740 Federal Register / Vol. 89, No. 4 / Friday, January 5, 2024 / Proposed Rules 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 25 and 76 

[MB Docket No. 23–405; FCC 23–106; FRS 

ID 192513] 

Promoting Competition in the 

American Economy: Cable Operator 

and DBS Provider Billing Practices 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The Federal Communications 

Commission (FCC) proposes to adopt 

customer service protection rules that 

prohibit cable operators and direct 

broadcast satellite (DBS) service 

providers from imposing early 

termination fees and billing cycle fees 

on subscribers. This document 

addresses certain billing practices of 

cable and DBS providers that penalize 

subscribers for terminating video service 

or switching video service providers, 

and seeks comment on proposals to 

further protect consumers and promote 

competition in the video programming 

marketplace. 

DATES: Submit comments on or before 

February 5, 2024. Submit reply 

comments on or before March 5, 2024. 

ADDRESSES: Federal Communications 

Commission, 45 L Street NE, 

Washington, DC 20554. 

FOR FURTHER INFORMATION CONTACT: For 

additional information on this 

proceeding, contact Katie Costello, 

Policy Division, Media Bureau at 

Katie.Costello@fcc.gov or (202) 418– 

2233. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Notice of 

Proposed Rulemaking, (NPRM) FCC 23– 

106, adopted on December 13, 2023, and 

released on December 14, 2023. These 

documents will also be available via 

ECFS https://www.fcc.gov/cgb/ecfs/). 

(Documents will be available 

electronically in ASCII, Word, and/or 

Adobe Acrobat.) To request these 

documents in accessible formats for 

people with disabilities, send an email 

to fcc504@fcc.gov or call the 

Commission’s Consumer and 

Governmental Affairs Bureau at (202) 

418–0530 (voice), (202) 418–0432 

(TTY). 

Synopsis. Introduction. 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. We propose to adopt 

customer service protections that 

prohibit cable operators and direct 

broadcast satellite (DBS) service 

providers from imposing early 

termination fees (ETFs) and billing cycle 

fees (BCFs) 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. 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. 

Background. 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. 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. 

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. The U.S. 

Court of Appeals for the First Circuit in 

Spectrum Northeast, LLC v. Frey 

recently decided that one such BCF 

regulation imposed by the State of 

Maine was not impermissible cable 

service rate regulation. 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. 

Customer Service Standards. The 

1984 Cable Act added Title VI to the 

Communications Act of 1934 (Act). 

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 . . .’’ 

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.’’ In 

1992, Congress amended section 632 to 

‘‘provide protection for consumers 

against . . . poor customer service’’ in 

part by requiring the Commission to 

‘‘establish standards by which cable 

operators may fulfill their customer 

service requirements.’’ The legislative 

history of the 1992 Cable Act explained 

that Congress considered cable customer 

service ‘‘an area of paramount concern,’’ 

and that the standards are intended to 

‘‘provide increased consumer 

protection.’’ In 1993, the Commission 

implemented this mandate in section 

76.309 of its rules, adopting baseline 

customer service requirements for cable 

operators. Although section 632 

specifies certain topics that must be 

addressed in the Commission’s cable 

customer service rules, such as 

‘‘communications between the cable 

operator and the subscriber (including 

standards governing bills and refunds),’’ 

the list is not exhaustive. Because 

section 632(b) states that the standards 

must address these topics ‘‘at a 

minimum,’’ the Commission has broad 

authority to adopt customer service 

requirements beyond those enumerated 

in the statute. Indeed, when enacting its 

customer service standards, the 

Commission noted that ‘‘we reserve the 

right to respond to particular 

circumstances brought to our attention 

to ensure that customer service 

satisfaction is achieved nationwide.’’ 

With regard to DBS providers, section 

303(v) of the Act grants the Commission 

‘‘exclusive jurisdiction to regulate the 

provision of direct-to-home satellite 

services,’’ and section 335(a) provides 

broad statutory authority to the 

Commission to impose ‘‘public interest 

or other requirements for providing 

video programming’’ on DBS providers. 

While the Commission has not adopted 

specific customer service obligations for 


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DBS providers as it has for cable 

providers, it has adopted rules 

implementing other public interest 

obligations. 

Discussion. Consistent with the 

objectives outlined above, we seek 

comment on our tentative conclusions 

with respect to ETFs and BCFs. As more 

thoroughly discussed below, this 

includes the scope and substance of our 

proposed rules, our legal authority to 

adopt these rules, the benefits and 

impacts of the proposed rules, and the 

extent to which any alternatives could 

achieve our policy goals. 

