FCC Plans to Stop Video Service Providers from Charging Early Termination Fees

The US Federal Communications Commission (FCC) recently introduced a new proposal that would eliminate what it calls video service junk fee billing practices," commonly used by cable operators and Direct Broadcast Satellite (DBS) service providers.

TheFCC has announced a rule proposal to ban early termination fees for cable and satellite service contracts. https://t.co/EAfa6mIQpn

- Meet the Press (@MeetThePress) November 22, 2023

These are the fees the mentioned services have put into place for users who wish to terminate their subscriptions before expiration, effectively forcing them to pay more for giving up on the providers' TV plans.

The FCC is also interested in studying their impact on consumer choices.

The Proposal Awaits the Mid-December Vote

The proposal is still awaiting an official vote, scheduled during a meeting on December 13 of this year. According to the FCC, the early termination fees might limit consumer choice and negatively impact competition for services in the marketplace.

Right now, the billing cycle fees also require users to pay for the entire billing cycle, even if they decide to terminate the service before the process ends.

This is something that the FCC wants to stop, and essentially, only have the users pay for the period during which they have access to the offered channels.

If the Commission votes to approve the proposal, a Notice of Proposed Rulemaking will propose prohibiting DBS' and cable operators from imposing the early termination fee in their contracts.

Instead, providers will grant subscribers a prorated credit or rebate for the days remaining in the running month from when they cancel their subscriptions.

The regulator further referred to a recent presidential Executive Order on Promoting Competition in the American Economy.

This order encouraged it to consider prohibiting unreasonable and unjust fees, and according to the FCC, early termination fees are a perfect example of this.

Promoting Competition and Lower Prices

With the fees out of the way, users would not feel obligated to stick to a specific provider. Instead, they could easily switch providers, resulting in greater competition among services and the need for quality service.

At the same time, subscribers would enjoy lower fees, likely as part of the companies' attempt to attract subscribers.

Finally, the FCC shared that it intends to implement Broadband Consumer Labels and even proposed all-in pricing for satellite and cable services.

Jessica Rosenworcel, the FCC Chairwoman, commented on this by saying that no one wants to pay junk fees for something they don't like or can't use for some reason.

She affirmed,

When companies charge customers early termination fees, it limits their freedom to choose the service they want. In an increasingly competitive media market, we should make it easier for Americans to use their purchasing power to promote innovation and expand competition within the industry."

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