Is the FCC About to Raise Your Cable Bill … By Accident?
By Ted Hearn, Editor of Policyband
Washington, D.C., Dec. 11, 2023 – On Wednesday, the Federal Communications Commission will embark on a new round of cable TV regulation. Paradoxically, instead of doing consumers a solid, the agency might end up increasing cable bills – which, according to several reports, already exceed $100 a month just for the video portion.
One proposal on the FCC’s Dec. 13 docket is a ban on Early Termination Fees (ETFs). These fees are the payment due, usually on a prorated basis, when a subscriber cancels cable TV prior to the end of a service contract.
The details in the FCC’s proposal suggest the agency did not grasp that long-term cable TV contracts with ETFs attached are an option, not a requirement, or that monthly bills under the ETF structure are typically less than the payment due under month-to-month billing plans.
So, in the end, it is quite possible that doing away with ETFs could result in cable bills going up for cable TV customers locked into ETFs who are subsequently told they need to migrate to month-to-month plans.
“ETFs enable longer-term service plans with reduced rates that are beneficial for many consumers and that banning them would be detrimental to consumers and competition,” NCTA – The Internet & Television Association warned the FCC last week. NCTA represents Comcast, Charter Communications and Cox Communications.
A cable regulation gone sideways wouldn’t be a first in the annals of the FCC. In 1993, the FCC said it was cutting cable rates by 10%, saving 57 million cable subscribers $1 billion.
But things did not go according to plan, as the New York Times reported the following year: “… Instead, the commission was flooded last fall with complaints from angry customers and members of Congress, who said bills were going up rather than down after cable companies found loopholes in the new rules. An FCC survey later found that a third of all customers had seen their bills increase.”
The FCC’s ban on ETFs would apply to all cable and satellite TV providers, regardless of size. They would also be covered by another FCC-proposed ban on Billing Cycle Fees (BCFs) – which require payment for an entire month without partial-month refunds.
For cable operators, a BCF ban could inflict pain on them and eventually customers. That's because the FCC has not taken into account that cable operators pay TV stations and cable programming networks for services based on “a monthly count of the cable operator’s subscribers who are authorized to receive such programming,” NCTA said.
As a result, a BCF ban with a proration requirement “could cause the operator to lose money, putting even more upward pressure on rates,” NCTA added.
ETFs or BCFs also handcuff cable's ability to respond to novel pricing plans offered by streaming rivals like Netflix, YouTube TV and Paramount+, which generally charge by the month or longer and do not offer partial-month rebates because they allow consumers to stay connected for the entire billing period.
The FCC’s will likely adopt the ETF and BCF bans next year, even though the imposition of an asymmetrical regulatory regime could not come at a worse time for cable. Since President Biden’s inauguration, cable TV companies have lost 9.5 million video subscribers - about 9,000 a day.