Proposed Rules. First, we propose to 

prohibit cable and DBS service 

providers from imposing a fee for the 

early termination of a cable or DBS 

video service contract. To the extent 

that the existing terms of service 

between a cable operator or DBS 

provider and its subscriber provide for 

an ETF, we seek comment on whether 

to deem such a provision unenforceable 

if we were to prohibit ETFs. We seek 

comment on this proposal to regulate 

video service ETFs. We tentatively find 

that our proposed prohibition on ETFs 

is a reasonable customer service 

requirement in an area, billing practices, 

where the Commission receives 

hundreds of complaints annually. When 

the Commission first established its 

customer service standards, it 

acknowledged that a ‘‘key objective’’ of 

the Act was to ‘‘ensure that cable 

operators nationwide provide 

satisfactory service to their customers.’’ 

We tentatively find that the imposition 

of ETFs inhibits subscribers from 

switching providers and making choices 

about the video services they wish to 

receive. We tentatively find that the 

prohibition of ETFs will create a 

standard that protects consumers from a 

billing practice that may effectively 

limit their ability to switch video 

service providers. Limiting such 

restrictions imposed on consumer 

choice could serve the public interest by 

allowing consumers to freely choose 

among providers, which promotes 

vibrant competition in the market for 

video services and encourages providers 

to maintain high customer service 

standards to retain subscribers to their 

service. Although in the past video 

service providers have generally 

claimed that ETFs decrease overall 

consumer costs, individual consumers 

maintain in general that ETFs are 

unreasonably restrictive. We tentatively 

find that our proposed rule preventing 

ETFs will protect consumers from 

billing practices that may deter or make 

it more difficult for consumers to switch 

providers, and thereby impede 

competition in the video marketplace. 

We seek comment on these tentative 

conclusions. 

We also propose 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. 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. As with 

ETFs, we tentatively find that 

prohibition of BCFs will create a 

standard that protects consumers from 

poor customer service, specifically, 

paying for services that have been 

cancelled, and that such a standard will 

serve the public interest 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, and the price for services 

comparable to expanded basic tier 

service from DIRECTV and DISH 

average $123.52 and $90.44 per month, 

respectively. We tentatively find that 

our proposed rule preventing BCFs will 

protect consumers from charges for 

cancelled cable or DBS service they no 

longer want. We seek comment on these 

tentative conclusions. 

Legal Authority. We seek comment on 

our authority to adopt ETF and BCF 

regulations for cable and DBS providers. 

We tentatively conclude that adoption 

of restrictions on both ETFs and BCFs 

is a proper exercise of the Commission’s 

authority under section 632 to 

‘‘establish standards by which cable 

operators may fulfill their customer 

service requirements.’’ Section 632(b)(3) 

directs the Commission to establish 

standards governing ‘‘communications 

between the cable operator and the 

subscriber (including standards 

governing bills and refunds).’’ Because 

ETFs and BCFs involve cable operators’ 

billing and refund practices, we 

tentatively conclude that these are 

customer service matters within the 

meaning of section 632(b)(3). In 

addition, we tentatively find that we 

may regulate these practices under our 

general authority in 632(b) to establish 

‘‘customer service’’ standards. Although 

the term ‘‘customer service’’ is not 

defined in the statute, the legislative 

history defines the term ‘‘customer 

service’’ to mean ‘‘in general’’ ‘‘the 

direct business relation between a cable 

operator and a subscriber,’’ and goes on 

to explain that ‘‘customer service 

requirements’’ include requirements 

related to ‘‘rebates and credits to 

consumers.’’ We tentatively conclude 

that the proposed restriction on ETFs 

and BCFs satisfies the definition of a 

‘‘customer service requirement’’ because 

billing practices governing the 

termination of service, such as ETFs and 

BCFs, involve the ‘‘direct business 

relation between a cable operator and a 

subscriber.’’ Additionally, we 

tentatively find that pro-rata refunds are 

properly considered ‘‘rebates [or] 

credits’’ given to consumers, which, 

according to the legislative history, are 

customer service matters. Furthermore, 

the list of topics Congress required the 

Commission to address in terms of 

customer service was not exhaustive. 

We tentatively conclude that fees—both 

those inhibiting subscribers from 

making choices about the video services 

they wish to receive and those imposing 

significant costs on consumers for 

services they did not choose to 

receive—are precisely the type of 

customer service concerns that Congress 

meant to address when it enacted 

section 632. Thus, we tentatively find 

that restrictions on such practices are 

within the statute’s grant of authority. 

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 this customer 

service requirement for cable operators. 

We also seek comment on our 

authority to adopt ETF and BCF 

regulations for DBS providers. We 

tentatively find that restrictions on ETFs 

are in the public interest because the 

fees unreasonably inhibit competition 

and consumer choice among video 

service providers. We tentatively 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 


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we have authority under section 335(a) 

to adopt ETF and BCF regulations for 

DBS providers? Do we have authority 

under other provisions of Title III? 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? 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. 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. 

