Loss-leader low prices are accompanied by murky fees.
Pay-TV companies won’t be allowed to advertise a low price but then hide costly fees in the fine print under reforms included in the omnibus spending bill approved by the Senate today.
Consumer Reports published an extensive report that documented, on average, $450 a year in extra company-imposed fees charged by cable and internet service providers.
Consumer Reports praised lawmakers for including the reforms in the spending bill, which was approved by the House earlier this week and will be signed into law by the President.
“People across the country are fed up with all of the extra fees they pay each month that keep growing more costly year after year,” said Jonathan Schwantes, senior policy counsel for Consumer Reports.
“Cable companies shouldn’t be allowed to disguise the true cost of service by charging a long list of add-on fees that aren’t clearly disclosed when customers sign up for service. These reforms will bring fairness and clarity to pay-TV billing so we can find a plan that fits our budget without having to worry about getting stuck paying hidden fees.”
Consumer Reports found that 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 premium services charges.
The spending bill incorporates the reforms in HR 5035, which requires pay-TV operators to disclose the total price, including all itemized charges, fees, and estimated taxes, before a consumer signs up for a video package, whether offered individually or as part of a bundled service.
Consumers will have the right to cancel service without penalty within 24 hours after receiving notice of the total cost at the point of sale. Pay-TV providers would be prohibited from charging consumers for equipment they do not use. The reforms will go into effect six months after the President signs the bill into law, unless the Federal Communications Commission grants a six-month extension.
Consumer Reports has been a champion of the effort to end hidden cable fees as part of its “What the Fee?!” campaign, which works to highlight surprising fees and charges across industries and help consumers fight back.
Consumer Reports found that consumers are being charged equipment fees for routers and modems even if they choose to use their own devices. In addition, some providers are starting to charge similar fees for internet access.
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. But in recent years, cable companies have been charging a base rate plus a growing list of fees that go by terms like Broadcast TV Fee, Regional Sports Surcharge, HD Technology Fee, and Network Access and Maintenance Fee.