It used to be free, but now they’re charging for it — is that legal?

FreePinocchio

All the over-the-air broadcast channels used to be included in Barbara Wilkins’s basic cable TV package, or in her words, “They were ‘free.’”

Now they’re not.

Is that legal?

“I’m one of the small percentage of people in the US who lives too far from any city to receive over-the-air TV signals,” she says. “So if I want local news, I must purchase it from a cable company.”

Over the last 25 years, the cost of the broadcast package has risen from $6 per month to $25 per month, plus taxes and fees.

But recently, the bill began to include a $4 per month “retransmission” fee for broadcast TV. This year, it increased to $6 per month.

“This is on top of the $25 per month they charge me for my broadcast basic TV package,” she says.

Wilkins is paying notorious network retrans fees, which rose by $18 million, or 84%, to $39.5 million from 2014 to 2015. Although these are legal, they are questionable, according to the American Television Alliance.

The retrans gravy train keeps rolling for the broadcast industry as they continue to charge more and more for broadcast signals that are “free” over the air.

Congress has a duty to fix our broken video laws that rig the game in the favor of the big special interests at the expense of American consumers … Congress cannot allow broadcasters to use viewers as pawns while they line their pockets with outrageous TV fees.

Wilkins is incredulous.

“My understanding is that federal law permits TV stations to charge cable companies for what they also give away for free,” she says. “If I lived where an antenna would work, I could get these same stations for free, but because my job is approximately 100 miles away from any city with a TV station, I am unable to pick up those transmissions.”

Why is this allowed?

The free-marketers reading this will say it’s simple. She lives far away, and a broadcast network is providing a service and charging the market rate. People like Wilkins (and members of Congress) should stay out of their way while they collect their hard-earned profits.

But if you’re an average consumer, you can see the wrong here. It’s not as if Wilkins has a choice. She can’t unbundle broadcast TV from her basic package, nor can she control how much the networks charge in retrans fees. What’s more, cable is a de facto monopoly, which means her choices are being connected — or not being connected.

“I don’t understand why, when all I am seeking is broadcast TV, I am being charged this much per month,” she says. “Since all I requested was broadcast basic, why doesn’t that include all the fees up front? In fact, for those of us who live too far to pick up over-the-air transmissions, why are we being charged a re-transmission fee at all?”

Does that story sound familiar? I mean, how many times have you heard airline passengers lament over being charged a fee for carry-on luggage? Or hotel guests over a resort fee? Why do they charge these extras? They’re legal, yes. But more to the point, because they can.

Of course, there’s a difference between can and should, but airlines, cable TV companies, and hotels don’t seem to know the difference.

Only the most callous, pro-business free-marketer would defend carry-on fees, retrans fees and resort fees (wait for it in the comments … some of them read this site). But the rest of us are just left to shake our heads in bewilderment as the rest of the world laughs at our unfettered, irresponsible, carelessly-regulated industries. And we get to be the suckers who pay these ridiculous fees.

Ah, but don’t worry. It’s a free market.

Should retrans fees be legal?

View Results

Loading ... Loading ...

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at chris@elliott.org. Got a question or comment? You can post it on our help forum.

More Posts - Website - Twitter - Facebook - LinkedIn - Google Plus

  • Alan Gore

    If the TV industry were a real free market, some company could disrupt the cable system by offering a service to capture broadcast signals for free in the city, and then feed them through the Internet to outlying subscribers, who would pay a competitive rate for this new form of distribution. Though cable companies have an ecclusive rightto retransmit broadcast stations into rural areas, this could be evaded by capturing an individual signal in the city for each specific subscriber, using a low-cost array of cheap micro-antennas.

    Oh wait – a company called Aereo once did exactly that, until the cable industry had Aereo crushed in the courts. The cable monopoly reigns supreme, and that’s why people in my area gleefully torrent their content.

  • RightNow9435

    right—–don’t blame them for torrenting at all. I have found that on many discussion boards, while people can seriously disagree on politics and many other issues, when the subject of cable tv providers comes up, suddenly everyone is in agreement about how bad they are.

  • RightNow9435

    Time Warner cable(and no doubt the others) have pretty much gone to the airlines system….Broadcast Channels Fee, Re-Trans Fee, cable box fee, ESPN fee, rental of cable modem, 3 or 4 levels of taxes…..so you can easily wind up paying $20-40 more than the so-called quoted price.

  • Pat

    The local broadcast channels were allowed to start collecting a fee from cable and satellite providers to rebroadcast their signal, so they did. And every contract renewal, they want more money. Since the broadcast channels cost the cable / satellite providers money, they charge the subscribers for the cost. A number of times I have lost a local channel on Dish because Dish and the local station could not come to an agreement.

