cable tv

FCC bans cable TV industry’s favorite trick for hiding full cost of service

Cable and satellite TV companies must start advertising “all-in” prices instead of using hidden fees to conceal the full cost of video service, the Federal Communications Commission said in new rules adopted last week.

The FCC voted to adopt the rules on March 14, and the final text of the order was released yesterday. The rules are aimed in particular at the Broadcast TV and Regional Sports Network fees charged by Comcast and other companies.

For years, TV providers have advertised artificially low prices that don’t include such fees. The actual bills received by subscribers thus have prices much higher than the advertised rates.

“The record indicates that approximately 24 to 33 percent of a consumer’s bill is attributable to company-imposed fees such as ‘Broadcast TV Fees,’ ‘Regional Sports Surcharges,’ ‘HD Technology Fees,’ and others, and that the ‘dollar amount of company-imposed fees has skyrocketed,'” the FCC order said.

Cable and satellite companies say the Broadcast TV and Regional Sports fees reflect the ever-rising price of acquiring content from programmers. But acquiring programming is the cost of doing business as a TV provider—with no channels to offer, there would be no reason for consumers to buy the service.

Cable lobby mad about “micromanagement”

One of the new rules states that cable and satellite TV “providers that communicate a price for video programming in promotional materials shall state the aggregate price for the video programming in a clear, easy-to-understand, and accurate manner.”

A similar rule will apply to customer bills, requiring an aggregate price in a single line item. In both advertisements and customer bills, the operator must state whether the price is a promotional rate and what the full price will be after the promotion expires.

Cable lobby group NCTA-The Internet & Television Association claimed that the commission’s “micromanagement of advertising in today’s hyper-competitive marketplace will force operators to either clutter their ads with confusing disclosures or leave pricing information out entirely.” The NCTA previously disputed the FCC’s legal authority to issue the rules, which indicates that the industry may sue the commission in an attempt to block the order.

The TV all-in pricing rules won’t take effect immediately. Because they include information-collection requirements, they are subject to a Paperwork Reduction Act review by the US Office of Management and Budget. The rules will take effect after that review or after nine months, whichever is later.

The FCC previously adopted rules requiring broadband providers to list all of their monthly fees and other information in a format modeled after nutrition labels. The broadband label rules take effect next month.

“Beginning April 10, 2024, consumers should look for broadband labels at any point of sale, including online and in stores,” the FCC says. “The labels must disclose important information about broadband prices, introductory rates, data allowances, and broadband speeds. They also include links to information about network management practices and privacy policies.”

Cable TV companies tell FCC: Early termination fees are good, actually

cable lobby, cable tv, early termination fees, Policy / Paul Patrick / February 8, 2024

A stack of $1 bills getting blown off a person's hand. — Getty Images | Jeffrey Coolidge

Cable and satellite TV companies are defending their early termination fees (ETFs) in hopes of avoiding a ban proposed by the Federal Communications Commission.

The FCC voted to propose the ban in December, kicking off a public comment period that has drawn responses from those for and against the rules. The FCC plan would prohibit early termination fees charged by cable and satellite TV providers and require the TV companies to give prorated credits or rebates to customers who cancel before a billing period ends.

NCTA-The Internet & Television Association, the main lobby group representing cable companies like Comcast and Charter, opposed the rules in a filing submitted Monday and posted on the FCC website yesterday. DirecTV and Dish opposed the proposal, too.

The NCTA claimed that banning early termination fees would hurt consumers. “Discounted plans with ETFs are an advantageous choice for some consumers,” the lobby group said. The NCTA said the video industry is “hyper-competitive,” and that it is easy for customers to switch providers.

“In response to these marketplace realities, some cable operators offer discounts for consumers who choose to agree to remain customers for a longer term,” the NCTA said. “Longer subscriber commitments decrease a cable operator’s subscriber acquisition costs and provide a more predictable revenue stream, which in turn enables a cable operator to offer discounted monthly rates.”

Cable companies also recently urged the US to scrap a “click-to-cancel” regulation that aims to make it easier for consumers to cancel services.

NCTA opposes partial-month credits, too

TV providers will be less likely to offer discounts to long-term customers if they are unable to impose early termination fees on those who want to cancel before a contract expires, the NCTA said. Customers who don’t want the possibility of an ETF can just choose a month-to-month plan, the NCTA argued.

The NCTA also defended whole-month billing in cases where customers cancel partway through a month. Whole-month billing “is the norm for many other common services, including gym memberships, gaming subscriptions, and online publications,” the NCTA said.

Taken together, “prohibiting ETFs and whole-month billing would increase prices and impair competition, to consumers’ detriment,” the NCTA claimed. The NCTA also claims the proposal amounts to rate regulation and is not allowed under the FCC’s legal authority to “establish standards by which cable operators may fulfill their customer service requirements.”

The proposed “ban on ETFs and a proration requirement are not ‘customer service requirements’ by any common understanding of the term,” the NCTA said.

The FCC proposal said that “customer service” isn’t defined in the 1984 Cable Act, but that the legislative history suggests the term includes rebates, credits, and other aspects of the relationship between providers and customers.

“Although section 632 specifies certain topics that must be addressed in the Commission’s cable customer service rules, such as ‘communications between the cable operator and the subscriber (including standards governing bills and refunds),’ the list is not exhaustive,” the FCC said. “Because section 632(b) states that the standards must address these topics ‘at a minimum,’ the Commission has broad authority to adopt customer service requirements beyond those enumerated in the statute.”

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