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The Cable Industry Makes $28 Billion Annually In Bullshit Fees

from the false-adverting-by-another-name dept

Last week we highlighted a study showing that your cable bill can be as much as 45 percent higher than the advertised price thanks to bullshit fees. Now a new study by Consumer Reports shows that up to 24 percent of your monthly cable bill is comprised of said bullshit fees. The fees are designed specifically for one purpose: to let companies falsely advertise one rate, then charge you significantly more money. It's effectively false advertising, but efforts to rein in the practice are fleeting to nonexistent, because creatively fleecing American consumers is just so hot right now.

Consumer Reports examined 787 consumer cable bills from 13 top cable providers and found that while the average user paid around $156.71 per month for cable TV, users in reality paid $217.42 a month once fees were included. As such about 24 percent of your cable TV bill each month ($37.11) is made up of fees and hidden surcharges, generating about $450 per year per consumer for the industry, or about $28 billion in total.

The report is quick to highlight how some of the bullshit fees (like the "regulatory recovery fee") are named in such a way to trick the consumer into blaming government. The group reached out to 74 consumer reps posing as a customer and found that support reps are pretty clearly trained to create that impression:

"Often these fees are misleadingly portrayed by cable providers as government-mandated surcharges so that consumers blame the government instead of cable providers. One such fee is the “regulatory recovery fee,” specifically named for just this purpose.

Consumer Reports researchers say they posed as consumers and called 74 customer service representatives (CSR), who routinely tried to blame government for excessive surcharges.

"At least one CSR of every major provider that our secret shoppers contacted misstated that fees were mandated by the government, without a clear distinction made between company-imposed fees and regulatory pass-through fees," the report said.

One of the industry's favorite, more recent fees is the "Broadcast TV fee," which we've hammered on previously. This fee simply involves taking a portion of the cost of programming and burying it below the line as an itemized fee, again with an eye on falsely advertising a lower rate. Thanks in part to a government that can't be bothered to protect consumers from said false advertising, Comcast has quietly been jacking up this fee for the better part of the last decade with zero repercussions whatsoever:

"The study found that in 2015, Comcast started charging consumers a $1-a-month Regional Sports Fee and $1.50-a-month broadcast TV fee ($2.50 per month). By 2019 those fees had ballooned to $18.50 a month, or a 600 percent increase in just four years."

Cool. While some bills have been proposed to rein in the practice, they routinely go nowhere thanks to our campaign contribution slathered Congress. And the FCC just neutered much of its authority over broadband and cable TV providers at lobbyist behest. Good times, yeah?

Keep in mind this is how the cable TV industry behaves when competition from streaming alternatives is steadily driving customers to cut the traditional cable TV cord, illustrating how organic competition isn't always enough to prevent entrenched predatory monopolies from behaving badly. Cable giants figure that sure, they may lose some TV subscribers by being predatory bastards, but they'll just recoup those costs by raising the costs of broadband (where they hold a more solid natural monopoly, another problem we apparently don't want to do anything about).

Filed Under: bogus fees, broadcast tv fee, cable industry, false advertising, fcc, fees, ftc, price hikes, regulatory recovery fee
Companies: comcast


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  1. identicon
    Anonymous Coward, 9 Oct 2019 @ 6:30am

    $217.42 / month ???
    Holy crap!

    No wonder cable cutting is huge.

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

  2. identicon
    Anonymous Coward, 9 Oct 2019 @ 7:01am

    ...and here I was complaining that my cable company was adding 1 euro to my 27 euro a month subscription for dsl internet.

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

  3. identicon
    Anonymous Coward, 9 Oct 2019 @ 7:23am

    Consumer Reports examined 787 consumer cable bills from 13 top cable providers and found that while the average user paid around $156.71 per month for cable TV, users in reality paid $217.42 a month once fees were included. As such about 24 percent of your cable TV bill each month ($37.11) is made up of fees and hidden surcharges, generating about $450 per year per consumer for the industry, or about $28 billion in total.

    Something is wrong with the math here.

    $156.71 + $37.11 = $193.82, not $217.42

    Is the missing $23.60 taxes, or what?

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

  4. icon
    OA (profile), 9 Oct 2019 @ 7:26am

    Fill in the blank

    The ____ Industry Makes $__ Billion Annually In Bullshit Fees.

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

  5. identicon
    Anonymous Coward, 9 Oct 2019 @ 7:34am

    Re: Fill in the blank

    and they wonder why many lack the funds for food and shelter.

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

  6. identicon
    AnonyCog, 9 Oct 2019 @ 7:43am

    Re:

    Bribing politicians won't pay for itself, your corporate overlords are forcing you to pay the bribes.

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

  7. identicon
    Pixelation, 9 Oct 2019 @ 7:47am

    FTFY

    "... users in reality paid $217.42 a month once feces were included."

