Consumer Reports is calling on the Federal Communications Commission (FCC) to move forward with developing a pricing transparency rule to mitigate the consumer harm and confusion caused by company-imposed fees (or what some today may label “junk fees” in most cases) in the cable and satellite television marketplace, or pay-TV marketplace. Consumer Reports along with Public Knowledge filed official comments to the FCC’s Notice of Proposed Rulemaking (NPRM).
“CR commends the FCC for working to address the issue of junk fees that have infiltrated every corner of the American economy, especially within the cable TV marketplace. This proceeding reflects policymakers’ growing recognition that concrete measures are necessary to rein in these excessive fees that harm consumers,” said Jonathan Schwantes, senior policy counsel at Consumer Reports. “Bold action is required to hold these companies accountable. We cannot simply trust the cable industry to rid itself of company-imposed fees which generate billions of dollars annually for these companies and serve little purpose other than to provide a vehicle to raise prices outside of a “locked-in” promotional rate and in some instances, multiple times a year. The FCC should act now to get rid of junk fees in the cable marketplace.”
CR is calling on the FCC to adopt the following reforms to protect consumers:
- Prohibit mandatory company-imposed “junk fees” (like the Broadcast TV Fee) which represent costs necessary to the underlying base service (video service)
- Display a prominent line item of the all-in price for video service, including equipment fees like set-top box rental fees and other junk fees like the HD Technology Fee
The FCC’s NPRM cites a 2019 CR report that examined hidden fees for a variety of services in major sectors of the U.S. economy, including the cable TV and broadband industry. As part of our research, CR examined hundreds of cable and satellite television bills collected in 2018 and made several findings, including that consumers pay significantly more than the advertised price for video programming (what we called pay-TV service in the report) because of the addition of various fees, surcharges, and taxes. Specifically, CR determined that for cable bills, additional charges of all types amount to an additional 33 percent mark-up over the base price of service. Many of these additional charges are not included in the advertised price, and are instead buried in the fine print of the service plan.
Company-imposed fees (e.g., Broadcast TV Fee, Regional Sports Fee, rental fees for set-top boxes, etc.) which are solely the creation of the provider (versus taxes or regulatory fees that are passed on to the consumer) and typically mandatory, made up the bulk of these added costs to the advertised price. 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.
Schwantes added, “In the face of evidence uncovered by CR of how company-imposed fees like the Broadcast TV Fee may be misrepresented as government fees or otherwise, and are potentially misleading to consumers, we are deeply skeptical that continuing their itemization on monthly cable bills provides any countervailing consumer benefit. Therefore, the Commission would be wise to prohibit them from being listed as line items.”
In April 2023, CR conducted a nationally representative survey of 2,121 U.S. adults to learn more about their experiences with hidden fees across a range of products and services in the last two years. CR found that 51 percent of Americans who had encountered hidden fees for telecommunications said those fees caused them to exceed their budget for their cable, internet, or phone service, and two out of three Americans (68 percent) say they are paying more in hidden fees now than they did five years ago.
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