News

Now Up for E-Bidding: Digital Cable Set-Tops

9/09/2001 8:00 PM Eastern

OpenCable-compliant digital boxes aren't yet available on retail shelves, but that hasn't stopped consumers from buying and selling the equipment on their own via the Web.

Although theft of analog cable service continues to draw the most attention, there's a growing trend in which consumers sell digital cable set-tops via popular online auctions, such as eBay Inc.'s Web site.

While selling non-addressable analog boxes is legal in most states, the sale of digital cable boxes by consumers is a much thornier issue. One big reason: Cable operators, not consumers, are the rightful owners of the equipment.

Still, buyers don't have to look very hard to find digital-cable boxes up for sale. A search last week for "digital cable box" on eBay generated about 19 listings, and a search for "digital cable" pulled up 201. Similar searches on Yahoo! Auctions and BidBay did not result in any listings, although both sites had analog boxes up for bid.

Though only about two dozen digital cable set-tops are listed on eBay at present, service theft continues to represent a sharp thorn in the cable industry's side.

The National Cable & Telecommunication Association estimates that cable operators lose $6.5 billion annually in unrealized revenue through a combination of basic, premium and pay-per-view service theft.

With respect to illegal consumer sales of digital boxes, it's the capital that cable operators have sunk into their networks — not service — that's at stake.

Digital set-tops from Motorola Broadband Communications Sector and Scientific-Atlanta Inc. that may have cost an operator hundreds of dollars each are being turned into a tidy profit, upwards of $50 in most cases, by their digital-cable customers.

Digital-cable boxes sold at auction should also come with a buyer beware warning. That's because Motorola set-tops are not compatible with S-A's network, and vice versa. And encrypted conditional access and high levels of addressability will leave those buyers who just plug in their set top and hope for the best with a "brick," instead of a working digital-cable box.

That technology has also aided cable in its fight against potential digital box knockoffs. But that doesn't mean third-party box merchants aren't at least thinking about it.

For example, the Web site www.101-cable-boxes-and-descramblers.com sells plenty of analog set-tops, but no digital boxes. The site notes: "Unfortunately NOTHING is available for the digital service (no cable descramblers or cable cubes) … We will CERTAINLY offer the items on our site as soon as they become available."

The site then encourages surfers to bookmark it and check back often.

Another site, www.cable-descrambler-box.com, declares that no digital cable knock-offs are available, but it "will be one of the first websites (sic) to offer universal digital cable descrambler boxes for sale!"

On the analog side, non-addressable clones are available under brand names such as Cleartron, Viewmaster, King Cobra and Ranger. A search on eBay for the words "cable box" generated 756 listings, most of the analog variety.

The majority of the analog box auctions were covered with disclaimers, such as this one from a seller based on the "East Coast": "The 2001 Cleartron Platinum Series is a legal product. We have listed it properly and it is not on your list of Banned Items. Purchaser must comply with all local, state and federal laws regarding the ownership of cable-TV equipment. It is illegal to watch premium cable channels without the knowledge of your cable provider."

UNBIDDING BIDDERS

Despite obvious technical obstacles, consumers unaware of those problems continue to bid on digital boxes.

An eBay seller in Las Vegas, for example, put an S-A Explorer 2000 up for bid. As of last Tuesday (Sept. 4), the bidding was up to $24.50, plus $12 shipping and handling.

Another seller based in southern Florida was selling a Motorola DCT-2000-class box. The seller's pitch: "Box lights up fine and scans through to [channel] 545. I have no way of testing because I do not have cable so box is being sold 'AS IS.' "

Last Tuesday, the bidding was holding steady at $23.16.

A Motorola digital box previously deployed on a Comcast Corp. system "powers on and scans through all the channels," read another seller's listing.

One eBay member who had a DCT-1000 up for bid was a bit surprised to learn that what he was doing might cross legal lines. In fact, he blamed his plight on the cable operator.

In an electronic-mail response, the seller explained that he had moved recently, "and the cable company did not pick up the box despite my calling them a few times. So, rather than throwing it out (my new neighborhood doesn't have digital cable), I decided to put it up for bid."

Another online auctioneer who was selling a DCT-2000 said the box came into his possession from a friend. "The fellow this came from had … digital cable service, and the remote was destroyed, of which the cable company had made him pay for the whole unit. He thought the remote and unit went hand-in-hand and paid for it."

While some sellers had digital boxes up for bid, others — such as an AT&T Broadband customer in Chicago — were auctioning digital-cable remote controls. Starting bid: $5.

"You never know when those things will be lost or broken. Have an extra ready," read the seller's pitch.

Though eBay allows its registered members to sell digital boxes, the company, which inked a new three-year marketing alliance with AOL Time Warner Inc. earlier this month, does give operators some recourse if it's believed that equipment up for bid is not the seller's property.

An eBay spokesman directed inquiries to the company's VeRO (Verified Rights Owner) Program, which is designed to protect intellectual property owners from having their products sold illegally via auction.

Fair enough, considering millions of items are up for bid everyday on the site, making it a monstrous chore for eBay to police every posting.

The program is available because eBay "does not and cannot verify that sellers have the right or ability to sell or distribute their listed items … [and is] committed to removing infringing or unlicensed items once an authorized representative of the rights owner properly reports them to us," according to a description of VeRO on the company's site.

In the case of digital-cable boxes, that authorized representative would theoretically be the cable operator or set-top vendor. After becoming a VeRO member, cable operators would be free to identify and request removal of questionable listings.

VeRO members also get access to dedicated eBay staff and priority e-mail for infringement reports. A "Favorite Searches" option offers VeRO members with up to 15 different automated searches for potentially infringing auction items. Results from those searches are subsequently e-mailed to the VeRO member.

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