Brad Hollerbach is the Director of Information Technology for the Southeast Missourian. His opinions are his own and do not reflect those of the newspaper or its editorial board. He writes this blog primarily for his own amusement and to parody the absurdities of the world we live in. He lives with his wife and two cats that don't really care for one another in Cape.

The Actual Cost of Charter's $7-A-Month Cable Boxes

Posted Wednesday, April 23, 2014, at 6:00 AM

Charter Communications switched to an all-digital cable signal in this area on April 15. This upgrade is being touted as an enormous enhancement to customers, that the freeing of the huge amounts of bandwidth which had been tied up by the old analog signals will now allow customers to have dozens of additional digital channels.

But the fine print to that sales pitch is that every TV a customer wants connected to cable -- from the 64" Sony just bought this past Christmas to the ancient 19" Magnavox collecting dust in front of the treadmill -- has to have a set-top box to decrypt the signal from Charter.

That's not surprising. Technology advancements often require change, and one might think that the switched digital video technology Charter is now using in this area must be cutting edge, right?

If you think that, you'd be wrong.

The switched digital video service Charter has rolled out is not revolutionary. Cable companies have been implementing this technology since 2007 and Charter has been steadily upgrading its almost six million customers for the last 4 years. Cape Girardeau and the surrounding area just finally made their corporate to-do list.

Well, if the technology is not exactly new, then perhaps those Motorola DCT-700 set-top boxes that Charter is renting to customers for $7 a month are the latest-and-greatest.

And if you think that, you'd also be wrong.

That model of set-top box has been in use by the cable industry for at least 7 years. A Puerto Rico cable company filed paperwork with the FCC in 2007 that says, "the DCT-700 is the least expensive new set-top box available today, at $79."

That price and time-frame bears repeating: These converter boxes cost $79 each, seven years ago.

I can only guess what Charter Communications is paying today for these boxes in the quantities they likely need for their customers and all of their TVs. $35? $25? $15? When you order millions of anything the price per item tends to drop pretty dramatically.

And yet Charter has the hubris, to not sell these boxes to their customers. That is not an option. Instead they're renting them for what I consider an exorbitant amount for seven-year old technology that sold for less than $80 in 2007.

Sure they've tried to soften the financial sting by typically making one or two of the boxes that a customer needs free for the first year, but that's because they're required to by the FCC from when it relaxed cable encryption requirements in 2012. In that ruling, the FCC did not require the cable companies to allow customers who wanted to purchase the boxes the option to do so, and they did not mandate any price-caps. In fact, the FCC ruling seems much more concerned with the well being of the cable monopolies, saying that "the consumer protection measures we adopt will not be unduly onerous on cable operators."

Onerous? Really? Poor, poor cable companies. Thanks to this lack of oversight and guidance by the FCC, many -- if not all -- of the major cable cartels charge heavily for these set-top boxes that they purchase for a pittance. Time-Warner charges almost the same as Charter while Cox rents their set-top boxes from $2 to $8.50 per month. But since cable companies are essentially monopolies, the alternate viewing choices of most consumers in most markets are highly limited. If you want TV content other than what is broadcast and can be picked up with digital "rabbit ears", you can switch to a satellite provider or cobble together access using an Internet connection and various web-based services.

I elected to go with the former, switching to DISH back in January when I heard of Charter's system conversion. At my house the Internet was not an option since we have a mid-grade DSL package with AT&T, and streaming video tends to download in trickles and spurts, and DirectTV was not viable thanks to a very large elm tree sitting between our house and their satellite in the southwest sky. I've been happy with my decision. Yes, my monthly cost did increase -- along with the features -- but not as much as it would have had I stayed with Charter. And I love the simplicity of the Hopper DVR that I have now. It is sweet!

Is my new system perfect? No. While snow and ice doesn't seem to bother the signal, DISH is not fond of lightning. In the three months we've had the system, we've lost service for about an hour one evening when heavy thunderstorms whipped through the region.

Who knows, perhaps, in a couple years when I fulfill my contract with DISH I might switch back to Charter and their exorbitantly priced set-boxes.

And if you think that is possible, you'd be wrong.

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I also have At&t mid-grade DSL. The option that I have found very pleasing: purchase a $100 digital TV antenna, connecting to existing wired coaxial (thus no rabbit ears required), purchase Roku boxes for all TVs and stream Netflix for $7.99 a month.

