Proposed Rule2023-13971
All-In Pricing for Cable and Satellite Television Service
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 30, 2023
Issuing agencies
Federal Communications Commission
Abstract
In this document, The Federal Communications Commission (Commission) propose to require cable operators and direct broadcast satellite providers to clearly and prominently display the total cost of video programming service in promotional materials and on subscribers' bills. Requiring "all-in" pricing is intended to clearly and accurately reflect consumers' subscription payment obligations, eliminate unexpected fees, and allow consumers to comparison shop among competing cable operators and direct broadcast satellite providers as well as alternative programming providers like streaming services. We also seek comment on the effect of imposing such requirements on other types of multichannel video programming distributors and on our authority to do so.
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[Federal Register Volume 88, Number 125 (Friday, June 30, 2023)]
[Proposed Rules]
[Pages 42277-42284]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-13971]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[MB Docket No. 23-203; FCC 23-52; FRS ID 151775]
All-In Pricing for Cable and Satellite Television Service
AGENCY: Federal Communications Commission
ACTION: Notice of proposed rulemaking.
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SUMMARY: In this document, The Federal Communications Commission
(Commission) propose to require cable operators and direct broadcast
satellite providers to clearly and prominently display the total cost
of video programming service in promotional materials and on
subscribers' bills. Requiring ``all-in'' pricing is intended to clearly
and accurately reflect consumers' subscription payment obligations,
eliminate unexpected fees, and allow consumers to comparison shop among
competing cable operators and direct broadcast satellite providers as
well as alternative programming providers like streaming services. We
also seek comment on the effect of imposing such requirements on other
types of multichannel video programming distributors and on our
authority to do so.
DATES: Submit comments on or before July 31, 2023. Submit reply
comments on or before August 29, 2023.
FOR FURTHER INFORMATION CONTACT: For additional information on this
proceeding, contact Brendan Murray, <a href="/cdn-cgi/l/email-protection#5614243338323738781b232424372f1630353578313920"><span class="__cf_email__" data-cfemail="efad9d8a818b8e81c1a29a9d9d8e96af898c8cc1888099">[email protected]</span></a>, of the
Policy Division, Media Bureau, (202) 418-1573.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking, (NPRM) FCC 23-52, adopted on June 14, 2023, and
released on June 20, 2023. These documents will also be available via
ECFS (<a href="https://www.fcc.gov/cgb/ecfs/">https://www.fcc.gov/cgb/ecfs/</a>). (Documents will be available
electronically in ASCII, Word, and/or Adobe Acrobat.) To request these
documents in accessible formats for people with disabilities, send an
email to <a href="/cdn-cgi/l/email-protection#c1a7a2a2f4f1f581a7a2a2efa6aeb7"><span class="__cf_email__" data-cfemail="a0c6c3c3959094e0c6c3c38ec7cfd6">[email protected]</span></a> or call the Commission's Consumer and
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432
(TTY).
Synopsis. Access to clear, easy-to-understand, and accurate
information about the pricing of video services helps consumers make
informed choices and encourages competition in the market. It does so
by empowering consumers with information to comparison shop and to find
the video programming services that best meets their needs and matches
their budget. Consumers who choose a video service based on an
advertised monthly price may be surprised by unexpected fees related to
the cost of video programming that raise the amount of the bill
significantly. These fees, with names like broadcast TV fee, or
regional sports programming surcharge, are listed in the fine print as
``fees'' or ``taxes and surcharges,'' separate from the top line listed
service price and can result in a bill that is substantially more than
the advertised price. This categorization can be potentially misleading
and interpreted as a government-imposed tax or fee, instead of a
company-imposed service fee increase. This practice can also make it
difficult for consumers to compare the service prices of competing
video service providers.
In this Notice of Proposed Rulemaking (NPRM), we propose to enhance
pricing transparency by requiring cable operators and direct broadcast
satellite (DBS) providers to specify the ``all-in'' price for service
in their promotional materials and on subscribers' bills. This proposal
would require cable operators and DBS providers to clearly and
prominently display the total cost of video programming service. This
all-in pricing proposal is intended to give consumers a transparent and
accurate reflection of their subscription payment obligations and
eliminate unexpected fees. It also seeks to provide consumers with the
ability to comparison shop among competing cable operators and DBS
providers, and to compare programming costs against alternative
programming providers, including streaming services. We also seek
comment on whether we should consider expanding the requirements of
this proceeding to other types of multichannel video programming
providers (MVPDs) and on our authority to do so.
Background. Sections 335 and 632 of the Communications Act of 1934,
as amended (the Act), authorize the Commission to adopt public interest
regulations for DBS and direct the Commission to adopt cable customer
service requirements, respectively. In 2019, Congress adopted the
Television Viewer Protection Act of 2019 (TVPA), which bolstered the
consumer protection provisions of the Act by adding specific consumer
protections. The TVPA revised the Act to add section 642, which, among
other things, requires greater transparency in subscribers' bills. As
it considered this legislation, Congress expressed specific concern
that consumers face ``unexpected and confusing fees when purchasing
video programming,'' including ``fees for broadcast TV,'' and noted
that the practice of charging these fees began in the late 2000s. In
2021, the Media Bureau sought comment on the steps MVPDs have taken to
implement the TVPA requirements and on whether consumers found those
steps effective in furthering Congress's goal of protecting consumers
when purchasing MVPD or broadband service. In response to that PN,
Consumer Reports commented that below-the-line fees, ``which are solely
the creation of the provider (versus regulatory fees that are passed on
to the consumer)[,] made up the bulk'' of costs that are added to
advertised rates and MVPD subscribers' bills. It appears that since
adoption of the TVPA, the practice of charging subscribers unexpected
``fees'' (for example, for broadcast television programming and
regional sports programming listed separately from the monthly
subscription rate for video programming service) that are actually
charges for the video programming service for which the subscriber
pays, has continued. Moreover, websites, advertisements, and other
promotional materials may advertise a top-line price that does not note
prominently the mandatory programming costs that make up the
[[Page 42278]]
service until the customer signs up for the service. For example, those
materials use a different font size (often in fine print) and separate
from the proclaimed monthly subscription fee amounts extra ``fees''
designated by the provider that consumers will also need to pay for the
video programming that they will receive.
