Telecommunications Act of 1996

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 96-57; FCC 96-117]

Telecommunications Act of 1996

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission is issuing this Notice of Proposed Rulemaking

(``NPRM'') in order to solicit comment on the proper implementation of

Section 623(a)(7)(A) of the Communications Act. This NPRM is necessary

to fulfill the statutory requirement in Section 301(j) of the

Telecommunications Act of 1996 that the Commission allow cable

operators to aggregate, on a franchise, system, regional, or company

level, their equipment costs into broad categories regardless of the

varying levels of functionality of the equipment within each such broad

category. This proceeding will permit the Commission to issue final

rules.

DATES: Comments are due April 12, 1996. Reply comments are due April

22, 1996.

FOR FURTHER INFORMATION CONTACT: Ibn Spicer, Cable Services Bureau,

Financial Analysis Division (202) 418-2296.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Notice of Proposed

Rulemaking in CS Docket No. 96-57, FCC 96-117, adopted March 18, 1996

and released March 20, 1996. The complete text of this Notice of

Proposed Rulemaking is available for inspection and copying during

normal business hours in the FCC Reference Center (room 239), 1919 M

Street N.W., Washington, DC, and also may be purchased from the

Commission's copy contractor, International Transcription Services,

Inc. (``ITS Inc.'') at (202) 857-3800, 2100 M Street N.W., Suite 140,

Washington, DC 20017.

Synopsis of Notice of Proposed Rulemaking

1. In this Notice of Proposed Rulemaking (``NPRM''), we propose to

amend our rules to implement Section 301(j) of the Telecommunications

Act of 1996 (``1996 Act'') which adds a new Section 623(a)(7) to the

Communication Act of 1934, as amended (``Communications Act''). Section

301(j) of the 1996 Act requires that the Commission allow cable

operators to aggregate, on a franchise, system, regional, or company

level, their equipment costs into broad categories regardless of the

varying levels of functionality of the equipment within each such broad

category. That section also provides that ``[s]uch aggregation shall

not be permitted with respect to equipment used by subscribers who

receive only a rate regulated basic tier.''

Discussion

A. Cost Categorization

2. Section 301(j) of the 1996 Act requires the Commission to allow

regulated operators to aggregate ``their [customer] equipment costs

into broad categories, such as converter boxes, regardless of the

varying levels of functionality of the equipment within each such broad

category.'' We tentatively conclude that the statute intends that

equipment be classified and placed in categories based on the primary

purpose of the equipment.

3. We propose to amend the Equipment Basket provisions in Section

76.923(c) to allow categorization of customer equipment costs into

broad categories. We further propose eliminating the language in

Sections 76.923(f) and (g) that requires separate charges for each

significantly different type of remote control device, converter box,

and other customer equipment. We propose amending the rules to require

that equipment be categorized based on its primary purpose. Thus,

customer equipment, except equipment used by basic-only subscribers,

that is used for the same purpose may be aggregated into the same broad

category and priced at the same rate, regardless of the level of

functionality. We seek comment on whether the Commission should

establish a definition of the term ``level of functionality'' in order

to bring more certainty to these new rules. If commenters believe we

should do so, they should propose a definition of that term. Because

equipment rates to subscribers must be based on actual costs, operators

must base equipment charges on the same aggregation level as their

costs. We propose amending our rules to make this explicit. Section

76.923(l) currently permits small systems to average costs for

``similar types of equipment'' on a company-wide basis. We propose

eliminating this section since all systems shall be permitted to

aggregate equipment

[[Page 13804]]

pursuant to the new provisions in the 1996 Act.

4. Section 76.923(h) currently contains language that effectively

requires separate charges for connections, which includes inside wire,

additional outlets and signal boosters, if needed, used to provide

cable service to additional television receivers. That language was

included to implement Section 623(b)(3) of the Communications Act of

1934, as amended, which specifically required rates for installation

and monthly use of connections for additional television receivers be

separate from rates for the initial receiver. Therefore, we tentatively

conclude that additional connections may not be aggregated with initial

connections into a broad category.

B. Organizational Levels

5. In light of new section 623(a)(7), we propose that Section

76.923(c) of our rules be amended to specifically permit customer

equipment cost aggregation at the franchise, system, regional, or

company level. Because equipment rates to subscribers must be based on

actual costs, operators must base equipment charges on the same

aggregation level as their costs. We propose amending our rules to make

this explicit. Furthermore, to the extent that our current rules permit

cost aggregation of equipment only in a manner consistent with an

operator's practices on April 3, 1993, we propose eliminating this date

restriction. We tentatively conclude that such a restriction would

improperly prevent an operator from aggregating costs at higher

organizational levels, as specifically permitted in the statute.

