The Cable Industry's Latest Lame Argument: We're Burying Sneaky Fees In Your Bill As Part Of An Effort To Be More Transparent

from the when-price-gouging-is-altruism dept

While banks pioneered the use of sneaky fees back in the 80s, the broadband industry has been taking the practice to an entirely new level. Whether it's "regulatory recovery fees," "Internet cost recovery fees," or "non-telecom services surcharges," gouging customers with nonsensical below-the-line fees has become an art form for the TV and broadband industries as they work to raise rates while leaving the advertised rates the same. In addition to generating major revenue (Comcast makes $300 million per quarter from modem rental fees alone), it allows a cable or ISPs' lobbyists and policy wonks to downplay soaring TV and broadband rates since the real prices (including fees and surcharges) usually aren't even actually being analyzed.

In addition to soaring cable modem fees, the last year has seen a spike in two new sneaky fees: a "broadcast TV surcharge" and the addition of new sports programming fees. In both instances, companies are taking the cost of doing business (programming costs) and burying it below the line so they can misleadingly advertise a lower price. It's false advertising, and it's sleazy, yet the industry's latest defense of this practice is -- amazingly enough -- that they're just interested in being transparent for the benefit of the consumer:
"In a statement, Comcast spokesman Steve Kipp said the charge is due to broadcast “retransmission costs,” which have more than doubled in recent years. "Beginning in 2014, we will itemize a portion of broadcast retransmission costs as a separate line item to be more transparent with our customers about the factors that drive price changes," he said. “In 2014, we will not increase the price of Limited Basic or Digital Preferred video service, and adjustments to other video service prices will be lower than they would have been without the Broadcast TV Fee.”
You see, we're not raising prices because we're raising prices in a more sneaky fashion! Now if you would be so kind, could you please applaud us for being transparent? Comcast's defense appears to have now become the industry's standard talking point. Defending its increase in all the same fees, Time Warner Cable tells a similar story to the Los Angeles Times:
"Dennis Johnson, a Time Warner Cable spokesman, defended the higher modem-rental cost by pointing out that the fee for Internet access hasn't gone up — yet. The company's last increases for various Internet service levels was in March. "There is no change in the price of Time Warner Cable Internet plans, although speeds have increased," Johnson said..."Our fees paid to local broadcast channels have soared 60% the past two years alone, and the cost of cable sports networks has increased 91% since 2008," Johnson said. "We think it's important to show customers the impact of these rising costs through a specific item on their bill," he said of the charge for sports channels."
In other words, the use of sneaky fees is a community service. Cable operators offered up a similar justification to Bloomberg in regards to the use of new regional sports fees:
"The rising cost of sports programming isn’t new, but it’s escalating dramatically, and we think that it’s important to show customers the impact of these rising costs through a specific item on their bills,” Amirshahi said in an e-mail. Cablevision, in a statement, said that their rate increases are “only a fraction of the rising costs of sports and other programming."
In addition to the pretense that these companies are helping consumers by bullshitting about their advertised price, they'd also have you ignore the fact that, in many instances, they are the sports broadcaster that's busy raising rates. Most cable operators now own regional sports broadcasters, and they're frequently among the most egregious when it comes to pushing higher and higher rates for the same content. As it stands, the lack of regulatory attention to these practices means we're only going to see the industry get more creative moving forward. So what's next? Passing on installer gasoline costs? An extra surcharge for talking to an actual human being? A "technician calorie expenditure surcharge?" The future of bullshit fees is wide, wide open.

Filed Under: false advertising, fees, retransmission, transparency
Companies: comcast, time warner cable


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  • icon
    Ninja (profile), 14 Jan 2015 @ 8:09am

    Considering how they are hemorrhaging customers to the cord cutting trend this is juts one more nail in the cable coffin. The sad part is that they are the sports broadcasters and secured the rights for quite a while so it isn't like they will die a fiery death anytime soon...

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2015 @ 8:26am

    If it's impossible to get the advertised rate without paying a bunch of surcharges, they should be investigated for fraud.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Jan 2015 @ 1:54pm

      Re: (anonymous coward @0826)

      Can we include airlines and hotels in this?

      Especially if they refuse to refund for non-use of whatever the surcharge was for?

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Jan 2015 @ 2:00pm

      Re:

      "If it's impossible to get the advertised rate without paying a bunch of surcharges, they should be investigated for fraud."

      On what basis? What they're doing is perfectly legal in the US. Perhaps what we need is a change in US law whereby advertised prices must include taxes and fees, like they do in other places, like Europe.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Anonymous Coward, 14 Jan 2015 @ 8:32am

    Transparency

    Dear Cable Co's.

