Consumers have a lot to complain about when it comes to their cable, broadband, and wireless services. But the issue that hits closest to home is their bills – they’re too high, too confusing, and larded with hidden fees. Cable industry billing practices are a big part of how the cable industry gets away with jacking up rates at more than twice the rate of inflation over the past twenty years.
It’s 2016, and this has been a problem for far too long. You know it, I know it, and the American people definitely know it. Senator Claire McCaskill’s office recently put out a very strong report addressing cable billing abuses and uncovering a plethora of abusive practices. And when they catch errors, not all companies fix them automatically – even when they know the bills are wrong. It’s up to consumers to catch the providers’ “mistakes” and demand refunds.
There’s a lot that goes into an overinflated and confusing cable bill, so let’s break it down piece by piece, starting with…
Things You Don’t, or Shouldn’t Need to Pay For
Let’s start with the fact that you’re forced to pay for things you don’t or shouldn’t need. For example, consumers are forced to rent a set-top box — a dedicated piece of hardware–just to watch their cable subscriptions. Over the past few years, Public Knowledge has been working to convince the Federal Communications Commission to bring competition to the set-top box market, as Congress directed, and alleviate $20 billion in fees American households pay to cable companies every year on required set-top box rental fees. The set-top box market has been almost completely stagnant for twenty years and dominated by cable companies, despite a statute directing the FCC to address this. We continue to urge the FCC to act promptly to end this consumer rip-off and bring competition to this market, as Congress intends.
Speaking of things you shouldn’t be forced to pay for, how about all the channels you pay for that you never watch? That’s right, it’s time to talk bundling. Thanks to consolidated control over particularly valuable programming, and market dynamics which allow cable companies and content conglomerates to negotiate with one another while consumers foot the bill, you’re forced to subsidize a lot of content you don’t want. Not everyone loves ESPN, for example, but you can bet that a good chunk of every pay-TV subscriber’s bill goes to funding that and other sports-related content.
The FCC could fix these two issues, giving consumers greater control and choice while opening up more opportunities for independent and minority-owned creators to gain carriage for their products that compete with force-bundled content. All this, while driving prices down for consumers everywhere. Amazing what competition can do, isn’t it?
Below-the-Line and Deceptive Fees
Then there are the the hidden, below-the-line fees. These fees are often deceptive in nature, as they’re usually not clearly disclosed in advertisements yet cover essential parts of the bundle consumers buy. Comcast was recently sued, for example, for its practice of breaking out a portion of its programming costs – those related to retransmission consent for local broadcast stations that we discussed above – as a below-the-line fee. Many cable and satellite distributors often advertise a price “plus taxes and fees” for a cable package, for example, but only later does it become clear that one or more of those fees is a direct cost recovery fee to offset their costs incurred in delivering the bundled service. Some companies, including Comcast, do the same with regional sports fees.
Cable companies argue that they’re simply being transparent about programming costs. We’d welcome real transparency, but this simply isn’t that. These fees are tacked on in addition to the advertised price for service – transparency about costs should be itemized as sub-parts of that bundle price, not tacked on below-the-line to increase revenue while maintaining the illusion of competitive pricing.
Then there are the legacy fees. I’m a Comcast subscriber, and I pay a $9.95 “HD Technology Fee” every month. That’s a below-the-line fee that doesn't actually tell me anything about what it is. It's maybe a set-top box fee? But my package, or so I was told, included one set-top box in the bundle price, and I have separate line item for a second box in my spare bedroom. So, what's it doing there? I've got no idea, and this below-the-line fee doesn't give me any clarity as to what I'm actually paying for. Billing language shouldn’t be so confusing for consumers, and the FCC shouldn’t permit these kinds of practices.
Bringing Bills Down
There are a lot of reasons cable companies are able to rip off consumers in these ways. The absence of robust competition in the marketplace plays a major role – limited consumer choice means providers have no incentive to lower prices or improve service. Mergers are a big issue here. Consolidation, even if it doesn’t reduce consumer choice directly, gives the newly expanded company even more power and leverage to force anti-consumer and anti-competitive practices which have an impact on consumer bills. They’ve got every incentive, too, as they need to recoup the staggering costs of telecom mergers.
As you can see, it’s not as though examples of cable billing practices are hard to spot. The FCC has fortunately been ramping up its enforcement efforts lately. They recently leveled a fine and, even more importantly, imposed a strict compliance plan on Comcast in response to a wide array of consumer billing abuses, including billing for equipment and services consumers didn’t order and which they couldn’t remove from their bills. So, there’s room for hope, but there are a still of a lot of areas where consumers remain at the mercy of dominant providers, with no relief in sight.
All in all, cable billing is rife with confusing and anti-consumer practices which providers are all too happy to exploit, at your and my expense. Below-the-line fees and billing errors all result in substantial consumer harm and drive up the cost of essential services, while arbitration shields companies from accountability. This situation is unacceptable, and there are a number of ways it can be addressed. The FCC can and should continue to act, and Congress is starting to show an appetite for examining these anti-consumer practices.
Public Knowledge remains engaged on these issues. It’s time for policymakers to start looking for solutions that put consumers first and ensure that their bills are fair, understandable, and honestly reflect the services people want and expect to pay for.