However, it has been announced Netflix will be raising their prices $1-2 dollars a month for new customers soon. Existing customers monthly fee will also be raised after a 'generous' grace period.

I had DirectTV for years, but found myself watching DVDs or local channels far too often because nothing good was on 120+ channels at $60+ a month.

-- Posted by Otoe on Thu, Apr 24, 2014, at 7:47 AM
Cable monopoly? It's not 1980. The VAST majority of places have multiple cable companies that they can utilize, not including satellite. Just because Cape and the Se Mo area is behind, does not mean the cable companies are monopolies.

You have the Dish DVR, but are focusing on the Charter cable box? Why not just get a Charter DVR? Dish's Hopper is better than Charter's Motorola DVR though as the Hopper is a really good product. U-Verse TV, unavailable in this region at this time, has the best DVR on the market imo (a different Motorola model than the one Charter offers). The On Demand service from Charter is very good, and not offered by Dish or U-Verse, so Charter has that going for it. Dish and Charter are by far the best two options in this area, DirectTV is going the way of the dinosaur and the VCR it seems. They need to do something to make them more relevant.

If you're not happy with AT&T internet, and I don't know anyone that is, get Charter's, their internet service and speed options are very good. You don't have to get phone or tv with it, just get the internet only, but would get a better price on their internet if you 'bundle'.

My ideal scenario would be for U-Verse TV with their DVR, Charter internet, and then whatever company out there gives me the best deal for landline phone service.

-- Posted by gomer on Thu, Apr 24, 2014, at 10:14 AM
Gomer, In the interest of full disclosure, how long have you worked for Charter?

I have AT&T (internet) DSL for 13 years and very happy with it. I do not look forward to the time when I will 'have' to trade in my CISCO modem for newer technology.

You do realize U-Verse is an AT&T (internet) product, right?

If you read Brad's entire blog entry, you know he has recently changed from years of Charter to Dish. His motivation was the cost each new digital boxes that are now required on every TV.

-- Posted by Otoe on Thu, Apr 24, 2014, at 12:49 PM
Cable companies are definitely considered a natural monopolies. Below you will find the top 10 cable companies subscribers, as of 2012. The numbers certainly support a 'natural monopoly' stance.

1. Comcast 21,690,000

2. Time Warner Cable 11,197,000

3. AT&T U-verse 5,266,000

4. Verizon FiOS 5,170,000

5. Cox Communications 4,540,280

6. Charter Communications 4,158,000

7. Cablevision 3,197,000

8. Bright House Networks 2,013,145

9. Suddenlink Communications 1,211,200

10. Mediacom 1,000,000

-- Posted by Otoe on Thu, Apr 24, 2014, at 12:52 PM
Gomer,

In Wikipedia the entry on cable companies cites the following from a 2010 law journal:

"Many cable systems operate as de facto monopolies in the United States. While exclusive franchises are currently prohibited by federal law, and relatively few franchises were ever expressly exclusive, frequently only one cable company offers cable service in a given community."

Sure AT&T U-Verse can be an option in some places, but it is only available in about 22 states and reaches approximately 30 million households or a little less than 25% in the country.

That number may be a bit fuzzy though since U-Verse is actually available here in Cape -- just not the TV portion. I can get the internet portion at my house, I just haven't. I'm sure the problem for AT&T is the "last mile." Video signals don't run very well over legacy Cat-3 cabling that is so prevalent. Unfortunately, the cost of running fiber is still pretty expensive and tends to be cost effective in either densely populated or affluent markets.

DISH does have on-demand, but so far I haven't really had a desire to use any of those services, and I think they're kind of expensive. If I want to see a new movie release I know of at least 3 Redbox rentals within a mile of my house and will go there and save $5. Besides, after I got the DVR and had my 3 months of free premium channels, I now have more than enough interesting programming stored up to last me a year or more (DVR is half full!).

Before I switched to DISH, I calculated the cost for staying with Charter (and getting their DVR) over the course of a two-year period. If I wanted to maintain the same number of TVs that we have -- but not have all of them on the DVR -- Charter was going to cost me about $1000 more than DISH over those two years.