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

  8. identicon
    Anonymous Coward, 9 Oct 2019 @ 7:47am

    Re:

    Another problem is that the statement buys into the narrative of the cable companies. The average subscriber paid $217.42, not $156.71 which is the average fictional advertised rate.

    It's also shockingly high. Being an average, it's likely that about half of people will have paid more than $217/month. Or a smaller number could have paid much more. For that kind of money, you could pay someone in Europe to buy a hard drive, subscribe to a good internet connection, and ship you the data monthly.

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

  9. identicon
    Anonymous Coward, 9 Oct 2019 @ 7:49am

    Re: Re: Fill in the blank

    Telecommunications and entertainment companies are definitely not wondering that.

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

  10. identicon
    Anonymous Hero, 9 Oct 2019 @ 8:28am

    Looks like the cable industry is entering a death spiral of sorts. Lose customers to cord cutting --> raise prices to make up for lost customers --> most customers leave due to price raises --> need to raise prices more to make up for lost customers --> ...

    Really though, once we figure out how to wrest sports from the hands of cable companies, they will collapse having nothing to offer that you can't get for less elsewhere.

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

  11. identicon
    Annonymouse, 9 Oct 2019 @ 8:37am

    Re:

    There is one niggling problem with this.
    The cable companies are monopolies so straight internet fees are going to skyrocket and there will be nothing you can do about it short of erasing each and every Corp and starting over. Oh and move all those execs to the subcontracted federal residence systems. Need to keep those beds filled.

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

  12. identicon
    Anonymous Coward, 9 Oct 2019 @ 9:06am

    Re:

    Actually, all we need to do is wrest from people's minds the idea that sports == major leagues.

    You can attend weekly junior league games in most sports for less money than it costs to subscribe to sports TV programming. And the games are usually more exciting.

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

  13. identicon
    Anonymous Coward, 9 Oct 2019 @ 9:12am

    Re: Re:

    Or get more people to "cut the cord" on sports. Seriously, why does anyone give a rat's ass about sports anyway?

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

  14. icon
    James Burkhardt (profile), 9 Oct 2019 @ 9:30am

    Re:

    Thankfully, Karl linked his source, so you can easily look it up. On page 7 (page 12 of the PDF) of the Linked Report, a nice Donut graph shows the numbers clearly.

    The advertised average price is $156.71, with company imposed below the line fees averaging $37.11 as reported. The rest is made up of:

    $9.15 for premium services (so, hopefully extra costs a consumer opted in to)
    $13.28 for Government Fees and Taxes
    $1.17 Miscellaneous

    Which accounts for the missing $23.60.

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

  15. icon
    James Burkhardt (profile), 9 Oct 2019 @ 9:37am

    Re: Re:

    Actually, I'd find the statement highlights the flaw in the narrative of the cable companies. Namely, that while the bill itemizes the base cost of service, the actual cost of service goes up when you include taxes and fees. And about 24% of that actual cost isn't the base cost of service, or customer-chosen upgrades, or government taxes, but fees that should be in the advertised base price of service.

    I would agree the way Karl phrased that passage leads to bad conclusions, notably that the entire increase from $156.71 base price to $217.42 final price comes from underhandedness, rather than acknowledging that some of that average increase includes premium services which are opt-in.

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

  16. identicon
    Anonymous Coward, 9 Oct 2019 @ 9:40am

    Re: Re:

    Thanks for the reference. The document says a law allows the cable companies to list government taxes and fees separately, but I'm still calling bullshit on their choice to do that. They're purposely advertising a price that nobody will be able to get—the taxes are not optional, and the company can predict the amount better than their customers can.

