Last week, the Federal Communications Commission (FCC) voted to pass a measure banning cable and satellite companies from charging early termination fees. If given final approval, the FCC action would also require cable and satellite providers to provide a prorated credit or rebate to customers who cancel before a billing period ends.
The new rules are being floated in a Notice of Proposed Rulemaking (NPRM) that the FCC voted to approve in a 3–2 vote, with both Republicans dissenting. The NPRM seeks public comment on the proposed rules and could lead to a final vote in a few months or so.
“Today’s action proposes to adopt customer service protections that prohibit cable operators and DBS (Direct Broadcast Satellite) providers from imposing a fee for the early termination of a cable or DBS video service contract,” the FCC said. “Additionally, the NPRM recommends the adoption of customer service protections to require cable and DBS providers to grant subscribers a prorated credit or rebate for the remaining whole days in a monthly or periodic billing cycle after the subscriber cancels service.”
“Consumers are tired of these junk fees,” FCC Chairwoman Jessica Rosenworcel said before casting the deciding vote at an open commission meeting. “They now have more choices when it comes to video content but these friction-filled tactics to keep us subscribing to our current providers are aggravating and unfair,” Rosenworcel added. “So, today we kick out a rulemaking to put an end to these practices.”
As CNBC reports, the agency first announced the proposal in late November to force cable and direct broadcast satellite providers to drop fees for canceling services before the end of a contract period. The rule will also require service providers to issue a prorated credit or rebate to customers for days remaining in the billing cycle after cancellation.
Cable lobby group NCTA-The Internet & Television Association opposes the plan and said it will submit comments to support “consumer choice and competitive parity.” The NCTA stated, “We do not support banning consumers from choosing a service plan with discounted rates in exchange for long-term service agreements that may include early termination provisions. The FCC should understand that its proposals would amount to rate regulation and result in consumers having fewer options.”
The ban on early termination fees is part of the Biden Administration’s initiative against excessive surcharges, or “junk” fees, which the White House estimates cost consumers tens of billions of dollars. Cable companies could be raking in an estimated $28 billion a year on fees, according to a 2019 brief by Consumer Reports.
Consumer advocacy group Public Knowledge called the FCC vote “a huge win for consumers that have felt trapped by expensive and restrictive cable contracts,” saying that “early termination fees are anti-consumer restrictions that make it difficult for households to switch video providers or even change their subscriptions.”
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