FCC Floats ‘Junk Fee’ Ban Exemption for Small Cable

Nov 23, 2023

By Ted Hearn, Editor of Policyband

Washington, D.C., Nov. 23, 2023 – Small and rural cable TV providers might be able to obtain exemptions from a proposed federal ban on so-called video junk fees, according to a notice posted on the Federal Communications Commission’s website on Wednesday.

FCC Chair Jessica Rosenworcel has tossed her support behind a ban on early termination fees (ETFs) charged by cable TV providers and satellite TV operators. She also wants consumers to receive rebates from both for terminating service prior to the end of a billing cycle, saying they should be able to avoid significant costs for services they no longer receive. She refers to both ETFs and rebate refusals as "junk fees," echoing President Biden.

The FCC’s detailed proposal – billed as consumer protection, not rate regulation – seeks comment on whether the agency should insulate certain small businesses from complying with new layers of regulation at the federal level.

“For example, should our rules exempt small cable operators or rural cable operators?” the FCC asked, adding that the burden should fall on exemption-seekers to justify such a policy. “Any party advocating for an exception should explain the reason they believe a carve-out from the prohibition is necessary.”

In floating the idea of exemptions, the FCC did not define a rural cable TV operator, though it has a longstanding regulation defining a small cable TV operator as including “any operator that serves fewer than 1% of all subscribers in the U.S. and that is not affiliated with entities that have gross annual revenues exceeding $250 million.”

Throughout the document with the proposed regulations, the FCC insisted an ETF ban and billing cycle rebates were permissible steps under federal laws that authorize the FCC to adopt consumer protection measures.

The FCC said the 1992 Cable Act provides for the agency to protect “consumers against ... poor customer service” and “establish standards by which cable operators may fulfill their customer service requirements.”

The FCC also claimed statutory authority to extend its consumer protection mandate to satellite providers Dish and DirecTV, which have never been price regulated by the FCC, the states, or local governments.

In 1999, Congress barred the FCC from price regulating cable’s “expanded basic” programming tier, the home of ESPN, C-Span, Discovery and BET.

In 2015, the FCC held that every cable TV company in the country was subject to “effective competition,” removing the ability of local governments to regulate the price of the “basic tier” of programming service, which typically includes local TV stations.

Rosenworcel’s proposed regulations sought comment on a few possible scenarios stemming from the ETF ban and rebate requirement. The agency seemed to suggest that it wasn’t entirely clear about unintended consequences as cable and satellite providers adjust to the new regulations.

“To the extent cable or DBS video service is part of a bundled package with non-video services, could ETF and BCF (Billing Cycle Fees) rules be applied to the entire bundle, and if so, under what authority?” the FCC asked.