Cable Television Act of 1992

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MM Docket Nos. 92-266 and 93-215, FCC 94-234]

Cable Television Act of 1992

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission has adopted a Fifth Order on Reconsideration to

revise certain cable regulations affecting small cable operators. Small

operators now will be permitted a total of 90 days after their initial

date of regulation to complete and submit required rate justification

forms and provide to subscribers advance notification of service and

equipment changes. Furthermore, small operators may make their initial

basic tier rates, established in accordance with the Commission's

revised rate regulations, effective on 30-days notice without prior

approval from their local franchising authority. If, upon subsequent

examination of a rate justification, a local franchising authority or

the Commission finds that a small operator has implemented rates in

excess of the maximum permitted rate, refunds may be ordered in

accordance with the Commission's regulations. These actions will

provide small cable operators with the administrative flexibility

needed to comply properly with the Commission's rate regulations.

The Commission also has adopted a Further Notice of Proposed

Rulemaking, which may be found elsewhere in this Federal Register.

EFFECTIVE DATE: November 16, 1994.

FOR FURTHER INFORMATION CONTACT: Susan Cosentino, (202) 416-0800.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Fifth Order on

Reconsideration in MM Docket No. 92-266 and MM Docket No. 93-215, FCC

94-234, adopted September 12, 1994 and released September 26, 1994.

The complete text of this Fifth Order on Reconsideration is

available for inspection and copying during normal business hours in

the FCC Reference Center (room 239), 1919 M Street, NW., Washington,

DC, and also may be purchased from the Commission's copy contractor,

International Transcription Service at (202) 857-3800, 2100 M Street,

NW., Suite 140, Washington, DC 20037.

Synopsis of the Fifth Order on Reconsideration

Pursuant to the Cable Television Consumer Protection and

Competition Act of 1992 (``1992 Cable Act''), the Commission has

established a comprehensive regulatory framework governing rates for

regulated cable services and equipment. Under that framework, all

regulated cable systems generally must set rates based on a 17 percent

competitive rate reduction from September 30, 1992 levels unless the

system is (1) eligible for temporary transition relief, (2) is eligible

for temporary streamlined rate relief, or (3) justifies rates based on

a cost-of-service showing.

The 1992 Cable Act requires the Commission to reduce regulatory

burdens on small systems. Small systems are defined in the statute as

systems serving 1,000 or fewer subscribers. Pursuant to that mandate,

the Commission's regulatory framework governing regulated cable

services incorporates several features designed to reduce

administrative burdens on small systems. These small systems may elect

to make streamlined rate reductions, unbundle charges for regulated

equipment based on their average equipment costs, make use of a

streamlined cost-of-service showing, or opt for transitional rate

relief. Small cable operators also may elect transitional rate relief.

Small operators are defined as operators serving 15,000 or fewer

subscribers who are not affiliated with a larger operator.

Under the Commission's rules, cable operators must file a rate

justification or cost-of-service showing for regulated service and

equipment, within 30 days of the initial date of regulation. All cable

operators are required to have rates and service offerings that comply

with our rules on the initial date of regulation. Operators with

equipment or service charges that exceed permitted levels are subject

to refund liability. As indicated, the 1992 Cable Act requires the

Commission to reduce administrative burdens for small systems. We

believe this statutory purpose would be furthered by permitting small

operators a brief period of time to restructure and establish rates and

service offerings that comply with our rules after a tier becomes

regulated, rather than require them to be in compliance with rate rules

on the initial date of regulation.

We take these actions on reconsideration on our own motion.

Petitions for reconsideration in Dockets MM 92-266 and 93-215

addressing other aspects of our rate rules remain pending and will be

addressed in subsequent Orders. We take up these issues on our own

motion in order to establish additional relief for small systems as

required by the Cable Television Consumer Protection and Competition

Act of 1992, 47 U.S.C. Sec. 543.