Discussion. We believe that the public interest requires that cable
operators and DBS providers represent their subscription charges
transparently, accurately, and clearly. Accordingly, we propose to
require cable operators and DBS providers to provide the ``all-in''
price for video programming service in their promotional materials and
on subscribers' bills. Below, we seek comment on (i) the specifics of
this proposal, (ii) existing Federal, state, and local requirements
related to truth-in-billing, (iii) the marketplace practices regarding
advertising and billing, and (iv) our legal authority to adopt this
proposal. We also seek comment on the costs and benefits of our
proposal and the effects that our proposal could have on equity and
inclusion.
Proposal Details. We propose to require that cable operators and
DBS providers aggregate the cost of the video programming service (that
is, any and all amounts that the cable operator or DBS provider charges
the consumer for video programming, including for broadcast
retransmission consent, regional sports programming, and other
programming-related fees) as a prominent single line item on
subscribers' bills and in promotional materials, if they choose to
advertise a price in those promotional materials. Section 602 of the
Act defines video programming as ``programming provided by, or
generally considered comparable to programming provided by, a
television broadcast station.'' We intend for this aggregate amount to
include the full amount the cable operator or satellite provider
charges (or intends to charge) the customer in exchange for video
programming service (such as broadcast television, sports programming,
and entertainment programming), but nothing more (that is, no taxes or
charges unrelated to video programming). We do not propose to require
that cable operators and DBS providers include equipment costs in the
``all-in'' price listed on promotional materials and bills, as these
costs are variable for each subscriber, and some subscribers use their
own equipment and therefore do not incur such charges from the
provider. We seek comment on this analysis. The goal of this proposal
is to provide consumers with the video programming service portion of
their subscription payment for which they are or will be responsible in
clear terms. This will allow consumers to make informed choices,
including the ability to comparison shop among competing cable
operators and DBS providers; compare programming costs against
alternative programming providers, including streaming services; and
budget for the actual amount that they will need to pay for cable or
DBS video service every month, similar to the truth-in-billing rules
that the Commission has in place to aid common carrier customers in
understanding their bills and making informed choices in the market.
We seek comment on our proposal. Is this proposal sufficient to
ensure that subscribers and potential subscribers have accurate
information about the cost for video service? To what extent are
providers to already advertising an ``all-in'' price that is inclusive
of all video programming-related costs, government-imposed taxes, and
fees? Would such materials satisfy our proposal, given that it relates
only to charges for video programming? If a provider attempts to
attract new subscribers with a total price (which would necessarily be
higher than just the price for video programming), does that benefit
outweigh the benefits of requiring uniformity for comparison shopping
purposes? Are there more consumer-friendly ways that cable operators
and DBS providers should be required to provide this information? Is
the term ``prominent'' specific enough to ensure that cable operators
and DBS providers present consumers with an easy-to-understand ``all-
in'' subscription price, or do we need to provide more detail about how
cable operators and DBS providers must communicate the price for
service? For example, should we require cable operators and DBS
providers to convey the information in a consistent font size or via
some other measurable metric? In cases where the cable operator or DBS
provider bundles video programming with other services like broadband
internet service, can the cable operator or DBS provider readily
identify the amount of the bill that is attributable to video
programming, and if not, how should our rulemaking account for those
situations? We invite comment, particularly from consumers and local
franchising authorities (LFAs), about whether consumers encounter
misleading promotions or receive misleading bills, and request that
commenters include documents (such as advertisements and bills with
redacted personal information) to support their claims.
Subscribers are entitled to clear, concise, and understandable
information about the elements that comprise their subscription fees.
