November 22, 2023
FCC FACT SHEET
*
Promoting Competition in the American Economy: Cable Operator and DBS Provider Billing
Practices
Notice of Proposed Rulemaking – MB Docket No. 23-405
Background: Early termination fees (ETFs) require subscribers to pay a fee for terminating a video
services contract prior to its expiration date, making it costly for consumers to switch services during the
contract term. Because an ETF may have the effect of limiting consumer choice after a contract is
enacted, it may negatively impact competition for services in the marketplace. Billing cycle fees (BCFs)
require video service subscribers to pay for a complete billing cycle even if the subscriber terminates
service prior to the end of that billing cycle. BCFs penalize consumers for terminating service by
requiring them to pay for services they choose not to receive.
This Notice of Proposed Rulemaking (NPRM) initiates a proceeding to consider these junk fee billing
practices that may have the effect of inhibiting video service subscribers from choosing the video
services they want or result in consumers paying fees for video services they did not choose to receive.
What the Notice of Proposed Rulemaking Would Do:
Proposes to adopt customer service protections that prohibit cable operators and direct broadcast
satellite (DBS) service providers from imposing
a fee for the early termination of a cable or DBS
video service contract.
Proposes to adopt customer service protections to 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 the cancellation of service.
*
This document is being released as part of a "permit-but-disclose" proceeding. Any presentations or views on the
subject expressed to the Commission or its staff, including by email, must be filed in MB Docket Nos. 23-405,
which may be accessed via the Electronic Comment Filing System (https://www.fcc.gov/ecfs/). Before filing,
participants should familiarize themselves with the Commission’s ex parte rules, including the general prohibition
on presentations (written and oral) on matters listed on the Sunshine Agenda, which is typically released a week
prior to the Commission’s meeting. See 47 CFR § 1.1200 et seq.
Federal Communications Commission FCC-CIRC2312-01
1
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Promoting Competition in the American Economy:
Cable Operator and DBS Provider Billing Practices
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MB Docket No. 23-405
NOTICE OF PROPOSED RULEMAKING
Adopted: [ ] Released: [ ]
Comment Date: 30 days after date of publication in the Federal Register
Reply Comment Date: 60 days after date of publication in the Federal Register
By the Commission:
TABLE OF CONTENTS
Heading Paragraph #
I. INTRODUCTION .................................................................................................................................. 1
II. BACKGROUND .................................................................................................................................... 2
III. DISCUSSION ........................................................................................................................................ 6
IV. PROCEDURAL MATTERS ................................................................................................................ 24
V. ORDERING CLAUSES ....................................................................................................................... 31
APPENDIX A - Proposed Rules
APPENDIX B - Initial Regulatory Flexibility Act Analysis
I. INTRODUCTION
1. This Notice of Proposed Rulemaking (NPRM) initiates a proceeding to consider certain
billing practices that may have the effect of inhibiting video service subscribers from choosing the video
services they want or result in consumers paying fees for video services they did not choose to receive.
This document has been circulated for tentative consideration by the Commission at its December 13, 2023 open
meeting. The issues referenced in this document and the Commission’s ultimate resolutions of those issues remain
under consideration and subject to change. This document does not constitute any official action by the
Commission. However, the Chairwoman has determined that, in the interest of promoting the public’s ability to
understand the nature and scope of issues under consideration, the public interest would be served by making this
document publicly available. The Commission’s ex parte rules apply and presentations are subject to “permit-but-
disclose” ex parte rules. See, e.g., 47 CFR §§ 1.1206, 1.1200(a). Participants in this proceeding should familiarize
themselves with the Commission’s ex parte rules, including the general prohibition on presentations (written and
oral) on matters listed on the Sunshine Agenda, which is typically released a week prior to the Commission’s
meeting. See 47 CFR §§ 1.1200(a), 1.1203.
Federal Communications Commission FCC-CIRC2312-01
2
We propose to adopt customer service protections that prohibit cable operators
1
and direct broadcast
satellite (DBS) service providers
2
from imposing early termination fees (ETFs)
3
and billing cycle fees
(BCFs)
4
on subscribers. We have initiated proceedings to review how the Commission’s existing cable
customer service standards may be updated to protect consumers from misleading pricing and be applied
to DBS providers.
5
This item builds upon those efforts and addresses additional junk fee billing practices
of cable and DBS providers that penalize subscribers for terminating video service or switching video
service providers, and further protects consumers and promotes competition in the video programming
marketplace.
II. BACKGROUND
2. Billing Practices. ETFs require subscribers to pay a fee for terminating a video services
contract prior to its expiration date, making it costly for consumers to switch services during the contract
term. Because an ETF may have the effect of limiting consumer choice after a contract is enacted, it may
negatively impact competition for services in the marketplace. This billing practice has been used by
video service providers for some time and, in 2008, the Commission heard from expert panelists
regarding the use of ETFs by communications service providers, including representatives from cable and
DBS providers.
6
More recently, the Executive Order on Promoting Competition in the American
Economy encouraged the Commission to consider “prohibiting unjust or unreasonable early termination
fees for end-user communication contracts; enabling consumers to more easily switch providers” in order
to promote competition and lower prices.
7
3. BCFs require video service subscribers to pay for a complete billing cycle even if the
subscriber terminates service prior to the end of that billing cycle. As such, BCFs penalize consumers for
terminating service by requiring them to pay for services they choose not to receive. Video service
subscribers may terminate service for any number of reasons, including moving, financial hardship, or
poor service. Recently, some states have enacted laws restricting BCFs.
8
The U.S. Court of Appeals for
the First Circuit in Spectrum Northeast, LLC v. Frey recently decided that one such BCF regulation
1
A “cable operator” is any “person or group of persons (A) who provides cable service over a cable system and
directly or through one or more affiliates owns a significant interest in such cable system, or (B) who otherwise
controls or is responsible for, through any arrangement, the management and operation of such a cable system.” 47
U.S.C. § 522(5). See also 47 U.S.C. §§ 522(6) (defining “cable service”), 522(7) (defining “cable system”).
2
Direct Broadcast Satellite, or DBS, Service is a radiocommunication service in which signals transmitted or
retransmitted by Broadcasting–Satellite Service space stations in the 12.2–12.7 GHz band are intended for direct
reception by subscribers or the general public. 47 CFR § 25.103.
3
An ETF is a fee that a provider charges a subscriber when the subscriber terminates its service contract prior to its
expiration.
4
A BCF is the fee that subscribers pay when they cancel service prior to the end of a billing cycle but do not receive
a refund of a pro-rated share of the monthly charge for the unused service.
5
See All-In Pricing for Cable and Satellite Television Service, MB Docket No. 23-203, FCC 23-52 (rel. June 20,
2023) (2023 WL 4105426).
6
See Open Commission Meeting, June 12, 2008, https://www.fcc.gov/news-events/events/2008/06/open-
commission-meeting-june-2008.
7
Executive Order 14036, 86 FR 36987 (July 9, 2021), §(l)(iv) (link: https://www.whitehouse.gov/briefing-
room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/)).
8
See, e.g., Maine regulation, 30-A M.R.S.A. § 3010(1-A) (“A franchisee shall grant a subscriber a pro rata credit or
rebate for the days of the monthly billing period after the cancellation of service if that subscriber requests
cancellation of service 3 or more working days before the end of the monthly billing period.”) and New Jersey
regulation, N.J. Admin. Code § 14:18-3.8 (“Bills for cable television service shall be rendered monthly, bi-monthly,
quarterly, semi-annually or annually and shall be prorated upon establishment and termination of service.”).
Federal Communications Commission FCC-CIRC2312-01
3
imposed by the State of Maine was not impermissible cable service rate regulation.
9
Likewise, the
Supreme Court of New Jersey recently reached the same conclusion regarding a similar New Jersey
statute in the Alleged Failure of Altice case.
10
4. Customer Service Standards. The 1984 Cable Act added Title VI to the Communications
Act of 1934 (Act).
11
Section 632, entitled “Consumer Protection,” addressed one particular type of
consumer protection—“customer service requirements,” providing specifically that “[a] franchising
authority may require . . . provisions for enforcement of . . . customer service requirements . . .”
12
Although the term “customer service” is not defined in the statute, the legislative history of the 1984
Cable Act defined “customer service” as “the direct business relation between a cable operator and a
subscriber” and “customer service requirements” as including requirements related to “rebates and credits
to consumers.”
13
In 1992, Congress amended section 632 to “provide protection for consumers against . .
. poor customer service”
14
in part by requiring the Commission to “establish standards by which cable
operators may fulfill their customer service requirements.”
15
The legislative history of the 1992 Cable
Act explained that Congress considered cable customer service “an area of paramount concern,”
16
and that
the standards are intended to “provide increased consumer protection.”