6. We tentatively conclude that Congress did not intend that cost

aggregation be permitted to the same extent for installation charges.

We reach this tentative conclusion because Section 301(j) of the 1996

Act refers only to equipment and not to installations, whereas the 1992

Cable Act separately mentions installations. Consistent with our small

system rules, we believe that customer equipment charges are less

likely to vary significantly between systems, whereas installation

charges are more dependent on local labor and other costs that can vary

between communities. We recognize, however, that this requirement could

impose additional burdens on cable operators, since customer equipment

rates could be set at higher organizational levels than installation

rates. We therefore propose that operators be permitted to aggregate

installation costs based on specific service areas designated for the

aggregation of those costs. Under this approach, a rate could be

established for installation for a specific service area that is chosen

by the operator because the costs of providing installation are

substantially similar throughout all franchises in that chosen service

area. We seek comment on this approach. We also seek comment on whether

there are alternative levels at which installation costs could be

identified that would ease burdens on operators, yet still comport with

Congressional intent.

C. Basic-Only Subscriber Equipment

7. The 1996 Act prohibits ``[s]uch aggregation * * * with respect

to equipment used by subscribers who receive only a rate regulated

basic service tier.'' We tentatively conclude that Congress was

concerned that basic-only subscribers not subsidize the costs of more

sophisticated equipment used by subscribers taking services in addition

to basic. Therefore, we tentatively conclude that equipment used by

basic-only subscribers may not be aggregated into broad categories. We

propose amending Section 76.923(c) to provide that the cost of

equipment used by basic service-only customers may not be averaged with

other customer equipment. However, the statute is not clear as to

whether a cable operator may aggregate the costs of equipment used by

basic-only customers at higher organizational levels and developing

system, regional, or company average prices for such equipment.

Although we recognize this ambiguity, we believe that allowing cable

companies to aggregate the costs of equipment used by basic service-

only customers at a higher organizational level and develop a rate

based upon such aggregation does not contravene Congress' concern that

basic-only subscribers not subsidize the costs of more sophisticated

equipment used by subscribers taking other services in addition to

basic. Any aggregation of the costs of basic service-only equipment at

a higher organizational level will still only include equipment for

that level of service. We seek comment on this issue.

D. Equipment Rates Jurisdiction and Review

8. Affected local franchising authorities will continue to review

the equipment rates and supporting aggregated cost data as part of the

review of the cable operators' rate justifications for basic rates. We

recognize that the review of aggregated cost data regarding equipment

by each of the affected local franchising authorities could lead to

varying analyses and potentially inconsistent orders regarding that

data. We seek comment on whether there is an alternative that could be

more administratively efficient for local franchising authorities and

cable operators alike.

E. FCC Form 1205

9. Because of our above tentative conclusions and proposed rules

changes, we believe that FCC Form 1205 will need to be modified. We are

proposing revisions to Form 1205 and seek comment on these revisions.

The pages of Form 1205 containing revisions are set forth below.

Procedural Provisions

A. Ex Parte Presentations

10. This is a non-restricted notice-and-comment rulemaking

proceeding. Ex parte presentations are permitted, except during the

Sunshine Agenda period, provided that they are disclosed as provided in

the Commission's rules. See generally 47 CFR Sections 1.1202, 1.1203,

1.1206(a).

B. Initial Regulatory Flexibility Analysis

11. Pursuant to Section 603 of the Regulatory Flexibility Act, the

Commission has prepared the following initial regulatory flexibility

analysis (``IRFA'') of the expected impact of these proposed policies

and rules on small entities. Written public comments are requested on

the IRFA. These comments must be filed in accordance with the same

filing deadlines as comments on the rest of the NPRM, but they must

have a separate and distinct heading designating them as responses to

the IRFA. Our initial regulatory flexibility analysis under the

Regulatory Flexibility Act indicates that if the proposed rule changes

are promulgated, there will not be a significant economic impact on a

substantial number of small business entities, as defined by Section

601(3) of the Regulatory Flexibility Act and that any impact will be to

give operators new, less burdensome options to comply with our rules.

We are committed to reducing the regulatory burdens on small cable

operators whenever possible, consistent with our other public interest

responsibilities. The Secretary shall send a copy of this NPRM of

Proposed Rulemaking to the Chief Counsel for Advocacy of the Small

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

Regulatory Flexibility Act, 5 U.S.C. Sections 601 et seq. (1981).

12. The Commission issues this NPRM to consider the changes needed

to permit cable operators to aggregate equipment costs into broad

categories

[[Page 13805]]

and at the organizational level of their choice, as required by Section

301(j)) of the 1996 Act.

13. Objectives. To solicit comments on the rule changes needed to

implement Section 301(j) of the 1996 Act.

