What's happening
This bill limits the amount cable or internet providers can charge consumers for leasing modems and sets related disclosure and enforcement rules.
Why it matters
Directly limits the amount providers can profit from modem leases. , ensuring consumers are not charged more than 16% above what the provider actually paid for the device. This could significantly reduce monthly bills for many households.
Mandates clear and upfront disclosure. , requiring providers to tell consumers the modem’s actual cost, the total number of payments, and where they can buy a modem themselves. This transparency empowers consumers to make informed decisions and potentially avoid unnecessary rental fees.
Prohibits ongoing or hidden fees. , including barring monthly charges after 12 months of leasing the same modem and forbidding additional maintenance fees. This prevents long-term, recurring costs that often add up over years.
Strengthens consumer protections with enforcement measures. , giving the state attorney general the authority to seek injunctions and penalties against violators, which increases the likelihood that companies will comply and that consumers have recourse if overcharged.
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Who cares
Headline styles
Cap Modem Rental Fees
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 55
No co-sponsors yet.
History
- Referred to consumer protection
- Referred to consumer protection
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
824
2017-2018 Regular Sessions
IN SENATE
January 5, 2017
Introduced by Sen. FUNKE -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to establishing a cap that limits the amount a consumer may be charged for leasing a modem from a cable or internet provider
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The general business law is amended by adding a new article 28-F to read as follows:
ARTICLE 28-F
LEASING OF MODEMS FROM CABLE OR INTERNET PROVIDERS Section 495-a. Purpose.
495-b. Definitions.
495-c. Prohibited acts.
495-d. Enforcement by the attorney general.
495-e. Civil penalty.
§ 495-a. Purpose. The purpose of this article is to limit the amount a cable or internet provider may charge consumers for the lease of a modem.
§ 495-b. Definitions. For the purposes of this article: 1. "Modem" means an electronic device that makes possible the transmission of data to or from a computer via telephone or other communication lines.
2. "Lease" means a contract or instrument conveying property to another for a specified period or for a period determinable at the will of either lessor or lessee in consideration of compensation.
3. "Internet or cable provider" means an organization that provides services for accessing, using, or participating on the internet or cable.
§ 495-c. Prohibited acts. 1. No cable or internet provider shall charge any consumer an amount which is more than sixteen percent over the actual cost of the modem device paid by the provider.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03772-01-7
S. 824 2
2. A cable or internet provider shall disclose in an initial billing correspondence: (a) the amount the modem costs the provider, (b) how many payments the consumer must make on the modem in total, and (c) information regarding how or where a consumer may purchase a modem at retail.
3. No cable or internet provider shall charge any consumer a monthly fee for the lease or use of a new modem beyond twelve months after the modem has been provided by such cable or internet provider. If an internet or cable provider replaces the customer's existing modem with a new modem during or after such twelve month period an additional twelve month period shall commence.
4. No cable or internet provider shall charge an additional or monthly fee for the maintenance of a provided modem.
§ 495-d. Enforcement by attorney general. Whenever there shall be a violation of this article, application may be made by the attorney general in the name of the people of the state of New York to a court or justice having jurisdiction by a special proceeding to issue an injunction, and upon notice to the defendant of not less than five days, to enjoin and restrain the continuance of such violations; and if it shall appear to the satisfaction of the court or justice that the defendant has, in fact, violated this article, an injunction may be issued by such court or justice, enjoining and restraining any further violation, without requiring proof that any person has, in fact, been injured or damaged thereby. In any such proceeding, the court may make allowances to the attorney general as provided in paragraph six of subdivision (a) of section eighty-three hundred three of the civil practice law and rules.
§ 495-e. Civil penalty. Whenever the court shall determine that a violation of this article has occurred, the court may impose a civil penalty of not more than five hundred dollars for each violation. In connection with any such proposed application, the attorney general is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the civil practice law and rules.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to establishing a cap that limits the amount a consumer may be charged for leasing a modem from a cable or internet provider
Purpose
The purpose of this bill is to limit the amount a cable or Internet provider may charger consumers for the lease of a modem.
Summary of provisions
Section 1 amends the general business law by adding a new article 28-F. Sections a95-a and 495-b determine the bill's purpose and definitions.
Read the full memo (728 words)
Section 495-c determines that cable or Internet providers shall not charge any consumer an amount which is more than sixteen percent over the actual cost of the modem device paid by the provider.
The cable or Internet provider must disclose in the initial billing correspondence (a) amount the modem costs the provider, (b) how many payments the consumers must make on the modem in total, and (c) information regarding how or where a consumer may purchase a modem at retail.
The cable or Internet provider shall not charge any consumer a monthly fee for the lease or use of a new modem beyond twelve months after the modem has been provided by the cable or Internet provider.
The cable or Internet provider shall not charge an additional or monthly fee for the maintenance of a provided modem.
Sections 495-d and 495-e determine the enforcement of the act, including civil penalties.
Section 495-f determines the private right of action.
Section 2 sets the effective date.
Justification
Internet Service Providers generate substantial sums of money through modem rentals. While some consumers opt to purchase their own modems, many choose to lease a modem through their cable or Internet providers, often citing convenience among other reasons
In late 2012, Time Warner Cable began charging its Internet service customers an "Internet modem lease fee" of $3.95 per month. Prior to this change, customers were not required to pay any sort of lease fee as Time Warner provided the modems at no charge. In a notice sent to all of its service customers, Time Warner claimed that the new lease fee would allow them to continually maintain and service their existing equipment and replace any damaged or under-performing modems. However, in fine print towards the end of the notice, the company was also giving their customers the option of avoiding the fee by purchasing their own modem from the approved list of modems at a third-party retailer and installing it themselves. While the lease fee offers the consumer free maintenance and the ability to replace a defective modem, others have claimed that this new fee is a way to recoup lost revenue as more consumers opt out of traditional cable television packages and rely more on the Internet.
More recently, Time Warner has raised its monthly modem lease fee from $5.99 to $8, while Comcast has raised their fee from $8 to $10. In turn, Time Warner Internet subscribers will spend approximately $96 per year, while Comcast subscribers will spend $120 per year in addition to installation charges and regular service fees.
The average cost of retail Internet modem is between $50 and $200. Based on these figures, it is most cost effective for a consumer to purchase their own modem rather than renting the equipment from their cable or Internet provider, even more so considering that once the lease is over, the consumer does not own the modem after annually paying over $100 in rental fees alone.
The proposed legislation would allow a cable or Internet provider to charge a consumer an amount that is no more than 16% over the actual cost of the modem device paid by the provider. The fees therein would have to be assessed within a twelve-month time period. Additionally, the bill requires that the cable or Internet provider disclose information regarding how or where a consumer may purchase a modem at retail in the initial billing correspondence.
As access to the Internet has become more of a necessity rather than a luxury, it is essential that consumers are aware of the most affordable and easily accessible options when choosing their cable and Internet service equipment.
Prior legislative history
S.5435/A.7491A of 2015-2016; referred to Consumer Protection
Fiscal implications
None to the State.
Effective date
This act shall take effect immediately.
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