We also understand that cable operators and DBS providers may wish to
(or in some cases are required to under 47 U.S.C. 562) provide their
subscribers and potential subscribers with information about how much
of their subscription payments are attributable to specific costs of
the video programming service, equipment rental, or other items that
contribute to the bill. Section 622(c) permits cable operators to
identify franchisee fees, public, educational, and governmental access
(PEG) fees, and other fees, taxes, assessments, or other charges
imposed by the government ``as a separate line item on each regular
bill of each subscriber.'' Section 642(b) states that when an MVPD
provides a consumer a bill in an electronic format, that bill shall
include an ``itemized statement that breaks down the total amount
charged for or relating to the provision of the covered service by the
amount charged for the provision of the service itself and the amount
of all related taxes, administrative fees, equipment fees, or other
charges.'' The language in our rulemaking is intended to make clear
that MVPDs may itemize their bills with even more granularity than the
statute requires. We are concerned, however, that some cable operators
and DBS providers may currently portray retransmission consent and
sports programming costs as separate lines on the bill in such a way as
to lead a reasonable consumer to believe that the charge has been
mandated by the government, which is a concern that is similar to the
concerns that the Commission had with regard to common carriers when it
adopted truth-in-billing rules that apply to them. Therefore,
consistent with sections 622(c) and 642 of the Act, we propose to
explicitly state in our rule that cable operators and DBS providers may
complement the prominent aggregate cost line item with an itemized
explanation of the elements that compose that aggregate cost, so long
as the cable operator or DBS provider portrays the video programming-
related costs as part of the all-in price for service. We seek comment
on this proposal. Are there consumer benefits to receiving the cost
line-item information, which would justify their inclusion on consumer
bills? Would a prohibition on separate line items, other than those
mandated by section 642 of the Act or permitted under section 622(c) of
the Act, better serve the public interest, and if so, could the
Commission adopt such
[[Page 42279]]
a prohibition consistent with the Act and the First Amendment? Should
we require cable operators and DBS providers that choose to itemize
portions of their bills to provide a full accounting of how a
subscriber's bill is apportioned? For example, should we require cable
operators and DBS providers to explain what portion of a bill is
attributable to programming costs, or other relevant costs? If so, we
seek comment on which categories would best inform consumers about how
their payments are apportioned. We invite comment about rules we should
consider in order to promote billing and marketing transparency.
Marketplace Practices. We seek comment on industry practices
regarding service pricing categorization. Is there a business purpose
for characterizing these service rate increases as taxes, fees, or
surcharges, and if so, what is this purpose? Are certain sectors in the
MVPD marketplace more prone to charging such fees? Aside from line-item
fees for broadcast television, sports programming (including regional
sports programming), and entertainment programming, are there other
video programming-related fees that are being categorized as taxes,
fees, and surcharges, instead of included in the price for video
service? Have any MVPDs changed the way they bill or promote such fees
since the TVPA took effect, and if so, how? Aside from the examples
discussed above, are there any other industry practices that are
relevant to the analysis of our proposal?
Existing Consumer Protections. We seek comment on whether any
existing laws and protections prevent these advertising and billing
practices related to charges for video programming that are listed
separately on bills as taxes, fees, or surcharges. The Act provides
shared authority over cable customer service issues: the Commission
sets baseline customer service requirements at the Federal level, and
state and local governments tailor more specific customer service
regulations based on their communities' needs. Given the bifurcated
authority we share with state and local governments, we seek comment on
whether any franchising authorities have regulations or franchise
agreement terms about these types of billing and advertising practices,
and if so, whether they would conflict with our proposal. We seek
specific input from franchising authorities about whether any
regulations or franchise agreement terms have succeeded in eliminating
surprise, below-the-line fees and potentially deceptive advertising,
and whether those regulations or terms would make for appropriate
Federal standards for purposes of the practices we are considering
here. What other insights can franchising authorities share regarding
their experiences in assisting constituents with understanding these
billing and/or advertising practices? And have other regulatory bodies
addressed this practice? For example, has the Federal Trade Commission
investigated any of these advertising and billing practices, and if so,
what was the result of that investigation? Have any state attorneys
general investigated these practices and found them to violate any
state laws? If so, how do such efforts contribute to our efforts in
this proceeding?
Legal Authority. We tentatively conclude that sections 335, 632,
and 642 of the Act provide ample authority for this proposal. We also
tentatively conclude that our proposed rule is consistent with the
First Amendment. We seek comment on our analysis below and invite
comment on other sources of authority upon which we may rely to support
our proposed rule.
We tentatively conclude that section 335 of the Act provides us
with authority to adopt our proposed rule as it will apply to direct
broadcast satellite (DBS) providers. Section 335(a) provides us with
authority to impose on DBS providers ``public interest or other
requirements for providing video programming.'' The Commission has not
relied on this authority to impose customer service obligations on DBS
before, but has recognized that section 335(a) authorizes the adoption
of public interest regulations. We tentatively find that the rules we
propose here are public interest requirements that fall squarely within
our authority under section 335(a). As the Commission recently
explained, ``Consumer access to clear, easy-to-understand, and accurate
information is central to a well-functioning marketplace that
encourages competition, innovation, low prices, and high-quality
services. The same information empowers consumers to choose services
that best meet their needs and match their budgets and ensure that they
are not surprised by unexpected charges or service quality that falls
short of their expectations.'' These are some of the same goals that
our proposed rule here is intended to accomplish. Although section
335(a) covers requirements for ``providing video programming,'' we do
not read that phrase to limit our authority to cover only
communications that take place after a DBS provider and consumer enter
into a contract. Advertising and promotional materials are often the
catalyst for locking consumers into long-term contracts for the
provision of video service. Our proposed rule, as it applies to
advertising and other promotional materials, will ensure consumers have
accurate and understandable information from the start of their
subscriber relationship with the DBS provider, prevent consumer
surprise down the road from unexpected charges assessed for ``providing
video programming,'' and allow each consumer to have accurate
information about the monthly cost in order to choose an MVPD service
that best suits his or her needs. Accordingly, we tentatively conclude
that we have authority under section 335(a) to apply our proposed rule
to DBS providers. We seek comment on this tentative conclusion.
In addition, we seek comment on whether we have authority under
section 4(i) of the Act to extend our proposed rule to DBS providers.
