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Feds say Broadcom used “monopolist” acts against pay TV providers

(Photo by Windell Oskay)

The Federal Trade Commission (FTC) has charged San Jose-based semiconductor manufacturer Broadcom with engaging in monopolistic practices with respect to equipment and services sold to several large domestic pay television providers.

In an announcement released earlier this month, the federal regulator said Broadcom had “monopolized markets” by forcing those pay TV companies to sign exclusivity agreements for services.

According to the FTC, Broadcom abused its market power in several ways. First, it supplied critical processing chips to equipment manufacturers on the condition that they sign exclusivity agreements with Broadcom. Those exclusivity agreements also extended to service providers who used equipment made with Broadcom processing chips and other hardware, the FTC said.

Affected companies who were subject to Broadcom’s tactics included AT&T (AT&T TV, DirecTV), Verizon (Fios TV), Charter (Spectrum), Comcast (Xfinity) and Dish Network. The hardware included set-top boxes used by those companies for their video products, as well as online gateways (modems and routers) used for various broadband Internet services, the FTC charged.

The exclusivity agreements “prevented these customers from purchasing chips from Broadcom’s competitors,” the FTC said. Those competitors were not named in the statement; Broadcom competes in the microprocessor and semiconductor market against Motorola, Intel and Qualcomm, among others.

In a statement, Broadcom said it did not agree with the FTC’s allegations, but was happy to put the matter behind them.

“While we disagree that our actions violated the law and disagree with the FTC’s characterizations of our business, we look forward to putting this matter behind us,” the company said.

As part of a settlement reached with the FTC, Broadcom is forbidden from entering into exclusivity contracts or “loyalty agreements” with suppliers who provide materials for its chips or customers who manufacture its video or Internet hardware. Those prohibitions extend to Broadcom’s dealings with pay television and Internet service providers as well.

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).