    Your slip is showing.

    Consumers

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2015 @ 8:34am

    I don't want sports channels. Unbundle them.
    YOUR MOVE CABLE INDUSTRY!

    reply to this | link to this | view in chronology ]

    • identicon
      Jason, 14 Jan 2015 @ 9:22am

      Re:

      This. A hundred million times this.

      I have no problem with paying for the channels I want. I may think they're charging too much for them, but that's a different argument. But don't pretend that passing along rising costs for channels I don't want but am still forced to have bundled is "transparent" or in any way a service to me.

      You want to be of service? Let me decline the sports package if I don't care to have it.

      reply to this | link to this | view in chronology ]

      • icon
        Ninja (profile), 14 Jan 2015 @ 9:46am

        Re: Re:

        You want to be of service? Let me choose what channels I want. Offer them via streaming. Charge reasonable prices.

        Somewhere in the Wonderland an unicorn laughed at my dream.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2015 @ 8:41am

    Most cable operators now own regional sports broadcasters, and they're frequently among the most egregious when it comes to pushing higher and higher rates for the same content.

    Hollywood style accounting at its finest, report a loss in one company because fees have moved all the profits to a different company, that you also own.

    reply to this | link to this | view in chronology ]

  • icon
    Manabi (profile), 14 Jan 2015 @ 8:49am

    So how's that explain the model rental fee going up?

    Even if we accept that logic, this doesn't explain the model rental fee going up at both Time Warner and Comcast. Cable modems haven't gotten a lot more expensive (if at all, I think they've gotten cheaper, especially when buying in the kind of bulk the cablecos do). Funny how they didn't explain that, ehh?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Jan 2015 @ 2:35pm

      Re: So how's that explain the model rental fee going up?

      Well, I suppose that would depend a lot on the model. A relative unknown would probably be a lot cheaper than a famous super-model.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2015 @ 9:22am

    it costs more to slow down a connection than it does to leave it open for the faster speeds
    the best way to not pay the increases is to not have these sports channels! if the people would stick together and say 'shove your sports or whatever channel services, there would be immediate panic and all sorts of offers would be on the table at much better prices too! the problem is getting people to act together, even threatening leaving if enough did it, would make them think. but as is usual, the biggest issue are the piss poor members of Congress who just do whatever they are told, for the price of a cup of coffee!!

    reply to this | link to this | view in chronology ]

    • icon
      jilocasin (profile), 14 Jan 2015 @ 9:36am

      That wouldn't eliminate the fee, just change the name of it.

      If enough people complained about the sports channel fee, loud enough to get it removed it still wouldn't help.

      Instead of a $29.95/mo sports channel fee, they would _remove_ the sports channels from your package and charge you a $31.09/mo sports channel removal and maintenance fee (or some other like sounding silliness).

      Those in charge have already decided how much they want to charge you, all that's left is what to call it.

      Whether it's a 'cost per bullet used' fee, or a 'bullet recovery fee', you are still getting shot, and they are still going to charge you for the privilege.

      reply to this | link to this | view in chronology ]

    • identicon
      Joe, 14 Jan 2015 @ 2:29pm

      Re: shove your sports

      A.C.: I'm huge sports fan who gladly cut the cable as a matter of principal. The final straw was the DTA fees by Comcast and the disgusting TV deal the Dodgers were handed by Time warner (soon to be Conmcast)
      When I canceled cable, I was asked the reason why...I told them so. I have no power to change the world...what little power I have is how I spend my hard earned dollars...I say NO to big sports tv fees. I bought a rooftop OTA TV antenna. Love my weekend sports for free and the rest can go to hell.

      reply to this | link to this | view in chronology ]

      • icon
        pixelpusher220 (profile), 14 Jan 2015 @ 5:35pm

        Re: Re: shove your sports

        As noted in the article above, most of the Cable Co's are also regional sports network operators. With the exception of Football, most local market teams aren't on OTA TV anymore.

        NBA does allow streaming I think, but NHL only allows out of market games in it's streaming subscription. In DC, the Capitals are on a cable sports network so no OTA access is available that I'm aware of.

        MLB is slightly better I think.

        But OTA access to 'local' sports isn't great in my experience.

        reply to this | link to this | view in chronology ]

  • icon
    jilocasin (profile), 14 Jan 2015 @ 9:30am

    If they were realliy interested in transparancy they'ld include the fees in the advertised price.

    The simplest way to call the cable (and ISP) industry's transparency bluff is to ask them to _include_all_of_the_fees_ in the _advertised_price_.

    In a fair and just marketplace, the advertised price would be the price you are expected to pay.

    Instead of advertising:

    Package X $49/mo.