17
In 1993, the Commission
9
Spectrum Northeast, LLC v. Frey, 22 F.4th 287 (1st Cir. 2022), cert denied, 143 S.Ct. 562 (2023) (finding that a
Maine statute requiring cable franchisees to provide a pro rata credit or rebate to subscribers that cancel their
service is not a law governing “rates for the provision of cable service” but rather is a “consumer protection law”
that is not preempted). See infra para. 14.
10
Alleged Failure of Altice USA, Inc., to Comply with Certain Provisions of the New Jersey Cable Television Act,
N.J.S.A. 48:5A-1 et seq., and the New Jersey Administrative Code, N.J.A.C. 14:18-1.1 et seq., --- A.3d ---- (Supreme
Court of New Jersey, Apr. 3, 2023), 2023 WL 2746964 (“Alleged Failure of Altice”).
11
Cable Communications Policy Act of 1984, Pub. L. No. 98-549, 98 Stat. 2779 (1984).
12
47 U.S.C. § 552.
13
H.R. REP. 98-934 at 79 (1984), reprinted in 1984 U.S.C.C.A.N. 4655, 4716 (“Customer service means the direct
business relation between a cable operator and a subscriber. Customer service requirements include requirements
related to interruption of service; disconnection; rebates and credits to consumers; deadlines to respond to consumer
requests or complaints; the location of the cable operator’s consumer service offices; and the provision to customers
(or potential customers) of information on billing or services.”).
14
S. REP. 102-92, at 1 (1992).
15
Pub. L. No. 102-385, 106 Stat. 1460 (1992); 47 U.S.C. § 552 (1992 Cable Act). The legislative history of the
1992 Cable Act points out that, “despite the ability of franchising authorities to include customer service
requirements in franchise agreements, some cable operators have failed to provide satisfactory customer service.
Numerous submissions to the Committee demonstrate that some cable operators . . . ignore or are slow to respond to
customer billing inquiries.” H.R. R
EP. 102-628 at 36-37, 105 (1992).
16
H.R. REP. 102-628, at 36-37, 105 (1992); S. REP. 102-92, at 1, 3 (1992).
17
Pub. L. No. 102-385, 106 Stat. 1460 (1992). Nothing in the 1992 Cable Act changed the statement in the
legislative history of the 1984 Cable Act that included “rebates and credits to consumers” as an example of customer
service requirements. We note that, while not specifically addressing ETFs and BCFs, Congress has recently
renewed its commitment to protecting consumers of video programming services, including DBS services, with the
Television Viewer Protection Act of 2019 (TVPA). See Television Viewer Protection Act of 2019, Pub. L. No. 116-
94, 133 Stat. 2534 (2019) (TVPA) (requiring MVPDs to “give consumers a breakdown of all charges related to the
MVPD’s video service” before entering into a contract with a consumer for service). See also 47 U.S.C. § 562;
Media Bureau Seeks Comment on Implementation of the Television Viewer Protection Act of 2019, DA 21-1610
(MB 2021). Congress stated its purpose in enacting the TVPA was “to provide basic protections to consumers when
purchasing MVPD services . . .” See H.R. R
EP. 116-329, 116th Cong., 1st Sess. 2019 at 4. Both cable operators and
DBS service providers fall within the statutory definition of the term MVPD or multichannel video programming
distributor. See 47 U.S.C. § 522(13) (“the term “multichannel video programming distributor” means a person such
(continued….)
Federal Communications Commission FCC-CIRC2312-01
10
based its decision on four aspects of the structure and legislative history of the Act. First, the court
explained that the legislative history of the Act and the Commission’s regulations “focused on preempting
monthly ‘rates’ charged for the provision of basic cable service” and do not “suggest that the term ‘rates
for the provision of cable service’ includes termination fees or termination rebates.”
66
Second, the court
noted that Congressional silence concerning termination fees or rebates is “particularly significant”
because Congress included regulation of rates for “installation” fees, but not termination fees, as rates
“for the provision of cable service.”
67
Third, the court observed that Congress acknowledged multiple
potential sources of competition but did not identify termination credits as being controlled by effective
competition. Instead, termination credits encourage competition “by prohibiting cable companies from
creating artificial barriers to switching between competitors by charging consumers beyond termination of
service.”
68
Finally, the court found that Congress expressed a purpose to “preserve state consumer
protection laws” despite preempting the regulation of “rates for the provision of cable service,” and this
favors “a narrow reading of the scope of the preemption provision.”
69
14. The New Jersey Supreme Court also recently concluded that a New Jersey statute
banning BCFs was not rate regulation preempted by federal law.
70
The New Jersey code states that
“[b]ills for cable television service shall be rendered monthly, bi-monthly, quarterly, semi-annually or
annually and shall be prorated upon establishment and termination of service.”
71
In Alleged Failure of
Altice, the Supreme Court of New Jersey concluded that New Jersey’s BCF regulation does not regulate
cable rates or control the rates for the provision of cable service.
72
The court based its decision on the
“ordinary meaning” of the text from the New Jersey statute and the Cable Act.
73
The court determined
that “the plain and ordinary meaning of rate regulation . . . is not so broad as to encompass all laws that
affect or concern cable prices.”
74
With regard to the New Jersey BCF regulation, the court concluded that
“the challenged regulation does not even indirectly affect the actual rate Altice charges . . . the regulation
merely uses the rate that the cable provider sets to enforce a price proportional to the quantity of service
provided.”
75
15. With regard to cable ETFs, we tentatively conclude that the courts’ logic in Spectrum
Northeast, LLC v. Frey and Alleged Failure of Altice applies to the ETF regulation we propose in this
NPRM. Similar to a BCF, an ETF is assessed upon termination of service, i.e., it concerns the time period
when cable service ends. Thus, a restriction on ETFs does not appear to cap the amount a cable operator
can charge for the provision of cable service; rather, it regulates only the charge that a cable operator may
impose on a customer after the customer has elected to terminate service. Further, we tentatively find
subscriber requests cancellation of service 3 or more working days before the end of the monthly billing period.”
This language is similar to the proposed rule in Appendix A. See Appendix A, proposed rule 47 CFR §
76.309(c)(5), “A cable operator must provide a subscriber a prorated credit or rebate for the remaining days in a
monthly billing cycle after the cancellation of cable service.”
66
Spectrum Northeast, 22 F.4th at 298-299.
67
Id. at 299.
68
Id. at 300.
69
Id.
70
See Alleged Failure of Altice. See also, Altice USA, Inc. v. New Jersey Board of Public Utilities, 26 F.4th 571 (3d
Cir. 2022) (vacating and remanding a Federal District Court’s finding of preemption).
71
N.J. Admin. Code § 14:18-3.8.
72
2023 WL 2746964 at 8.
73
Id.
74
Id. at 9.
75
Id.
Federal Communications Commission FCC-CIRC2312-01
11
that the structure and legislative history of the Act does not support treating ETFs as a form of rate
regulation, just as the courts found with regard to BCFs.
76
Also, we tentatively find that an ETF does not
fall within the plain and ordinary meaning of rate regulation, similar to the court’s reasoning regarding
BCFs.
77
Thus, we tentatively conclude that regulation of ETFs is not “rate regulation.” In addition, our
tentative conclusion is consistent with case law evaluating whether State regulation of cellular telephone
ETFs is preempted by federal rate regulation.
78
In In re Cellphone Termination Fee Cases, the California
Court of Appeals for the First District concluded that a cellular telephone ETF regulation was not
preempted by federal law.
79
Although the court was not addressing cable rate regulation specifically, it
was addressing a similar statutory provision
80
that carves out the universe of “other terms and conditions”
from rate regulation of wireless services, similar to how “consumer protection” and “customer service” is
distinct from rate regulation in the cable statute. The scope of both carveouts appears to be similar in
nature and includes billing issues, consumer protection, and customer service.
81
The court concluded that
the “purpose in adopting the cellular telephone ETF was to control churn” and prevent customers from
leaving,
82
and because the State law invalidating the ETFs had “only an indirect and incidental effect on .
. . rates,” it was not preempted by federal law.
83
We find this reasoning and that of the BCF cases
discussed above to be applicable to the question of whether cable ETF regulations are rate regulations
under the Act, and tentatively conclude that they are not. We therefore tentatively conclude that,
consistent with case law and the Commission’s own precedent, regulations concerning cable ETFs also
are not rate regulations. Thus, we tentatively find inapplicable section 623’s prohibition on the
Commission’s regulation of “the rates for the provision of cable service” in franchise areas where
effective competition exists.
