Federal Communications Commission Acts Against Video Service Junk Fees

The Federal Communications Commission adopted a Notice of Proposed Rulemaking that proposes to eliminate video service junk fees from cable operators and direct broadcast satellite providers and to study the impact of these practices on consumer choices. Early termination fees require subscribers to pay a fee for terminating a video service contract prior to its expiration date, making it costly for consumers to switch services. Because these fees may have the effect of limiting consumer choice, they may reduce competition for video service. Additionally, billing cycle fees require TV video service subscribers to pay for a complete billing cycle even if the subscriber terminates service prior to the end of that billing cycle. These fees penalize consumers for terminating service by requiring them to pay for services they choose not to receive. The Executive Order on Promoting Competition in the American Economy encouraged the Commission to consider “prohibiting unjust or unreasonable early termination fees for end-user communication contracts; enabling consumers to more easily switch providers” in order to promote competition and lower prices. This Notice of Proposed Rulemaking is the latest in a series of consumer-focused proposals including Broadband Consumer Labels and proposed “all-in-pricing” for cable and satellite services.