    Then socking you with below the line fees (regulatory fee, cable box fee, because we feel like it fee, etc.) and presenting you with a $257.89/mo actual bill.

    Advertise $260/mo.

    Then explain that the cost includes a $10/mo set top box fee, a $22.95 sports transmission fee, a $2.62/mo because we feel like it fee, etc.

    That would be _increasing_transparency_. Anything less is self serving B.S..

    It would be like someone amputating both of your legs, presenting you with the bill and then claiming they were only interested in reducing your footwear costs.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Jan 2015 @ 2:05pm

      Re: If they were realliy interested in transparancy they'ld include the fees in the advertised price.

      "The simplest way to call the cable (and ISP) industry's transparency bluff is to ask them to _include_all_of_the_fees_ in the _advertised_price_."

      Well, that's just not what the law requires in the US. Even Walmart advertises prices before taxes, for example. If you want to change that, change the law.

      reply to this | link to this | view in chronology ]

  • icon
    DannyB (profile), 14 Jan 2015 @ 9:56am

    Broadcast retransmission fees

    The retransmission fees are evidence that Broadcast and Cable TV are locked in a death spiral.

    As more people cut the cord, they'll get left behind. The cable companies will interfere with your internet connection. The tv broadcasters have no such luxury; so they will have to lobby to get it.

    reply to this | link to this | view in chronology ]

  • identicon
    Joel Coehoorn, 14 Jan 2015 @ 10:19am

    Part of it makes sense, but the rest :(

    I get that they want to itemize those costs. They want to position themselves for the next rate increase fight with their provider, so that consumers will see that part of it. That's fine. I would actually like to see more of this on my bill. It helps me understand what I'm paying for.

    But there are two HUGE problems with this:

    1. Don't pretend that keeping the base rate the same and adding a new fee isn't a rate increase.

    2. Don't advertise a base rate the excludes the unavoidable fees.

    I believe the best solution is still to list these fees individually on your bill, but under a common heading of "Standard Fees", with totals that show both individually and for the group, and then **advertise a rate that includes both the base rate and the standard fees!**

    reply to this | link to this | view in chronology ]

    • icon
      John Fenderson (profile), 14 Jan 2015 @ 10:38am

      Re: Part of it makes sense, but the rest :(

      I half agree. The best solution on the cable company's side is to punish the cable companies for lying about their rates in promotional materials.

      The best solution on our side is to cancel your cable subscription.

      reply to this | link to this | view in chronology ]

    • icon
      mb (profile), 17 Jan 2015 @ 12:05am

      Blatant Manipulation is what it is.

      So while they are at it, should they also include line items for Technician's Salary, Helpdesk Support, Facilities Rental, O&M, and Coffee machine power usage. Then they can blame rate increases on the landlord for increased rent or those damned Columbians for increasing the price of coffee.

      That is completely absurd. If the fees are for services that cannot be unbundled, then they do no deserve separate line items. That is the cost of providing the service, and playing some shell game with numbers is, frankly, despicable. It is a blatant attempt to obfuscate the rates, and a manipulation technique to make it difficult and undesirable for the consumer to compare rates and services: By providing too many choices, the consumer literally gets tired out trying to compare all the possibilities.

      reply to this | link to this | view in chronology ]

  • icon
    Dirkmaster (profile), 14 Jan 2015 @ 10:27am

    My "Favorite" Ripoff fee

    Is the settop box, that you MUST rent if you want HD. Verizon FIOS, paying for a TV package that includes HD channels, but the FREE box (and oh,yeah, you can't just hook it up to a Smart TV) DOESN'T SUPPORT HD. You gotta pay $11.99 to SEE the HD you are paying for. That one really sticks in my craw.

    reply to this | link to this | view in chronology ]

    • icon
      Jeremy Lyman (profile), 14 Jan 2015 @ 10:44am

      Re: My "Favorite" Ripoff fee

      Yeah I thought I was doing alright with limited basic quote on Verizon till I realized they were gonna tack on $25 every month for two boxes (HD + SD).

      Instead I use a $5 cablecard rental and a video repeater. At least on Comcast they used to CREDIT me $3 for using a cable card.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Jan 2015 @ 2:16pm

      Re: My "Favorite" Ripoff fee

      "Is the settop box, that you MUST rent if you want HD. Verizon FIOS, paying for a TV package that includes HD channels, but the FREE box (and oh,yeah, you can't just hook it up to a Smart TV) DOESN'T SUPPORT HD."