84
Nearly all, if not all, cable operators now face effective competition and
76
See discussion in para. 14, supra. That is, (i) the legislative history of the Cable Act does not suggest that the term
“rates for the provision of cable service” includes termination fees; (ii) Congressional silence concerning
termination fees is “particularly significant” because Congress included regulation of rates for “installation” fees,
but not termination fees, as rates “for the provision of cable service”; (iii) Congress acknowledged multiple potential
sources of competition but did not identify termination fees as being controlled by effective competition; and (iv)
Congress preserved the regulation of customer service, despite placing limitations on the regulation of “rates for the
provision of cable service.” Id. See also Cable Television Ass’n of N.Y., Inc. v. Finneran, 954 F.2d 91 (2d Cir.
1992) (“[T]he Cable Act does not expressly pre-empt state regulation of downgrade charges.”).
77
See discussion in para. 15, supra. As mentioned above, ETFs are fees imposed upon termination of service, rather
than charges for the provision of cable service.
78
In re Cellphone Termination Fee Cases, 193 Cal.App.4th 298, 122 Cal.Rptr.3d 726 (2011), cert. denied, 565
U.S.1014, 132 S.Ct. 555, 181 L.Ed.2d 397 (2011) (regulation of cellular telephone ETFs as liquidated damages
provisions was not preempted rate regulation).
79
In re Cellphone Termination Fee Cases, 193 Cal.App.4th at 319, 122 Cal.Rptr.3d at 744, cert. denied, 565
U.S.1014, 132 S.Ct. 555, 181 L.Ed.2d 397 (2011).
80
See 47 U.S.C. § 332(c)(3)(A) (“no State or local government shall have any authority to regulate the … rates
charged by any commercial mobile service or any private mobile service, except that this paragraph shall not
prohibit a State from regulating the other terms and conditions of commercial mobile services”).
81
Id. Section 332(c)(3)(A)’s clause governing “other terms and conditions,” which are regulated by the States,
“include such matters as customer billing information and practices and billing disputes and other consumer
protection matters.” See H.R. Rep. No. 103-111, at 211 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 588.
82
In re Cellphone Termination Fee Cases, 193 Cal.App.4th 298, 320 (2011).
83
Id. at 321.
84
47 U.S.C. § 543(a)(2) (“If the Commission finds that a cable system is subject to effective competition, the rates
for the provision of cable service by such system shall not be subject to regulation by the Commission…”). There is
no corollary provision with regard to DBS providers.
Federal Communications Commission FCC-CIRC2312-01
6
tentative conclusions.
8. We also propose to require cable and DBS service providers to grant subscribers a
prorated credit or rebate
34
for the remaining whole days in a monthly or periodic billing cycle after the
cancellation of service.
35
We seek comment on this proposal, and whether the specific language reflects
our intent of relieving a subscriber from payment obligations as of the date the provider receives a
cancellation request. To the extent that the existing terms of service between a cable operator or DBS
provider and its subscriber provide for a BCF, we seek comment on whether to deem such a provision
unenforceable if we were to prohibit BCFs. We tentatively find that this prohibition on BCFs is a
reasonable customer service requirement because this practice requires consumers to pay for service they
no longer wish to receive.
36
As with ETFs, we tentatively find that prohibition of BCFs will create a
standard that protects consumers from poor customer service,
37
specifically, paying for services that have
been cancelled, and that such a standard will serve the public interest
38
by protecting consumers from
unfair billing practices. BCFs impose significant costs on consumers for services they have cancelled and
no longer wish to receive. For instance, based on the average price for cable service, subscribers
cancelling mid-billing cycle could pay a significant price even after cancelling their service: the average
monthly price for basic tier cable service is $42.63, for expanded basic tier service it is $101.54, for the
next most popular cable service tier it is $115.67,
39
and the price for services comparable to expanded
basic tier service from DIRECTV and DISH average $123.52 and $90.44 per month, respectively.
40
We
34
We note that the Act uses the term “refund” in section 632(b) whereas Congress referred to “rebates or credits” in
the legislative history of section 632. Compare 47 U.S.C. 552(b)(3) with H.R. R
EP. 98-934 at 79 (1984), reprinted
in 1984 U.S.C.C.A.N. 4655, 4716. Neither the Act nor the legislative history otherwise define these terms. We note
that the dictionary definitions of each terms is similar. See Merriam-Webster Dictionary, online version,
https://www.merriam-webster.com/dictionary/rebate (defining “rebate” as “a return of a part of a payment”);
https://www.merriam-webster.com/dictionary/credit (defining “credit” as “a deduction from an amount otherwise
due”); https://www.merriam-webster.com/dictionary/refund (defining “refund” as “to return (money) in restitution,
repayment, or balancing of accounts”). Accordingly, we tentatively conclude that Congress did not intend for there
to be any legal distinction between these terms, and thus we may use these terms interchangeably, as we do
throughout this notice. We seek comment on this analysis and tentative conclusion.
35
See Appendix A, proposed rules 47 CFR § 25.701(g), “A DBS provider must provide a subscriber a prorated
credit or rebate for the remaining days in a monthly billing cycle after the cancellation of DBS service,” and 47 CFR
§ 76.309(c)(5), “A cable operator must provide a subscriber a prorated credit or rebate for the remaining days in a
monthly billing cycle after the cancellation of cable service.”
36
As noted above, the Commission receives hundreds of complaints annually about billing practices. This figure is
based on informal consumer complaints filed with the Commission for the years 2018-2022. The Commission’s
Consumer Complaint Center can be found at: https://consumercomplaints.fcc.gov/hc/en-us. Examples of consumer
complaints include the following: A subscriber cancelled service on the 11
th
day of the month and was charged for
the whole month despite service being disconnected; a subscriber cancelled service on the 16th day of the month and
returned all of the provider’s equipment but was charged for the whole month; a subscriber terminated service on the
3
rd
day of the month but was charged for the whole month.
37
S. REP. 102-92, at 1 (1992).
38
47 U.S.C. § 335(a).
39
2022 Communications Marketplace Report, Appendix E, Report on Cable Industry Prices, GN Docket No. 22-
203, FCC 22-103, at 231, 233 (Dec. 30, 2022) (“[P]rogramming services referenced in the Report on Cable Industry
Prices . . . reflect the non-promotional rates and exclude taxes and fees as well as fees subscribers may incur to lease
cable equipment . . . We collected information on basic service and other cable programming services not offered on
a per channel or per program basis, as well as cable equipment.”)
40
2020 Communications Marketplace Report, 36 FCC Rcd 2945, 3500-3501, Appendix E, Report on Cable Industry
Prices at para. 40 and Attachment 1 (2020).
Federal Communications Commission FCC-CIRC2312-01
16
available on https://www.fcc.gov/proposed-rulemakings.
98
29. People with Disabilities. To request materials in accessible formats for people with
disabilities (braille, large print, electronic files, audio format), send an e-mail to [email protected] or call
the Consumer and Governmental Affairs Bureau at (202) 418-0530.
30. Additional Information. For additional information on this proceeding, please contact
Katie Costello, Media Bureau, Policy Division at [email protected] or (202) 418-2233.
V. ORDERING CLAUSES
31. Accordingly, IT IS ORDERED that, pursuant to the authority found in sections 1, 4(i),
303(v), 335(a) and 632(b), of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
303(v), 335(a) and 552(b), this Notice of Proposed Rulemaking IS ADOPTED.
32. IT IS FURTHER ORDERED that the Commission’s Office of the Secretary,
Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rulemaking, including
the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
98
5 U.S.C. § 553(b)(4). The Providing Accountability Through Transparency Act, Pub. L. No. 118-9 (2023),
amended section 553(b) of the Administrative Procedure Act.
Federal Communications Commission FCC-CIRC2312-01
8
find that restrictions on BCFs are in the public interest because the practice imposes fees on subscribers
for services that they did not choose to receive and that the fees can be significant. Excluding DBS from
these rules would mean that their subscribers would remain vulnerable to these practices. Do we have
authority under section 335(a) to adopt ETF and BCF regulations for DBS providers?
50
Do we have
authority under other provisions of Title III?
51
We also seek comment on whether we have—and should
exercise—ancillary authority under section 4(i) of the Act to adopt such regulations and whether it is
necessary to undertake this regulation for the Commission to effectively perform its responsibilities under
the foregoing primary sources of statutory authority?
52
By doing so, we will ensure uniformity of
regulation between and among cable operators (regulated under Title VI and by various state consumer
protection laws and local franchising provisions) and DBS providers (under Title III), thereby preventing
DBS providers from gaining a competitive advantage over their competitors through the use of ETFs and
BCFs.
53
We seek comment on this analysis. We also seek comment on whether there are alternative or
additional statutes or arguments that provide a legal basis for our authority to adopt these customer
service requirements for DBS providers.
11. Finally, as noted above, based on the language and structure of section 632, Congress
authorized the Commission to establish customer service requirements, and franchising authorities to
adopt additional laws above and beyond the Commission’s baseline requirements.
54
Therefore, we
tentatively find that this proposed rule would not preempt existing state and local laws that prohibit ETFs
and BCFs or otherwise exceed the requirements we adopt in this proceeding, so long as they are not
inconsistent with Commission regulations. We seek comment on this analysis.
