The Federal Communications Commission (FCC) has passed a rule that would prohibit cable operators from charging early termination fees and require them to provide prorated credits or rebates to users after canceling their services.
The prorated credits or rebates would cover the remaining days in a billing cycle after the subscriber chooses to cancel their service. Cable operators typically require subscribers to pay for the rest of a month or billing cycle if they chose to cancel service, a move that penalizes subscribers for terminating services they choose not to receive, the FCC said.
The agency voted 3-2 to pass the measure, which awaits public comment before it can be finalized.
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The ban comes at a time when cable operators are struggling with Pay TV rates that are at their lowest point since 1991, Kiplinger previously reported. Currently, there are about 75 million pay TV subscribers in the U.S., down from 100 million in 2012, and analysts think this could fall to 50 million in the near future.
Early termination fees make it costly for consumers to switch services and may limit their choice, which in turn may reduce competition for video service, the FCC said. The fees also go against President Joe Biden's 2021 executive order to promote competition in the U.S., it added. The order calls for the FCC to consider “prohibiting unjust or unreasonable" early termination fees in customer contracts to allow to more easily switch providers.
“Consumers are tired of these junk fees,” FCC Chair Jessica Rosenworcel said in a statement. “They now have more choices when it comes to video content. But these friction-filled tactics to keep us subscribing to our current providers are aggravating and unfair. So today we kick off a rulemaking to put an end to these practices.”
Streaming service options
If you’re thinking about cutting the cord and becoming a streaming-only household, check out Kiplinger’s special report: How to save on streaming services and find streaming deals.
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