Cox accused of antitrust violations over cable TV boxes

By Steve Green

Monday, April 6, 2009 | 10:38 a.m.

Lawyers in Nevada and at least four other states have filed lawsuits against Cox Communications in recent weeks, accusing the company of antitrust violations for allegedly requiring customers to rent Cox's cable TV converter boxes to receive premium channels and services.

The suits, which seek national class-action status, claim Cox uses an unlawful "tying arrangement" that forces consumers to pay a rental fee for converter boxes provided by Cox in addition to the fee subscribers pay for premium channels such as HBO and premium services such as on-demand movies, digital video recording and high-definition programming.

At Cox headquarters in Atlanta, spokeswoman Amy Cohn on Monday said company lawyers are aware of the suits.

"Since this is pending litigation, I'm unable to comment specifically about this or any other related suit, other than to say that Cox intends to vigorously defend itself against this litigation," said Cohn, Cox's executive director, corporate reputation management.

One of the most recent suits was filed April 2 in U.S. District Court in Las Vegas by Cox customer Sandra Prezgay. That suit was filed by Las Vegas attorney Glen Lerner and New Orleans attorneys Jonathan Andry and Kea Sherman.

Similar suits were filed in state and federal courts last month against Cox in Arizona, Louisiana, Oklahoma and Florida.

The trade publication Multichannel News reported last year that suits over the same issue had been filed in California and Missouri against cable TV operators Comcast Corp. and Time Warner Cable.

The federal lawsuit in Las Vegas charges the alleged policy tying the purchase of premium services to the rental of descrambler boxes "impermissibly restrains trade" in violation of antitrust law.

"Cox forces plaintiff and members of the class to rent the boxes instead of offering the option to buy them or allowing plaintiff and members of the class to purchase the boxes directly from another source (i.e. directly from the manufacturer) even though the boxes perform the same function when bought on the open market," the suit charges.

This, the suit alleges, means consumers must pay "a significantly higher sum for cable television than would be required if the two products remained distinct."

"Since plaintiff and the class members can only rent a cable box directly from Cox, there is little incentive for other (converter box) manufacturers to enter the market, and those that do are precluded from renting or selling their products to plaintiffs ... at lower, market-driven prices," the suit alleges.