FCC Affirms Cable Billing Practices in Response to TWC Request

Lake found against a lawyer in California who brought a lawsuit against Time Warner Cable in state Superior Court in Los Angeles that’s seeking class-action status. Douglas Caiafa sued the cable operator, representing two named plaintiffs, alleging it doesn’t properly tell customers how much remote controls and set-top boxes cost when they sign up for service. The lawyer’s reading of Section 623(f), in which everything must be ordered by an “affirmative request by name,” is impractical, the bureau said. Caiafa said he wasn’t disappointed by the ruling because what it requires Time Warner Cable do in terms of customer notification isn’t being done in California. The cable operator is pleased the commission granted its request, a spokesman said. He declined to comment on Caiafa’s allegations.

"Interpreting the statute in the manner suggested by Mr. Caiafa could result in significant customer confusion and unnecessary delay during the ordering process,” Lake wrote. “The goal of the provision is to ensure that consumers are not duped into paying for services or equipment that they have not ordered and do not want. As long as the offered services and equipment and their prices have been adequately explained and identified, we find that the requirement that the customer affirmatively request such by name is met by the customer’s affirmative consent.” Such permission can be granted when a CSR asks whether the consumer agrees to buy the products and services requested, Lake said.

"It would be overly formalistic -- and not conducive to an efficient and productive business transaction -- to require customers to engage in a sort of Kabuki theater in which the customer is required to parrot back to the CSR a laundry list of the particular services and equipment being purchased before the CSR can place the order,” Lake wrote. The order is at http://xrl.us/bikevb. Time Warner Cable’s petition had been backed by Cox Communications, facing a negative option billing case over set-tops in U.S. District Court in Oklahoma, and the NCTA, which declined to comment. “Cox is grateful to have the FCC act in such an expeditious and reasonable fashion,” a spokesman said. “We agree with the FCC that this order will help support consumer-friendly provisioning practices that Cox has worked long and hard to establish."

Negative option billing isn’t permissible when a new tier of service is added by a consumer or a single channel is added, the bureau said. The practice is OK when there’s a “change in the mix of channels in a tier, including additions or deletions of channels,” unless “they change the fundamental nature of the tier,” the bureau said, citing a 1993 commission order implementing the Cable Act. A price change “accompanied by a fundamental change in service, such as the addition of a new tier,” also would need the customer’s explicit consent, the bureau said. It declined Time Warner Cable’s request to rule whether that company’s ordering process follows commission rules. “Instead, we take this opportunity to define more clearly what is required of cable operators in their ordering processes and practices to protect consumers from being duped into paying for any cable service or equipment without making an informed and conscious decision to do so,” Lake wrote. “This should aid cable operators around the country in complying with the statute and our rules, and ensure that their subscribers and potential subscribers receive and pay only for the services that they affirmatively request."

Time Warner Cable’s practices still are illegal under California law and violate Section 623, and the bureau’s decision doesn’t speak directly to the company’s procedures, Caiafa told us. “There are a lot of positive things in this declaratory ruling for the plaintiff’s case” because the bureau “describes what the FCC sees as the standard for compliance with the statute,” he said. The cable operator isn’t “meeting its obligation under the statute,” he added, because “the consumer is not being fully informed of the cost of each piece of equipment.”