FCC Takes Next Step Against Cable ‘Junk Fees’

Dec 13, 2023

By Ted Hearn, Editor of Policyband

Washington, D.C., Dec. 13, 2023 – The Federal Communications Commission today took the next step in cracking down on certain fees charged by cable and satellite TV companies.

In a vote along partisan lines, the FCC launched a rulemaking that will likely result in a ban on Early Termination Fees (ETFs) and Billing Cycle Fees (BCFs) collected by companies like Comcast, Dish and DirecTV. The agency is expected to adopt new rules next year.

Speaking at the FCC's monthly public meeting, FCC Chair Jessica Rosenworcel referred to ETFs and BCFs as “junk fees” – the same term used by President Biden.

“Consumers are tired of these junk fees,” Rosenworcel said. “These friction-filled tactics to keep us subscribing to our current providers are aggravating and unfair.”

In support of Rosenworcel’s plan were Democratic FCC Commissioners Geoffrey Starks and Anna Gomez. Republicans Brendan Carr and Nathan Simington voted against moving ahead.

An ETF is the payment due when a subscriber cancels cable TV prior to the end of a service contract. A BCF refers to the denial of a partial refund after a cancellation at some point in the billing period.

Simington predicted the FCC’s plan would result in higher cable bills because long-term cable contracts with ETFs cost less per month than monthly plans.

“This proposal will reduce consumer choice, make it harder for [cable and satellite TV] to compete in the unified video marketplace, and won’t save consumers one thin dime,” Simington said.

In his comments, Starks said he was open to learning about whether ETFs have any consumer benefits.

“Do they unfairly prohibit consumers from switching providers? Are there circumstances in which they do benefit consumers – for example, by giving consumers a choice between a costlier month-to-month contract or a cheaper long-term contract with an ETF?”

Since the start of the Biden administration in January, 2021, cable TV companies have lost 9.5 million video subscribers - about 9,000 a day.

NCTA - The Internet & Television Association, which represents cable's largest companies, has told the FCC it lacks legal authority to ban ETFs and BCFs.

The cable industry is expected to challenge the FCC in court, claiming a ban on ETFs and BCFs is an impermissible form of rate regulation. Under federal law, every cable system in the country is deemed subject to “effective competition” and exempt from rate regulation.

In his dissent, Carr said the FCC's proposed ETF and BCF bans were relying on “customer service requirements” that the FCC may impose on cable TV companies under a 1984 cable law. He said the law's provision referred to rules limiting the wait times when customers call customer service centers.

“Not exactly a very clear grant of authority to engage in rate regulation,” Carr said.