      Have you thought about complaining to the TV manufacturer about the TV not supporting cable HD?

      reply to this | link to this | view in chronology ]

  • icon
    Jeremy Lyman (profile), 14 Jan 2015 @ 10:40am

    Boldly screwing customers

    If you're still wondering what the word "innovation" refers to in the various telcom press releases... this is it. New ways to charge more for less and have people thank you for it. Exciting stuff!

    reply to this | link to this | view in chronology ]

  • icon
    Dirkmaster (profile), 14 Jan 2015 @ 10:44am

    And while I'm getting all angry about rip offs in bills

    How does THIS work? (Wish I could embed pics)

    Verizon says that my Flex Double Play costs $89.99/month (for FiOS TV Prime HD and FiOS Quantum Internet (50/50 Mbps))

    On the My Bill page of www.myverizon.com, it says that FiOS TV Prime is 54.99 and FiOS Internet 50/50 is 50.00 for a Double Play Bundle Price of 94.99. So the price goes up by $5 between the two pages of their website.

    What is up with THAT? That says fraud to me, but IANAL.

    reply to this | link to this | view in chronology ]

  • identicon
    David, 14 Jan 2015 @ 11:26am

    Interesting

    So they put the sports channel extra on the bill for greater transparency. And now that everything is itemized separately, the modem rental rate doubles. All the other items which presumably got more expensive are already listed.

    So how does that modem become twice as expensive to rent? One should expect that it becomes cheaper as it is paid off. Does it require counseling because of the customer satisfaction ratings of Comcast?

    reply to this | link to this | view in chronology ]

  • icon
    Sheogorath (profile), 14 Jan 2015 @ 12:13pm

    "Our fees paid to local broadcast channels have soared 60% the past two years alone, and the cost of cable sports networks has increased 91% since 2008," Johnson said.
    Substantive evidence that an independent third party hiked costs or it didn't happen. Simples!

    reply to this | link to this | view in chronology ]

  • identicon
    Eric, 14 Jan 2015 @ 12:20pm

    Let's apply this to other products...

    Your gas price isn't increasing, its just the cost of oil is, which we have added as an additional line item (well this use to be true i guess).

    The cost of chicken has not changed, there is just an extra line item to account for the increase in cost to feed the chickens

    reply to this | link to this | view in chronology ]

    • identicon
      David, 14 Jan 2015 @ 1:03pm

      Re: Let's apply this to other products...

      There is a chicken claw disposal surcharge.

      reply to this | link to this | view in chronology ]

      • icon
        John Fenderson (profile), 14 Jan 2015 @ 3:10pm

        Re: Re: Let's apply this to other products...

        This reminds me. I bought a new set of tires lately, and part of what I have to pay is a fee for the disposal of my old tires. That fee is imposed by the county and goes to the county. When I asked the tire store how much my new tires would cost, they quoted a price that included that fee.

        That's called doing business honestly. The cable industry doesn't do business that way.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 18 Jan 2015 @ 2:11pm

          Re: Re: Re: Let's apply this to other products...

          "That's called doing business honestly."

          Really? Just exactly what tire store is this? I'd like to check their ads and see if the advertised prices include taxes. OK?

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 19 Jul 2016 @ 12:01pm

            Re: Re: Re: Re: Let's apply this to other products...

            The advertised price doesn't include the fees.

            It's when you ask for a quote that they include all the fees (disposal, mounting, balancing, warranty, etc).
            I've avoided the disposal fee in the past by keeping the old tires, but many places won't do that now.


            Go buy a quart of oil and look at the receipt for the disposal fee charged on that too.

            reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Jan 2015 @ 2:23pm

      Re: Let's apply this to other products...

      My electric power company does this. They add on an extra fuel charge every month. I heard about someone who refused to pay it and they turned his electricity off. He then thought he was going to sue the power company, until a lawyer explained reality to him.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2015 @ 1:20pm

    I'd love to see some legislation that requires telecommunications and subscription television operators to advertise costs including any regulatory and rebroadcast fees.

    reply to this | link to this | view in chronology ]

  • identicon
    Vince, 11 Jan 2016 @ 9:40am

    Why can't I just buy the channels i want, instead of being forced to get channels I don't watch. If i don't need a one ton pick up truck, I am not forced to buy one if that is not what I want

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Jul 2016 @ 12:11pm

      Re:

      It's due to the tired service contracts the content producers offer. Nutshell is, the producers won't let them.

      The company that controls channel X says we won't let you carry X unless you also carry Y and Z. And you have to include Y in the same package as X (Z can be in a higher package).

      There's also the price breaks due to the number of people that CAN see the channel. It might cost $1 per channel ala-cart. But if all 2 million customers can see it in the basic tier, well we'll only charge $0.10 per subscriber. And if you also put this other channel in the same tier, you can get both for $0.15.

      reply to this | link to this | view in chronology ]


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