NY State Senate Bill 2015-S5435

Senate Bill S5435

2015-2016 Legislative Session

Relates to establishing a cap that limits the amount a consumer may be charged for leasing a modem from a cable or internet provider

download bill text pdf

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to consumer protection
May 14, 2015	referred to consumer protection

2015-S5435 (ACTIVE) - Details

See Assembly Version of this Bill:: A7491
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add Art 28-F §§495-a - 495-e, Gen Bus L
Versions Introduced in 2017-2018 Legislative Session:: S824, A5218

2015-S5435 (ACTIVE) - Summary

Relates to establishing a cap that limits the amount a consumer may be charged for leasing a modem from a cable or internet provider.

2015-S5435 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S5435

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.

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: This is a new bill.

FISCAL IMPLICATIONS:  None to the State.

EFFECTIVE DATE: This act shall take effect immediately.

2015-S5435 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5435

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                              May 14, 2015
                               ___________

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  ASSEM-
BLY, 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.
  S 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.
  S 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 ANOTH-
ER 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.
  S  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.
                                                           LBD10328-03-5

S. 5435                             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 INTER-
NET  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.
  S  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 INJUNC-
TION, 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, WITH-
OUT  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.
  S  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.
  S 2. This act shall take effect immediately.

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