Biden proposes ban on cable cord-cutting fees

WASHINGTON — The Federal Communications Commission on Tuesday announced a rule proposal to ban early termination fees for cable and satellite service contracts.

The proposed rule would require cable operators and direct broadcast satellite, or DBS, providers to eliminate early cancellation fees. It would also require cable and DBS companies to provide customers a prorated credit or rebate for the remaining days within a billing cycle after cancellation, according to an FCC release.

"No one wants to pay junk fees for something they don't want or can't use," FCC Chairwoman Jessica Rosenworcel said in a statement. "When companies charge customers early termination fees, it limits their freedom to choose the service they want."

The proposed rule is part of the White House's larger focus on eliminating surplus fees under President Joe Biden's July 2021 executive order to promote competition in the U.S. economy.

According to that order, cable television is one sector where fees can stifle competition, due to costs associated with canceling services or switching service providers.

"Companies shouldn't lock you into services you don't want with large fees," President Joe Biden said via X on Tuesday. "It's unfair, raises costs, and stifles competition. We're doing something about it."

The FCC had previously announced it would implement Broadband Consumer Labels — easily accessible information for consumers about the functions and costs of a broadband service, similar to a food nutrition label. The agency has also proposed "all-in" pricing for cable and satellite services, so that customers will see the total service costs, fees included, up front.

"In an increasingly competitive media market, we should make it easier for Americans to use their purchasing power to promote innovation and expand competition within the industry," Rosenworcel said.

Don't miss these stories from CNBC PRO: