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Federal Hearing May Extend To Cable, Internet Fees

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The Washington Post

Published: June 1, 2008

WASHINGTON - A planned federal hearing on penalties that cell phone users pay for canceling their contracts early may be expanded to include a discussion on similar fees for ending cable and Internet services ahead of schedule, the chairman of the Federal Communications Commission said in an interview.
FCC Chairman Kevin Martin said the June 12 hearing on early-termination fees will be a broad-reaching attempt to rein in complaints that have begun to spread to other industries.

"The issue has been highlighted in the context of the wireless industry, but what I'd also point out is that this is a practice that seems to be migrating to other platforms," Martin said. "To the extent that the commission takes action and says that these kinds of practices are reasonable and these are not, that could have implications for other industries."

The attention to cancellation fees illustrates a growing frustration among consumers, who spend an average of $200 each month for wireless phone, cable and Internet services. Many see the fees as an unfair penalty that makes it difficult to switch providers. Early-termination fees were among the five most common complaints by cell phone users, who filed 20,300 service-related complaints in 2007, according to the FCC.

Many wireless companies are fighting lawsuits seeking hundreds of millions of dollars in fees that have been collected from former subscribers. Cable, DSL Internet and paid television services such as Verizon's FiOS also have had an increase in complaints from consumers about early-termination fees.

Now wireless carriers are pushing a policy that, if adopted, could provide relief from the fines, which typically range from $150 to $200. Verizon and AT&T have recently softened their policies, with prorated plans that would knock down the penalty by $5 for each month of service. T-Mobile intends to introduce a similar plan next month; Sprint has promised to follow suit by the end of the year.

The proposals being discussed by carriers and the FCC would provide more safeguards, such as a 30-day grace period and no penalties for subscribers who extend their contracts.

In exchange, carriers are asking for protection from the numerous lawsuits under way in California and other state courts.

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