12. Rate Regulation versus Customer Service Regulation. In Spectrum Northeast, LLC v.
Frey, the First Circuit determined that a state regulation prohibiting BCFs substantially similar to the
prohibition we propose here is not rate regulation pursuant to the Act.
55
We tentatively conclude that this
same analysis (as described in further detail below) applies to our proposed BCF prohibition. We seek
50
Section 335(a) authorizes the Commission to impose on DBS providers “public interest or other requirements for
providing video programming.” 47 U.S.C. § 335(a). Although section 335(a) requires the Commission to adopt
certain statutory political broadcasting requirements for DBS providers, the statute is clear that this list is not
exhaustive. 47 U.S.C. § 335(a) (“Any regulations prescribed pursuant to such rulemaking shall, at a minimum,
apply the access to broadcast time requirement of section 312(a)(7) and the use of facilities requirements of section
315 to providers of direct broadcast satellite service …”) (emphasis added).
51
See Targeting and Eliminating Unlawful Text Messages, Report and Order and Further Notice of Proposed
Rulemaking, 2023 WL 2582658, para. 40 (2023) (noting the Commission’s authority under Sections 303(b), 307,
and 316).
52
47 U.S.C. § 154(i).
53
See, e.g., Mobile Communications Corp. v. FCC, 77 F.3d 1399, 1405-06 (D.C. Cir. 1996) (upholding reliance on
4(i) for the Commission to adjust the terms of preferences to reduce the gulf between recipients of preferences (who
would otherwise receive a free license) and other license aspirants (who, under the new auction regime, would have
to pay for a license)).
54
47 U.S.C. § 552. See Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984 as
Amended by the Cable Television Consumer Protection and Competition Act of 1992, Second Report and Order, MB
Docket No. 05-311, 22 FCC Rcd 19633, 19646, para. 27 (2007) (citing 47 U.S.C. §552(d)(2) (stating that the
“statute’s explicit language makes clear that Commission standards are a floor for customer service requirements,
rather than a ceiling, and thus do not preclude LFAs from adopting stricter customer service requirements”).
55
Spectrum Northeast, LLC v. Frey, 22 F.4
th
287, 293 (1
st
Cir. 2022), cert denied, 143 S.Ct. 562 (2023) (stating a
“termination event ends cable service, and a rebate on termination falls outside the ‘provision of cable service.’
Thus, the plain language of § 543 excludes the time after provision of service . . . .”). See 47 U.S.C. § 543(a)(1);
Maine regulation, 30-A M.R.S.A. § 3010(1-A) (“A franchisee shall grant a subscriber a pro rata credit or rebate for
the days of the monthly billing period after the cancellation of service if that subscriber requests cancellation of
service 3 or more working days before the end of the monthly billing period.”).
Federal Communications Commission FCC-CIRC2312-01
9
comment on this tentative conclusion. While Spectrum Northeast, LLC v. Frey addresses the issue of
whether a BCF prohibition is impermissible rate regulation, the court did not address ETFs. We
tentatively conclude that cable ETF regulations are not rate regulations under section 623 of the Act.
56
We seek comment on this tentative conclusion. The statute does not define the term “rates” or explain the
meaning of the phrase “rates for the provision of cable service” for purposes of section 623. Historically,
the Commission’s cable rate regulations have not covered service termination fees or termination
rebates.
57
The Commission has previously found the regulation of fees similar to the proposed regulation
of ETFs and BCFs is not rate regulation. For instance, the Commission has found that limits on late fees
are considered customer service regulation and not rate regulation.
58
And, in practice, the Media Bureau
and its predecessor bureau (the Cable Services Bureau) have found that local regulations similar to the
proposed ETF and BCF regulations herein, were not properly categorized as rate regulation and therefore
not pre-empted. Such findings have included local regulations that address unreturned equipment fees,
pay-by-phone fees, late fees, returned check fees, and other miscellaneous cable subscriber charges that
were found not to be included as part of the Commission’s rate regulations.
59
Thus, we tentatively
conclude that Commission practice and precedent supports the notion that ETF regulations also are not
rate regulation.
13. Furthermore, our tentative conclusion is consistent with recent court precedent. In the
First Circuit’s recent decision in Spectrum Northeast, LLC v. Frey,
60
the court determined that a state
BCF regulation is not rate regulation pursuant to the Act.
61
The Maine regulation was enacted after a
cable company implemented a new practice of declining to provide refunds when cable service was
terminated prior to the end of a billing cycle. The regulation then required cable operators to issue
prorated credits or rebates for the days remaining in a billing period after termination of cable service.
The court determined that the federal preemption of cable rate regulation
62
“did not extend to the
regulation of termination rebates”
63
and concluded that the Maine law is not a law governing “rates for the
provision of cable service” but rather is a “consumer protection law”
64
that is not preempted.
65
The court
56
47 U.S.C. § 543.
57
See 47 CFR §§ 76.901-76.990.
58
See 1993 Cable Consumer Protection Order, 8 FCC Rcd at 2907, para. 68.
59
See, e.g., Falcon Cablevision, Memorandum Opinion and Order, 11 FCC Rcd 10511, 10525 (CSB 1996) (late
fees and charges for returned checks, converter equipment deposits, field collections, and account transfers may be
reviewed through the application of customer service laws); Charter Communications, 20 FCC Rcd 3503, 3505-06
(MB 2005) (unreturned equipment fees may be reviewed through application of customer service laws).
60
Spectrum Northeast, 22 F.4
th
at 301 (“It is also not a stretch to think that Maine’s limited termination-rebate law in
the Pro Rata Act protects against the kind of deceptive business practices that consumer protection laws typically
target.”).
61
47 U.S.C. § 543(a)(1); Maine regulation, 30-A M.R.S.A. § 3010(1-A) (“A franchisee shall grant a subscriber a pro
rata credit or rebate for the days of the monthly billing period after the cancellation of service if that subscriber
requests cancellation of service 3 or more working days before the end of the monthly billing period.”).
62
See 47 U.S.C. § 556 (“Except as provided in section 557 of this title, any provision of law of any State, political
subdivision, or agency thereof, or franchising authority, or any provision of any franchise granted by such authority,
which is inconsistent with this chapter shall be deemed to be preempted and superseded.”).
63
Spectrum Northeast, 22 F.4th at 299-301.
64
The court left open the separate issue of whether the state BCF regulation was a “customer service” regulation
within the broader category of consumer protection laws. Id. at 303.
65
Id. The Maine statute, entitled “When Service Is Cancelled by a Subscriber” amended Me. Stat. tit. 30-A, § 3010,
titled “Consumer rights and protection relating to cable television service,” to add: “A franchisee shall grant a
subscriber a pro rata credit or rebate for the days of the monthly billing period after the cancellation of service if that
(continued….)
Federal Communications Commission FCC-CIRC2312-01
22
distribution services using facilities and infrastructure that they operate are included in this industry.
27
9. The SBA small business size standard for Wired Telecommunications Carriers classifies
firms having 1,500 or fewer employees as small.
28
U.S. Census Bureau data for 2017 show that 3,054
firms operated in this industry for the entire year.
29
Of this number, 2,964 firms operated with fewer than
250 employees.
30
Based on this data, the majority of firms in this industry can be considered small under
the SBA small business size standard. According to Commission data however, only two entities provide
DBS service - DIRECTV (owned by AT&T) and DISH Network, which require a great deal of capital for
operation.
31
DIRECTV and DISH Network both exceed the SBA size standard for classification as a
small business. Therefore, we must conclude based on internally developed Commission data, in general
DBS service is provided only by large firms.
D. Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
10. The NPRM proposes to adopt rules that prohibit cable and DBS service providers from
imposing ETFs and BCFs. This may impose new or additional compliance obligations on small entities.
When subscribers wish to terminate their services contract prior to its expiration date, small entity cable
operators may need to use additional accounting and finance processes to determine the prorated credit or
rebate to provide subscribers for the remaining days in a billing cycle. These operators must then
determine how to return this fee to the subscriber. The NPRM seeks comment on any potential costs that
would be imposed on regulatees and whether a ban on ETFs and BCFs would impose unnecessary
burdens on small cable operators.
32
The Commission anticipates the information received in comments
including where requested, cost and benefit analyses, will help identify and evaluate relevant compliance
matters for small entities, including compliance costs and other burdens that may result from the
proposals and inquiries made in the NPRM.
E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and
Significant Alternatives Considered
11. The RFA requires an agency to describe any significant alternatives that it has considered
in reaching its proposed approach, which may include the following four alternatives (among others): (1)
the establishment of differing compliance or reporting requirements or timetables that take into account
the resources available to small entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for such small entities; (3) the use of performance,
rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for
small entities.
