Over the last few months, we’ve reviewed cable and internet service bills for seven of the nation’s largest providers in an attempt to make sense of all those fees and charges. So what did we learn from these bills covering cable, satellite, and fiber customers from Connecticut to California?
1. Everyone is nickel-and-diming the their customers, some more than others
The fees! The fees are everywhere!
As a rule of thumb, the collection of taxes, fees, and surcharges above the stated subscription price ranged from about 15% to 30% of any given customer’s total bill (including bills we looked at but didn’t publish).
Taxes and state charges are, of course, highly variable. State and local taxes ranged from 0% to about 9%, depending on where subscribers live. Likewise, some states charge telecom taxes or franchise fees, while others don’t; all told, it makes for one big mess to compare different locations in any apples-to-apples way.
Similarly, some fees that are technically added by the companies — to recoup state or federal charges — are fixed by other entities, and so the cable companies don’t have much to do with it.
But then there are the pure revenue fees — those times where cable companies are making bank by charging you money they could just have put in their packages. The biggest bugaboos we saw?
- Set-top box / receiver fees
There’s a reason the FCC is going after the set-top box market: the vast majority of customers we saw are paying between $10 and $20 for their primary cable or satellite receiver, let alone second and subsequent units.
For the pay-TV companies, this is a big source of revenue — even pro-industry estimates put it at $13 billion a year — so of course these companies hate the proposal.
Even if cable box fees are limited, they will find a way to make up the charges to customers.
Some fees, like cable modem rental, you can eliminate by buying your own. But this one, at this time, you’re basically stuck with unless you cut the cord entirely.
- HD Service fees and DVR fees
Sometimes these were rolled into the set-top box fees, and sometimes they were broken out. But let’s be real here: HD broadcasting started in 1996 and the TiVo launched in 1999 — respectively 20 and 17 years ago.
High-definition television uses more bandwidth than standard-def does, it’s true, but when a technology is nearly old enough to go buy itself a celebratory birthday drink at the bar, perhaps the time to charge extra for it as a “feature” has truly come and gone.
If you have something like a TiVo or other DVR, you don’t need to subscribe to DVR service from your cable company, but opting out of HD television in 2016 kind of defeats the point of having programming at all, for the majority of consumers.
- Maintenance fees
Let’s make a bet: you pay me $5 a month against the chance of needing my help. If you don’t pay me, and do need help, I’m going to charge you $50 to help. If you do pay me, and need help, I will charge you $10 to help. And if you don’t need my help at all, I pocket all that cash in perpetuity.
It’s how all insurance works, really, and when it comes to really expensive or important things (your house, your car, your health), insurance is important to have, as you could be out thousands of dollars or even left homeless otherwise.
As part of your cable bill, though, maybe not so much. The satellite companies charge $8 per month for their protection plans, and Charter charges $5. If you don’t want to take the bet, you can opt out of these plans.
- “Broadcast” fees and “Regional Sports” fees
Last but not least, the “Broadcast TV fee” is probably the most egregious of the whole set, with the “regional sports” fee running right behind.
When the telecommunications act got its big fat upgrade in the 1990s, so did the rules pertaining to the carriage agreements between local broadcast stations (your NBC, NBC, and CBS affiliates and so on — the whole UHF and VHF gamut) and cable carriers.
That change in regulation opened up the opportunity for broadcast stations to negotiate their own retransmission rates rates with cable companies. Since 1994, the cable companies have been permitted to pass those costs through to consumers.
Similarly, companies charge extra for recouping the cost of carrying regional sports networks in your package, whether or not you want them. (Sometimes it can be almost impossible to get a bundle without.) Those are the “regional sports fees,” and cable companies say that it’s simply too expensive to carry whatever channel is playing baseball in your neighborhood.
As a bonus: if you’re a Comcast customer, you’re paying regional sports fees for them to bring you… Comcast-owned stations. That is some chutzpah.
