In shift, Comcast now bills for once-free digital adapters
Jan 31, 2013 (The Philadelphia Inquirer - McClatchy-Tribune Information Services via COMTEX) --
When Comcast Corp. upgraded its cable-TV network to all-digital technology, the company told millions of customers with televisions in spare bedrooms or basements that they needed special adapters and that those adapters -- two per household -- would be free.
They're no longer free.
Comcast, which completed the upgrade in 2012, this month began charging Philadelphia-area subscribers $1.99 per digital-television adapter, or DTA, and is expected to extend the pricing policy to other Comcast TV markets in 2013.
Although $2 a month doesn't sound like much, the cable-TV company deployed 23 million of the adapters in U.S. homes during the several-year upgrade, a top executive said last year. When implemented nationwide, the lease charge could boost Comcast cable revenue $550 million a year.
The change also means that Comcast will be charging per TV -- a subscriber previously could run a cable line directly into a second or third TV -- and will put inflationary pressure on TV bills.
Told of the new DTA lease charges, Mark Cooper, director of research at the Consumer Federation of America, said Wednesday that the $2 a month "adds up" and that the pay-TV market "is not sufficiently competitive to protect consumers from abuse."
DirecTV and Verizon Communications Inc.'s FiOS TV service, which compete directly with Comcast in Philadelphia, charge about $6 a month for adapters for additional TVs.
Pay-TV distributors, analysts say, are facing unrelenting revenue demands because of costs for securing sports and other TV channels and seeking new sources of revenue.
Time Warner Cable, the nation's second-largest cable-TV company, added a $3.95 monthly modem-rental fee in 2012.
Steven L. Wittels, a New York lawyer, filed consumer class-action lawsuits over the modem fee in state courts in New York and New Jersey in late 2012.
Time Warner Cable spokesman Alex Dudley had no comment on the suits but said modem lease fees were fairly standard.
'The real mission'
"The industry appears to be diversifying the ways in which it raises prices in an effort to minimize the sticker shock of a single headline price increase," said Craig Moffett, one of the nation's leading telecommunications analysts.
"Whether it is notionally a price increase for DTA converters or monthly broadband service, the real mission is to attempt to recover the soaring cost of video programming," he said.
Derek Baine, senior analyst with the research firm SNL Kagan, said in a research note Monday that "costs are a growing concern" at pay-TV companies. "Will it get better We think not," he wrote.
The Comcast lease charge seems like a change in direction. Comcast customer information on its website, last updated Aug. 8, tells subscribers "How your bill will change with Digital Migration."
The memo says, "If you have the Expanded Basic package, you'll get one cable box and up to two digital adapters at no additional monthly service charge."
The Comcast memo repeats the phrase "no additional monthly service charge" and notes in parentheses, "Prices may vary, and this cost doesn't include any applicable equipment taxes."
Comcast spokeswoman Jenni Moyer said Philadelphia-area customers were informed in their December bills of the new adapter leasing charge, which may include franchise fees or taxes, depending on the town or city. From the beginning of the all-digital upgrade, Comcast has charged subscribers $1.99 a month for each adapter beyond two in a home.
Comcast says there are benefits to adapters.
"In addition to providing customers with additional channels -- including History International, Biography, C-SPAN 3, G4, Sprout, Bloomberg News and Hallmark Movie Channel -- at no change in price, DTAs also provided customers improved picture quality," spokesman Jeff Alexander said in an e-mail.
Comcast has said the digital upgrade has allowed it to offer faster Internet speeds to broadband customers. The company also says it will upgrade this first generation of adapters with HD adapters, and an interactive guide for DTA-connected TVs. The DTAs include TV remotes.
Contact Bob Fernandez
at 215-854-5897 or email@example.com or follow on Twitter @bobfernandez1.
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