33
12. To assist in the Commission’s evaluation of the economic impact on small entities, as a
27
Id.
28
See 13 CFR § 121.201, NAICS Code 517311.
29
See U.S. Census Bureau, 2017 Economic Census of the United States, Selected Sectors: Employment Size of Firms
for the U.S.: 2017, Table ID: EC1700SIZEEMPFIRM, NAICS Code 517311,
https://data.census.gov/cedsci/table?y=2017&n=517311&tid=ECNSIZE2017.EC1700SIZEEMPFIRM&hidePrevie
w=false.
30
Id. The available U.S. Census Bureau data does not provide a more precise estimate of the number of firms that
meet the SBA size standard.
31
See Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming,
Eighteenth Report, Table III.A.5, 32 FCC Rcd 568, 595 (Jan. 17, 2017).
32
NPRM at para. 22 (discussing cost/benefit analysis of ban on ETFs and BCFs for small cable operators).
33
See 5 U.S.C. § 603(c).
Federal Communications Commission FCC-CIRC2312-01
11
that the structure and legislative history of the Act does not support treating ETFs as a form of rate
regulation, just as the courts found with regard to BCFs.
76
Also, we tentatively find that an ETF does not
fall within the plain and ordinary meaning of rate regulation, similar to the court’s reasoning regarding
BCFs.
77
Thus, we tentatively conclude that regulation of ETFs is not “rate regulation.” In addition, our
tentative conclusion is consistent with case law evaluating whether State regulation of cellular telephone
ETFs is preempted by federal rate regulation.
78
In In re Cellphone Termination Fee Cases, the California
Court of Appeals for the First District concluded that a cellular telephone ETF regulation was not
preempted by federal law.
79
Although the court was not addressing cable rate regulation specifically, it
was addressing a similar statutory provision
80
that carves out the universe of “other terms and conditions”
from rate regulation of wireless services, similar to how “consumer protection” and “customer service” is
distinct from rate regulation in the cable statute. The scope of both carveouts appears to be similar in
nature and includes billing issues, consumer protection, and customer service.
81
The court concluded that
the “purpose in adopting the cellular telephone ETF was to control churn” and prevent customers from
leaving,
82
and because the State law invalidating the ETFs had “only an indirect and incidental effect on .
. . rates,” it was not preempted by federal law.
83
We find this reasoning and that of the BCF cases
discussed above to be applicable to the question of whether cable ETF regulations are rate regulations
under the Act, and tentatively conclude that they are not. We therefore tentatively conclude that,
consistent with case law and the Commission’s own precedent, regulations concerning cable ETFs also
are not rate regulations. Thus, we tentatively find inapplicable section 623’s prohibition on the
Commission’s regulation of “the rates for the provision of cable service” in franchise areas where
effective competition exists.
84
Nearly all, if not all, cable operators now face effective competition and
76
See discussion in para. 14, supra. That is, (i) the legislative history of the Cable Act does not suggest that the term
“rates for the provision of cable service” includes termination fees; (ii) Congressional silence concerning
termination fees is “particularly significant” because Congress included regulation of rates for “installation” fees,
but not termination fees, as rates “for the provision of cable service”; (iii) Congress acknowledged multiple potential
sources of competition but did not identify termination fees as being controlled by effective competition; and (iv)
Congress preserved the regulation of customer service, despite placing limitations on the regulation of “rates for the
provision of cable service.” Id. See also Cable Television Ass’n of N.Y., Inc. v. Finneran, 954 F.2d 91 (2d Cir.
1992) (“[T]he Cable Act does not expressly pre-empt state regulation of downgrade charges.”).
77
See discussion in para. 15, supra. As mentioned above, ETFs are fees imposed upon termination of service, rather
than charges for the provision of cable service.
78
In re Cellphone Termination Fee Cases, 193 Cal.App.4th 298, 122 Cal.Rptr.3d 726 (2011), cert. denied, 565
U.S.1014, 132 S.Ct. 555, 181 L.Ed.2d 397 (2011) (regulation of cellular telephone ETFs as liquidated damages
provisions was not preempted rate regulation).
79
In re Cellphone Termination Fee Cases, 193 Cal.App.4th at 319, 122 Cal.Rptr.3d at 744, cert. denied, 565
U.S.1014, 132 S.Ct. 555, 181 L.Ed.2d 397 (2011).
80
See 47 U.S.C. § 332(c)(3)(A) (“no State or local government shall have any authority to regulate the … rates
charged by any commercial mobile service or any private mobile service, except that this paragraph shall not
prohibit a State from regulating the other terms and conditions of commercial mobile services”).
81
Id. Section 332(c)(3)(A)’s clause governing “other terms and conditions,” which are regulated by the States,
“include such matters as customer billing information and practices and billing disputes and other consumer
protection matters.” See H.R. Rep. No. 103-111, at 211 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 588.
82
In re Cellphone Termination Fee Cases, 193 Cal.App.4th 298, 320 (2011).
83
Id. at 321.
84
47 U.S.C. § 543(a)(2) (“If the Commission finds that a cable system is subject to effective competition, the rates
for the provision of cable service by such system shall not be subject to regulation by the Commission…”). There is
no corollary provision with regard to DBS providers.
Federal Communications Commission FCC-CIRC2312-01
12
are not subject to rate regulation.
85
However, there is no such prohibition found in section 632’s customer
service provision.
86
Accordingly, the applicability of ETF and BCF regulations are not affected by the
existence of effective competition in a community. We seek comment on this analysis.
16. Implementation. We seek comment on how to tailor our rules to best protect consumers
and promote competition. As an initial matter, we seek specific comment on the interplay of our
proposed rules and any state or local ETF and BCF regulations.
87
To what extent are State and local
authorities currently regulating ETFs and BCFs with respect to cable and DBS services?
88
Do local
authorities have adequate resources to enforce the proposed rules effectively? To the extent the
Commission were to enforce its own rules in individual cases, how could it best coordinate enforcement
with local authorities?
17. We also seek specific comment from State and local authorities on our proposed
prohibition on cable and DBS ETFs and BCFs as proposed in Appendix A. Should we adopt something
less than a total ban and allow variations within States or communities?
89
Given our shared jurisdiction
with local authorities over cable customer service issues, we seek comment regarding their local
subscriber complaints and regulation experiences. We seek comment on what enforcement mechanisms
should be implemented at the federal level. We also seek comment on what enforcement mechanisms
have been or could be implemented at the local level and how those might inform enforcement
mechanisms at the federal level. To the extent we adopt a ban on DBS ETFs and BCFs, would this need
to be enforced by the Commission given that DBS providers are not required to have local or state
franchises? If so, are there additional rules we should adopt to ensure an effective enforcement scheme?
18. If the Commission adopts the proposals to ban ETFs and BCFs, what is a reasonable
amount of time for cable and satellite providers to implement this change? How should our proposed rule
85
See, e.g., NATOA v. FCC, 862 F.3d 18 (D.C. Cir. 2017) (upholding the FCC’s rebuttable presumption that cable
operators are subject to effective competition under the competing provider test); Petition for Determination of
Effective Competition in 32 Massachusetts Communities and Kauai, HI, Memorandum Opinion and Order, 34 FCC
Rcd 10229 (2019), petition for review denied, Mass. Dep't of Telecomms. & Cable v. FCC, 983 F.3d 28 (1st Cir.
2020) (finding of LEC effective competition). Likewise, if State and local ETF and BCF regulations are “rate
regulations,” they would be preempted by the Commission’s rules and also susceptible to the effective competition
rule. See 47 U.S.C § 543 (“No Federal agency or State may regulate the rates for the provision of cable service
except to the extent provided under this section. . .”). See also 47 U.S.C. § 556 (“[A]ny provision of law of any
State, political subdivision, or agency thereof, or franchising authority, or any provision of any franchise granted by
such authority, which is inconsistent with this chapter shall be deemed to be preempted and superseded.”).
86
47 U.S.C. § 552.
87
Section 632 does not prevent “the establishment or enforcement of any municipal law or regulation, or any State
law, concerning customer service that imposes customer service requirements that exceed the standards set by the
Commission under this section.” 47 U.S.C. § 552(d)(2).
88
To date, the Commission has deferred to local authorities to enforce its cable customer service obligations. See
1993 Cable Consumer Protection Order, 8 FCC Rcd at 2897, para. 19. Although the Commission previously
determined that the statute did not give it a “specific enforcement role” with regard to customer service requirements
whereas it gave such a role to local franchise authorities, we note that there is nothing in section 632 or its legislative
history that precludes the Commission’s ability to enforce its own standards. Id. Indeed, the Commission has
always retained its enforcement authority to address “systemic abuses that undermine the statutory objectives.”
1993 Cable Consumer Protection Order, 8 FCC Rcd at 2897, para. 19. Moreover, the Commission has broad
authority under the Act to enforce its rules. See 47 U.S.C. § 151 (directing the Commission to “execute and enforce
the provisions of [the Communications] Act”); 47 U.S.C. § 312(b) (authorizing the Commission to order persons to
cease and desist from violating any provision of the Act or the Commission’s rules); 47 U.S.C. § 503 (authorizing
the Commission to assess a forfeiture penalty for failure to comply with any of the provisions of the Act, or any rule,
regulation, or order issued by the Commission under this Act).
89
See infra para. 19.
Federal Communications Commission FCC-CIRC2312-01
13
banning BCFs be implemented for the benefit of current subscribers? Do operators require time to
implement changes to their current billing systems? What effect, if any, will our proposed rule banning
ETFs have on consumers’ existing contracts? If commenters argue that our proposed rule should apply
only to new contracts entered into after its effective date, what are the legal and policy justifications for
treating agreements of existing customers differently than new customers? Should there be a grace period
to accommodate existing contracts with ETF provisions? If so, what effect, if any, will our proposed rule
have on existing ETFs? In lieu of the rules proposed in Appendix A, we seek comment on whether the
Commission should, on the other hand, adopt more detailed cable and DBS regulations that include grace
periods, limiting or extenuating circumstances, or other factors for determining when an ETF or BCF
might be appropriate. Is there any justification for less than a total ban on ETFs and BCFs? For example,
should our rules exempt small cable operators or rural cable operators? Any party advocating for an
exception should explain the reason they believe a carve-out from the prohibition is necessary. We seek
comment on these issues.
19. To the extent cable or DBS video service is part of a bundled package with non-video
services, could ETF and BCF rules be applied to the entire bundle, and if so, under what authority? We
therefore seek comment on enforcement issues relating to an ETF or BCF ban when video services are
bundled with non-video services. With respect to cable, does permitting state and local government
enforcement of an ETF or BCF ban conflict with other sections of Title VI of the Act or the scope of local
franchise authority under Title VI when video services are included as part of a bundle?
90
We recognize
that section 624(b)(1) provides that franchising authorities “may not . . . establish requirements for . . .
information services.”
91
Does this provision limit franchising authorities’ ability to enforce a
Commission-established ban on ETFs or BCFs when video services are part of a bundle with non-video
services? We seek comment on these issues.
20. Cost/Benefit Analysis. If a ban on ETFs were implemented, we expect consumers to
benefit because they would have the ability to switch video service providers more easily and cancel
video service without cost. In addition, a ban on BCFs would benefit consumers because it would prevent
consumers from paying for services they choose not to receive. If ETFs are eliminated, would video
service providers still choose to offer long term contracts for reasons other than price, for instance in
order to avoid churn? Could the elimination of ETFs alter the price of long term contracts and if so how?
What would be the impact of such changes on consumers? If video service providers were to decide not
to offer long term contracts or to offer them at higher prices, would the higher prices be offset by the
consumer savings in avoiding ETFs? How would these possible outcomes affect low-income and new
consumers? Further, would eliminating ETFs and BCFs affect billing cycles? We seek comment on how
the Commission should assess the likelihood and magnitude of these potential benefits and costs to
consumers.
21. We also seek comment on how a ban on ETFs and BCFs would affect competition
among video providers. By reducing consumer switching costs, could a ban on ETFs foster competition
between developing online video services and cable and satellite video providers? For example, might
consumers who have signed multi-year contracts with cable and satellite video providers benefit from
earlier opportunities to choose among all options? Would this additional choice enhance competition?
For cable and satellite video customers, what are the shares of customers with month-to-month, one-year,
two-year, or other service agreements subject to ETFs or BCFs?
22. We also seek comment on any potential costs that would be imposed on regulatees if we
adopt the proposals contained in this NPRM. Do these costs differ between large and small cable
providers? Would a ban on ETFs and BCFs impose substantial or unnecessary burdens on small cable
90
See City of Eugene, Oregon v. FCC, 998 F.3d 701 (6
th
Cir. 2021), cert. denied, 142 S.Ct. 1109 (2022) (holding
that the Act preempts State or local action that is “inconsistent” or “incompatible” with any of the Act’s provisions).
91
47 U.S.C. § 544(b)(1) (emphasis added). See also City of Eugene, 998 F.3d at 715.
Federal Communications Commission FCC-CIRC2312-01
14
operators? Further, would a ban on ETFs limit entry by new providers by limiting their ability to recoup
upfront costs through an ETF? Would a ban on ETFs and BCFs have a positive impact on video service
provider negotiations with broadcast stations and cable networks for programming by allowing
consumers more freedom to switch providers to obtain preferred programming? Could programming
costs be affected by a ban on ETFs and BCFs? What amounts do cable and DBS operators charge for
early termination fees? Comments should be accompanied by specific data and analysis supporting
claimed costs and benefits.
23. Digital Equity and Inclusion. Finally, the Commission, as part of its continuing effort to
advance digital equity for all,
92
including people of color, persons with disabilities, persons who live in
rural or Tribal areas, and others who are or have been historically underserved, marginalized, or adversely
affected by persistent poverty or inequality, invites comment on any equity-related considerations
93
and
benefits (if any) that may be associated with the proposals and issues discussed herein. Specifically, we
seek comment on how our proposals may promote or inhibit advances in diversity, equity, inclusion, and
accessibility, as well the scope of the Commission’s relevant legal authority.
IV. PROCEDURAL MATTERS
24. Ex Parte Rules - Permit-But-Disclose. The proceeding this Notice initiates shall be
treated as a “permit-but-disclose” proceeding in accordance with the Commission’s ex parte rules.
94
Persons making ex parte presentations must file a copy of any written presentation or a memorandum
summarizing any oral presentation within two business days after the presentation (unless a different
deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are
reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise
participating in the meeting at which the ex parte presentation was made, and (2) summarize all data
presented and arguments made during the presentation. If the presentation consisted in whole or in part of
the presentation of data or arguments already reflected in the presenter’s written comments, memoranda,
or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or
her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers
where such data or arguments can be found) in lieu of summarizing them in the memorandum.
Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex
parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule
1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte
presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must
be filed through the electronic comment filing system available for that proceeding, and must be filed in
their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should
familiarize themselves with the Commission’s ex parte rules.
92
Section 1 of the Communications Act of 1934 as amended provides that the FCC “regulat[es] interstate and
foreign commerce in communication by wire and radio so as to make [such service] available, so far as possible, to
all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or
sex.” 47 U.S.C. § 151.
93
The term “equity” is used here consistent with Executive Order 13985 as the consistent and systematic fair, just,
and impartial treatment of all individuals, including individuals who belong to underserved communities that have
been denied such treatment, such as Black, Latino, and Indigenous and Native American persons, Asian Americans
and Pacific Islanders and other persons of color; members of religious minorities; lesbian, gay, bisexual,
transgender, and queer (LGBTQ+) persons; persons with disabilities; persons who live in rural areas; and persons
otherwise adversely affected by persistent poverty or inequality. See Exec. Order No. 13985, 86 Fed. Reg. 7009,
Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal
Government (January 20, 2021).
94
47 CFR §§ 1.1200 et seq.
Federal Communications Commission FCC-CIRC2312-01
15
25. Filing Requirements—Comments and Replies. Pursuant to sections 1.415 and 1.419 of
the Commission’s rules, 47 CFR §§ 1.415, 1.419, interested parties may file comments and reply
comments on or before the dates indicated on the first page of this document. Comments may be filed
using the Commission’s Electronic Comment Filing System (ECFS). See Electronic Filing of Documents
in Rulemaking Proceedings, 63 FR 24121 (1998).
Electronic Filers: Comments may be filed electronically using the Internet by accessing the
ECFS: http://apps.fcc.gov/ecfs/.
Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing.
Filings can be sent by commercial overnight courier, or by first-class or overnight U.S. Postal
Service mail. All filings must be addressed to the Commission’s Secretary, Office of the
Secretary, Federal Communications Commission.
o Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.
o Postal Service first-class, Express, and Priority mail must be addressed to 45 L Street,
NE, Washington, DC 20554.
Effective March 19, 2020, and until further notice, the Commission no longer accepts any
hand or messenger delivered filings. This is a temporary measure taken to help protect the
health and safety of individuals, and to mitigate the transmission of COVID-19.
95
During the time the Commission’s building is closed to the general public and until further
notice, if more than one docket or rulemaking number appears in the caption of a proceeding,
paper filers need not submit two additional copies for each additional docket or rulemaking
number; an original and one copy are sufficient.
26. Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980, as amended (RFA),
96
requires that an agency prepare a regulatory flexibility analysis for notice and comment rulemakings,
unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a
substantial number of small entities.”
