I’m Business columnist David Lazarus, with a look today at questionable cable fees.
You won’t be surprised to hear that many companies try to make prices seem lower than they are by breaking out fees and surcharges from a “base price” for a product or service. This was the topic of a recent column, which looked at fees charged by telecom companies, airlines, hotels, restaurants and even a record store.
Now we have a study from Consumer Reports showing that such fees represent more than $37 of average monthly cable bills, or about $450 in annual charges.
“Cable companies are notorious for advertising a low price but charging much more by adding a long list of confusing fees to monthly bills,” said Jonathan Schwantes, senior policy counsel for Consumer Reports.
“These sneaky fees are a real budget-buster that enable cable companies to jack up their rates and disguise the true cost consumers pay each month.”
As I’ve noted in the past, cable, wireless and phone companies routinely make surcharges appear to be official or required by government authorities, when in fact they’re just routine business expenses that are being passed along to customers.
For instance, AT&T last year more than doubled its monthly “administrative fee” to $1.99 from 76 cents. The company said at the time that the fee “helps cover costs we incur for items like cell site maintenance and interconnection between carriers.”
Needless to say, those costs are part of operating a wireless network. The fee is in no way a government-imposed tax or charge.
Among the fees cited by Consumer Reports is what’s known as the broadcast TV surcharge, which helps to defray payments by cable companies to local broadcasters — again, a routine business expense that should be part of the base price.
The study notes that Charter Communications’ Spectrum pay-TV service “first began charging a Broadcast TV Surcharge in 2010.” It was $1 a month.
“More recently, the company raised that fee three times since November 2018, first from $8.85 a month to $9.95, and then to $11.99 a month in March 2019 — a 35% price increase in less than three months,” the study says.
“Incredibly, Charter just announced another increase of this company-imposed fee, raising its Broadcast TV Surcharge to $13.50 a month, a 50% increase over what it cost a year ago. All told, that’s a 1,250% increase of that fee since 2010.”
Dennis Johnson, a Spectrum spokesman, said the company’s bills are “simple and straightforward.”
“Any applicable taxes and regulatory fees are included in the monthly prices for both Spectrum Mobile and Spectrum Voice,” he said. “Yes, the broadcast TV surcharge is a separate line on the bill, which reflects the continually and rapidly rising cost of local broadcast channels.”
Spectrum partners with the Los Angeles Times for a nightly TV show.
“Pricing for cable service should be fair and transparent so we can find a plan that fits our budget without having to worry about getting stuck paying hidden fees,” Schwantes said. “Congress should require cable providers to include all company and government-imposed fees in their advertised prices to make it easier to comparison shop and find the most affordable package.”
That seems like a reasonable request. No one is telling cable companies how much they can charge (although perhaps that’s not a bad idea). But it doesn’t seem like too much to ask that all costs be disclosed up front.
One price. All-inclusive. No more sneaky fees.
Now then, here are some recent stories that caught my eye:
Who’s driving?: Tesla unveiled a new feature called Smart Summon that lets owners of its vehicles press a button on a smartphone and command a Tesla to turn itself on, back out of its parking space and drive to the smartphone holder’s location. So does that make it a self-driving car? Not exactly.
Lone Starship: In its push to build a rocket that will bring humans to Mars, SpaceX is first setting its sights on a closer target: a small Texas community. The Hawthorne company is offering to buy out residents of Boca Chica, whose homes aren’t far from the launchpad of its planned Mars craft.
Bank on it: A new law makes California the second state in the nation to allow cities and counties to found their own public banks. The bill, signed last week by Gov. Gavin Newsom, lets jurisdictions lend at interest rates below commercial banks, potentially aiding local business initiatives, affordable housing developments, or other projects.
WHAT WE’RE READING
Friend request: Presidential hopeful Elizabeth Warren is making major inroads in Silicon Valley — even as she’s calling for breaking up some of tech’s biggest companies. One can assume Mark Zuckerberg was not included in Recode’s canvass of tech world donors, considering his belief that a Warren presidency would “suck” for Facebook.
Search results: Facial recognition software has struggled to identify people with darker skin, but Google is facing backlash for its attempts to fix that problem. According to the New York Daily News, the tech giant is taking heat for attempting to build its database by courting the homeless community in Atlanta, students on college campuses and attendees of BET Awards events in Los Angeles.
Until next time, see you in the Business section.