By doing so, we will ensure uniformity of regulation between and among
cable operators (regulated under Title VI and by various state consumer
protection laws and local franchising provisions) and DBS providers
(under Title III), thereby preventing DBS providers from gaining a
competitive advantage over their competitors with potentially
misleading marketing materials. We seek comment on this analysis.
Further, we tentatively conclude that section 632 of the Act
provides us with authority to adopt our proposed rule as it will apply
to cable operators. Section 632(b) provides us authority to establish
customer service standards regarding billing practices and other
communications with consumers, and we have relied on that authority for
decades to regulate in this area. Our mandate under section 632(b) is
to adopt customer service requirements regarding, among other
enumerated topics, ``communications between the cable operator and the
subscriber (including standards governing bills and refunds).''
Although the statute identifies specific areas that the Commission's
customer service standards must cover, section 632 describes these only
as the ``minimum'' standards. Thus, by its terms, section 632(b) gives
us broad authority to adopt customer service standards that go beyond
those enumerated, including outside the billing context. The
legislative history of section 632 provides that ``[p]roblems with
customer service have been at the heart of complaints about cable
television,'' and Congress believed that ``strong mandatory
requirements are necessary.'' Congress expected ``the FCC, in
[[Page 42280]]
establishing customer service standards to provide standards addressing
. . . billing and collection practices; disclosure of all available
service tiers, [and] prices (for those tiers and changes in service) .
. . .'' This language from the legislative history--particularly the
expectation that the Commission would adopt standards regarding
``disclosure of all available service tiers, [and] prices''--suggests
that Congress granted the Commission authority over how cable operators
disclose their prices to consumers, including prices for services to
which consumers may have not yet subscribed. We do not read the
reference to ``customer service'' requirements in section 632(b) to
limit the Commission to regulate only post-contract communications;
rather, we tentatively find that price information in advertising and
other promotional materials is a natural extension of the power
Congress expressly delegated to the Commission concerning billing
communications between cable operators and subscribers. That is, our
proposal seeks to prohibit a cable operator from promoting a
potentially misleading price to entice customers to sign up for service
and then billing subscribers more than the advertised price. Thus, we
tentatively conclude that requiring an ``all-in'' price for service is
the type of ``strong mandatory requirement'' that Congress contemplated
in section 632 and accordingly we have authority under section 632(b)
to adopt our proposed rule as applied to cable operators. We seek
comment on these tentative conclusions, and whether we should consider
expanding the requirements of this proceeding to other types of MVPDs,
and on what statutory basis. We also seek comment on the potential
competitive effects of applying these requirements to only a subset of
video programming providers.
As discussed above, section 642, as added by the TVPA, requires
MVPDs to bill subscribers transparently when the MVPD sends an
electronic bill, and specifically requires MVPDs to include in their
bills ``an itemized statement that breaks down the total amount charged
for or relating to the provision of the covered service by the amount
charged for the provision of the service itself and the amount of all
related taxes, administrative fees, equipment fees, or other charges.''
We tentatively conclude that our proposal requiring cable operators and
DBS providers to provide consumers with the ``all-in'' price for video
programming service meets this statutory directive, at least as it
applies to any electronic bill the MVPD sends. Specifically, our
proposal to require cable operators and DBS providers to provide
consumers with the total charge for all video programming would ensure
that consumers are provided complete and accurate information about the
``amount charged for the provision of the service itself,'' as Congress
intended. We tentatively find that such costs make up the charges for
the ``provision of the service itself'' because broadcast channels,
regional sports programming, and other programming track the statutory
definition of ``video programming'' (that is, all are programming
provided by, or generally considered comparable to programming provided
by, a television broadcast station), and video programming is, by
definition, the service that an MVPD makes available for purchase. We
tentatively conclude that listing such costs as below-the-line fees
potentially results in confusion for consumers about the ``amount
charged for the provision of the service itself,'' because the word
``itself'' suggests a single charge for the total service rather than
one charge for one portion of the service and then a separate charge
for other programming provided. This contravenes Congress's core
purpose for enacting the legislation: as noted above, the legislative
history of this section indicates that Congress intended to curb MVPDs'
practice of charging ``unexpected and confusing fees,'' but recent
press reports suggest that this practice continues. We observe that the
statute further provides for the disclosure of a second group of costs
on electronic bills--i.e., ``the amount of all related taxes,
administrative fees, equipment fees, or other charges.'' However, we do
not believe that costs related to video programming fall within this
category. Such costs are not ``taxes,'' ``administrative fees,''
``equipment fees,'' or ``other charges'' because the Act defines video
programming as the specific service that customers buy from MVPDs--in
other words, the ``service itself.'' Thus, the terms ``taxes,''
``administrative fees,'' ``equipment fees,'' or ``other charges''
cannot reasonably include separate charges for various types of video
programming (e.g., amounts paid for retransmission consent rights or
rights to transmit regional sports programming or any other
programming). We note that section 622(c) permits cable operators to
identify, ``as a separate line item on each regular bill of each
subscriber, . . . [t]he amount of the total bill assessed to satisfy
any requirements imposed on the cable operator by the franchise
agreement to support public, educational, or governmental channels or
the use of such channels.'' 47 U.S.C. 542(c). As noted above, we
drafted our proposed rule to be consistent with this rule section by
making explicit that cable operators and DBS providers may list
discrete costs that make up the ``all-in'' cost for video programming.