97
Accordingly, the Commission has prepared an Initial Regulatory
Flexibility Analysis (IRFA) concerning the possible/potential impact of the rule and policy changes
contained in this NPRM. The IRFA is set forth in Appendix B. Written public comments are requested
on the IRFA. Comments must be filed by the deadlines for comments on the NPRM indicated on the first
page of this document and must have a separate and distinct heading designating them as responses to the
IRFA.
27. Paperwork Reduction Act. This document does not contain any proposed information
collections subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition,
therefore, it does not contain any new or modified information collection burden for small business
concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002,
Public Law 107-198, see 44 U.S.C. § 3506(c)(4).
28. Providing Accountability Through Transparency Act. Consistent with the Providing
Accountability Through Transparency Act, Public Law 118-9, a summary of this document will be
95
See FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Policy, Public
Notice, 35 FCC Rcd 2788 (2020).
96
See 5 U.S.C. § 603. The RFA, 5 U.S.C. §§ 601–612, was amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
97
Id. § 605(b).
Federal Communications Commission FCC-CIRC2312-01
16
available on https://www.fcc.gov/proposed-rulemakings.
98
29. People with Disabilities. To request materials in accessible formats for people with
disabilities (braille, large print, electronic files, audio format), send an e-mail to [email protected] or call
the Consumer and Governmental Affairs Bureau at (202) 418-0530.
30. Additional Information. For additional information on this proceeding, please contact
Katie Costello, Media Bureau, Policy Division at [email protected] or (202) 418-2233.
V. ORDERING CLAUSES
31. Accordingly, IT IS ORDERED that, pursuant to the authority found in sections 1, 4(i),
303(v), 335(a) and 632(b), of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
303(v), 335(a) and 552(b), this Notice of Proposed Rulemaking IS ADOPTED.
32. IT IS FURTHER ORDERED that the Commission’s Office of the Secretary,
Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rulemaking, including
the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
98
5 U.S.C. § 553(b)(4). The Providing Accountability Through Transparency Act, Pub. L. No. 118-9 (2023),
amended section 553(b) of the Administrative Procedure Act.
Federal Communications Commission FCC-CIRC2312-01
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APPENDIX A
Proposed Rules
Part 25 of Title 47 of the U.S. Code of Federal Regulations is amended to read as follows:
PART 25 – SATELLITE COMMUNICATIONS
1. The authority citation for Part 25 is amended to read as follows:
AUTHORITY: 47 U.S.C. 154, 301, 302, 303, 307, 309, 310, 319, 332, 335, 605, and 721, unless
otherwise noted.
2. Amend § 25.701 by revising paragraph (a) and by adding paragraph (g) to read as follows:
§ 25.701 Other DBS Public interest obligations.
(a) DBS providers are subject to the public interest obligations set forth in paragraphs (b), (c), (d), (e), (f)
and (g) of this section. * * *
* * * * *
(g) Customer service obligations.
A DBS provider shall not charge a subscriber a fee for terminating a DBS services contract before its
expiration date. A DBS provider must provide a subscriber a prorated credit or rebate for the remaining
days in a billing cycle after the cancellation of DBS service.
* * * * *
Part 76 of Title 47 of the U.S. Code of Federal Regulations is amended to read as follows:
PART 76 – MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
1. The authority citation for Part 76 continues to read as follows:
AUTHORITY: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317,
325, 338, 339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552,
554, 556, 558, 560, 561, 571, 572, 573
2. Amend § 76.309(c) by adding paragraph (5) to read as follows:
§ 76.309 Customer service obligations.
* * * * *
(c) * * *
(5) A cable operator shall not charge a subscriber a fee for terminating a cable services contract before its
expiration date. A cable operator must provide a subscriber a prorated credit or rebate for the remaining
days in a billing cycle after the cancellation of cable service.
Federal Communications Commission FCC-CIRC2312-01
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* * * * *
Federal Communications Commission FCC-CIRC2312-01
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APPENDIX B
Initial Regulatory Flexibility Act Analysis
1. As required by the Regulatory Flexibility Act of 1980, as amended (RFA),
1
the
Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on small entities of the policies and rules proposed in this Notice of Proposed
Rulemaking (NPRM). The Commission requests written public comments on this IRFA. Comments
must be identified as responses to the IRFA and must be filed by the deadlines for comments specified in
the NPRM. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel
for Advocacy of the Small Business Administration (SBA).
2
In addition, the NPRM and IRFA (or
summaries thereof) will be published in the Federal Register.
3
A. Need for, and Objectives of, the Proposed Rules
2. The NPRM initiates a proceeding to consider billing practices that inhibit video service
subscribers from choosing the video services they want and that result in consumers paying fees for video
services they choose not to receive. The Commission has received numerous complaints from cable and
DBS subscribers about two billing practices: early termination fees (ETFs) and billing cycle fees (BCFs).
An ETF is a fee that a provider charges a subscriber when the subscriber terminates its service contract
prior to its expiration. ETFs remove consumer choice, negatively impacting competition for services in
the marketplace. A BCF is a fee that subscribers pay when they cancel service prior to the end of a billing
cycle and the service provider refuses to refund a pro-rated share of the billing cycle charge for the
unused service. BCFs harm consumers by requiring them to pay for services they did not choose to
receive. Both of these fees place a financial burden on subscribers and can create barriers to competition.
The proposed rules in the NPRM will prevent the imposition of ETFs and BCFs, protecting consumers
and promoting competition.
B. Legal Basis
3. The proposed action is authorized under sections 1, 4(i), 303(v), 335(a) and 632(b), of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 303(v), 335(a) and 552(b).
C. Description and Estimate of the Number of Small Entities to Which the Proposed
Rules Will Apply
4. The RFA directs agencies to provide a description of, and where feasible, an estimate of
the number of small entities that may be affected by the proposed rule revisions, if adopted.
4
The RFA
generally defines the term “small entity” as having the same meaning as the terms “small business,”
“small organization,” and “small governmental jurisdiction.”
5
In addition, the term “small business” has
the same meaning as the term “small business concern” under the Small Business Act (SBA).
6
A small
1
5 U.S.C. § 603. The RFA, 5 U.S.C. §§ 601-612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
2
5 U.S.C. § 603(a).
3
Id.
4
5 U.S.C. § 603(b)(3).
5
5 U.S.C. § 601(6
6
5 U.S.C. § 601(3) (incorporating by reference the definition of “small business concern” in 15 U.S.C. § 632(a)(1)).
Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an agency, after
consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public
comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and
publishes such definition(s) in the Federal Register.” Id.
Federal Communications Commission FCC-CIRC2312-01
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business concern is one which: (1) is independently owned and operated; (2) is not dominant in its field
of operation; and (3) satisfies any additional criteria established by the SBA.
7
5. Cable and Other Subscription Programming. The U.S. Census Bureau defines this
industry as establishments primarily engaged in operating studios and facilities for the broadcasting of
programs on a subscription or fee basis.
8
The broadcast programming is typically narrowcast in nature
(e.g., limited format, such as news, sports, education, or youth-oriented). These establishments produce
programming in their own facilities or acquire programming from external sources.
9
The programming
material is usually delivered to a third party, such as cable systems or direct-to-home satellite systems, for
transmission to viewers.
10
The SBA small business size standard for this industry classifies firms with
annual receipts less than $41.5 million as small.
11
Based on U.S. Census Bureau data for 2017, 378 firms
operated in this industry during that year.
12
Of that number, 149 firms operated with revenue of less than
$25 million a year and 44 firms operated with revenue of $25 million or more.
13
Based on this data, the
Commission estimates that a majority of firms in this industry are small.
6. Cable Companies and Systems (Rate Regulation). The Commission has developed its
own small business size standard for the purpose of cable rate regulation. Under the Commission’s rules,
a “small cable company” is one serving 400,000 or fewer subscribers nationwide.
14
Based on industry
data, there are about 420 cable companies in the U.S.
15
Of these, only seven have more than 400,000
subscribers.
16
In addition, under the Commission’s rules, a “small system” is a cable system serving
15,000 or fewer subscribers.
17
Based on industry data, there are about 4,139 cable systems (headends) in
7
15 U.S.C. § 632(a)(1)-(2)(A).
8
See U.S. Census Bureau, 2017 NAICS Definition, “515210 Cable and Other Subscription Programming,”
https://www.census.gov/naics/?input=515210&year=2017&details=515210.
9
Id.
10
Id.
11
See 13 CFR § 121.201, NAICS Code 515210 (as of 10/1/22, NAICS Code 516210).
12
See U.S. Census Bureau, 2017 Economic Census of the United States, Selected Sectors: Sales, Value of Shipments,
or Revenue Size of Firms for the U.S.: 2017, Table ID: EC1700SIZEREVFIRM, NAICS Code 515210,
https://data.census.gov/cedsci/table?y=2017&n=515210&tid=ECNSIZE2017.EC1700SIZEREVFIRM&hidePrevie
w=false. The US Census Bureau withheld publication of the number of firms that operated for the entire year to
avoid disclosing data for individual companies (see Cell Notes for this category).
