If you’ve got Verizon FiOS and you’re paying fees each month for multiple cable boxes, you may be wasting a lot of money. The pay-TV provider has an app that will give you live access to FiOS on your TV through a number of devices that are less expensive than a leased set-top box. Is it deceptive for Verizon to let its customers continue paying for leased boxes without advising them of cheaper options?
That’s a question underlying an ongoing lawsuit against Verizon, filed by a Pennsylvania FiOS customer who says the telecom giant violated the state’s consumer protection law by using “deceptive and confusing” messaging about the necessity of its set-top boxes.
The customer says he had two FiOS boxes in his house, and was paying a total of nearly $20/month to Verizon for the privilege.
In his lawsuit, which was originally filed in a Philadelphia court last year (more on that in a bit), the plaintiff alleges that “Verizon trains and instructs its employees to claim that customers must least a set-top box for each television to be connected to the FiOS network.”
He says that when a prospective FiOS customer goes to order service on the Verizon website, every available service requires the customer to lease a set-top box for each TV set.
The complaint contends that this apparent requirement for multiple set-top boxes is “nothing more than a thinly veiled mechanism enabling Verizon to secure additional, supracompetitive profits.”
FiOS Quantum subscribers are able to access live, on-demand, and recorded video, not just on their smartphones or laptops, but on their TVs through apps on devices like Amazon Fire TV, Google Chromecast, or various Roku products. These devices range in price from $35 to more than $100, but ultimately cost less than what a FiOS customer would pay in a year for a single additional set-top box.
According to the plaintiff, Verizon fails to mention this fact to customers.
“At no time throughout its sales process does Verizon inform its Quantum customers that it is possible to access FiOS service on a television that is not connected to a set-top box,” reads the complaint.
This lawsuit is currently stuck in a legal limbo, as the plaintiff and Verizon argue over where it should be heard and ultimately whether or not the plaintiff is even allowed to file this suit in court.
The potential class action was originally filed last September in a Philadelphia Court of Common Pleas, as it only alleged violations of Pennsylvania law and only sought to represent FiOS customers located in the Keystone State. Additionally, the defendant in the lawsuit is not Verizon Communications Inc., but the local Verizon Pennsylvania LLC.
However, Verizon successfully had the case removed to federal court [PDF], arguing that Verizon Pennsylvania — despite its PA address — is a Delaware-based limited corporation, whose only member is Verizon Communications, which is primarily based in New York.
The plaintiff has since countered [PDF] that the lawsuit should be sent back to the state court, arguing that the Class Action Fairness Act — the very law that Verizon used to justify removing the case to federal court — actually requires the federal court to remand it back to the Philadelphia court.
That matter has yet to be settled, but regardless of where the lawsuit ends up, the plaintiff faces a bigger roadblock: forced arbitration.
Verizon, just like every other major telecom and broadband provider, includes a clause in its customer agreement that does two things: Force customers to give up their right to resolve disputes with the company in a court of law; and bars the customer from entering into any sort of class action against the company, even in private litigation.
Shortly after having the lawsuit removed to federal court, Verizon asked the court to compel the matter into arbitration [PDF]. The judge recently denied that motion, but only because the matter of state/federal jurisdiction hasn’t been decided. Even if the lawsuit does end up back in state court, Verizon can try to force it into arbitration. The 1984 Supreme Court ruling in Southland Corp. v. Keating clarified that that the Federal Arbitration Act applies to disputes in both state and federal courtrooms.
Last year, facing an astroturfed push-back financed by the cable industry, then-FCC Chairman Tom Wheeler tried to break up the pay-TV providers’ control over the multibillion-dollar set-top box industry.
The initial plan was to require that cable companies open up their proprietary box technology to third parties so they could make competing devices that (hopefully) cost less and do more. However, after significant blowback and legal threats from the industry, the final version of the proposal involved only the use of free apps for subscribers. Even though this was nearly identical to ideas put forth by the cable industry, they immediately came out against it, claiming it violated the law.
In the end, Wheeler scrapped a vote on the proposal, and the odds of it being brought up by new FCC Chair Ajit Pai are about the same as me being drafted to play small forward for the Cleveland Cavaliers.