The Federal Communications Commission (FCC) voted to approve a new rule that will require cable and satellite television providers to disclose programming-related surcharges and fees to customers in advertised prices.
The measure will force traditional pay TV providers that are regulated by the FCC to reveal the total cost a consumer will pay to subscribe to a programming package, including any broadcast and regional sports fees that have typically not been revealed to customers until after they purchase a service.
“No one likes surprises on their bill — the advertised price for a service should be the price you pay when your bill arrives,” FCC Chairperson Jessica Rosenworcel said on Thursday. “It shouldn’t include a bunch of unexpected junk fees.”
Cable and satellite TV groups opposed the proposal when it was first floated last year, saying any requirement to disclose prices up front could lead to consumer confusion and drive up the cost of their services.
That opposition was renewed last month by NCTA the Internet & Television Association (NCTA) when representatives from the group met with their counterparts at the FCC.
The NCTA — which represents large cable operators like Comcast and Charter — pointed out that broadcast and regional sports fees tend to vary by location, with some cable and satellite customers receiving more of those types of channels compared to others. The disparity means fees associated with those channels can be difficult to nail down in nationally-advertised prices for TV service, and any exercise in providing a specific customer with an all-in price based on their precise location is technologically burdensome, if not impossible, to achieve.
“As fees may vary based on location, to avoid being misleading, advertised prices would either have to be geo-targeted to each media market—which is highly impractical, technically challenging, more costly, and an unwarranted government intrusion into lawful marketing strategies,” the NCTA said in a letter filed with the FCC following its meeting.
Cable and satellite groups warned that any attempts to force all-in pricing would result in marketing efforts that would ultimately drive up the cost of service, suggesting customers who live in certain parts of the country with fewer broadcast and regional sports channels will ultimately be charged the same price as those who live in areas with an abundance of these channels.
Consumer advocacy groups said those concerns were overblow, claiming cable and satellite providers had the ultimate power to lower hidden fees that drive up customers’ bills. Last year, Consumer Reports said broadcast and sports-related fees, along with equipment surcharges, were once included in a base programming price, and suggested the industry needed to make a return to that practice.
“On average, based on the cable bills analyzed for our report, company-imposed fees added $37 to a consumer’s monthly bill, which was the equivalent of an extra 24 percent surcharge added to the base price,” Jonathan Schwantes, the senior policy counsel for Consumer Reports, said in prepared remarks submitted to the FCC last summer. “Unfortunately for consumers, the cable industry practice of separating out operating costs as cleverly-named fees remains firmly in place, and company-imposed fees continue to rise in price.”
The FCC was ultimately not persuaded by arguments from the cable and satellite companies that all-in pricing would do more harm than good, siding with consumer advocacy groups who said the practice of incorporating so-called “junk fees” onto customer bills needed to end.
It wasn’t clear if the pay television industry plans to take the FCC to court over the issue, but some organizations are already voicing their displeasure. Grant Spellmeyer, the CEO of ACA Connects, which represents small and rural-area cable TV providers, said members of his organization already support “easy-to-understand and transparent pricing for customers,” but the initiative passed by the FCC on Thursday only makes things harder for cable operators and customers alike.
“This order fails to meet that goal because it does nothing to address a driving cause of sticker shock—broadcasters’ retransmission consent fees forced on cable providers and, ultimately, on their customers,” Spellmeyer said in a statement. “Further, the heavy-handed requirements are more likely to confuse people than increase transparency and will create implementation challenges for providers.”
Spellmeyer said the issue ultimately highlighted another pain point for cable operators: Retransmission consent terms imposed by broadcasters who have sought higher fees for their channels over the past few years, a driving force behind rising cable and satellite subscription prices.
“With the Commission moving forward on this complex and counterproductive ‘all-in pricing’ order, we again urge it to address this root cause of hidden pricing with retransmission consent reform,” Spellmeyer affirmed. “This is the only way to bring true transparency to the system and make cable bills more affordable.”
