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.