    Also Aereo was shut down through the courts by the broadcast networks, not by cable providers.

  • Peter Varhol

    In general, I am a free marketer, but cable and Internet have nothing to do with any conceivable free market. The only alternative is satellite, which requires a significant investment, and I don’t have the southern exposure needed to reliably acquire the satellite. We are more or less captive here.
    And I notice that my Comcast bill has gone up another 7 percent in the last year, far above inflation. And I have no reasonable alternative. Nor do the majority of people.
    Still, people claim how much better it is in Europe. Certainly not on the cable and Internet front. I have paid incredibly high rates in many European cities for very poor Internet. Compared to Europe, our TV and Internet are far better, for less money.

  • AJPeabody

    Cable companies are by nature utilities, but they wish to have their stocks viewed as growth companies. So, instead if having a boring stable income stream, they require steadily increasing revenue from a stagnant source. Hence fees, increases, and so forth.

    Hooray for the free market!

  • mdy2k1

    Chris, you give away your website for free. I’m not paying you a damn cent to enjoy your labor.
    Now imagine I create a service, where I bundle a bunch of sites where the consumer has to pay for access. And because of a technical limitation, it would be really difficult for my customers to access your site. So a bunch of potential customers don’t subscribe to my service because they really like your site. “Yeah, mdy2k1 has a great product, but it’s not worth giving up my Elliott.”
    So I come up with a solution where they can now get access to your site through my service. And because of that, it greatly increases my customer base.
    I am now making money off your labor.
    So do you deserve a cut?

  • Jeff W.

    Not a big fan of the retrans fee, but should the ire be directed at the cable company or the networks?

    The cable company is providing a service. She is NOT local if she lives 100 miles from the city from which she lives. Maybe she should purchase a better antenna. Not the rely on the old “rabbit ears”.

    But the networks keep raising the rates and the cable company passes the costs along. The retrans rates and/or costs probably used to be negligible and could be baked into the standard rate. Not so much anymore. I think the retrans fee is a marketing ploy by the cable companies. “Hey don’t be mad at us, the networks keep raising their rates, See how much?”

    But if you want to be mad, think of all the channels you do have and do not care about. An ala carte model is really consumer friendly and has met with much resistance. I think our family watches 15-20 channels with any regularity. But I have 100s. And don’t want them. I like ESPN, but don’t watch it enough to pay $6 a month like them.

  • RightNow9435

    Exactly, when it comes to airlines, hotels, rental cars, we do have some choice. Maybe not great choices, but at least there are a number of airlines, rental companies,hotels, etc. For most folks for TV, there is usually only 2 viable choices, and sometimes only one choice if you live in a rural area.

  • RightNow9435

    Totally agreed re ala-carte. That’s the way it should be. In my case, I NEVER watch ESPN nor would want to have it or pay for it, so I don’t get full cable, since so much of the full cable fee is due to ESPN’s charges to the cable company.

  • Pat

    I would love ala carte selection of channels. But the problem with that model is a lot of cable channels would disappear or go bankrupt as they depend on the fees they get from cable and satellites providers. Those fees would disappear or be reduced significantly using an ala carte system.

  • Kerr

    Was Aereo paying the networks for the signals? Otherwise that’s charging for content copyrighted by others and not paying any royalty fees.

  • Mel65

    Customers already pay the cable company for their service and adding things on top of that shoulnd’t be allowed.. Anything that impacts their profitability and ability to provide that service without additional cost, should be included in the final cost I’m given. If they pay a retrans fee, I have no problem with them recouping that fee, but it shouldn’t be at a profit. Whatever that cost is should be split up and added to the total out the door price and there is NO way that amount is $25 or more per household. Realistically, I suspect it’s pennies. Having said that, if the OP gets decent Internet, there is no longer a compelling need for cable. Most channels make their shows available on their websites, or one can use some of the inexpensive services like Hulu. Or … buy a Boxie or Chromecast. Customers have more options than they think they do…

  • Alan Gore

    Aereo ran the shows exactly as broadcast, with the commercials that came with them. In essence, you were a ‘city viewer’ outside the city, paying the networks in the same way an in-city viewer would.

  • Fishplate

    I manage to live my life, in a perfectly acceptable manner, without any cable /or/ broadcast TV.

    If I need “local” TV (and the nearest broadcast stations won’t cover much of anything that’s really local to me), that content is available on the Internet, on demand.

