Study: Cable bills disguise price hikes

Consumer Reports finds unadvertised surcharges cost average customer nearly $450 annually

Cable companies are imposing fees that jack up customers’ bills by hundreds of dollars a year on average, disguising price hikes without changing their advertised rates, according to a new report.

A review of nearly 800 cable bills by Consumer Reports, a consumer advocacy group, found that company-imposed fees cost customers $37 per month on average, or nearly $450 per year — effectively adding a 24% surcharge on top of the advertised base price. The report, released last week, estimates that cable companies could be collecting $28 billion a year from such hidden fees.

Unlike taxes or charges for optional services, these fees merely cover the cost of doing business, according to the report. In many cases, the fees cover features and services that had previously been included in the base advertised price.

“Cable companies are always criticized for raising their rates,” said Jonathan Schwantes, senior policy counsel for Consumer Reports. “So now they’re disguising their price increases in these fees without changing their advertised rates.”

Cable companies cited rising programming costs to carry content from local network affiliates and other broadcasters, according to the report. For example, the “Broadcast TV Fee” is a non-optional fee that cable companies said helps recoup their cost of obtaining programming from broadcasters.

Broadcasters typically ask cable companies to pay more to carry their TV channels, while cable companies try to keep costs low. The fee disputes have become more contentious in recent years, and cable companies often have little choice but to pay up or else risk having content “blacked out” by broadcasters, the report noted.

But authors of the report argued that providing these channels is among the most basic services a cable company offers and should be included in the advertised base rate. No one is forcing cable companies to pass these costs onto consumers, Schwantes said, adding that

splitting the fees from the base price allows cable companies to shift blame for the price hikes.

“Cable company costs may be increasing, but that doesn’t justify burying these fees in the fine print and blaming someone else,” he said.

Consumer Reports said it analyzed nearly 800 cable bills collected in 2018 from consumers across the country, paid special attention to companyimposed fees, and then calculated how much various fees were costing consumers.

The fees have rapidly increased in recent years, according to the report. For example, Philadelphia-based Comcast charged consumers $2.50 per month for both the Broadcast TV Fee and Regional Sports Fee in 2015. Those fees combined now cost $18.25 per month, the report said. Similarly, Charter increased its Broadcast TV Surcharge three times in the last year, from $8.85 per month in October 2018 to $13.50 a year later.

In a June 2018 letter to Consumer Reports, Comcast said it “discloses these fees to consumers in its rate cards, advertising, online, and during the ordering process so that customers have access to full pricing information from Comcast when they are comparison shopping and know what to expect on their first bill before they sign up for service.”

The average amount of company-imposed fees ranged from $22.96 for AT&T U-verse to $43.79 for Verizon Fios, though the report cautioned that the averages are only a snapshot of the marketplace based on bills Consumer Reports reviewed, and the averages are not meant for comparisons. The average for Comcast was $39.59.

Cable companies said the billing practices are entirely legal, noting that the Federal Communications Commission permits them to separately itemize their programming costs on consumer bills, the report said.

Consumer Reports called on Congress to require cable providers to include all company and government-imposed fees in their advertised prices.