Report shows cable companies use hidden fees to raise prices while leaving advertised rates unchanged
WASHINGTON, D.C. – A new investigation by Consumer Reports found that cable companies charged numerous costly fees that added $450 to the average customer’s bill each year, based on a review of nearly 800 cable bills from consumers across the country. Cable companies bury the fees deep in the fine print of customer bills in order to raise prices while leaving their advertised rates unchanged, according to the consumer group. CR found that cable companies often provide incomplete or inaccurate information about their fees to prospective customers and sometimes blame the government for the charges.
“Cable companies are notorious for advertising a low price but charging much more by adding a long list of confusing fees to monthly bills,” said Jonathan Schwantes, senior policy counsel for Consumer Reports. “These sneaky fees are a real budget-buster that enable cable companies to jack up their rates and disguise the true cost consumers pay each month.”
For many years, cable bills included a base package price, state and local taxes, and a few government-imposed regulatory fees that operators were allowed to pass on to consumers. The price that consumers were billed largely reflected the advertised price.
That changed about ten years ago, when cable companies began to charge a base rate plus a range of new line-item fees that go by terms like Broadcast TV Fee, Regional Sports Surcharge, HD Technology Fee, and Network Access and Maintenance Fee. The exact assortment of fees varies by cable provider, but they are company-imposed and cover features or services that had previously been included in the base advertised price.
In order to measure the impact of this practice, Consumer Reports analyzed nearly 800 cable bills collected in 2018 from consumers across the country who shared their stories with CR. Consumer Reports catalogued all fees appearing on those bills, paying special attention to company-imposed fees, and then calculated how much various fees were costing consumers. CR’s analysis found that:
- Company-imposed fees cost consumers $37 per month, on average, and add an extra 24 percent surcharge on top of the advertised base price. That comes to $450 per year for the average customer just for company-imposed fees.
- Cable providers could be making an estimated $28 billion a year from charging company-imposed fees. This amount is separate from taxes, regulatory pass-through fees imposed by the government, and optional charges for premium services.
- The average cable bill includes more than 13 line-item charges, including the base package price, company-imposed fees, regulatory fees, and taxes, creating a jumbled environment ripe for consumer confusion.
The combined effect is stretching consumer pocketbooks to the breaking point. A recent Consumer Reports survey found that the telecom industry (which includes cable companies) was the worst offender when it came to hidden fees that CR asked about. Nearly six in 10 Americans who encountered unexpected or hidden fees while using telecom services in the past two years say the fees caused them to exceed their budgets.
In addition to analyzing customer bills, Consumer Reports conducted a secret shopper investigation in which anonymous callers posing as potential customers contacted Charter, Comcast, DIRECTV, Frontier, and Verizon. Though some customer service representatives offered CR’s shoppers accurate information about company-imposed fees, the majority did not, and some incorrectly blamed the government for fees or failed to mention fees at all.
“Pricing for cable service should be fair and transparent so we can find a plan that fits our budget without having to worry about getting stuck paying hidden fees,” said Schwantes. “Congress should require cable providers to include all company and government-imposed fees in their advertised prices to make it easier to comparison shop and find the most affordable package.”
Consumer Reports supports the Truth-In-Billing, Remedies, and User Empowerment Over Fees (TRUE Fees) Act, introduced by Representative Anna Eshoo and Senator Edward Markey, which would require telecom providers to list a single advertised price inclusive of all fees, government and company-imposed alike. Only taxes that vary by locality could be charged separately.
The bill would also allow consumers to end their contract without early termination fees, if the provider increases fees; prevent arbitrary price hikes on equipment fees, unless the equipment is actually improved; and prohibits forced arbitration clauses for wrongful billing errors.
Consumer Reports recently launched “What the Fee?!”, an organization-wide campaign to highlight surprising fees and charges across industries—and help consumers fight back. Consumers can visit WhatTheFee.com to share their stories and learn how to avoid hidden fees.
Michael McCauley, mmccauley@consumer.org, 415-431-6747, ext 7606