In the Rate Freeze Order, the Commission stated that it would

consider lifting the freeze for a particular cable system if it could

demonstrate that the freeze would impose severe economic hardship or

threaten the viability of continued cable service. See Rate Freeze

Order, MM Docket No. 92-266, FCC 93-176, 8 FCC Rcd 2921, 58 Fed. Reg.

17530 (April 5, 1993). The Commission later denied Fidelity

Cablevision, Inc.'s request for a waiver of the rate freeze for, among

other things, failing to show that foreclosure proceedings had been, or

would have been, initiated as a result of the rate freeze. See Order in

the Matter of Fidelity Cablevision, Inc. Petition for Emergency Relief,

FCC 93-445, 9 FCC Rcd 2629 (1993). In a July 28, 1994 letter, Jere W.

Glover, Chief Counsel for Advocacy of the Small Business

Administration, wrote to Chairman Reed E. Hundt that ``[p]roviding

assistance at the time of bankruptcy or other type of loan foreclosure

is too little assistance too late.''

In the Report and Order and Further Notice of Proposed Rulemaking

in MM Docket No. 93-215, the Commission made available hardship rate

relief for an operator that concludes that the benchmark/cost-of-

service regulations threaten its financial health or ability to provide

cable service. See Report and Order and Further Notice of Proposed

Rulemaking, MM Docket No. 93-215, FCC 94-39, summarized at 59 Fed. Reg.

17975 (April 15, 1994). Such relief does not require a showing that

foreclosure or bankruptcy proceedings have been or would be imminently

initiated, and continued cable service need not be in jeopardy. An

important factor in assessing any hardship showing will be the

operator's ability to meet costs, including costs associated with

capital improvement and debt service. We recognize that there are

differences among cable operators based on system size, and that small

operators may experience greater difficulty in assembling documentation

to make a hardship showing. Therefore, we would expect that a small

operator could rely on existing data rather than expending resources on

obtaining an independent analysis of its financial situation.

Furthermore, the Commission recognizes that for those operators facing

financial challenges, time is of the essence. The Commission will work

as expeditiously as possible to resolve any request for hardship rate

relief filed.

This will reduce administrative burdens on small operators by

assuring that they will not need to undertake the steps associated with

establishing restructured rates and service offerings that comply with

our rules, including completion of FCC forms, until they are actually

regulated. Moreover, this additional time to comply will not harm cable

subscribers because, under transition relief, small operators are not

required in any event to make competitive rate reductions pending the

Commission's cost studies, but may set rates based on March 31, 1994

levels with some adjustments. Accordingly, we conclude that

establishing a period of time after regulation begins for small

operators to comply will further statutory purposes without injuring

consumers.

We believe that 90 days after the initial date of regulation is an

appropriate period of time for small operator to establish rates and

service offerings that comply with our rules. Accordingly, we will

revise our rules to provide that small operators are not required to

establish rates and service offerings that comply with our rules for 90

days after the initial date of regulation. In addition, in order to

assure that this will reduce administrative burdens, we are changing

our rules to provide that small operators do not need to file necessary

rate justification forms with the local franchising authority, or the

Commission, until 60 days after the initial date of regulation.

However, we are not altering our rules concerning provision of advance

notice to subscribers. Pursuant to those rules, all operators,

including small operators, must give 30-days notice to subscribers

prior to implementing rate and service changes.

Additionally, small systems and small operators may make their

initial basic tier rates, established in accordance with the

Commission's revised rate regulations, effective on 30-days notice

without prior approval from their local franchising authority. If, upon

subsequent examination of a rate justification, a local franchising

authority or the Commission finds that a small operator or small system

has implemented rates in excess of the maximum permitted rate, refunds

may be ordered in accordance with our regulations.

Administrative Matters

Regulatory Flexibility Act Analysis

Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.

