Optional Early Termination Fees June 13, 2008
The cable industry took a stand against an FCC drive to take a closer look at “early termination fees,” the pesky hammer that forces millions of cell phone customers to stay with their providers despite being dissatisfied with the service.
FCC Chairman Kevin Martin has indicated he wants to take a look at ETFs—mainly in the mobile world but also in cable and satellite, and the FCC held a hearing Thursday to discuss it. Martin said the FCC received 3,700 complaints in 2006 and 2007 about such fees, and he wants to establish rules to improve disclosure and fairness. Daniel Brenner, senior vice president for law and regulatory policy at the National Cable and Telecommunications Association, said all such fees in his industry are optional; that is, customers always have the option of month-to-month service with no long-term commitment. He advised the FCC against prohibiting such arrangements. “Cable may, in fact, provide the FCC with a model of how such arrangements can best serve consumers,” he said. “The cable approach allows customers to shop around and compare different offers. And most importantly, residential offers that may include ETFs are always optional, and they always convey value, in the form of lower combined price over the life of the term, to the customer.” Brenner added that most cable customers today do not opt for long-term agreements, although many promotional offers include such agreements. An informal survey of NCTA’s larger members indicates that only around 5 to 7 percent of triple-play customers have chosen agreements with minimum terms, he said. “There is nothing unfair about a fee—disclosed and agreed to in advance—which seeks to recover some of the benefit enjoyed by the customer if he does not fulfill his end of the deal,” Brenner said.
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