Comcast now bills for digital adapters

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.

While $2 a month doesn't sound like much, the cable-TV company deployed 23 million DTAs 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.

Mark Cooper, director of research at the Consumer Federation of America, said Wednesday that the $2-a-month "adds up" when told of the new DTA lease charges 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 attorney, 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 are fairly standard.

"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," Craig Moffett, one of the nation's leading telecommunications analysts, said.

"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 research firm SNL Kagan, said in a research note on 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 Web site, last updated on 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" later in the memo and notes in parentheses that "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 DTA 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 DTA beyond two in a home.

Comcast says there are benefits to DTAs.

"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 DTAs with HD DTAs, and an interactive guide for DTA-connected TVs. The DTAs include TV remotes.