I have considered switching to Charter Internet, but a neighbor has it and is actually switching to DSL because of speed issues. What a lot of people don't realize about Internet service from either cable or DSL is that they are shared bandwidth. The more households that are connected in a given neighborhood to a particular service can slow down everyone's service.

Thanks for reading.

-- Posted by Brad_Hollerbach on Thu, Apr 24, 2014, at 1:52 PM
Don't work for Charter, never have. Frankly don't know anyone that works there either. Just because someone says that a company has a particular good product doesn't mean you work for them, sheesh. I have their services though. Like their On Demand services, LOVE their internet services, phone service is pretty meh. I have a good price on phone service with them, that's the only reason I have it through them right now though. Just a guy that has expanded cable tv packages, Amazon Prime, Netflix, Roku, WatchESPN, etc. I'm just kind of a TV junkie really (yes, sad, I know).

Epictus - yes I know all about AT&T U-verse being an internet product. Are you not familiar with the fact that AT&T U-Verse has a cable TV service also? Their cable tv service is very good, their internet is very meh, at least from what I've experienced and heard from many others.

I would switch to AT&T U-Verse TV in a heartbeat though if it was available here (and not the DirectTV partnership they offer, the actual U-Verse TV).

Brad - Charter's On Demand service I was referencing is the free portion, the ability to watch a TV show from last week that you didn't record on the DVR but can still watch for free. The little gomers in the house use it all the time, watching their shows that came on last week. etc. Being able to watch the shows from last week and further back attracts me to the On Demand service, not the movie purchases. I watched all of Game of Thrones season 2 after the entire season was already over on HBO, but you could still watch On Demand. Haven't watched any of the current season yet (please, no spoilers lol) but plan on doing so in time with On Demand.

As far as internet speeds, sometimes you have to make sure you have a router capable of delivering the speeds you signed up for. Doesn't hurt to double check that before anyone signs up for these mega speed offers that are coming along lately.

-- Posted by gomer on Thu, Apr 24, 2014, at 4:35 PM
Turn the **** thing off and get a life.

-- Posted by math on Sat, Apr 26, 2014, at 7:47 AM
Charter's motto: "We work hard every day to find new ways to charge you more money."

-- Posted by ParkerDaws on Thu, May 1, 2014, at 9:35 AM
Unfortunately that motto is so true........

And here is an eye opener for ya. As a poster above stated Charter has over four million subscribers.

4,000,000 x $7.99= $31,960,000!!! How much they will make in one year if those people only had one TV with a box. We know lots of them will have more than one box. So......... Monopoly I Don't Know But, GREEDY YES!!!!!!!!!!!!!! :0 And I wonder how much if any of that money will go to the low rungs of the ladder. The ones who actually do the work!!!! But just my thoughts...... :S

-- Posted by CommonCentsGal on Tue, May 6, 2014, at 1:44 PM
I was in Cape when my mother's TV went dark on April 15. That experience set it motion something that is going to have unintended consequences for cable companies in two states.

I figured that I could go with an off-air antenna to pick up all the local stations where we live in FL. That means I can shed at least $60 a month in cable fees. We have two Tivo boxes, that's another 21 bucks a month for service.

We already get streaming video through Amazon Prime, but I may add Netflix or Hulu with the savings from dropping Comcast and Tivo.

If that works out well in FL, I'll put an antenna on Mother's house for all the local stations she watches and cut the cable cord. I bought her a Roku box for an early Mother's Day gift to watch old movies, so there should be plenty of stuff to occupy her.

I'd be interested in hearing how well thumbing your nose at the cable companies has been working out in the SE MO area.

-- Posted by ksteinhoff on Mon, May 12, 2014, at 10:46 PM
I think the price of watching tv has gotten way to high. The time has come to just botcott all of the cable companies. We pay these high prices for what? Entertainment? Its getting ridiculous. I pay more for cable than I do for heating. Then they dont even tell you about the box prices until you get the bill. You try to call and complain and they dont care what you have to say or how long you been a customer. They just want your money. How much is enough? How long do you think we would have to go without cable before they lower their prices? A week? A month? I can bet it won't be longer than that. That is if we ALL have them come get their equipment. It will only work if we all stick together. I am willing to give it up in order to make them realize that WE are the customer and we are tired of being held hostage.

-- Posted by stlsross on Mon, Nov 17, 2014, at 6:06 AM

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