Policy

Find the Cost of Retrans (On Your Cable Bill)

9/20/2010 12:01 AM Eastern

Charter Communications
wants its customers to know that
as far as cable delivery is concerned,
broadcast TV is fee, not
free, TV.

In the latest salvo in the battle
between cable operators and
broadcasters over TV-station pay-for-play, Charter, the sixth-largest
U.S. MSO, will start itemizing the
price increases it says it must pass
along to customers because of retransmission-
consent deals, at an
average of about $1 more per sub.

Charter joins at least one other
major operator, Suddenlink Communications,
in deciding to make
a point about the price it has to
pay to bring many local TV-station
channels to customers.

On its website, Charter explains
to customers that they will
start seeing a “Broadcast TV Surcharge”
in the “taxes and fees”
section of their cable bills (starting
with the October bill).

PRICE GOT HIGH

“These local-TV signals were
historically made available to
Charter at no cost, or low cost.
However, in recent years the
prices demanded by local broadcast-
TV stations have necessitated
that we pass these costs on to
customers,” Charter said.

Charter has notified franchisees
of the new itemized charges,
as it would “anything new that
concerns customers in their communities,”
Charter senior director
of corporate communications
Anita Lamont said.

“This is a challenging issue,
passing along a cost that, until
now, didn’t exist,” Lamont said.
“But it does now, and we chose a
means of passing along the new
cost that we believe is fair and least
impactful to our customers.”

Charter did not require local
approvals to locate the breakout
under “taxes and fees,” she said.

Federal law requires cable bills
to be “fully itemized,” including,
“but not limited to,” basic, premium
and equipment charges.
The “taxes and fees” section traditionally
features items such as
Universal Service Fund contributions,
Enhanced 911 charges,
sales taxes and other government-
issue obligations.

To give customers a little more
incentive to check those bills,
Charter will promote the change.
“We are notifying customers
now” that they will see the surcharge
on their October statement,
Lamont said.

Charter joined with Time
Warner Cable and other cable
and satellite operators earlier
this year in asking the Federal
Communications Commission
to fix what they call a “broken”
retransmission-consent regime
skewed in favor of broadcasters
to the detriment of consumers
and their wallets.

The National Cable & Telecommunications
Association had no
comment on Charter’s decision to
break out the charge.

“Given cable’s well-documented
history of raising rates four to six
times the annual rate of inf lation,
it seems rather disingenuous
for them to now claim their
rate hikes are coming as a result
of broadcast-TV stations, which
provide the highest-rated entertainment
and local news programming
on the cable lineup,”
responded National Association
of Broadcasters executive vice
president Dennis Wharton.

Charter is not the only cable
company that has decided to
give customers the skinny on why
their bill is fatter than it might
otherwise be.

Suddenlink Communications,
which ranks No. 11 on the NCTA’s
list of top cable companies with
about 1.3 million subscribers,
has been itemizing retransmission
fees on its bills for more than
a year, “so our customers could
see what retransmission consent
is costing them,” said senior vice
president of corporate communications
Pete Abel.

Unlike Charter, Suddenlink
lists retransmission-consent levies
as a separate item, rather than
as taxes and fees. “We did not put
the surcharge under taxes and
fees because we typically reserve
that section of the bill for charges
that are imposed or levied directly
by a government entity,”
Abel said. “Retrans charges are
enabled by law, but they are imposed/
levied by broadcasters.”

Like Charter, Suddenlink
signed the FCC petition asking
for retransmission reform
and has been trying to make a
point about the retransmissionconsent
system and the need for
something to change.

“If retransmission consent were
to be repealed, we would gladly remove
this surcharge from customers’
bills,” said Abel. “Similarly, if
the retransmission process is reformed
in such a way that the cost
is reduced, we would reduce the
charge accordingly.”

MARKET BY MARKET

Also like Charter, the Suddenlink
bill item is calculated based
on which stations collectively
in each individual market are
charging it for carriage.

Some Multichannel News readers
responding to an online story
on the Charter move asked why
cable companies were breaking out
the TV-station charge for customers,
but not what those customers
were paying for cable channels like
ESPN, the poster channel for commanding
pricey carriage fees.

“Although this is a good first
step, Charter should take it to its
logical conclusion and tell its subscribers
how much the company
is paying for each cable channel,”
one commenter said. “Subscribers
would be amazed how much
they are forking out for channels
that they never watch.”

Another commenter replied:
“You can add a rack with a competing
newspaper on the street
corner. You can’t start broadcasting
a competing TV signal. Broadcasters
get essentially free use of
a scarce resource in exchange for
serving the public. Withholding
content in lieu of higher consent
fees isn’t good public service.”

Abel pointed to the company’s
online explanation: “Unlike cable
TV networks, broadcast TV
stations distribute their signals
over the air, using free spectrum
granted to them by the federal
government. In effect, taxpayers
subsidize the distribution
of broadcast TV signals. These
same broadcast TV stations are
then allowed by the government
to charge for their signals
— and if we don’t agree to
pay, broadcasters can force us
to drop their channels.”

Top U.S. cable providers Comcast
and Time Warner Cable do
not break out retransmission fees
in customer cable bills.

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