5 Times The Cable Industry Embarrassed Itself During Today’s Senate Hearing

As mentioned in the earlier story about Sen. Claire McCaskill’s customer disservice call to her pay-TV provider, the Missouri senator and others on the Permanent Subcommittee on Investigations held a hearing today to talk to cable industry executives about their bad billing practices. Not surprisingly, the cable suits did a bang-up job of proving that these companies deserve their poor reputation.

In advance of the hearing, the subcommittee staff issued a report [PDF] finding that Charter and its new merger buddy Time Warner Cable both have had policies that fail to automatically issue refunds to customers when billing errors are found.

This includes, by TWC’s own estimates, more than 40,000 customers — in Ohio alone and just in 2015 — were overbilled over $430,000.

The report, and these figures, played into two of the most headslap-inducing moments of this morning’s hearing:

1. It All Evens Out

Subcommittee chair Sen. Rob Portman (OH) asked John Keib, who was TWC’s Executive Vice President and Chief Operating Officer, Residential Services, before the Charter merger why — unlike most other retail businesses — Time Warner Cable chose to not grant refunds automatically when it learned of an equipment billing error.

Keib justified the policy by noting that the company does refund more than $150 million/year to customers when they ask for them.

Besides, it’s all okay because, “We’re undercharging customers significantly more than we’re overcharging them.”

That seemed to amuse Sen. Portman, who countered that, “It’s easy to say ‘We undercharge some people; we over charge others. It all kinda adds out,’ but not for those 40,000 families, not for the family that’s getting overcharged. I mean, you shouldn’t undercharge either; you should have business practices that take care of that.”

“If you’re overcharged and you [the cable company] find out about it, you oughta make them good, and that’s what other businesses do,” concluded the senator.

2. Fuzzy Math

In his testimony and prepared statement to the subcommittee, Keib tried to minimize the scope of the equipment billing problems by claiming that only “.07% of customers had billing issues with video equipment.”

If that were true, given that TWC had around 11 million video customers in 2015, that would mean only around 8,000 customers in the entire country had a billing issue with their video equipment.

However, as Portman immediately pointed out, “You’re talking about 40,000 customers in Ohio alone in 2015, so you’re talking about many more than that.”

It’s possible that Keib meant .7%, which would put the number closer to 80,000 but even that seems low when you consider that Ohio was a small market for TWC compared to its footprints in New York City and Los Angeles, where it was the dominant cable provider.

Regardless of the scope of the problem, Portman also questioned whether TWC customers — who received small bill credits rather than refunds — were being made whole.

“You’re giving them a month’s credit, when it could be years that they were overcharged for,” argued the senator.

To which Keib, who should probably have just stayed home, replied, “I would venture to say that a majority are of those are more recent, and within the 30-45 day span.”

This didn’t convince Portman.

“A majority of those are more recent but you don’t know that it hasn’t been years,” he told the former TWC VP, “You’re not providing people the money that they’re owed, even though you know that they deserve a refund.”

3. The Sound of Silence

Sen. McCaskill described the business model of pay-tv as “figure out a way to make the entry price as low as possible; figure out how to roll people off that entry price as quickly as you can, and then deal with their anger once the price has gone up.”

“There are so many things about this business model that are asking for customers to be upset,” she noted, before asking valid questions that elicited only blank stares from the panelists.

The senator pointed out that cable companies love to advertise the promotional price, but that they seem to uniformly hide what customers will pay when that promo expires.

“Do any of you advertise the price after the promotion?” she asked the panelists.

No answer.

“So all of you do the promotional price and then there’s fine print. In fact, many of you don’t even put what the price is gonna be after the promotional price, correct?”

Crickets.

You could hear a pin drop a few minutes later when McCaskill asked about hidden “retention rates” given to high-level customer service staff. Some companies not only provide retention agents with unadvertised low rates they can give to angry customers, the employees were instructed to refer to whatever price they were offering as the “lowest price” they could offer even if they knew a better offer can be made.

“When we asked you about that, you said ‘Well, at that moment, that was the lowest price that agent could offer,'” said the senator. “That’s the kind of stuff that’s driving people through the wall.”

“How does a customer know when they have gotten the best deal?”

A hush draws over the crowd.

“Will you all make a commitment today to advertise the lowest price available? Any of you? Will you publish it on your website?”

Offfffff course not.

4. Dish Doesn’t Charge HD Fees, Except It Does

McCaskill asked Kathleen Schneider, Senior Vice President of Operations for Dish, about the satellite service’s claim to not charge customers for HD service.

“For new customers we don’t charge HD fees,” clarified Schneider.

“So for new customers you don’t charge, but what about old customers?” asked the senator.

“We have a small number of customers who, when they came into Dish they had sort of a different pricing arrangement,” explained Schneider. “Where customers today we include HD fees in the receiver that they’re paying for new Hopper equipment… for the subset of customers in earlier days we did not have that fee included in the receiver fees, so they’re having lower receiver fees then paying that HD fee as an offset.”

So wait — Dish advertises, and even brags about it on every Dish bill — that HD is “free for life,” but Schneider just admitted that customers are indeed paying for HD, it’s just been shifted to another line item.

That’s not us misinterpreting Schneider’s words. This is directly from her response to McCaskill: “In essence we’re charging both, just kind of in different buckets.”

5. Congressional Intervention

Some senators in the subcommittee seemed peeved to even be having this hearing, including Sen. James Lankford of Oklahoma, who said it was a case of the “pot calling the kettle black” for the federal government to call out private business for poor billing and customer service.

Even so, Sen. Lankford noted that his office has repeatedly heard from folks in Oklahoma who had exhausted the usual options for resolving a cable billing dispute.

“They reached the point where they called their cable provider so many times and got non-answers, that they eventually called their senator,” recalled Lankford, “We called someone that we knew and they eventually got attention, and it was the oddest thing for me to think ‘Why does it take, literally, an act of someone in Congress to try to get attention on someone who has a billing problem?’”

Lankford says this is a particular issue for senior citizens who “have no idea about this billing practice and have no idea about these packages, and they’re being taken advantage of.”