and Xbox 360's at each TV. I only get 1080p resolution, but for TV viewing that is plenty. I also get DVR ability with Media Center which is really nice. I will morn the passing of Windows 7 when it's finally cut lose by Microsoft and I will likely punt on Cable at that point anyway. My whole investment for 3 TV's is about $400, but it's been a couple of years since I purchased it all.

Re:Comcast won't give a static IP without their mo

[grep -v '.*' *]

. No customer-owned modems allowed for business accounts at all. They claim it's to "maintain the quality of their business network"

I've got Comcast Business, with a force-rented modem. I understand that it's actually for support -- if you call with a problem as a business customer, you want it fixed. And they don't want to futz with yet ANOTHER modem, and what's it's password, and what do you mean you don't know?

Besides, if you're a "business customer" then that's just another ongoing cost of doing business, no big. This way they know *everything* up past the demarc to your edge of the network and they know EXACTLY what to expect once they get there.

They also give you (most of) the controls for it as well, so you can make reasonable changes. One of the techs was surprised that I had changed from their default /24 network. Not that it bothered him at all, but apparently no one else bothers to do so.

Re:Comcast won't give a static IP without their mo

[Anonymous Coward]

Actually, they know all the client devices connected as well.

I was experiencing an outage a few weeks ago. My systems are really stable, so I assumed it was Comcast's fault. I rebooted their router/modem, that didn't fix it. I called in and had them reset it remotely through the automatic system. No joy.

Called back and spoke with someone who could actually help. For once I wasn't an asshole and asked for help nicely. Learned long ago that about 10% of the time, I'm wrong, so best to be nice. She connected to their modem/router in my business and started listing the connected devices. I have "guest" devices connected on their 10.x.x.x subnet but have the static IPs passed into my router via bridge mode so I don't need to trust their security settings. Anyway, she didn't list my router so I knew that was the issue and bounced it. It had been patched a few days earlier. That was 3+ weeks ago and the router has been solid since then and patched 2 more times.

With just 1 static IP, I think you can talk your way into using your own router/modem on a Biz account. People do. With multiple static IPs, the router uses BGP and could accidentally take over all the IPs for youtube, just like Pakistan did a few years ago. Best to let Comcast's automation handle all that. I'm not happy with the $11.95/month rental fee, but it is what it is.

Re:I used to work for Comcast.

[Anonymous Coward]

I'm OP anon from before. The person above is correct. The prices are heavily inflated. I will explain why. I worked at corporate in Philly and while yes I didn't know any hardware folks my team did take boxes apart and do user testing.

First of all it's not one box. There's constant version changes. There are a few dozen SKUs in the system from dozens of manufacturers. Over the years there are many variations of boxes in the wild. R&D keeps fucking with them continuously. Job security masked as "improvement".

Details right? Okay.
They run linux. They are full computers. The generation before the current one includes a 5400 RPM HDD for recording functionality. They run a NodeJS powered JavaScript application to render the front end and generally speaking that things is slow as fuck and has to be compatible with all the dozens of SKUs so it's a memory leaking piece of shit written by below average engineers in center city Philadelphia. The thing leaks memory so badly that all the boxes are sent a restart signal once a day to avoid total lockups of the machines. They all send plain text logs to Splunk all day every day apache2 style. There are literally millions of error codes that get thrown daily by the boxes. Part of my job was to literally parse this crap from Splunk and spit out charts that would get put into Slack for execs to regurgitate in their fucking reports. Engineering can SSH into boxes at will.

The boxes have lower memory and have shit CPU except with dedicated real-time processing video chips for the actual video. And by real time I just mean the tuner to the output as well as the 'overlay' would render kinda fast with a decent on-board video processor for that kind of stuff. The rest is yes very low end crap. But remember the buy orders on these things are in the tens of thousands at a time. Unless someone is a new customer or we have a tech come out we will not try to upgrade someone's box. That can cause all sorts of problems for none technical people and technical people alike.

The new 4K boxes are much smaller. They don't have hard drives and are designed to play your DVR recordings from the cloud. Which itself is a giant R&D mess. Oh and we're not even talking about the Cable Modems which is a whole other device. Also around $500-$600 for those. When I left they were testing switching to AWS for some VoIP stuff. Testing showed a 3x performance improvement from AWS servers compared to in-house devops. Not surprised lmao.

There's also tons and tons of waste. The Comcast buildings in Philly have data centers in them. There's brand new boxes and servers from 10 years ago sitting in boxes unopened. Don't worry they will just increase your bill to pay for it all! Like I said. Fuck that place. I have FiOS at home.