13
Id. The available U.S. Census Bureau data does not provide a more precise estimate of the number of firms that
meet the SBA size standard. We note that the U.S. Census Bureau withheld publication of the number of firms that
operated with sales/value of shipments/revenue in all categories of revenue less than $500,000 to avoid disclosing
data for individual companies (see Cell Notes for the sales/value of shipments/revenue in these categories).
Therefore, the number of firms with revenue that meet the SBA size standard would be higher than noted herein.
We also note that according to the U.S. Census Bureau glossary, the terms receipts and revenues are used
interchangeably, see https://www.census.gov/glossary/#term_ReceiptsRevenueServices.
14
47 CFR § 76.901(d).
15
S&P Global Market Intelligence, S&P Capital IQ Pro, U.S. MediaCensus, Operator Subscribers by Geography
(last visited May 26, 2022).
16
S&P Global Market Intelligence, S&P Capital IQ Pro, Top Cable MSOs 12/21Q (last visited May 26, 2022); S&P
Global Market Intelligence, Multichannel Video Subscriptions, Top 10 (April 2022).
17
47 CFR § 76.901(c).
Federal Communications Commission FCC-CIRC2312-01
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the U.S.
18
Of these, about 639 have more than 15,000 subscribers.
19
Accordingly, the Commission
estimates that the majority of cable companies and cable systems are small.
7. Cable System Operators (Telecom Act Standard). The Communications Act of 1934, as
amended, contains a size standard for a “small cable operator,” which is “a cable operator that, directly or
through an affiliate, serves in the aggregate fewer than one percent of all subscribers in the United States
and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed
$250,000,000.”
20
For purposes of the Telecom Act Standard, the Commission determined that a cable
system operator that serves fewer than 498,000 subscribers, either directly or through affiliates, will meet
the definition of a small cable operator.
21
Based on industry data, only six cable system operators have
more than 498,000 subscribers.
22
Accordingly, the Commission estimates that the majority of cable
system operators are small under this size standard. We note however, that the Commission neither
requests nor collects information on whether cable system operators are affiliated with entities whose
gross annual revenues exceed $250 million.
23
Therefore, we are unable at this time to estimate with
greater precision the number of cable system operators that would qualify as small cable operators under
the definition in the Communications Act.
8. Direct Broadcast Satellite (“DBS”) Service. DBS service is a nationally distributed
subscription service that delivers video and audio programming via satellite to a small parabolic “dish”
antenna at the subscriber’s location. DBS is included in the Wired Telecommunications Carriers industry
which comprises establishments primarily engaged in operating and/or providing access to transmission
facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and
video using wired telecommunications networks.
24
Transmission facilities may be based on a single
technology or combination of technologies.
25
Establishments in this industry use the wired
telecommunications network facilities that they operate to provide a variety of services, such as wired
telephony services, including VoIP services, wired (cable) audio and video programming distribution; and
wired broadband internet services.
26
By exception, establishments providing satellite television
18
S&P Global Market Intelligence, S&P Capital IQ Pro, U.S. MediaCensus, Operator Subscribers by Geography
(last visited May 26, 2022).
19
S&P Global Market Intelligence, S&P Capital IQ Pro, Top Cable MSOs 12/21Q (last visited May 26, 2022).
20
47 U.S.C. § 543(m)(2).
21
FCC Announces Updated Subscriber Threshold for the Definition of Small Cable Operator, Public Notice, DA
23-906 (MB 2023) (2023 Subscriber Threshold PN). In this Public Notice, the Commission determined that there
were approximately 49.8 million cable subscribers in the United States at that time using the most reliable source
publicly available. Id. This threshold will remain in effect until the Commission issues a superseding Public Notice..
See 47 CFR § 76.901(e)(1).
22
S&P Global Market Intelligence, S&P Capital IQ Pro, Top Cable MSOs 06/23Q (last visited Sept. 27, 2023); S&P
Global Market Intelligence, Multichannel Video Subscriptions, Top 10 (April 2022).
23
The Commission does receive such information on a case-by-case basis if a cable operator appeals a local
franchise authority’s finding that the operator does not qualify as a small cable operator pursuant to § 76.901(e) of
the Commission’s rules. See 47 CFR § 76.910(b).
24
See U.S. Census Bureau, 2017 NAICS Definition, “517311 Wired Telecommunications Carriers,”
https://www.census.gov/naics/?input=517311&year=2017&details=517311.
25
Id.
26
See id. Included in this industry are: broadband Internet service providers (e.g., cable, DSL); local telephone
carriers (wired); cable television distribution services; long-distance telephone carriers (wired); closed-circuit
television (CCTV) services; VoIP service providers, using own operated wired telecommunications infrastructure;
direct-to-home satellite system (DTH) services; telecommunications carriers (wired); satellite television distribution
systems; and multichannel multipoint distribution services (MMDS).
Federal Communications Commission FCC-CIRC2312-01
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distribution services using facilities and infrastructure that they operate are included in this industry.
27
9. The SBA small business size standard for Wired Telecommunications Carriers classifies
firms having 1,500 or fewer employees as small.
28
U.S. Census Bureau data for 2017 show that 3,054
firms operated in this industry for the entire year.
29
Of this number, 2,964 firms operated with fewer than
250 employees.
30
Based on this data, the majority of firms in this industry can be considered small under
the SBA small business size standard. According to Commission data however, only two entities provide
DBS service - DIRECTV (owned by AT&T) and DISH Network, which require a great deal of capital for
operation.
31
DIRECTV and DISH Network both exceed the SBA size standard for classification as a
small business. Therefore, we must conclude based on internally developed Commission data, in general
DBS service is provided only by large firms.
D. Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
10. The NPRM proposes to adopt rules that prohibit cable and DBS service providers from
imposing ETFs and BCFs. This may impose new or additional compliance obligations on small entities.
When subscribers wish to terminate their services contract prior to its expiration date, small entity cable
operators may need to use additional accounting and finance processes to determine the prorated credit or
rebate to provide subscribers for the remaining days in a billing cycle. These operators must then
determine how to return this fee to the subscriber. The NPRM seeks comment on any potential costs that
would be imposed on regulatees and whether a ban on ETFs and BCFs would impose unnecessary
burdens on small cable operators.
32
The Commission anticipates the information received in comments
including where requested, cost and benefit analyses, will help identify and evaluate relevant compliance
matters for small entities, including compliance costs and other burdens that may result from the
proposals and inquiries made in the NPRM.
E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and
Significant Alternatives Considered
11. The RFA requires an agency to describe any significant alternatives that it has considered
in reaching its proposed approach, which may include the following four alternatives (among others): (1)
the establishment of differing compliance or reporting requirements or timetables that take into account
the resources available to small entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for such small entities; (3) the use of performance,
rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for
small entities.
33
12. To assist in the Commission’s evaluation of the economic impact on small entities, as a
27
Id.
28
See 13 CFR § 121.201, NAICS Code 517311.
29
See U.S. Census Bureau, 2017 Economic Census of the United States, Selected Sectors: Employment Size of Firms
for the U.S.: 2017, Table ID: EC1700SIZEEMPFIRM, NAICS Code 517311,
https://data.census.gov/cedsci/table?y=2017&n=517311&tid=ECNSIZE2017.EC1700SIZEEMPFIRM&hidePrevie
w=false.
30
Id. The available U.S. Census Bureau data does not provide a more precise estimate of the number of firms that
meet the SBA size standard.
31
See Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming,
Eighteenth Report, Table III.A.5, 32 FCC Rcd 568, 595 (Jan. 17, 2017).
32
NPRM at para. 22 (discussing cost/benefit analysis of ban on ETFs and BCFs for small cable operators).
33
See 5 U.S.C. § 603(c).
Federal Communications Commission FCC-CIRC2312-01
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result of actions that have been proposed in the NPRM, and to better explore options and alternatives, the
Commission seeks comment on whether any of the burdens associated with the compliance requirements
described above can be minimized for small entities.
34
An alternative option that may reduce burdens on
small entities considered in the NPRM is whether the Commission should adopt more detailed cable and
DBS regulations that include grace periods, limiting or extenuating circumstances, or other factors for
determining when an ETF or BCF might be appropriate.
35
Additionally, the Commission seeks comment
on whether potential costs associated with a ban on small entities imposing ETFs and BCFs would
impose unnecessary burdens on small cable operators.
36
The Commission expects to more fully consider
the economic impact and alternatives for small entities based on its review of the record and any
comments filed in response to the NPRM and this IRFA.
F. Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rule
13. None.
34
NPRM at para. 27.
35
NPRM at para. 19.
36
NPRM at para. 23 (discussing cost/benefit analysis of ban on ETFs and BCFs for small cable operators).
