Study: Cable bills dis­guise price hikes

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

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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.

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