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. 

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. 

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. We 

tentatively conclude that this same 

analysis (as described in further detail 

below) applies to our proposed BCF 

prohibition. We seek 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. 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. 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. 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. Thus, we tentatively 

conclude that Commission practice and 

precedent supports the notion that ETF 

regulations also are not rate regulation. 

Furthermore, our tentative conclusion 

is consistent with recent court 

precedent. In the First Circuit’s recent 

decision in Spectrum Northeast, LLC v. 

Frey, the court determined that a state 

BCF regulation is not rate regulation 

pursuant to the Act. 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 ‘‘did not extend 

to the regulation of termination rebates’’ 

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’’ that is not 

preempted. The court 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.’’ 

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.’’ 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.’’ 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.’’ 

The New Jersey Supreme Court also 

recently concluded that a New Jersey 

statute banning BCFs was not rate 

regulation preempted by federal law. 

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.’’ 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. The court based its 

decision on the ‘‘ordinary meaning’’ of 

the text from the New Jersey statute and 

the Cable Act. 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.’’ 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.’’ 

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 that the structure and 

legislative history of the Act does not 

support treating ETFs as a form of rate 


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regulation, just as the courts found with 

regard to BCFs. 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. 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. 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. Although the court was not 

addressing cable rate regulation 

specifically, it was addressing a similar 

statutory provision 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. The 

court concluded that the ‘‘purpose in 

adopting the cellular telephone ETF was 

to control churn’’ and prevent 

customers from leaving, and because the 

State law invalidating the ETFs had 

‘‘only an indirect and incidental effect 

on . . . rates,’’ it was not preempted by 

federal law. 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. 

Nearly all, if not all, cable operators 

now face effective competition and are 

not subject to rate regulation. However, 

there is no such prohibition found in 

section 632’s customer service 

provision. 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. 

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. To what 

extent are State and local authorities 

currently regulating ETFs and BCFs 

with respect to cable and DBS services? 

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? 

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? 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? 

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 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. 

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? We 

recognize that section 624(b)(1) provides 

that franchising authorities ‘‘may not 

. . . establish requirements for . . . 

information services.’’ Does this 

provision limit franchising authorities’ 

ability to enforce a Commissionestablished ban on ETFs or BCFs when 

video services are part of a bundle with 

non-video services? We seek comment 

on these issues. 

State of the Video Marketplace. We 

seek comment on how cable operators 

and DBS providers currently handle 

ETFs and BCFs. As noted above, BCFs 

are a more recent development than 

ETFs. Were there changes in the video 

marketplace that prompted introduction 

of ETFs and/or BCFs? Are there video 

service providers who currently do not 

impose ETFs and/or BCFs? Are there 

providers that offer multiple 

subscription choices including plans 

with and without ETFs? Are providers 

offering long term contracts at reduced 

prices without ETFs? If so, what other 

differences are there between offerings 

with and without ETFs? How likely are 

consumers to elect a plan that does not 

include ETFs when such offerings are 

available? If such offerings are available, 

what is the cable operator’s or DBS 

provider’s rationale for offering that 

plan or option? Would the absence or 

presence of an ETF impact a consumer’s 

choice of provider? Are there any cable 

operators or DBS providers that offer 

multiple subscription choices including 

plans with and without BCFs? If so, 

what is the cable operator’s or DBS 

provider’s rationale for offering that 

plan or option? Are there cable 

operators or DBS providers that only 

impose BCFs in certain circumstances 


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and not in other circumstances? If so, 

what are the circumstances in which the 

BCF is not imposed? What is the cable 

operator’s or DBS provider’s rationale 

for not imposing the BCF in those 

circumstances? Would the absence or 

presence of BCFs impact a consumer’s 

choice of provider? How would 

prohibiting or limiting cable operators 

and DBS providers from imposing ETFs 

and/or BCFs change providers’ current 

customer services? 

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. 

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-tomonth, one-year, two-year, or other 

service agreements subject to ETFs or 

BCFs? 

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 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. 

Digital Equity and Inclusion. Finally, 

the Commission, as part of its 

continuing effort to advance digital 

equity for all, 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 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. 

Ex Parte Rules—Permit-But-Disclose. 

The proceeding this Notice initiates 

shall be treated as a ‘‘permit-butdisclose’’ proceeding in accordance 

with the Commission’s ex parte rules. 

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. 

Filing Requirements—Comments and 

Replies. Pursuant to §§ 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: https://

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. 

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. 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. 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. 


