Two years ago, the White House announced an initiative to eliminate junk fees across the economy. It defined junk fees as fees that are hidden from customers when companies advertise the cost of using their services or buying their products. The White House initiative named a number of industries that widely use junk fees, including airlines, hotels, ticket sellers, and cable TV companies.

All of the big cable companies, and many of the smaller ones, routinely use hidden fees to disguise the true cost of buying cable TV. Consider the hidden fees from Comcast (but note that I could have looked at any other big cable company and found similar results). The Comcast hidden fees for cable are roughly as follows (it differs by market):

• Comcast has a broadcast fee of around $29 per month. This fee has grown as Comcast accumulates increases in programming costs each year into this fee rather than increasing the list price of its cable products.
• A typical regional sports fee is over $6 per month and varies by market. Again, the company has shuttled increases in sports programming into this fee instead of increasing the advertised price of cable TV.
• Comcast also charges $9.00 extra for a settop box – a fee that is rarely mentioned in the advertised price.

Comcast routinely advertises introductory rates for cable TV on the web or in mailed advertising, and the advertised prices don’t disclose these extra fees. A customer signing up for a $30 advertised cable product might get a first bill for almost $75 – a startling difference.

Comcast also has what most in the industry consider to be hidden fees for broadband. The company charges $15 per month for its WiFi modem. The biggest surprise for a new customer might be the Comcast data cap on broadband in some markets, where customers are charged $10 for each 50 GB of data over the data cap limit.

The FCC has been moving to tackle hidden fees, and at its December meeting it released an NPRM that proposes to eliminate a service fee and early termination fees on customer who want to break the contracts that are required to get promotional pricing. To use the example above, a customer will have signed a contract to get the $30 special rate for a cable product and the cable companies enforce that contract after the customer wants to cancel after seeing the first bill for $75.

Not surprisingly, the cable industry is fighting vehemently against the elimination of such fees. In December, NCTA – the Internet and Television Association, which is the trade association for the major cable TV companies, sent a  letter to the FCC telling the agency that it doesn’t have the authority to tackle junk fees since that would amount to rate regulation.

NCTA crafted a really cleverly worded argument against eliminating the contract termination fees. They say that the FCC will be depriving consumers of getting low-cost specials if the ISPs have to tell the public the truth about the real cost of the specials. They argue that they can’t offer low prices if they can’t collect the full year of revenue for the lower rates, even if they are no longer delivering the services. I highly recommend reading the NCTA letter – policy nerds will find it amusing.

NCTA makes one recommendation that makes sense. If the FCC imposes new rules, it should override rules from states and cities that impose different rules. It’s hard to argue with that.