    The only way to fight fees you consider oppressive is to stop paying them.

  • charliebgolf

    As a person formerly working in broadcasting, I don’t think any station, local or national, that charges for and runs advertising should also be charging viewers. Those stations should thank their lucky stars that the cable/satellite companies put their product on the air. Every time I hear about one of my local stations saying XYZ viewers may lose their local programming, due to broadcast contract negotiations, I want to scream. My local ABC affiliate went through this a couple of years ago with Directv and was actually off the air for a couple of weeks. During that time I switched to another local station for my news and have never gone back.

    And while on this subject, it’s way past time for ala carte programming. I have well over 200 stations available and watch about 25 or 30 of them. Should I really have to pay for all of the ones I could care less about and will never watch?

  • cscasi

    But, was Aero paying any fees like the local area TV stations have to pay to broadcast various programs? If not, then Aero was making profits without having to pay for anything except its infrastructure.

  • cscasi

    Plus all the taxes that are added in; franchise tax, local tax, state tax, etc. It rally does add up. Just like all the fees that are added into one’s electricity bill, or ga bill.

  • cscasi

    What inflation? Government leads us to believe that there has been little or no inflation these past couple of years (a lot of hype, I know). But, the prices of everything else keep rising. Therefore, the cable companies give their employees wage increases, the cost of materials keep going up (i.e., Dishes, cabling, tools, vehicles, etc.). So, like it or not, that is why our TV and Internet bills keep climbing. After all, we do not want them to fall behind the airlines, hotels, food suppliers, etc.; do we? I say that tongue in cheek, but you get the picture.

  • cscasi

    Agree, but there are too many lobbyists with MONEY hammering on the FCC and even Congress, for that to happen.

  • cscasi

    Here is something I just got in my in box; an e-mail from DIRECTV. Just want you to real all the “fine print” that is below the ad.

    Funds to be paid by DIRECTV in the form of a DIRECTV Visa Reward Card. DIRECTV Visa Reward Cards are issued by MetaBank®, Member FDIC, pursuant to a license from Visa U.S.A. Inc. This card does not have cash access and can be used anywhere Visa debit cards are accepted within the U.S. only. Card valid through expiration date shown on front of card. Offer ends 4/13/16.

    ALL DIRECTV OFFERS REQUIRE 24-MONTH AGREEMENT. ADD’L FEES APPLY. All offers valid through 4/13/16. New residential DIRECTV customers only (equipment lease req’d). Credit approval req’d. Credit card req’d (except MA & PA). Pro-rated ETF fee (up to $480) and Equipment Non-Return fees apply. Programming, pricing and offers are subject to change and may vary in certain markets. Some offers may not be available through all channels and in select areas. Customers activating the CHOICE™ Package or above or the MÁS ULTRA™ Package or above will be automatically enrolled in the 2016 season of NFL SUNDAY TICKET at no additional cost and will receive a free upgrade to NFL SUNDAY TICKET MAX for the 2016 season.1Based on one Genie HD DVR setup (model HR34 Advanced Whole-Home DVR only). Requires a Genie Mini or an RVU-enabled TV/device for each additional room. Additional fees apply. Access to programming based on package selection. Blackout restrictions apply to sports programming. Program must air in HD to record in HD. 2Package consists of all out-of-market NFL games (based on customer’s service address) broadcast on FOX and CBS. 3Functionality varies by compatible device and location. Only select networks corresponding to your package selection are available for live streaming and may vary by location and device. Additional charges may apply. In-home live-streaming feature requires home-based Wi-Fi connection and Internet-connected HD DVR. Out-of-home viewing requires high-speed internet connection. All functions and programming subject to change at any time. Visit directv.com/everywhere for a list of compatible devices (sold separately) and complete details. Data charges may apply. TechRadar is a trademark of Future Publishing Limited and is used with permission. Guardians of the Galaxy @ 2014 Marvel. All Rights Reserved.
    Additional Details

    DIRECTV VISA REWARD CARD OFFER: New DIRECTV residential customers who activate SELECT Pkg or above will receive one (1) Reward Card automatically shipped to the name and address used to activate account. Allow 6-8 weeks after installation for delivery. Not valid for purchase by groups, clubs, businesses or organizations. Void where prohibited, licensed, taxed or restricted. Funds to be paid by DIRECTV in the form of a DIRECTV Visa Reward Card. DIRECTV Visa Reward Cards are issued by MetaBank®, Member FDIC, pursuant to a license from Visa U.S.A. Inc. This card does not have cash access and can be used anywhere Visa debit cards are accepted within the U.S. only. Card valid through expiration date shown on front of card. Offer ends 4/13/16.