Secs. 601-12, the Commission's final analysis with respect to the Fifth

Order on Reconsideration is as follows:

Need and purpose of this action. The Commission, in compliance with

section 3(i) of the Cable Television Consumer Protection and

Competition Act of 1992 pertaining to rate regulation, adopts rules and

procedures intended to ensure cable subscribers of reasonable rates for

cable services with minimum regulatory and administrative burden on

cable entities.

Sumary of issues raised by the public comments in response to the

Initial Regulatory Flexibility Analysis. There were no comments

submitted in response to the Initial Regulatory Flexibility Analysis.

The Chief Counsel for Advocacy of the United States Small Business

Administration filed comments in the original rulemaking order

(``SBA''). The Commission addressed the concerns raised by the SBA in

the First Report and Order, MM Docket No. 92-266, FCC 93-177. The SBA

filed reply comments in MM Docket No. 93-215 and the Small Cable

Business Association filed reply comments in MM Docket No. 92-266.

Those comments will be reviewed as part of the instant Further Notice

of Proposed Rulemaking.

Significant alternatives considered and rejected. Petitioners

representing cable interests and franchising authorities submitted

several alternatives aimed at minimizing administrative burdens. The

Commission responded to these comments in previous Orders in these

dockets. Although the Commission is issuing this Fifth Order on

Reconsideration on its own motion, the Commission has attempted to

accommodate commenters' concerns and to reduce administrative burdens

by providing an additional period of time for small cable operators to

comply with the rate regulations.

Paperwork Reduction Act

The requirements adopted herein have been analyzed with respect to

the Paperwork Reduction Act of 1980 and found to impose no new or

modified information collection requirements on the public.

Ordering Clauses

Accordingly, it is ordered That, pursuant to sections 4(i), 4(j),

303(r), 612, and 623 of the Communications Act of 1934, as amended, 47

U.S.C. Secs. 154(i), 154(j), 303(r), 532, and 543 the rules,

requirements and policies discussed in this Fifth Order on

Reconsideration is adopted and Section 76.934 of the Commission's

rules, 47 CFR Section 76.934, is amended as set forth below.

It is further ordered That, the Secretary shall sent a copy of this

Fifth Order on Reconsideration including the Initial Regulatory

Flexibility Analysis, to the Chief Counsel for Advocacy of the Small

Business Administration in accordance with paragraph 603(a) of the

Regulatory Flexibility Act. Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C.

Secs. 601 et seq. (1981).

It is further ordered, That, the requirements and regulations

established in this decision shall become effective November 16, 1994.

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 76 of Chapter I of Title 47 of the Code of Federal Regulations

is amended as follows:

PART 76--CABLE TELEVISION SERVICE

1. The authority citation for Part 76 continues to read as follows:

Authority: Secs. 2, 3, 4, 301, 303, 307, 308, 309, 48 Stat., as

amended, 1064, 1065, 1066, 1081, 1082, 1083, 1084, 1085, 1101; 47

U.S.C. Secs. 152, 153, 154, 301, 303, 307, 308, 309, 532, 533, 535,

542, 543, 552, as amended, 106 Stat. 1460.

2. Section 76.934 is amended by revising the section heading and

adding paragraph (e) to read as follows:

Sec. 76.934 Small Systems and Small Operators.

* * * * *

(e) Systems owned by Small Operators. Systems owned by small

operators as defined in Section 76.922(b)(4)(A) shall have 90 days from

their initial date of regulation of a tier to bring their rates for

that tier into compliance with the requirements of Sections 76.922 and

76.923. Such systems shall have sixty days from the initial date of

regulation to file FCC Forms 1200, 1205, 1210, 1211, 1215, 1220 and/

1225 and any similar forms as appropriate. Rates established during the

90-days period shall not be subject to prior approval by franchising

authorities or the Commission, but shall be subject to refund pursuant

to sections 76.942 and 76.961.

[FR Doc. 94-25023 Filed 10-12-94; 8:45 am]

BILLING CODE 6712-01-M