The thing is, though, there’s already a pass-through charge for recouping retransmission fees, and it’s called “your entire cable bill.”
Because that’s exactly how the system works: content companies, like Disney and Discovery and Viacom and so on, make agreements with distribution companies, like Comcast and Charter. For every cable subscriber that receives Channel X in their bundle, Cable Company Y will pay the content company that owns Channel X a small monthly fee. If the agreement is for $0.50, and 10 million subscribers receive that channel, then the cable company pays the content company $5 million per month.
The cable company recoups those fees by getting paying subscribers in the door. So if you pay $100 per month for your cable bill, and you get Channel X, then nominally about $0.50 of your bill goes to that company. It’s not that direct, of course, and the cable company is using giant pools of fungible money on both ends, but that’s the idea.
With “Broadcast” and “regional sports” fees added on — which can run $8 per month or more, combined — cable companies are simply increasing the rate you pay for cable TV while claiming not to be increasing the rate you pay for cable. It’s impressive, in its own way.
2. Breaking things down too much is just as confusing as not breaking them down at all
Some companies, like Dish and Charter, are particularly opaque about the various taxes you might need to pay.
Dish has a line item for “tax” but rolls various state and local taxes into one line item so you can’t see what the real charges are. And when it comes to voice service, Charter completely fails to break out any line items and instead just rolls them all into your monthly fee. Convenient? Sure, maybe, if you’re trying to save space on the bill — but that makes it very hard to tell what the real cost of service is, and where your money goes.
On the other end of the spectrum, AT&T Uverse goes so transparent with its invoice details that it loops right back around to being opaque.
By breaking out literally every charge into a separate fee, and putting them all in separate sections of the bill, AT&T generates confusion and make it look, incorrectly, like some fees are being assessed twice.
The best bills are a happy medium, which — don’t count this as an endorsement — Comcast strikes fairly well.
3. Loyal customers are being had
One recurring theme we noticed: new customers are getting better packages, for less money, than existing customers.
When pricing out comparable bundles for the bill guides, we generally saw that new customers were being offered the same or better service for $10-$20 less than our current customer. We even found one ten-year Charter customer, whose bill we did not publish, paying roughly $75 per month more than a brand-new customer, getting similar service, in their neighborhood would.
Customers who do happen to live in competitive markets might as well shop around, check with other businesses, and see who’s offering the best deal. Competition has this way of dropping prices and improving available service, after all.
Unfortunately, a huge percentage of us live in markets where we are stuck with a cable/broadband monopoly, so switching is off the table.
The conventional wisdom says that if you can’t quit, you may as well negotiate. And for a long time, that was good advice.
As recently as 2014, our siblings at Consumer Reports put together a handy list of tips for negotiating a better deal with your cable company. Even in a 2015 survey Consumer Reports still found that by and large, the 42% of customers who tried to negotiate were able either to reduce their bills or to get more services included for the prices they were paying.
Anecdotally, however, it appears that the big companies — especially Comcast — aren’t as interested in negotiating with you as they used to be. Consumerist readers who have tried to negotiate better TV or triple-play rates with Comcast in recent months tell Consumerist that the company is simply not playing anymore, and the calls are ending either with rates unchanged or with Comcast calling a would-be cord-cutter’s bluff, and cheerfully snipping their service.
Why the turn-around from extreme efforts at retention to a “don’t let the door hit’cha on the way out” attitude?
Perhaps the wave of high profile, awkward, painful, retention-related PR disasters the company endured in 2014 and early 2015 has finally pushed it in that direction.
Or maybe they’re just reading the writing on the wall: pay-TV has been losing customers for a while, after all, while broadband subscriptions are going up, up, up. And pay TV costs a lot more to provide, and has much thinner profit margins on it, than broadband service does.
So, friends and readers, we leave you with a parting curiosity. We want to know: if you think your bills are too dang high, have you tried negotiating, and how has that worked out for you?
by Kate Cox via Consumerist
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