Based on this analysis, we tentatively conclude that our proposed rule
regarding pricing disclosures is a reasonable construction of these
statutory directives and is authorized under the TVPA. Section 642's
silence with respect to the Commission's rulemaking role does not
remove such authority. The courts have previously affirmed the
Commission's authority to promulgate rules implementing a section of
the Communications Act even where Congress never explicitly or
implicitly delegated power to the Commission to interpret that
particular statutory section. We seek comment on these tentative
conclusions.
We also tentatively conclude that our proposed rule is consistent
with the First Amendment. As the Commission has explained in other
contexts where it adopted truth-in-billing, advertising, and labeling
rules, ``[c]ommercial speech that is misleading is not protected speech
and may be prohibited,'' and ``commercial speech that is only
potentially misleading may be restricted if the restrictions directly
advance a substantial governmental interest and are no more extensive
than necessary to serve that interest.'' To what extent is the speech
at issue here--portrayal that the cost of video service is a certain
amount when the actual amount for the video service is potentially much
higher--misleading? Is it categorically misleading such that is not
considered protected speech? Or is it only potentially misleading? Is
there a credible argument that this practice is not misleading at all?
If a reviewing court were to find that the speech is misleading,
the constitutional analysis would end there because the proposed rule
simply prevents misleading commercial speech, which is afforded no
protection under the First Amendment. However, even if our proposed
rule seeks to regulate only potentially misleading speech, regulations
involving commercial speech that require a disclosure of factual
information (such as the disclosure of the total cost for video
programming service that our proposed rule would require) are entitled
to more lenient review from courts than regulations that limit speech.
That is, under Supreme Court precedent, a speaker's commercial speech
rights are adequately protected as long as
[[Page 42281]]
disclosure requirements are reasonably related to the government's
interest in preventing deception of consumers. That standard is met
here as our proposed rule would simply require cable operators and DBS
providers to disclose to consumers in bills and promotional materials
an accurate statement of the total cost for video programming service,
and the disclosure requirement is reasonably related to the
government's interest in preventing deception of consumers. As was the
case in Zauderer, here, a cable operator's or DBS provider's
constitutionally protected interest in not providing the required
information is ``minimal.'' In addition, the rule does not prevent
cable operators and DBS providers from conveying any additional
information. We seek comment on this analysis.
Assuming, for the sake of argument, that our proposed rule would be
subject to the more stringent test of commercial speech regulation
(i.e., intermediate scrutiny), we still believe that the rule passes
that three-prong test that the Supreme Court established in Central
Hudson: first, the government must assert a substantial interest in
support of its regulation; second, the government must demonstrate that
the restriction on commercial speech directly and materially advances
that interest; and third, the regulation must be ``narrowly drawn.''
Our proposed rule passes this test. First, we have a substantial
interest in making sure that consumers can identify the full cost of
video programming to which they subscribe so that they can understand
the price they are being charged for the service as well as make
informed purchasing decisions as they consider competing cable and DBS
service options. Second, our proposed rule would advance that interest
by requiring cable operators and DBS providers to identify the cost for
video programming as a single, prominent line-item on consumer bills
and promotional materials, which would allow consumers to identify the
full cost of video programming. Finally, our proposal is narrowly drawn
and proportionate to the substantial interest we aim to promote: the
proposed rule would permit cable operators and DBS providers to
identify elements that comprise the total charge for video programming
and require only that they present information about the total cost for
video programming uniformly. We seek comment on this analysis.
Cost/Benefit Analysis. We seek comment on the benefits and costs
associated with adopting the proposed rules. In addition to the
consumer benefits discussed above, including promotion of competition,
are there also benefits to industry, such as leveling the playing field
for cable operators and DBS providers that do offer transparent
pricing? We also seek comment on any potential costs that would be
imposed on consumers or cable operators and DBS providers if we adopt
the proposals contained in this NPRM. Would a truth-in-billing
requirement impose undue burdens on small cable operators, as that term
is defined by the Small Business Administration? Are there ways to
limit any potential compliance burdens on providers, including small
cable operators, while still achieving the benefits to consumers
discussed above? Comments should be accompanied by specific data and
analysis supporting claimed costs and benefits. We seek comment on
these issues and any other issues related to the regulation of below-
the-line fees and truth-in-billing requirements.
Digital Equity and Inclusion. Finally, the Commission, as part of
its continuing effort to advance digital equity for all, including
people of color, persons with disabilities, persons who live in rural
or Tribal areas, and others who are or have been historically
underserved, marginalized, or adversely affected by persistent poverty
or inequality, invites comment on any equity-related considerations and
benefits (if any) that may be associated with the proposals and issues
discussed herein. Specifically, we seek comment on how our proposals
may promote or inhibit advances in diversity, equity, inclusion, and
accessibility, as well the scope of the Commission's relevant legal
authority.
Initial Regulatory Flexibility Act Analysis. As required by the
Regulatory Flexibility Act of 1980, as amended (RFA), the Commission
has prepared an Initial Regulatory Flexibility Analysis (IRFA) relating
to this NPRM. The IRFA is set forth below.
Paperwork Reduction Act. This NPRM may result in new or revised
information collection requirements subject to the Paperwork Reduction
Act of 1995, Public Law 104-13 (44 U.S.C. 3501 through 3520). If the
Commission adopts any new or revised information collection
requirement, the Commission will publish a notice in the Federal
Register inviting the public to comment on the requirement, as required
by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C.
