‘Big Four’ networks press Congress to probe Cable/Satellite companies over unfair billing

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TVFreedom, a coalition headed up by the “Big Four” broadcast networks (ABC, CBS, NBC, FOX), wrote a letter to leaders of the House and Senate communications oversight committees today, requesting an investigation into the billing practices of cable and satellite companies. Broadly speaking, the networks are accusing cable and satellite companies of ripping off you, the viewer. More specifically, TVFreedom claims that “the negative economic impact of pay-TV fees and billing practices on the American family budget highlights the need for further Congressional inquiry.” The coalition further recommends “that the Committee consider fundamental industry-wide reform to facilitate lower monthly pay-TV bills for the American consumer.”

The principal allegations listed in the letter include cumbersome and hard-to-understand “Truth-in-Billing” (TIB) updates, overbilling, excessive equipment retail fees, hidden “below-the-line” fees, lockdown early termination fees, and unnecessary “change-of-service” fees. Back in late April, TVFreedom wrote a similar letter to eight consumer groups – including Consumer Action, Free Press, and Public Citizen – that went into more technical detail when describing the purported affronts.

Probably the most stunningly grievous offense detailed in the April letter is the estimated $7 billion that cable operators rake in each year from set-top box leasing fees. The report notes additionally that, despite the fact that consumer electronics prices almost always drop over time, monthly cable set-top rental prices continue to rise – it’s the “one area where operators can raise revenue to boost earnings … at a time when cable operators are faced with rising programming costs.” This is one of the biggest factors driving consumer costs higher and higher.

Trying to save money? Yep – there’s a fee for that, too.

The letter goes on to delve into more damning statistics. Under “service commitment arrangements,” subscribers are often forced to agree to pay between $240 and $480 in early termination fees, effectively locking them into paying higher monthly bills filled to the brim with vaguely labeled “below-the-line” fees slyly tucked into customers’ billing statements. Furthermore, analysis by Consumer Reports finds that “consumers’ monthly cable and satellite TV bills have increased at double the rate of inflation in each of the past 15 years through 2012.” The NPD Group has also unearthed a concerning scrap of data: consumers today pay an average of $90 per month for pay-TV services, and research predicts that continuing down this track will yield monthly bills averaging a ridiculous $200. As a result, TVFreedom is calling for a comprehensive series of “Truth-in-Billing” reforms, including expanded federal oversight of pricing and billing practices in the video realm.

Pay-TV operators are also accused of amassing revenue via the classic nickel-and-dime tactic, using “one-time, change-of-service fees that are typically less than $5 as a ‘lock-in’ mechanism for their revenue streams.” The charges tend to crop up when consumers seek to lower the cost of their monthly bills by requesting a change of service to less expensive tiers of bundled programming.

Trying to save money? Yep – there’s a fee for that, too.

While the four big networks are heading up the coalition, the remainder of TVFreedom is comprised of local broadcasters, community advocates, network television affiliate associations, multicast networks, manufacturers, and other independent broadcaster-related organizations. Overall, the alliance seeks to “enlighten the public on the controls they have in place to identify and self-correct billing errors, subpar service quality, and corporate policies that negatively impact their customers.” That’s the politically correct way to put it, at least.

Until recently, it would’ve been safe to assume that pay-TV operators and big broadcast networks were incahoots, but it appears that cable/satellite providers have overstepped their bounds, and networks are pushing back. At the heart of the Big Four’s concerns is their belief that the increasingly-monopolistic service providers are snuffing out innovation and effectively holding their own subscribers hostage as a means to extort greater and greater profits. Ultimately, networks’ profits are on the line, and some form of pushback is inevitable.

 Image courtesy of HconQ/Shutterstock