Public Knowledge: Pay-TV customers overpaying on set-tops by $6 billion to $14 billion

Public Knowledge and the Consumer Federation of America have taken highly speculative data on just how much revenue pay-TV operators are making from leasing set-tops, and extrapolated it to one fuzzy level higher.

Commenting on a polarizing report filed last year by the FCC's Downloadable Security Technology Advisory Committee (DSTAC), the two orgs took stabs at estimating profits U.S. operators are making set-top leasing, pegging them at between $6 billion to $14 billion a year.

Last year, Sen. Ed Markey of Massachussetts and Sen. Dick Blumenthal of Connecticut surveyed the major pay-TV operators, seeking insight into their leased set-top businesses. They got back a highly redacted set of responses, from which they somehow derived total pay-TV set-top leasing data to be in the neighborhood of $20 billion.

Public Knowledge and Consumer Federation of America (CFA) used data from a variety of sources, determining that leasing charge increases have outstripped costs for set-tops.

"Today, the average charge for a set top box is $7.43 per month, an increase of 185 percent since 1994," the groups said.

Public Knowledge and Consumer Federation of America concede that pay-TV set-tops are a lot more advanced than they were in 1994. "But this is true of all areas of consumer electronics. Indeed, computers, televisions, and mobile phones have gotten better to a greater degree than set-top boxes, and more quickly. But as the attachment indicates, the cost of these devices has not gone up since the 1990s. In fact, it has gone down by over 90 percent."

If any of this math appears fuzzy, it's worth nothing that neither the National Cable Telecommunications Association or any of its member operators have released any data to date countering these estimates.

The comments follow technology standard proposals rendered last year by DSTAC to create a means for set-tops made by consumer electronics and tech companies, and sold at retail, to work in the pay-TV ecosystem.

Public Knowledge represents a few such companies who are pushing for the FCC and Congress to adopt a successor standard to CableCard, which largely failed to accomplish the objective of creating a vibrant retail set-top market.

For their part, pay-TV operators have been, to put it politely, cool to DSTAC's suggestions. The general feeling among pay-TV operators is that apps supplied through TV Everywhere enable participation in the pay-TV ecosystem by a wide array of devices.

For more:
- read Public Knowledge's letter to the FCC
- read this Public Knowledge press release

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