Cable TV companies threaten to raise monthly bills over junk fee ban

Cable TV companies are pushing back against the Federal Communications Commission’s proposal to ban early termination fees, which cable firms usually charge consumers for canceling services. In a new filing to the commission, a lobbying group that represents large cable companies claim that if the FCC’s proposed ban goes into effect, then consumers will be charged higher monthly fees for cable service to make up for the loss in money.

In December last year, the FCC voted to approve a Notice of Proposed Rulemaking that introduces the ban. The commission claims in the proposal that early termination fees “penalize consumers for terminating service by requiring them to pay for services they choose not to receive.”

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Proposal seeks partial month refunds

If the ban gets the final approval from the FCC in the next few months, it will also require cable TV companies to give their customers “a prorated credit or rebate” for the remaining days “in a monthly or periodic billing cycle” after they cancel their service.

The NCTA-The Internet & Television Association, which represents cable operators such as Comcast and Charter Communications, is not happy with the proposal. In a Feb. 5 filing to the FCC that was submitted by the association, the group refers to early termination fees as "ETFs" for short and claims that the proposed ban will end up harming consumers.

“Banning ETFs would ultimately harm consumers by reducing the variety and depth of discounts available to them,” said the NCTA.

The NCTA also claims that mandating “partial month refunds” to consumers who cancel their service, which is highlighted in the FCC’s proposal, would “alter the terms under which the customers accepted service” and will result in higher monthly prices for all.

New rule could encourage subscriber churn

“In addition, effectively allowing subscribers to void their monthly service contracts before the end of the month could encourage subscriber ‘churn,’ raising provider costs,” said the NCTA. “The Commission’s refund proposal would therefore put upward pressure on cable rates for all subscribers, as the operator would have to set the rate high enough to offset losses from subscribers who cancel partway through the month.”

The group also claimed that the proposed ban would make the video marketplace more “competitive” when it comes to pricing amid a challenging environment where consumers are cord-cutting cable TV in favor of subscribing to online streaming services.

The NCTA declined to respond to TheStreet’s request for comment on its recent filing to the FCC.

The move from the NCTA comes after it testified last month against proposed legislation from the Federal Trade Commission that would make it easier for consumers to cancel their subscriptions. The group argues that the proposed policy could make consumers "easily misunderstand the consequences of canceling."

Cord-cutting is a trend that has been ramping up in recent years. According to data from Leichtman Research Group, traditional cable providers have lost almost 6 million customers each year between 2019 to 2022 as consumers opt for streaming services such as Sling TV, Disney+ and Hulu.

In another report by Leichtman Research Group, which was released on Nov. 14, top cable providers had a net loss of about 1,015,000 video subscribers during the third quarter of 2023, which is an increase compared to the 985,000 subscribers they lost during the same time period in 2022.

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