The FCC has issued a Notice of Proposed Rulemaking (NPRM) to consider prohibiting certain billing practices of cable operators and direct broadcast satellite (DBS) providers. Specifically, the FCC is proposing to ban cable operators and DBS providers from imposing early termination fees (ETFs) and billing cycle fees (BCFs) on their subscribers, and seeks comment on issues related to the proposals. The NPRM is a continuation of FCC proceedings to review cable and DBS provider practices that may be misleading or limit consumer choice.

ETFs require subscribers to pay a fee to terminate a video services contract before its expiration date, making it costly for consumers to switch services during a contract term. BCFs require subscribers to pay for a complete billing cycle even if a subscriber terminates service before the end of the cycle, forcing customers to pay for a service they no longer want.

The FCC is proposing to:

(1) prohibit cable and DBS service providers from imposing a fee for the early termination of a video services contract; and

(2) require cable and DBS service providers to grant subscribers a prorated credit or rebate for the remaining whole days in a monthly or periodic billing cycle after a cancellation of service.

Related issues include:

• Whether the FCC has the legal authority to adopt ETF and BCF regulations
• Whether the proposed rules would preempt existing state or local laws
• Whether ETF and BCF prohibitions are customer service standards which would not preempt state regulations or are rate regulation which could preempt state regulations
• How federal regulation should be coordinated with state and local regulations
• Whether the prohibition could be applied to an entire bundle if cable or DBS video service is bundled with non-video services
• How best to implement the proposed rules to protect consumers and promote competition
• What a reasonable amount of time would be for cable and DBS providers to comply with the rules
• Whether there is any justification for less than a total ETF and BCF ban

The FCC also seeks comment on the current state of the video marketplace and how cable operators and DBS service providers currently handle ETFs and BCFs; the costs and benefits of banning the practices and how a ban would affect competition; and how the proposals would promote or inhibit advances in diversity, equity, inclusion, and accessibility.

Comments are due 30 days after publication of the NPRM in the Federal Register, and reply comments are due 60 days after publication in the Federal Register.