FCC Plans to Curb Video Service Junk Fees imposed by Cable and Satellite Operators

Federal Communications Commission (FCC) has unveiled a proposal to cut video service junk fees imposed by cable operators and direct broadcast satellite (DBS) providers.
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Kantar’s Entertainment on Demand study in the US uncovers the following behaviours within the VoD market over the 3 months to December 2022:

The report said the number of households with video streaming rose 2.5 million, reaching a total of 115.6 million households in the US from September to December 2022. Household penetration of video streaming is now 89 percent.

FCC says its Notice of Proposed Rulemaking (NPRM) proposal includes an examination of the repercussions of these practices on consumer options.

The proposal aims to address the burdensome nature of early termination fees levied on TV video service subscribers, which force individuals to pay a penalty for terminating their service contracts prematurely. This financial deterrent, often a barrier to switching services due to reasons like relocation or dissatisfaction, poses challenges for consumers seeking to opt for alternative providers.

Highlighting the potential limitations these fees impose on consumer choices and their adverse impact on competition in the video service arena, the FCC’s move resonates with the objectives outlined in the Executive Order on Promoting Competition in the American Economy. The order urges the consideration of measures to prevent unjust or unreasonable early termination fees, enabling consumers to navigate provider transitions more seamlessly.

This NPRM falls in line with a broader series of consumer-centric initiatives, aligning with previous proposals such as Broadband Consumer Labels and the concept of “all-in-pricing” for cable and satellite services, all aimed at enhancing transparency and consumer empowerment in the telecommunications sphere.

The proposed customer protection measures set forth in this action would bar cable operators and DBS providers from imposing early termination fees on video service contracts. Additionally, the NPRM suggests mandating these providers to issue prorated credits or rebates for the remaining days in a billing cycle after a subscriber cancels their service.

The Commission’s decision, endorsed by FCC Chairwoman Rosenworcel and Commissioners Starks and Gomez, has encountered dissent from Commissioners Carr and Simington, with each issuing separate statements. Nevertheless, this move signifies a critical stride by the FCC toward fostering a more consumer-friendly landscape within the video service domain.