FCC proposes ban on early termination fees for cable and satellite service contracts
US President Joe Biden speaks during a meeting on progress to counter the flow of fentanyl into the US, in the Roosevelt Room of the White House in Washington, DC, on November 21, 2023. Andrew Caballero-Reynolds | AFP | Getty Images
The Federal Communications Commission (FCC) on Tuesday put forward a proposal to prohibit early termination fees for cable and satellite service contracts. This move is part of the White House’s larger focus on eliminating surplus fees, under President Joe Biden’s executive order to promote competition in the U.S. economy.
Eliminating early termination fees
The proposed rule would require cable operators and direct broadcast satellite (DBS) providers to eliminate early termination fees. Additionally, cable and DBS companies would be mandated to provide customers with a prorated credit or rebate for the remaining days within a billing cycle after cancellation, according to an FCC release.
FCC Chairwoman Jessica Rosenworcel expressed the importance of this move, stating, “No one wants to pay junk fees for something they don’t want or can’t use. When companies charge customers early termination fees, it limits their freedom to choose the service they want.”
White House’s larger focus
The proposed rule is part of the White House’s larger focus on eliminating surplus fees under President Joe Biden’s July 2021 executive order to promote competition in the U.S. economy. According to the executive order, cable television is one sector where fees can stifle competition, due to costs associated with canceling services or switching service providers.
President Joe Biden took to Twitter to affirm the move, stating, “Companies shouldn’t lock you into services you don’t want with large fees. It’s unfair, raises costs, and stifles competition. We’re doing something about it.”
Further plans by the FCC
The FCC had previously announced it would implement Broadband Consumer Labels—a system that provides easily accessible information for consumers about the functions and costs of a broadband service, similar to a food nutrition label. The agency has also proposed “all-in” pricing for cable and satellite services, so that customers will see the total service costs, fees included, up front.
Rosenworcel emphasized the importance of consumer empowerment in an increasingly competitive media market, stating, “In an increasingly competitive media market, we should make it easier for Americans to use their purchasing power to promote innovation and expand competition within the industry.”
The move to ban early termination fees for cable and satellite service contracts is part of a broader effort to promote competition in the telecommunications industry and eliminate unnecessary financial burden on consumers.