    ‡American Airlines 25K AAdvantage® Mile Offer: AAdvantage® mile offer is valid to new DIRECTV customers who provide their AAdvantage® number when ordering DIRECTV service through the phone number listed above, or online at aa.directv.com. Customers who have a current DIRECTV account, or have been a DIRECTV customer within the last 24 months are ineligible. DIRECTV account must be kept current and in good standing for a minimum of 60 days before AAdvantage® miles will be awarded. Please allow 6-8 weeks after 60 day period for mileage to post to your account. DIRECTV hardware and programming available separately. Credit card required (except in MA & PA). Programming, pricing, terms and conditions subject to change at any time. Pricing residential. Taxes not included. Receipt of DIRECTV programming subject to DIRECTV Customer Agreement; copy provided at directv.com/legal and in your first bill. This promotional offer may not be combined or used in conjunction with any other promotional or partner offers.

    American Airlines reserves the right to change the AAdvantage® program and its terms and conditions at any time without notice, and to end the AAdvantage® program with six months notice. Any such changes may affect your ability to use the awards or mileage credits that you have accumulated. Unless specified, AAdvantage® miles earned through this promotion/offer do not count toward elite-status qualification or AAdvantage® Million MilerSM status. American Airlines is not responsible for products or services offered by other participating companies. For complete details about the AAdvantage® program, visit aa.com/aadvantage.

    American Airlines, AAdvantage®, the Flight Symbol logo and AAdvantage® Million Miler are trademarks of American Airlines, Inc.

    BASE PACKAGE OFFERS: In certain markets, Regional Sports fee of up to $6.39/mo. assessed with CHOICE and MÁS ULTRA Pkg and above. After 12 mos., then-prevailing rate for base pkg applies (currently $51.99/mo for SELECT; $61.99/mo. for ENTERTAINMENT; $74.99/mo. for CHOICE; $81.99/mo. for XTRA; $91.99/mo. for ULTIMATE; $144.99/mo. for PREMIER) unless canceled or changed by customer prior to end of the promotional period. Some offers may not be available through all channels and in select areas.

    2016 NFL SUNDAY TICKET OFFER: Package consists of all live out-of-market NFL games (based on customer’s service address) broadcast on FOX and CBS. Games available via remote viewing based on device location. Other conditions apply. 2016 NFL SUNDAY TICKET regular full-season retail price is $257.94. 2016 NFL SUNDAY TICKET MAX regular full-season retail price is $359.94. Customers activating CHOICE Pkg or above or MÁS ULTRA Pkg or above will be eligible to receive the 2016 season of NFL SUNDAY TICKET at no add’l cost and will receive a free upgrade to NFL SUNDAY TICKET MAX for the 2016 season. NFL SUNDAY TICKET subscription will automatically continue each season at a special renewal rate unless customer calls to cancel prior to start of season. To renew NFL SUNDAY TICKET MAX, customer must call to upgrade after the 2016 season. Subscription cannot be canceled (in part or in whole) after the start of the season and subscription fee cannot be refunded. Only one game may be accessed remotely at any given time. Compatible device/operating system required for online/mobile access. Additional data charges may apply. Visit directv.com/nfl for a list of compatible devices/system requirements. [Short Cuts are available from midnight Sunday ET through midnight Wednesday ET. For full Mix Channel and interactive functionality, HD equipment model H/HR 21 or later is required.

    GENIE HD DVR UPGRADE OFFER: Includes instant rebates on one Genie HD DVR and up to three Genie Minis. Req’s SELECT Pkg or above; ÓPTIMO MÁS Pkg or above; or any int’l service bundle w/PREFERRED CHOICE Pkg. $99 fee applies for Wireless Genie Mini (model C41W) upgrade. Free upgrade offer requires a Genie HD DVR and at least one Genie Mini. $99 fee applies for single-room setup. Whole-Home HD DVR functionality req’s an HD DVR connected to one television and a Genie Mini, H25 HD Receiver(s) or a DIRECTV Ready TV/Device in each additional room. Limit of three remote viewings per HD DVR at a time. Visit directv.com/genie for complete details.

