Cable companies shouldn't force subscribers into renting cable boxes when they could just purchase one outright and save money, a new lawsuit alleges. Kansas native Matthew Meeds has filed what he hopes will become a class-action lawsuit against Time Warner Cable and parent company Time Warner over what he considers to be an illegal tying arrangement that violates antitrust laws and hurts customers.
In a lawsuit filed earlier this week, Meeds notes that Time Warner customers in Kansas are forced to pay a rental fee to Time Warner for a cable box in order to view premium channels. Customers don't have the option of using their own box, and renting a cable box from Time Warner is apparently a condition of subscribing to the premium channels. "By doing this, Time Warner forces the class to pay a much larger amount of money than would be the case if they were allowed to purchase a cable box of their choice from the manufacturer of their choosing," reads the lawsuit.
This practice runs afoul of Federal Communications Commission's regulations requiring the cable industry to separate the descrambling capabilities of the cable box and place them in a separate device (a CableCARD), says Meeds. Although Time Warner does offer CableCARD to customers, it's not easy to find on the company's website and Time Warner promotes its own boxes as superior. Finally, even if customers decide to go with the CableCARD, Time Warner still requires customers to lease the device instead of buying it. In fact, it's quite difficult to purchase any sort of set-top cable box. Despite the FCC's optimism that the introduction of the CableCARD would open the flood gates to tons of third-party boxes, that has simply not happened thanks to manufacturers' disinterest in selling them customers and cable companies' desire to push the rental of their own devices.
Time Warner's actions constitute "unlawful tying" under to the Sherman Antitrust Act because the class can't unbundle tied products from their cable service, says Meeds, who also accuses Time Warner of acting as a monopoly and violating the Kansas Consumer Protection Act. Meeds would like to see the case turned into a class-action and have Time Warner pay damages, attorney's fees, civil penalties, and other costs involved in the suit.
When speaking to the Kansas City Star (via Techdirt) Meeds' attorney John Edgar likened Time Warner's behavior to the days when AT&T used to require customers to rent phones from the company instead of using their own equipment. "I think it's very similar to the cases brought back in those days, where slowly but surely, the courts whittled away at that kind of protectionist activity by AT&T," Edgar told the paper. "I think the same thing is present here. You have a lot of companies out there manufacturing these boxes, and there's nothing necessarily proprietary about them."
Indeed, it has now been 40 years since the FCC ruled that AT&T could not force customers to rent specific handsets directly from the company as long as other devices don't harm the phone system, and the landmark case has been used frequently to shape modern FCC rulings.
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