The Federal Communications Commission could have a legal problem on its hands, but agency lawyers seem to have crafted what appears to be an acceptable workaround: Don’t call a ban on certain cable and satellite TV billing fees rate regulation – call it consumer protection.

At its Dec. 13 open meeting, FCC Chair Jessica Rosenworcel is planning to launch a rulemaking designed to bar cable and satellite TV providers from collecting early termination fees and billing cycle fees – even though the agency receives just hundreds of informal complaints about these fees annually. The U.S. has 53.3 million cable and satellite TV subscribers combined, down 15.7 million since January 2021.

Although the FCC says a ban on these fees has nothing to do with rate regulation, the agency is likely to face strong rebuttal on this point – if not from NCTAitv, the trade association for large cable TV operators, then at least from Charter Communications.  Charter invoked impermissible rate regulation in its court fight against a billing cycle fee ban adopted by the state of Maine in 2020 that remains in effect.

In seeking U.S. Supreme Court review of its loss below, Charter was emphatic that Maine’s billing cycle fee statute embraced prohibited price regulation by requiring partial-month refunds.

“Maine’s law … caps Charter’s rates during the final month of service and precludes Charter from charging either for the full month, or a daily rate higher than its standard monthly rate. That is rate regulation, pure and simple,” Charter said last year in a brief with the high court. The Supreme Court declined to take the case, handing victory to Maine.

An early termination fee is collected when a customer cancels service prior to the expiration of an existing service contract, which can run as long as 24 months. A billing cycle fee involves denial of pro rata refunds when customers cancel before the end of the month. Echoing President Biden, Rosenworcel blasted ETFs and BCFs as “junk fees” that penalize consumers and impede competition.

If all goes according to plan, the FCC will adopt new junk fees rules in 2024. The FCC has floated an exemption for small or rural cable TV operators, but it put the onus on these entities to justify any special treatment.

The FCC’s crackdown on ETFs and BCFs would run counter to the agency’s bipartisan light-touch approach to cable TV regulation that began more than two decades ago. By law, the FCC in 1999 had to cease regulating the price of cable’s expanded basic tier, a service level which typically includes ESPN, C-SPAN, CNBC, and Fox News. 

In 2015, the FCC stripped away the last layer of cable rate regulation. The agency, led at that time by Chairman Tom Wheeler, an Obama appointee, held that every cable operator in the country was subject to “effective competition.” That prevented local governments from continuing to regulate cable’s basic tier – the traditional home of local TV stations and public access channels. Rosenworcel, then an FCC Commissioner, voted against the Wheeler plan as going too far.

Rosenworcel is evidently not planning on letting the agency’s long legacy of cable deregulation to prevent her from pivoting in the opposite direction.

Sprinkled throughout the FCC’s junk fees ban proposal are references to recent court cases holding that BCFs are not rate regulation preempted by federal law, but rather consumer protection measures that states are permitted to adopt and enforce. The FCC said the logic used by the courts in upholding state BCFs applies just as well to a would-be ETF ban.

The FCC said its authority to ban ETFs and BCFs on cable is contained in the 1992 Cable Act, saying it provides for the agency to protect “consumers against … poor customer service” and “establish standards by which cable operators may fulfill their customer service requirements.”

Whether past FCC cable deregulation steps would prevent a junk fees ban, the FCC concluded: “The applicability of ETF and BCF regulations are not affected by the existence of effective competition in a community.”

DBS providers Dish and DirecTV will probably have an easier time than cable in getting a junk fees ban struck down in court.

Since their arrival in the mid-1990s, Dish and DirectTV have never been price regulated at the state or federal level or subject to any form of cable-like specific customer service obligations adopted by the FCC. 

Still, the FCC is confident regarding its power to act, asserting that it retains “exclusive jurisdiction to regulate the provision of direct-to-home satellite services” and authority to impose “public interest or other requirements for providing video programming” on DBS.

In a final rationale left undeveloped, the FCC said a junk fees ban exemption for Dish and DirecTV would be inappropriate because it would allow the DBS providers to gain “a competitive advantage over their competitors through the use of ETFs and BCFs.”

The FCC failed to explain how DBS reliance on junk fees deemed unlawful for cable could be an effective tool at keeping customers or attracting new ones while Dish and DirecTV bled nearly 700,000 subscribers in the most recent quarter.

Maybe FCC lawyers don’t have it all figured out after all.

Ted Hearn is the Editor of Policyband, a new website dedicated to comprehensive coverage of the broadband communications market. A former communications executive and reporter for newsletters and trade journals, Hearn has decades of experience with traditional video and broadband industry trends, regulatory developments, technology advancements, and market dynamics. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

With the government now funded into the new year, it’s time for Congress to take another look at its broader priorities, especially when it comes to the race with China for dominance in next-generation technologies. Whether it’s AI or cloud computing or virtual reality, if the United States is to remain competitive, we need to make secure and effective communications a priority. This means finally connecting all Americans to high-speed broadband and ensuring that our connectivity cannot be undermined by foreign adversaries.

Two popular programs are central to this goal: the Affordable Connectivity Program and the Rip-and-Replace program. Both of these programs have tremendous bipartisan, bicameral support; but both have been underfunded and now risk dying on the vine. Congress has the opportunity to fully fund these programs if it has the will to do so.

Let’s break it down.

The Affordable Connectivity Program provides low-income American families and veterans with discounts on Internet service and connectivity equipment, including higher discounts for those living on Tribal lands. With affordable broadband, more Americans can get online and be a part of the digital economy.