3501-3520). In addition, pursuant to the Small Business Paperwork
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the
Commission seeks specific comment on how it might ``further reduce the
information collection burden for small business concerns with fewer
than 25 employees.''
Ex Parte Rules--Permit-But-Disclose. This proceeding shall be
treated as a ``permit-but-disclose'' proceeding in accordance with the
Commission's ex parte rules. Ex parte presentations are permissible if
disclosed in accordance with Commission rules, except during the
Sunshine Agenda period when presentations, ex parte or otherwise, are
generally prohibited. Persons making ex parte presentations must file a
copy of any written presentation or a memorandum summarizing any oral
presentation within two business days after the presentation (unless a
different deadline applicable to the Sunshine period applies). Persons
making oral ex parte presentations are reminded that memoranda
summarizing the presentation must (1) list all persons attending or
otherwise participating in the meeting at which the ex parte
presentation was made, and (2) summarize all data presented and
arguments made during the presentation. Memoranda must contain a
summary of the substance of the ex parte presentation and not merely a
listing of the subjects discussed. More than a one or two sentence
description of the views and arguments presented is generally required.
If the presentation consisted in whole or in part of the presentation
of data or arguments already reflected in the presenter's written
comments, memoranda or other filings in the proceeding, the presenter
may provide citations to such data or arguments in his or her prior
comments, memoranda, or other filings (specifying the relevant page
and/or paragraph numbers where such data or arguments can be found) in
lieu of summarizing them in the memorandum. Documents shown or given to
Commission staff during ex parte meetings are deemed to be written ex
parte presentations and must be filed consistent with section 1.1206(b)
of the rules. In proceedings governed by section 1.49(f) of the rules
or for which the Commission has made available a method of electronic
filing, written ex parte presentations and memoranda summarizing oral
ex parte presentations, and all attachments thereto, must be filed
through the electronic comment filing system available for that
proceeding, and must be filed in their native format (e.g., .doc, .xml,
.ppt, searchable .pdf). Participants in this proceeding should
familiarize themselves with the Commission's ex parte rules.
Filing Requirements--Comments and Replies. Pursuant to sections
1.415 and 1.419 of the Commission's rules, 47 CFR
[[Page 42282]]
1.415, 1.419, interested parties may file comments and reply comments
on or before the dates indicated on the first page of this document.
Comments may be filed using the Commission's Electronic Comment Filing
System (ECFS). See Electronic Filing of Documents in Rulemaking
Proceedings, 63 FR 24121 (1998).
Electronic Filers: Comments may be filed electronically using the
internet by accessing the ECFS: <a href="https://fjallfoss.fcc.gov/ecfs2/">https://fjallfoss.fcc.gov/ecfs2/</a>.
Paper Filers: Parties who choose to file by paper must file an
original and one copy of each filing. If more than one docket or
rulemaking number appears in the caption of this proceeding, filers
must submit two additional copies for each additional docket or
rulemaking number. Filings can be sent by hand or messenger delivery,
by commercial overnight courier, or by first-class or overnight U.S.
Postal Service mail. All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
Commercial overnight mail (other than U.S. Postal Service Express Mail
and Priority Mail) must be sent to 9050 Junction Drive, Annapolis
Junction, MD 20701. U.S. Postal Service first-class, Express, and
Priority mail must be addressed to 45 L Street NE, Washington, DC
20554.
People with Disabilities. To request materials in accessible
formats for people with disabilities (Braille, large print, electronic
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection#5c3a3f3f696c681c3a3f3f723b332a"><span class="__cf_email__" data-cfemail="365055550306027650555518515940">[email protected]</span></a> or call the FCC's
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice),
(202) 418-0432 (TTY).
Availability of Documents. Comments and reply comments will be
publicly available online via ECFS.
Initial Regulatory Flexibility Analysis. As required by the
Regulatory Flexibility Act of 1980, as amended (RFA), the Commission
has prepared this present Initial Regulatory Flexibility Analysis
(IRFA) concerning the possible significant economic impact on small
entities by the policies and rules proposed in the Notice of Proposed
Rulemaking (NPRM). Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
by the deadlines for comments provided on the first page of the NPRM.
The Commission will send a copy of the NPRM, including this IRFA, to
the Chief Counsel for Advocacy of the Small Business Administration
(SBA). In addition, the NPRM and IRFA (or summaries thereof) will be
published in the Federal Register.
