Satellite Provider Opposes Early Termination Fee Immunity For Cable Companies

WASHINGTON, July 23, 2024 - DIRECTV, a major satellite TV operator, is concerned that its cable TV rivals could receive a regulatory advantage within pending federal rules aimed at banning fees customers pay for breaking pay-TV contracts early.

“Regulating only a single class of traditional video service providers while leaving all other competitors untouched would harm consumers and competition. This would leave only satellite carriers subject to such restrictions,” said DIRECTV in a July 18 filing with the Federal Communications Commission.

The comments – submitted by DIRECTV outside counsel Michael Nilsson of the HWG law firm – was the latest round of industry pushback against FCC Chairwoman Jessica Rosenworcel's proposed rules to ban cable and satellite TV early termination fees. 

Consumers usually agree to long-term ETFs in exchange for lower rates for service and equipment, such as wireless remotes and set-top boxes. But breaking the contract can come with a pro-rated penalty – a practice Rosenworcel wants to end. But her proposal would not apply to YouTube TV and Hulu + Live TV.

Last month, NCTA - The Internet & Television Association requested in its own filing that the proposed ban should not extend to video-broadband bundles offered by cable companies.

DIRECTV argued that exempting bundled broadband services from the ban would effectively grant immunity to cable and other terrestrial video services, as most consumers receiving cable television also take a bundled broadband service.

Although agreeing with NCTA's request insofar as the ETF ban should not exist in the first place, DIRECTV said that this specific exemption for bundling would leave only satellite providers in the crosshairs of the ban and kill their ability to compete in the marketplace.

In its filing, DIRECTV justified its use of ETFs for customers in the first two years because it helped cover the cost of the equipment required for satellite services. DIRECTV said satellite providers would be treated unfairly under the bundled services exemption because they do not offer broadband like cable.

“Since [satellite] providers both uniquely depend on ETFs to help spread upfront costs and are particularly struggling in the marketplace, such an outcome strikes us as arbitrary and capricious,” DIRECTV said, referring to a potential ETF ban exemption for bundled services.

DIRECTV did find some solid common ground with NCTA’s FCC filing, agreeing that the FCC should target “unjust and unreasonable” ETFs rather than apply a blanket ban. DIRECTV offered the following example of what could be considered not unjust.

“ETFs used to permit consumers to pay for upfront costs over time should be considered at least presumptively just and reasonable,” DIRECTV said.