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Set-top TV boxes: What do you pay?

Daniel Dauterive recently noticed that his Dish Network bill had increased sharply, but his subscription rate had not.

"I added no new service," the Missoula, Mont., resident said. He hadn't added hardware, either.  So why the price hike?

Simple.  He was paying higher rent.

Most pay TV customers today pay a monthly fee for set-top boxes that interpret signals sent from the TV provider. Given the variety of options now available – HD channels, digital video recorder capabilities, support for multiple TVs -- costs per box can add substantially to the monthly subscription price. It's a frustration the Federal Communications Commission hopes to take on as part of its National Broadband Plan announced last month.

In Dauterive's case, Dish raised the monthly fee for his set-top boxes from $5 to $14. Dauterive was frustrated by the increase, which he described as sneaky.

"It is obvious that DISH is trying to avoid admitting to raising prices for programming, so they call it fees," he said.

Dish spokeswoman Francie Bauer said the firm made the price change in February as part of an effort to clarify costs to consumers.   Some Dish prices were lowered or eliminated, she said, such as the per-TV digital video recorder fee.

"We tried to do some things to offset the cost (increase)," she said. "We're trying to standardize our prices."

To its credit, Dish spells out the four-tiered set-top box rental costs clearly on its Web site. The first box is free with a subscription, but for each additional TV, boxes can cost $7, $10, $14, or $17 each per month, depending on capabilities.

With some other TV providers, finding the set-top box rental price on Web sites or marketing materials can require an advanced degree in library science. Some bundle in the cost of DVR services or HD channels; others split those costs out. Some prices are based on local conditions, and vary from market to market.

It all makes coming up with an honest apples-to-apples comparison of pay TV services a nightmare. What might sound like a low monthly price in an ad can become a triple-digit bill in a hurry.

It wasn't supposed to be this way. In 1996, Congress directed the Federal Communications Commission to make it easier for consumers to buy set-top boxes from third-party providers, potentially eliminating monthly lease fees. In fact, the reverse has occurred -- consumers are paying more tack-on, set-top fees than ever. And an FCC ruling in 2007 is blamed for pushing leasing prices higher.  That year, pay TV providers were forced to separate their channel changing and channel security functions in their set-top boxes, a move that was supposed to provide an opening for alternative boxes. Consumers who wanted to buy their own simply had to insert a CableCARD -- similar to PCMCIA cards that were once common to laptops -- provided by the pay TV firm. But the so-called "integration ban," cable industry officials said, simply raised the cost of making boxes, an increase that was passed on to consumers.

In the meantime, there's been plenty of consumer confusion about boxes.  In 2008, DirecTV was sued by consumers who say they were misled when purchasing set-top boxes from electronics retailers like Best Buy. Even though the consumers paid up to $200 at the store, the boxes were still "leased," according to DirecTV, which assessed additional monthly fees on the boxes and required that the boxes be returned when consumers canceled service.

Also that year, Time Warner Cable and Comcast were sued by private plaintiffs who claimed the firms violated antitrust laws by forcing customers to rent their boxes.

In March, the National Cable & Telecommunications Association told the FCC that only 489,000 CableCARDS were being used in third-party boxes -- a tiny fraction of all pay TV customers.

Amid the frustration, confusion and disappointment, the FCC is about to take another run at the problem.

In March, when the agency issued its highly anticipated broadband plan, it unveiled a proposal to reignite the set-top box market, this time with even grander goals. Now that millions of consumers are watching TV using their computer and Internet connections, the agency wants to encourage a marketplace for do-everything boxes that would allow people to consume television through  multiple platforms. The FCC wants to require that all multi-channel video programming distributors (MVPDs) play nice with each other, and with consumers, by Dec. 31, 2012. The newfangled set-top box that would allow this freedom is referred to as a "gateway" device.

"It would allow consumer electronics manufacturers to design to a stable, common open interface and to integrate multiple functions within a retail device," the FCC wrote. "Those functions might include combining MVPD and Internet content and services, providing new user interfaces and integrating with mobile and portable devices such as media players and computers. It could enable the emergence of completely new classes of devices, services and applications involving video and broadband."

The FCC is taking up creation of a market for gateway devices at its regular monthly meeting on Wednesday, when it will also discuss other aspects of the National Broadband Plan.

The pay television industry hasn't signaled precisely how it will respond yet to the FCC proposal – competing interests abound.

For example, in a blog posting, Kyle McSlarrow, CEO of the National Cable & Telecommunications Association, said his group saw promise in the gateway concept, but cautioned against a heavy-handed approach.

"While we are committed to working constructively with the FCC on this and related issues, we still firmly believe that technology mandates should be a last resort," he wrote.

In the meantime, what do you pay to rent set-top boxes in your house? Pull out last month's bill and tap out your costs below. Don't forget to include:

1. Provider

2. Hometown

3. Type of box (basic, DVR, etc)

4. Number of boxes

5. Related fees, such as DVR fee

We'll compile a list for a later story and help you compare services.

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