Cable companies net around $28 billion in revenue on discretionary fees, many of which are not advertised to consumers in promotional and regular service rates, according to a study.
The Consumer Reports study revealed around 24 percent of cable bills are comprised of fees that cable companies tack on to customer bills to offset the cost of carrying some local broadcast and regional sports channels.
The fees are different from those charged for premium networks like HBO, Showtime and Starz because they often can’t be removed from a customer’s bill, even when a customer switches programming packages.
These fees creep up to around $450 a year on average for cable television subscribers, Consumer Reports said, which draws an estimated $28 billion every year based on current subscriber totals.
There appears to be no relief in sight for customers of traditional pay TV packages: Consumer Reports evaluated a broadcast TV and regional sports fee charged to Comcast customers that averaged around $2.50 a month in 2015 and now cost more than $18 a month. Charter, which sells pay TV packages under the Spectrum name, charges around $13 a month in similar fees, Consumer Reports said.
Both cable companies charge these fees even when customers live in markets where they own local broadcast or regional sports stations. For instance, Comcast cable customers living in the San Francisco Bay Area must pay the same local broadcast and regional sports fees as those living elsewhere, even though Comcast owns NBC Sports Bay Area, NBC Sports California and local NBC station KNTV (Channel 11).
Jonathan Schwantes, a senior attorney for Consumer Reports, sent a letter to several of the nation’s largest cable TV companies — including Charter and Spectrum — urging them to be more transparent when it comes to the price their customers will ultimately pay for service.
“Consumer Reports has long maintained that consumers should have access to full pricing information when they are comparison shopping,” the letter said. “We urge all pay-TV providers and [Internet service providers] to include the full cost of service in the base price so that consumers know the actual price they will pay and can effectively compare the prices of different services.”