    GEN. DIRECTV SVC TERMS: Subject to Equipment Lease Agreement and Customer Agreement. Must maintain a base TV pkg of $29.99/mo or above or int’l service bundle. Advanced Receiver fee ($15/mo.) req’d for HD DVRs. TiVo service fee ($5/mo.) req’d for TiVo HD DVR from DIRECTV. There is a fee of $7/mo. for each receiver and/or Genie Mini/DIRECTV Ready TV/Device on your account. $19.95 Handling & Delivery fee may apply. Taxes not included. Programming, pricing, terms and conditions subject to change at any time. Installation: Standard installation included in up to four rooms only. Custom installation extra. Applicable use tax adjustment may apply on the retail value of the installation. Visit directv.com/legal or call 1-800-531-5000 for details.

    DIRECTV EVERYWHERE: Content varies by device, TV plan and viewing location. Not all channels available. Data connection req’d. Data charges may apply for wireless use.

    HD: HD television req’d. Number of HD channels based on TV plan.

    LOCALS: Eligibility for local channels based on service address. Not all networks available in all markets.

    NFL, the NFL Shield design and the NFL SUNDAY TICKET name and logo are registered trademarks of the NFL and its affiliates. NFL team names and uniform designs are registered trademarks of the teams indicated.

    ©2016 AT&T Intellectual Property. All Rights Reserved. AT&T, Globe logo, DIRECTV, and all other DIRECTV marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners.

    Privacy Policy | Advertising Choices
    Can you tell me what to expect if I bought this? DIRECTV has all these little fees, additional items and equipment lease required, etc. This is a fine example of what customers are complaining about. They throw you a couple of crumbs to snag you and then sock it to you when you sign up.
    I guess most people would just read about the “free” stuff and the “gift card”, but look at all the other language that is in there. And, most people need more than what they are offering for free in order to make it useable in their homes.
    Just thought I would add this here to make people more aware and to applaud the commenters here for what they have said.

  • Pat

    It is not just the channels no one watches. Sports channels negotiate contracts to pay for MLB, NFL, NASCAR, etc. partly based on the fees they will be getting from cable and satellite providers. Those fees are based on the number of homes that can receive that channel. If you go ala carte, and the homes that want those channels are cut in half or more, the sports channels will not have the money to pay for the contracts they negotiated.

  • Extramail

    Imagine how pissed I was when I moved to Kentucky and discovered that I had to pay state tax on my homeowners and car insurance. Really? I think the only thing we don’t pay tax on is the air we breathe . . .

  • Mike

    My ComCrap bill is a litany of taxes, fees, rental fees (I can’t buy my cable/telephone modem retail or I would) and BOHICA fees. My $169 rate turns into $230.

  • wilcoxon

    So ESPN (and the like) will cost significantly more than other channels. Right now we’re subsidizing ESPN as part of our cable bill and get (almost) nothing for it (we watch the world cup every 4 years which is usually partly on ESPN). Is it fair that we have to help pay for ESPN contracts when we never watch it (except for those few weeks every 4 years)? The free market says those that do want to watch sports should pay the cost of ESPN’s contracts (and not the rest of us).

  • wilcoxon

    I’ve been looking at that but our only viable internet is ComCrap. If we drop tv, our bill only drops by about $50-60 (from $180 down to $120-130 if I calculated it right). Even though cable tv is by far the most expensive item in the bundle, ComCrap screws you on prices for internet and phone if you drop the tv. :(

  • Pat

    So let’s say ESPN gets $10 per home. If it goes to ala carte, they will need to charge $30 per home to keep themselves at the same income levels. And when you get done with the channels you want, you are paying as much, it not more, because each of the channels will want more money to keep at the same income levels as they were getting before ala carte.

  • wilcoxon

    That’s always the claim by those opposed to ala carte and it may be true or not. Let’s see some hard numbers on ala carte pricing before we just throw it out.

    Honestly, I don’t care nearly as much about tv as I do internet. I’m happy to have current or ala carte or something else as long as the ISPs stop fighting reclassification (claiming that broadband internet is not a utility is absolutely ludicrous).

  • Blamona

    Just another “service fee” to add to the list of growing companies, Expedia, Homeaway?vrbo, Flipkey, Verizon, credit card companies, banks, airlines……..

  • No it wasn’t paying the stupid fee, and there was no moral reason why it should. It was transmitting over the Internwt, which even if it reached the user over the cable company’s own cable, is being paid for in full by the user.

  • Algebralovr

    You have apparently never lived in a rural area. 100 miles is nothing in parts of the country. I have a >75 mile drive to get to anything other than Wal-Mart, the Hardware Store or the Feed Store. Better antennas are not always the answer, either, if the layout of the earth itself does not cooperate. For some people to get OTA TV, an antenna might need to be tall enough that you have to light it with flashers for planes, and then it also becomes an issue for lightning (as I know firsthand).