The ACP has been wildly successful, connecting over 21 million households to essential broadband they could otherwise not afford. And it continues to garner widespread support, with the vast majority of voters (78%) calling for its extension, including 64% of Republicans, 70% of Independents, and 95% of Democrats.

Congress provided the ACP with $14.2 billion in 2021—but funding is now running low and is projected to be fully exhausted by spring 2024. Governors, lawmakers on both sides of the aisle, public interest groups, and Internet service providers are all raising the alarm about its imminent depletion. That’s why the Biden Administration in October called on Congress to replenish the program’s coffers with an additional $6 billion.

A good start, but not the whole story. Our foreign adversaries are well known for their espionage, and while a spy balloon might get the attention, a far more insidious problem lurks in our communications networks: equipment designed and produced by Chinese suppliers Huawei and ZTE. A bipartisan Congress passed the Secure and Trusted Networks Act to eradicate national security threats such as these, but sufficient funding for the Rip and Replace program has never materialized.

Again, the Biden Administration has stepped up and identified a need for $3.1 billion to fully fund the program as a “key national security priority” in its emergency supplemental funding request. It’s a narrative we can all get on-board with: that broadband falls under the umbrella of national security as a whole. American consumers and institutions both benefit from American-built networks and increased protection at home. But communications providers can’t live up to these needs on their own.

As it stands, the responsibility to get affordable, secure connectivity programs across the finish line rests with Congress. Even with a consensus of support for these two programs, the devil is in the details of how to make the price tags palatable to enough policymakers on Capitol Hill. The key is ensuring that any changes preserve the widespread efficacy of the program that has made it popular so far.

For example, Congress could cut the cost of the ACP by limiting the additional Tribal funding to rural Tribal lands. Any such change should be grounded in an evaluation of existing need in urban areas, but could be an opportunity to ensure funds are being directed to areas of greatest need. And Congress should consider indexing the ACP to inflation. The high inflation of recent years has wreaked havoc on the budgets of consumers—and inflation-proofing the program would ensure that broadband remains affordable for all Americans even should inflation come back.

As for Rip-and-Replace, those of us urging for more funds could concede putting safeguards in place to ensure the money is being used for its intended purpose – the kind of compromise needed to get such policies across the finish line

These are just some ideas as we head into the final funding fight. Not everyone is going to be on the same page on what is and isn’t working best, but shared success starts by recognizing that we all have the same endgame. Congress must ensure that adequate funding for the ACP and Rip and Replace program are included in any year-end spending package. We have an all-too-rare opportunity to win the race for high-tech dominance—we just need to provide the resources.

Kate Forscey is a contributing fellow for the Digital Progress Institute and principal and founder of KRF Strategies LLC. She has served as senior technology policy advisor for Congresswoman Anna G. Eshoo and policy counsel at Public Knowledge. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

Congress dedicated more than $42 billion to help states and companies build out broadband networks to all Americans. This program, called the Broadband Equity, Access, and Deployment Program, marked a crucial step towards bridging the digital divide in our nation. But this program will fail if Congress doesn’t renew the Affordable Connectivity Program that states are relying on to connect low-income Americans.

Bipartisan legislation from Congress made it clear that states needed to offer a low-cost broadband plan to residents to qualify for BEAD funding. For the uninitiated, the ACP is a $30-a-month subsidy that an eligible consumer can use towards any broadband plan a participating service provider offers.

In fact, many providers have started offering broadband plans at a $30 price point so the effective cost of broadband to the consumer is zero. Using ACP is an easy way for ISPs to meet the affordability requirement, a “short-hand” of sorts for them to offer affordable plans using an existing — and successful — model.

However, the ACP is expected to exhaust its funding in the first half of next year, leaving a potentially disastrous scenario for families who may have little savings or discretionary income. Ultimately allowing the ACP to end leaves a crucial question unanswered: what good are networks if people cannot afford to connect to them?

During a congressional oversight hearing in May, National Telecommunications and Information Agency Administrator Alan Davidson explained to Members of Congress that the BEAD program will be negatively impacted if continued funding for the ACP is not found. He emphasized that for low-income rural Americans, the ACP is the lifeline ensuring they can afford to access the internet. Without it, some providers may hesitate to deploy in rural areas over fear that the investment will be sustainable. Subscribership concerns may prove to be a limiting factor on which rural areas are served.

The ACP extends every BEAD dollar further. A study conducted by Common Sense Media found that the ACP could reduce the BEAD subsidy needed to incentivize providers to build in rural areas by up to 25% per year. According to the study, ACP reduces the per-household subsidy required to incentivize ISP investment by $500. Simply put, ACP improves the economic case because it 1) effectively lowers the cost of service, 2) creates a customer base with less churn, and 3) makes subscribers easier to acquire because of the massive public and private investment in raising awareness for the program.

But if the ACP is allowed to end, the federal government could end up overspending on every broadband deployment made through BEAD. This ultimately means BEAD networks will fail to connect millions of Americans.

The ACP is more than a simple affordability program; for over 21 million households; it’s a gateway to our ever-increasing digital society. Without it, millions of Americans will be unable to see doctors, visit with family, shop, and engage with their communities online. At the same time, the ACP plays a significant role in future infrastructure deployment. Allowing the ACP to end all but ensures that millions will be disconnected and future funding dollars won’t go the distance to close the digital divide.

Ryan Johnston is senior policy counsel at Next Century Cities. He is responsible for NCC’s federal policy portfolio, building and maintaining relationships with Federal Commissions Commission officials, members of Congress and staff, and public interest allies. Working with various federal agencies, Ryan submits filings on behalf of NCC members on technology and telecommunications related issues that impact the digital divide such as broadband data mapping, benchmark speeds, spectrum policy, content moderation, privacy, and others. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.