14. Legal Basis. Action as proposed for this rulemaking is

contained in Section 301(j) of the 1996 Act.

15. Description, Potential Impact and Number of Small Entities

Affected. The proposals, if adopted, will not have a significant effect

on a substantial number of small entities. The proposed rules changes

would provide all regulated entities with new options, but would not

require them to change the methodology by which they currently justify

equipment rates. Thus, any economic impact of the rule changes will be

positive.

16. Reporting, Recordkeeping and Other Compliance Requirements.

None.

17. Federal Rules which Overlap, Duplicate or Conflict with these

Rules. None.

18. Any Significant Alternatives Minimizing Impact on Small

Entities and Consistent with Stated Objectives. None.

C. Comment Filing Procedures

19. Pursuant to applicable procedures set forth in Sections 1.415

and 1.419 of the Commission's rules, 47 CFR Sections 1.415, 1.419,

interested parties may file comments on April 12, 1996, and reply

comments on April 22, 1996. To file formally in this proceeding,

interested parties must file an original and four copies of all

comments, reply comments, and supporting comments. We find these

periods for the filing of comments and reply comments to be reasonable

in light of the 1996 Act's mandate that the Commission issue revisions

to the appropriate rules and forms concerning the aggregation of

equipment costs within 120 days of enactment. See Florida Power & Light

Co. v. United States, 846 F.2d 765 (D.C. Cir. 1988) cert. denied, 490

U.S. 1045 (1989). Any party that wishes each Commissioner to receive a

personal copy of its comments, must file an original and nine copies.

Comments and reply comments should be limited to 25 pages, with

reasonable margins and font size of at least 12 points, and sent to

Office of the Secretary, Federal Communications Commission, 1919 M

Street, N.W., Room 222, Washington, D.C. 20554, with a copy to Lenworth

Smith, Jr. of the Cable Services Bureau, 2033 M Street, N.W., Room

805E, Washington, D.C. 20554. Comments and reply comments will be

available for public inspection during regular business hours in the

FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C.

20554.

D. Paperwork Reduction Act

20. Initial Paperwork Reduction Act of 1995 Analysis. This NPRM

proposes a modified information collection for FCC Form 1205. As part

of its continuing effort to reduce paperwork burdens, we invite the

general public and the OMB to take this opportunity to comment on the

information collections contained in this NPRM, as required by the

Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency

comments are due at the same time as other comments on this NPRM; OMB

comments are due 60 days from date of publication of this NPRM in the

Federal Register. Comments should address: (a) whether the proposed

collection of information is necessary for the proper performance of

the functions of the Commission, including whether the information

shall have practical utility; (b) the accuracy of the Commission's

burden estimates; (c) ways to enhance the quality, utility, and clarity

of the information collected; and (d) ways to minimize the burden of

the collection of information on the respondents, including the use of

automated collection techniques or other forms of information

technology.

21. Written comments by the public on the proposed and/or modified

information collections are due on or before 15 days after publication

in the Federal Register, and reply comments on or before 10 days after

the comment due date. Written comments must be submitted by the Office

of Management and Budget (``OMB'') on the proposed and/or modified

information collections on or before 60 days after date of publication

in the Federal Register. In addition to filing comments with the

Secretary, a copy of any comments on the information collections

contained herein should be submitted to Dorothy Conway, Federal

Communications Commission, Room 234, 1919 M Street, N.W., Washington,

DC 20554, or via the Internet to [email protected] and to Timothy Fain,

OMB Desk Officer, 10236, NEOB, 725 - 17th Street, N.W., Washington, DC

20503 or via the Internet to [email protected].

OMB Approval Number: 3060-0603.

Title: Rates for equipment and installation used to receive the

basic service tier

Type of Review: Revision of existing collection

Respondents: Businesses or other for profit; state, local or tribal

government

Number of Respondents: 2,000.

Estimated Time Per Response: The commission estimates an average

burden of 4 hours for cable operators to maintain in-house accounting

records pertaining to 76.923. The Commission estimates a burden of 1

hour for cable operators contracting out for accounting services.

Total Annual Burden: We estimate 75% of respondents maintain

records in-house and 25% contract out. 1,500 (75% in-house) x 4 hours

= 6,000. 500 (25% contracted out) x 1 hour = 500. 6,000 + 500 = 6,500

hours.

Estimated costs per respondent: We estimate that operators

contracting out accounting assistance will pay $100 per hour for the

maintenance of their accounting systems. 500 (25% contracted out)

accounting systems x 4 hours @ $100 per hour = $200,000.

Needs and Uses: The information is used by cable operators in their

accounting systems to justify rates for equipment and installations.

OMB Approval Number: 3060-0592.

Title: FCC Form 1205 Determining Costs of Regulated Cable Equipment

and Installation.

