Cox's fee for cable TV boxes spurs suit

Ex-AZ high-court judge Feldman challenges $6.99 monthly charge
2012-10-25T00:00:00Z 2012-10-25T13:17:01Z Cox's fee for cable TV boxes spurs suitHoward Fischer Capitol Media Services Arizona Daily Star
October 25, 2012 12:00 am  • 

A former state Supreme Court judge is hoping to get what he believes is a little justice of his own, for himself and other Arizona cable TV subscribers.

Stanley Feldman is asking the U.S. District Court in Tucson to ban the practice by Cox Communications of forcing those who are buying the company's premium service to also rent a set-top converter box at an additional $6.99 a month. He charges the practice is not just unfair and expensive, but also violates federal law.

The lawsuit seeks to do more than simply halt the practice. It asks Judge Hector Estrada to order the company to "disgorge the profits it has made from its wrongful and illegal conduct alleged."

Todd Schneider, Feldman's attorney, acknowledges premium services offered by Cox and other cable companies require a set-top box to perform two-way communication between the customer and the service. That enables things like the interactive programming guide, on-demand movies and pay-per-view special events.

And forget about high-definition digital reception without a box.

But Schneider said there is no reason Cox cannot sell the box outright, figuring it probably costs the company only about $200. And if the useful life of the box is five to seven years, the lawsuit says, that means those $6.99 monthly fees pay off the cost in less than 2 1/2 years, "leaving Cox with a minimum of 2 1/2 years of pure profits and consumers with a substantial loss."

Schneider also said there is no reason customers cannot buy their own boxes, at least not technically, from another vendor.

He said all set-top boxes use the same basic technology and components. What is happening, Schneider said, is that Cox has set up its system so third-party boxes won't work.

The outcome of the lawsuit could affect more than just customers who want more than basic cable.

The Federal Communications Commission earlier this month rescinded its rules preventing companies that provide a digital signal from scrambling basic cable, responding to concerns by companies about theft of cable services. The net result could be that all cable customers may eventually need a set-top box and be forced to pay an extra monthly fee.

Similar lawsuits are playing out in other states against some other major cable companies.

Andrea Katsenes, a Cox spokeswoman, initially said there are technical reasons customers must use only Cox-supplied boxes.

But when pressed for details, Katsenes said the company will not comment on pending litigation. A prepared statement said the company's business practices "are straightforward, fair and in full compliance with applicable state and federal regulations."

The case started as a nationwide class-action lawsuit against Cox.

A federal judge in Oklahoma rejected the company's bid to dismiss the complaint, but concluded a nationwide class-action lawsuit was not appropriate, suggesting customers and their attorneys bring individual complaints in their home states. Feldman said the lead attorneys for that nationwide lawsuit sought him out to be the lead plaintiff here.

The suits are based on the federal Sherman Act, which deals with illegal "tying arrangements." The contention is customers can get premium service from Cox only if they also agree to pay the company the extra monthly fee for the set-top boxes.

The Arizona lawsuit also charges Cox with violations of this state antitrust laws.

While customers could buy television services from another provider, Schneider said Cox's market dominance puts it in a position to force customers to buy or rent products they do not want in order to get those they do, which is a violation.

Schneider compared company claims to those raised by AT&T years ago, when it insisted that only its own equipment could be hooked up to the telephone lines, and that equipment had to be rented and could not be owned.

Todd Smith, a spokesman at Cox headquarters in Atlanta, said basic cable subscribers have no immediate need to worry about having to get a box because the FCC order allowing encryption applies to companies that deliver only digital signals. Cox provides both digital and lower-quality analog signals, so it cannot legally scramble basic signals unless and until it drops its analog service.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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