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

  17. icon
    ECA (profile), 9 Oct 2019 @ 10:27am

    Love those WALLS,,,

    Here is how much different sports network families charge each month per subscriber: ESPN (ESPN, ESPN2, ESPNU, SEC Network) — $9.06. Fox Sports (FS1, FS2, Big Ten Network) — $1.86. NFL Network — $1.39. NBC Sports (NBCSN, Golf Channel) — $0.68. NBA TV — $0.30. MLB Network — $0.28. CBS Sports — $0.26. Tennis Channel — $0.15. https://www.businessinsider.com/cable-satellite-tv-sub-fees-espn-networks-2017-4 no cable subscription required. In fact, five out of the top 10 most popular channels (ABC, CBS, NBC, FOX, PBS) are all available for free viewing via a digital antenna. The most popular pay TV network is the Discovery Channel, followed by the History Channel, A&E, and TNT. What’s interesting is that the channel that adds the highest cost by far to cable subscribers’ monthly bills is not even among the top 15 most popular networks. According to a Chicago Tribune report last year, ESPN charges distributors an average of $7.21 per month per subscriber, plus another $.90 for ESPN2. The next priciest channel is in distant second: Fox News’ monthly fee is $1.41. And yet ESPN is only the 19th most popular channel, according to the Tivo survey. ESPN’s real-life monthly fee is four times what people would be willing to pay for it. PBS (another free broadcast network) and HGTV tied for third at $1.52. Overall, the price people would be willing to pay for 20 channels at all fell by more than 12% compared with Tivo’s previous quarterly study. http://money.com/money/4700663/cable-prices-most-popular-tv-channels-espn-abc-discovery-hbo/ https://www.fool.com/investing/2019/01/22/heres-how-much-americans-pay-for-cable-channels-th.asp x NEWEST.. https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2 F507629%2Fpopularchannels.png&w=700&op=resize The average man reported watching 12 channels, while the average woman only watched 10. That's 5.7% of the nearly 200 channels respondents reported receiving as part of their cable packages. That makes it not very surprising that 81.9% of those surveyed felt they "wasted money on their TV bill." Respondents spent an average of $96.18 per month, or roughly $0.50 per channel, making each channel they actually watch cost them $8.74. (That, of course, is not how cable bills work, but it does show what consumers might be willing to pay for their favorites). "That means, given the small number of channels they watch, the average respondent wastes $1,088 on unused channels per year," according to the report. ^^ leads to here. and allot more data.. https://cordcutting.com/research/paying-for-channels-you-dont-watch/ HOw many Persons/groups have taken this to courts to see if they can get some logic Discount?? Even this last site, has a section on the avg number of channels people Watch, and over 1/2 of those channels are FREE Broadcast. WHO would pay $1-2 Per Channel for the CABLE/SAT ONLY channels that you cant get local.. I live in the country, and get over 20 channels...all the basics with allot of independent and Religion.. Why in HELL would I want to pay over $50 for ??? channels I wont watch? But there is a realization..That Im not paying for ... Local cable company..50 people?? The main office 2 states away.. 200 people?? I paying 200 Corps to get Money for nothing..because they generally get money 2 other ways.. Adverts, and Leasing Channel time.. MAny collect groups of movies to Lease to other companies and Other people to Broadcast..(not Cheap).. These companies make money many other ways. Cellphone/Wall phones/Cable/sat/internet..and I would not put it past them to also Own the Advert companies..

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

  18. identicon
    Anonymous Coward, 9 Oct 2019 @ 11:11am

    Re: Re: Re: Fill in the blank

    The ones who bitch about "entitlements" do. If they want to get rid of entitlements, I suggest getting rid of their entitlements first, for example, the corporate subsidies called welfare, food stamps (SNAP) and medicare.

    Since many corporate c-suites do not see the reasons for paying a living wage, they rely upon the government to provide their workers who struggle every day to pay their bills and put food on the table.

    Who wants their employees to be financially capable of looking for better employment?

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

  19. identicon
    AlexisR200, 9 Oct 2019 @ 3:03pm

    A potential solution:

    Since we know companies will keep up the BS perhaps the government should fine the the exact amount they made on BS fees. Sure people don't see the money back but neither will the greedy a-holes that dreamed them up.

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

  20. icon
    R.H. (profile), 9 Oct 2019 @ 4:05pm

    Re: Why Do People Care About Sports?

    What do you do for entertainment? Rock climbing? Working on cars? Painting? Coding? Whatever it is, that's one of the "itches" that sports scratches for many people. However, it's not just that. Being a fan of a sports team also provides an individual with an automatic "in group" which, whether you like it or not, we humans generally need for our mental wellbeing. Also, as long as you don't take it too seriously, (which some people unfortunately do) it gives you a safe "out group" to dislike which is also not a completely bad thing from a social point of view (repeating myself for emphasis, as long as you don't take it too seriously).

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

  21. identicon
    Anonymous Coward, 10 Oct 2019 @ 7:24am

    Re: Love those WALLS,,,

    In fact, five out of the top 10 most popular channels (ABC, CBS, NBC, FOX, PBS) are all available for free viewing via a digital antenna.

    There is no such thing as "a digital antenna". The correct antenna to pick up WWNY-DT 7 digitally is the same antenna that picked up WWNY-TV 7 in the analogue era, if the station is still on the same frequency. The only thing that has changed is that no one seems to want the low-VHF channels (2-6) anymore due to impulse noise, so that just leaves channels 7-36 to cram in basically everything.

    I'm very wary of the folks claiming their wares to be "digital" antennas. All too often, this means that they're selling UHF-only antennas (no good in some cities, like Rochester, that still have a couple of VHF stations) or that they think that building a booster amplifier onto an inadequate indoor antenna is going to do anything other than turn unwatchable noise into slightly louder unwatchable noise. Whatever was on the rooftops before the cable companies came to town (unless it's VHF-only or completely broken) should've been simply left there... as it usually does a better job.

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

  22. identicon
    Anonymous Coward, 10 Oct 2019 @ 10:17am

    Re:

    $28,000,000,000.00 in annual fees!

    Not a penny from me!!

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

  23. icon
    nasch (profile), 14 Oct 2019 @ 9:44am

    Re: Re:

    I predict municipal broadband is going to take off like gangbusters once a decent internet connection costs $300 a month.

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


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