Need for, and Objectives of, the Proposed Rules. Sections 335 and
632 of the Communications Act of 1934, as amended (the Act), authorize
the Commission to adopt public interest regulations for direct
broadcast satellite (DBS) and direct the Commission to adopt cable
customer service requirements, respectively. In 2019, Congress adopted
the Television Viewer Protection Act of 2019 (TVPA), which bolstered
the consumer protection provisions of the Act by adding specific
consumer protections. The TVPA revised the Act to add section 642,
which, among other things, requires greater transparency in
subscribers' bills. As it considered this legislation, Congress
expressed specific concern that consumers face ``unexpected and
confusing fees when purchasing video programming,'' including ``fees
for broadcast TV,'' and noted that the practice of charging these fees
began in the late 2000s. In 2021, the Media Bureau sought comment on
the steps multichannel video programming distributors (MVPDs) have
taken to implement the TVPA requirements and on whether consumers found
those steps effective in furthering Congress's goal of protecting
consumers when purchasing MVPD or broadband service. In response to
that PN, Consumer Reports commented that below-the-line fees, ``which
are solely the creation of the provider (versus regulatory fees that
are passed on to the consumer)[,] made up the bulk'' of costs that are
added to advertised rates and MVPD subscribers' bills. It appears that
since adoption of the TVPA, the practice of charging subscribers
unexpected ``fees'' (for example, for broadcast television programming
and regional sports programming listed separately from the monthly
subscription rate for video programming service) that are actually
charges for the video programming service for which the subscriber
pays, has continued. Moreover, websites, advertisements, and other
promotional materials may advertise a top-line price that does not note
prominently the mandatory programming costs that make up the service
until the customer signs up for service. For example, those materials
use a different font size (often in fine print) and separate from the
proclaimed monthly subscription fee amounts extra ``fees'' designated
by the provider that consumers will also need to pay for video
programming that they will receive.
Some MVPDs charge subscribers an assortment of unexpected fees that
are not identified as a cost attributable to the video programming
service that they sell, even though those fees are for parts of that
video programming service. This categorization can potentially be
misleading and interpreted as a government-imposed tax or fee, instead
of a company-imposed service fee increase. This practice can also make
it difficult for consumers to compare the service prices of competing
video service providers. To make sure that consumers have the
information they need to budget for video programming service and
compare competitive services,
Legal Basis. The proposed action is authorized pursuant to sections
1, 4(i), 303(v), 335(a), 632(b), and 642 of the Communications Act of
1934, as amended, 47 U.S.C. 151, 154(i), 303(v), 335(a), 552(b), and
562.
Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply--Cable and Other Subscription
Programming. The U.S. Census Bureau defines this industry as
establishments primarily engaged in operating studios and facilities
for the broadcasting of programs on a subscription or fee basis. The
broadcast programming is typically narrowcast in nature (e.g., limited
format, such as news, sports, education, or youth-oriented). These
establishments produce programming in their own facilities or acquire
programming from external sources. The programming material is usually
delivered to a third party, such as cable systems or direct-to-home
satellite systems, for transmission to viewers. The SBA small business
size standard for this industry classifies firms with annual receipts
less than $41.5 million as small. Based on U.S. Census Bureau data for
2017, 378 firms operated in this industry during that year. Of that
number, 149 firms operated with revenue of less than $25 million a year
and 44 firms operated with revenue of $25 million or more. Based on
this data, the Commission estimates that a majority of firms in this
industry are small.
Cable Companies and Systems (Rate Regulation Standard). The
Commission has developed its own small business size standards, for the
purpose of cable rate regulation. Under the Commission's rules, a
``small cable company'' is one serving 400,000 or fewer subscribers,
nationwide. Industry data indicate that, of 4,200 cable operators
nationwide, all but 9 are small under this size standard. In addition,
under the Commission's rules, a ``small system'' is a cable system
serving 15,000 or fewer subscribers. Industry data indicate that, of
4,200 systems nationwide, 3,900 have fewer than 15,000 subscribers,
based on the
[[Page 42283]]
same records. Thus, under this second size standard, the Commission
believes that most cable systems are small.
Cable System Operators (Telecom Act Standard). The Communications
Act of 1934, as amended, contains a size standard for a ``small cable
operator,'' which is ``a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than one percent of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' For purposes of the Telecom Act Standard, the
Commission determined that a cable system operator that serves fewer
than 677,000 subscribers, either directly or through affiliates, will
meet the definition of a small cable operator based on the cable
subscriber count established in a 2001 Public Notice. Based on industry
data, only six cable system operators have more than 677,000
subscribers. Accordingly, the Commission estimates that the majority of
cable system operators are small under this size standard. We note
however, that the Commission neither requests nor collects information
on whether cable system operators are affiliated with entities whose
gross annual revenues exceed $250 million. Therefore, we are unable at
this time to estimate with greater precision the number of cable system
operators that would qualify as small cable operators under the
definition in the Communications Act.
Direct Broadcast Satellite (DBS) Service. DBS service is a
nationally distributed subscription service that delivers video and
audio programming via satellite to a small parabolic ``dish'' antenna
at the subscriber's location. DBS is included in the Wired
Telecommunications Carriers industry which comprises establishments
primarily engaged in operating and/or providing access to transmission
facilities and infrastructure that they own and/or lease for the
transmission of voice, data, text, sound, and video using wired
telecommunications networks. Transmission facilities may be based on a
single technology or combination of technologies. Establishments in
this industry use the wired telecommunications network facilities that
they operate to provide a variety of services, such as wired telephony
services, including VoIP services, wired (cable) audio and video
programming distribution; and wired broadband internet services. By
exception, establishments providing satellite television distribution
services using facilities and infrastructure that they operate are
included in this industry. The SBA small business size standard for
Wired Telecommunications Carriers classifies firms having 1,500 or
fewer employees as small. U.S. Census Bureau data for 2017 show that
3,054 firms operated in this industry for the entire year. Of this
number, 2,964 firms operated with fewer than 250 employees. Based on
this data, the majority of firms in this industry can be considered
small under the SBA small business size standard. According to
Commission data however, only two entities provide DBS service--DIRECTV
(owned by AT&T) and DISH Network, which require a great deal of capital
for operation. DIRECTV and DISH Network both exceed the SBA size
standard for classification as a small business. Therefore, we must
conclude based on internally developed Commission data, in general DBS
service is provided only by large firms.
Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements. The NPRM proposes to require cable operators
and DBS providers to state the makeup of consumers' bills
transparently, accurately, and clearly. The NPRM does not propose any
new or modified recordkeeping or other compliance requirements.
In assessing the cost of compliance for small entities, at this
time the Commission is not in a position to determine whether, if
adopted, amending the cable operator customer service obligations will
require small entities to hire professionals to comply, and cannot
quantify the cost of compliance with any of the potential rule changes
that may be adopted. To help the Commission more fully evaluate the
cost of compliance, in the NPRM we seek comment on whether a truth-in-
billing requirement would impose undue burdens on small entities. We
also seek comment on ways to limit any potential compliance burdens on
small entities, while still achieving the benefits to consumers of
clearer, non-misleading bills and advertisements. Comments should be
accompanied by specific data and analysis supporting claimed costs and
benefits. In addition, we seek comment on these issues and any other
issues related to the regulation of below-the-line fees and truth-in-
billing requirements. We expect the comments that we receive from the
parties in the proceeding, including cost and benefit analyses, to help
the Commission identify and evaluate compliance costs and burdens for
small entities that may result from the matters discussed in the NPRM.
Steps Taken to Minimize Significant Economic Impact on Small
Entities and Significant Alternatives Considered. The RFA requires an
agency to describe any significant alternatives that it has considered
in reaching its proposed approach, which may include the following four
alternatives (among others): ``(1) the establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rule for such small entities; (3) the
use of performance, rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for small entities.''
The NPRM seeks comment on whether cable operators and DBS providers
have changed the way they bill or promote such fees since the TVPA took
effect, and if so, how. We ask whether there is a business purpose for
characterizing these service rate increases as taxes, fees, or
surcharges, and whether certain sectors in the MVPD marketplace more
prone to charging such fees. We also ask whether any franchising
authorities have regulations or franchise agreement terms about these
types of billing and advertising practices, and if so, whether they
would conflict with our proposal. Consistent with section 642 of the
Act, the NPRM proposes to explicitly state in our rule that cable
operators and DBS providers may complement the prominent aggregate cost
line item with an itemized explanation of the elements that compose
that aggregate cost, so long as the cable operator or DBS provider
portrays the video programming-related costs as part of the all-in
price for service. There may be consumer benefits to allowing cable
operators and DBS providers to provide their subscribers and potential
subscribers with information about how much of their subscription
payments are attributable to specific elements of the video programming
service, equipment rental, or other elements that contribute to the
bill.
We considered alternatives to whether our proposal to provide the
``all-in'' price for service in their promotional materials and on
subscribers' bills is sufficient to ensure that subscribers and
potential subscribers have accurate information about the cost for
video service. We considered whether there are more consumer-friendly
ways that cable operators and DBS providers should be required to
provide this information and whether the term ``prominent'' is specific
enough to
[[Page 42284]]
ensure that cable operators and DBS providers present consumers with an
easy-to-understand ``all-in'' subscription price, or whether we need to
provide more detail about how cable operators and DBS providers must
communicate the price for service and seek comment on these matters. We
also considered whether, aside from line-item fees for broadcast
television, sports programming (including regional sports programming),
and entertainment programming, there are other video programming-
related fees that are being categorized as taxes, fees, and surcharges,
instead of included in the price for video service. We also considered
whether are there also benefits to industry, such as leveling the
playing field for MVPDs that do offer transparent pricing.
We expect to more fully consider the economic impact and
alternatives for small entities following the review of comments and
costs and benefits analyses filed in response to the NPRM. Our
evaluation of this information will shape the final alternatives we
consider, the final conclusion we reach, and any final actions we
ultimately take in this proceeding to minimize any significant economic
impact that may occur on small entities.
Federal Rules that May Duplicate, Overlap, or Conflict with the
Proposed Rule. None.
It is ordered that, pursuant to the authority found in sections 1,
4(i), 303(v), 335(a), 632(b), and 642 of the Communications Act of
1934, as amended, 47 U.S.C. 151, 154(i), 303(v), 335(a), 552(b), and
562, this Notice of Proposed Rulemaking is adopted. It is further
ordered that the Commission's Consumer and Governmental Affairs Bureau,
Reference Information Center, shall send a copy of this Notice of
Proposed Rulemaking, including the Initial Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
List of Subjects in 47 CFR Part 76
Cable television, Reporting and recordkeeping requirements.
Federal Communications Commission.
Marlene Dortch,
Secretary.
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 76 as follows:
PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
0
1. The authority citation for part 76 is revised to read as follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303,
303a, 307, 308, 309, 312, 315, 317, 325, 338, 339, 340, 341, 503,
521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548,
549, 552, 554, 556, 558, 560, 561, 571, 572, 573.
0
2. Add Sec. 76.310 to read as follows:
Sec. 76.310 Truth in billing and advertising.
Cable operators and direct broadcast satellite (DBS) providers
shall aggregate the cost of video programming that they provide as a
prominent single line item on subscribers' bills and in any promotional
materials. Cable operators and DBS providers may complement the
aggregate line item with an itemized explanation of the elements that
compose that single line item.
[FR Doc. 2023-13971 Filed 6-29-23; 8:45 am]
BILLING CODE 6712-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.