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Federal Register / Vol. 89, No. 4 / Friday, January 5, 2024 / Proposed Rules 745 

Regulatory Flexibility Act. The 

Regulatory Flexibility Act of 1980, as 

amended (RFA), 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.’’ 

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 below. 

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. 

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). 

Providing Accountability Through 

Transparency Act. Consistent with the 

Providing Accountability Through 

Transparency Act, Public Law 118–9, a 

summary of this document will be 

available on https://www.fcc.gov/ 

proposed-rulemakings. 

People with Disabilities. To request 

materials in accessible formats for 

people with disabilities (braille, large 

print, electronic files, audio format), 

send an email to fcc504@fcc.gov or call 

the Consumer and Governmental Affairs 

Bureau at (202) 418–0530. 

Initial Regulatory Flexibility Act 

Analysis. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(RFA), 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). In 

addition, the NPRM and IRFA (or 

summaries thereof) will be published in 

the Federal Register. 

Need for, and Objectives of, the 

Proposed Rules. 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. 

Legal Basis. The proposed action is 

authorized under §§ 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). 

Description and Estimate of the 

Number of Small Entities to Which the 

Proposed Rules Will Apply. 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. The RFA generally defines 

the term ‘‘small entity’’ as having the 

same meaning as the terms ‘‘small 

business,’’ ‘‘small organization,’’ and 

‘‘small governmental jurisdiction.’’ In 

addition, the term ‘‘small business’’ has 

the same meaning as the term ‘‘small 

business concern’’ under the Small 

Business Act (SBA). A small 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. 

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. 

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. The 

programming material is usually 

delivered to a third party, such as cable 

systems or direct-to-home satellite 

systems, for transmission to viewers. 

The SBA small business size standard 

for this industry classifies firms with 

annual receipts less than $41.5 million 

as small. Based on U.S. Census Bureau 

data for 2017, 378 firms operated in this 

industry during that year. 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. Based on this data, 

the Commission estimates that a 

majority of firms in this industry are 

small. 

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. Based on industry data, 

there are about 420 cable companies in 

the U.S. Of these, only seven have more 

than 400,000 subscribers. In addition, 

under the Commission’s rules, a ‘‘small 

system’’ is a cable system serving 15,000 

or fewer subscribers. Based on industry 

data, there are about 4,139 cable systems 

(headends) in the U.S. Of these, about 

639 have more than 15,000 subscribers. 

Accordingly, the Commission estimates 

that the majority of cable companies and 

cable systems are small. 

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.’’ 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. 

Based on industry data, only six cable 

system operators have more than 

498,000 subscribers. 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 


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746 Federal Register / Vol. 89, No. 4 / Friday, January 5, 2024 / Proposed Rules 

affiliated with entities whose gross 

annual revenues exceed $250 million. 

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. 

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. 

Transmission facilities may be based on 

a single technology or combination of 

technologies. 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. By exception, 

establishments providing satellite 

television distribution services using 

facilities and infrastructure that they 

operate are included in this industry. 

The SBA small business size standard 

for Wired Telecommunications Carriers 

classifies firms having 1,500 or fewer 

employees as small. U.S. Census Bureau 

data for 2017 show that 3,054 firms 

operated in this industry for the entire 

year. Of this number, 2,964 firms 

operated with fewer than 250 

employees. 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. 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. 

Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements. 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. 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. 

Steps Taken to Minimize Significant 

Economic Impact on Small Entities, and 

Significant Alternatives Considered. 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. 

To assist in the Commission’s 

evaluation of the economic impact on 

small entities, as a 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. 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. 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. 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. 

Federal Rules that May Duplicate, 

Overlap, or Conflict with the Proposed 

Rule. None. 

It is ordered that, pursuant to the 

authority found in §§ 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. 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. 

List of Subjects 

47 CFR Part 25 

Administrative practice and 

procedure, Satellites. 

47 CFR Part 76 

Television. 

Federal Communications Commission 

Marlene H. Dortch, 

Secretary. 

Proposed Rules 

For the reasons discussed in the 

preamble, the Federal Communications 

Commission proposes to amend 47 CFR 

part 25 and 76 as follows: 

PART 25—SATELLITE 

COMMUNICATIONS 

■ 1. The authority citation for Part 25 is 

revised 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 the 

introductory text of 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. 

* * * * * 


lotter on DSK11XQN23PROD with PROPOSALS1
Federal Register / Vol. 89, No. 4 / Friday, January 5, 2024 / Proposed Rules 747 

PART 76—MULTICHANNEL VIDEO 

AND CABLE TELEVISION SERVICE 

■ 3. 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. 

■ 4. Amend § 76.309 by adding 

paragraph (c)(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. 

* * * * * 

[FR Doc. 2023–28622 Filed 1–4–24; 8:45 am] 

BILLING CODE 6712–01–P 


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