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 a month on average, or nearly $450 a year — effectively adding a 24% surcharge on top of the advertised base price. The report, released Thursday, 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."
The fees have rapidly increased in recent years, according to the report. For example, Philadelphia-based Comcast charged consumers $2.50 a month for both the Broadcast TV Fee and Regional Sports Fee in 2015. Those fees combined now cost $18.25 a month, the report said. Similarly, Charter increased its Broadcast TV surcharge three times in the last year, from $8.85 a month in October 2018 to $13.50 a year later.
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.
“The fees that broadcast stations and regional sports networks charge us to carry their content are the two fastest growing components of our overall programming costs," a Comcast spokesperson said. "We clearly disclose these fees to be transparent with customers about what’s included in their bills, and we get their consent when they sign up or add services to their account. We disagree with Consumer Reports’ assertion that these are ‘hidden fees’ – in fact, the documents Consumer Reports included in its own report show that these fees are clearly identified for customers.”
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 company-imposed fees, and then calculated how much various fees were costing consumers.
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.