Comcast is being smacked down by the FCC, but not for the real reason they should be

Comcast is getting their knuckles rapped by the FCC this month to the tune of millions of dollars. Their sin was the deliberate overcharging of customers for equipment and services which they hadn’t asked for. As the Washington Post reports, this is one of the first times a major provider has been nailed in this fashion but it’s probably been going on for ages.

Comcast is paying one of the biggest fines ever levied on a cable company after regulators said it illegally billed customers for unwanted equipment and services.

In a settlement with the Federal Communications Commission, Comcast is agreeing to pay $2.3 million. It’s also agreeing to give consumers a chance to block the addition of new services and equipment if they don’t want it.

Some subscribers who complained to the FCC said they’d been charged for premium channels, set-top boxes or video recording devices despite telling the company they weren’t looking for upgrades, the agency said Tuesday. Regulators added that many didn’t find out about the extra charges until they thought to check their bills or were surprised by emails notifying them of the changes after the fact.

You can understand why they are being fined in this case because this is flat out fraud and robbery. Dumping extra charges on the bills you send to your customers for things they did not order is theft. But it’s no doubt a pretty good deal for them because if anyone actually looks at their bill and calls to complain they can simply apologize for the “oversight” and credit their account. But how many people don’t look at the bill that closely and just pay it? More than you’d imagine I bet, and for all of those people they just get to keep the money.

But that’s not the real problem with cable television providers. The place we’re seriously getting ripped off is in the “bundling” of channels into packages you must choose from. Some of them like to pretend they’re offering you a lot of flexibility by having a large number of “options” when you order, but you’ve probably noticed that many of the most popular (and desirable) channels mysterious show up in different racks. For every good one there’s another pack which you’ll probably never watch. But if you want to see your four favorite channels, odds are that you’ll not be finding them all in the “basic” package and they’ll be spread out across a couple of other options that cost more. The problem is that this is a massive ripoff.

Data delivery is the modern equivalent of the long distance call from back in the day. Some of you aren’t old enough to remember this, but there was a time when you could only make “local calls” as part of your base monthly phone bill. And that local area was pretty small, too. Calling my sister who lived less than one hour’s drive away in a nearby city cost extra and it was charged by the minute. The thing is, calling a further distance away isn’t costing the phone company any more. It’s not like there’s a guy with a donkey carrying the electronic signal in a basket from town to town and the greater distance means they’ll have to pay the guy overtime and spend more on oats for the donkey. It’s just a signal going across lines which are already in place. But we kept paying that for years until people began to get wise.

Cable television isn’t much different. The signal is already there on the line and available at your cable box. In fact, the box has to accomplish extra steps to block you from seeing those other channels. The cable company has to work out deals with all of the content providers to carry their programming, but once that’s been paid for the rest is just transmission infrastructure costs which are fixed.

How do we fix this aside from more massive government regulation of a private company? We don’t. And the reason we can’t is that there is essentially no competition in the industry just as there isn’t in the airlines and a few other related services. If there were more actual competition I can assure you that prices would come down and you’d be seeing more flexible options when ordering cable TV.