Last year, the issue of expensive set top boxes had been a matter of discussion in regulatory quarters and in courts. The latest development was when the second Circuit Court of Appeals rejected an antitrust law that accuses Time Warner Cable of tying the cable TV services to the leasing of cable set top boxes. That action that was reviewed by the second Circuit was consolidated multi district suit targeting Time Warner Cable for allegedly abusing the market power over the premium cable services in fifty-three of their markets.
As per the complaint filed, subscribers were not able to make use of their own cable set top boxes to get some of the services like program guides, “start over” functionality, VOD programming, and parental control devices. In the majority opinion, judges Ralph Winter and Denny Chen wrote that to have a valid tying claim, plaintiffs should show that sale of product is dependent on the purchase of a different product and that the seller of the products has necessary market power to make use of actual coercion to make their consumers buy both of the products.
Judges Winter and Chen added that no tying agreement could exist unless there is much demand for the tied product not related to the tying one. Within this framework, the judges conclude that the cable boxes and the premium services have not been held up as different in-demand products.
“The Complaint alleges that, ‘[b]ut for Time‐Warner’s unlawful tying requirement… there would be a thriving market in which consumers would have a choice in their purchase of cable boxes,’” states the opinion. “However, the Complaint lacks any allegation that there have ever been separate sales of set‐top boxes and cable services, whether or not ‘premium,’ in the United States, even in markets where cable providers face competition and, more specifically, in markets where Premium Cable Services are available through competing fiber optic networks that do not use set‐top boxes.”
The newest decision nods to FCC acknowledgements that try to make different markets have failed. The agency have been navigating content and cable TV companies to reform rules and increase competition to the set top box market.