Customers of Insight Communications ("Insight") who buy or subscribe to premium services must also pay the cable company to rent a converter box. However, two Louisville, Kentucky subscribers have filed a federal lawsuit claiming that they should be free to shop around for a box instead of being forced to buy the Insight cable box.
The lawsuit in U.S. District Court, Louisville Division, which seeks to become a class action, alleges that defendant Insight is in violation of federal antitrust laws by forcing its subscribers or customers to pay “inflated” monthly rental fees for the cable box, without which they are not able to get High-Definition signals and/or interactive services, including Pay-Per-View.
According to Matthew White, attorney for the plaintiffs, “If you or I could … buy this cable box from Radio Shack or what have you, hook it up in our home and it would work, then there would be a marketplace driven by supply and demand” and as a result prices would fall. This lawsuit is one of several similar litigations that are ongoing across the country and accuse the cable companies of encrypting cable signals and of signing exclusive deals with cable box manufacturers so that consumers cannot simply walk into an electronics store and purchase their own converter box.
The lawsuits come as the Federal Communications Commission (FCC) is in the midst of studying the same issue. Last October, the Commission issued rules it hoped would encourage electronics manufacturers to produce converter boxes for retail sale, which would give consumers a choice and, potentially, some savings. That would fulfill a 1996 directive by Congress calling for vigorous retail competition for cable navigation devices, similar to the competition among sellers of phone-system equipment, for example modems and fax machines.
Currently, Insight has 775,000 cable, phone and Internet customers in Kentucky, Indiana and Ohio. Its largest Kentucky markets are Louisville, Lexington and Northern Kentucky. Insight charges $15.95 per month for the box, or approximately $200.00 per year.
According to Insight spokesperson, Jason Keller, Insight doesn't give customers the option of buying a cable box from Insight, that is, instead of renting one. According to Insight's defense lawyer, Larry Zielke, the cable company follows existing FCC rules and isn’t violating antitrust law. But, in their lawsuit filed at Kentucky federal court in 2009, subscribers Michelle Downs and Laurie Jarrett of Louisville argue that customers who buy premium services are essentially held hostage. Since 2008, similar lawsuits have been filed across the nation against cable giants and corporations, including Comcast, Time Warner and Cox. They have been consolidated into a few multi-state cases against each of those companies, which are making their way through the courts now.
CableCARDs, which allow some TVs and other devices such as digital video recorders to decode cable-system signals without a leased box, are available from Insight for $2 a month. The cards stemmed from an FCC order in the late 1990s, however, consumers haven’t embraced them, and TV makers now produce far fewer units with the card slots because they cost more and were tough to sell, according to Steve Effros, a cable analyst and lawyer in Washington, D.C. Further, the cards also have limits that frustrate some consumers, including the inability to perform two-way tasks such as Pay-Per-View. Effros further commented that despite exceptions such as TiVo, which can be used as a cable box using the CableCARD and has its own monthly service charges, electronics companies have largely shied away from manufacturing card-enabled digital video recorders and other devices that can function as cable boxes simply because, according to him, the consumer demand isn't there. Effros also commented that consumers are better off renting a converter box than buying one because rapidly changing technology will soon make any box obsolete. Matt White and many others, however, believe that consumers should have the right and option to make that choice.
The cable industry formally says it supports retail competition for boxes. But Megan Pollock, spokeswoman for the Consumer Electronics Association, which includes the equipment makers, said the cable industry “is a very strong group that certainly doesn't want this change.” She said consumers are taking matters into their own hands — turning to Internet-based services like Amazon Video on Demand and devices like the Roku digital video player to rent TV and movie content without a monthly fee.
“I think that may be in response to some of the frustration with cable,” Pollock said. Meanwhile, consumers like Sara Villacencio continue to pay Insight's rental fee. “They definitely have you in a bind,” said Villacencio, who lives in the Crescent Hill area. She said she would buy her own converter box if she could.
Gray and White Law is among the top law firms of Kentucky, and nationwide, and is an experienced law firm with decades of success litigating claims relating to antitrust, consumer fraud and consumer protection lawsuits. Our law firm has a winning track record and a strong reputation for vigorously protecting the rights of consumers locally and nationwide. If you suspect that you, or someone you care about, was the victim of unfair and/or fraudulent business practices, you should contact our lawyers immediately for your free legal consultation. We are available to learn about your case and to address any questions or concerns you may have at your convenience, simply contact us by toll-free call at 1-888-450-4456 or by confidential e-mail.