Form No.: FCC Form 1205.

Type of Review: Revision of existing collection

Respondents: Business and other for profit; state, local and tribal

government

Number of Respondents: 8,800.

Estimated Time Per Response: The Commission estimates an average

burden of 12 hours for operators to complete the FCC Form 1205 in-

house. For operators contracting out accounting and legal assistance

for completing the FCC Form 1205, we estimate an average burden of 1

hour.

Total Annual Burden: We estimate 75% of operators complete the FCC

Form 1205 in-house and 25% contract out for assistance. 6,600 (75% in-

house) x 12 hours = 79,200. 2,200 (25% contracted out) x 1 hour =

2,200 hours. 79,200 + 2,200 = 81,400 hours. The average burden to local

franchising authorities to review FCC Form 1205s is estimated to be 8

hours per filing. We estimate local franchising authorities review

approximately 8,000 FCC Form 1205 filings annually. 8,000 x 8 hours =

64,000. 81,400 + 64,000 = 145,400 hours.

Estimated costs per respondent: We estimate postage and

photocopying costs of $2 per filing. 8,800 x $2 = $17,600. We

estimate that operators contracting out accounting assistance will pay

$100 per hour to complete FCC Form 1205. 2,200 (25% contracted out) x

12 hours @ $100 per hour = $2,640,000. $17,600 + $2,640,000 =

$2,657,600.

[[Page 13806]]

Needs and Uses: Information derived from FCC Form 1205 filings

facilitates the review of equipment and installation rates when

reviewed by applicable local franchising authorities.

Ordering Clauses

22. Accordingly, it is Ordered that, pursuant to Sections 4(i),

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

U.S.C. Sections 154(i), 154(j), 303(r), and 543, Notice is Hereby Given

of proposed amendments to Part 76, in accordance with the proposals,

discussions, and statement of issues in the Notice of Proposed

Rulemaking, and that Comment is Sought regarding such proposals,

discussion, and statement of issues.

23. It is Further Ordered that, the Secretary shall send a copy of

this Notice of Proposed Rulemaking, including the regulatory

flexibility certification, to the Chief Counsel for Advocacy of the

Small Business Administration, in accordance with paragraph 603(a) of

the Regulatory Flexibility Act, 5 U.S.C. Sections 601 et seq. (1981).

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Proposed Amendatory Text

Part 76 of Title 47 of the Code of Federal Regulations is proposed

to be amended as follows:

PART 76--[AMENDED]

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, 535, 542,

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

2. Section 76.923 is amended by revising paragraphs (c), (f), and

(g), removing paragraph (l) and redesignating paragraphs (m) through

(o) as as paragraphs (l) through (n)and revising redesignated paragraph

(l) to read as follows:

Sec. 76.923 Rates for equipment and installation used to receive the

basic service tier.

* * * * *

(c) Equipment basket. A cable operator shall establish an Equipment

Basket, which shall include all costs associated with providing

customer equipment and installation under this section. Equipment

Basket costs shall be limited to the direct and indirect material and

labor costs of providing, leasing, installing, repairing, and servicing

customer equipment, as determined in accordance with the cost

accounting and cost allocation requirements of Sec. 76.924, except that

operators do not have to aggregate costs in a manner consistent with

the accounting practices of the operator on April 3, 1993. The

Equipment Basket shall not include general administrative overhead

including marketing expenses. The Equipment Basket shall include a

reasonable profit.

(1) Customer Equipment. Costs of customer equipment included in the

Equipment Basket may be aggregated, on a franchise, system, regional,

or company level, into broad categories. Except to the extent indicated

in paragraph (c)(2) of this section, such categorization may be made,

provided that each category includes only equipment having the same

primary purpose, regardless of the levels of functionality of the

equipment within each such broad category. When submitting its

equipment costs based on average charges, the cable operator must

provide a general description of the averaging methodology employed and

a justification that its averaging methodology produces reasonable

equipment rates.

(2) Basic Service Tier Only Equipment. Costs of customer equipment

included in the Equipment Basket, which is used by subscribers who

receive only a rate regulated basic service tier, shall not be

aggregated into broad cost categories. Costs of each significantly

different type of equipment must be classified into specific equipment

cost categories. The costs shall not be averaged with the costs of

equipment that is used by subscribers who receive only a rate regulated

basic service tier.

(3) Installation Costs. Installation costs may be aggregated only

for a specific service area, to the extent that the costs of providing

installation are substantially similar throughout all franchises in

that service area.

* * * * *

(f) Remote charges. Monthly charges for rental of a remote control

unit shall consist of the average annual unit purchase cost of remotes

leased, including acquisition price and incidental costs such as sales

tax, financing and storage up to the time it is provided to the

customer, added to the product of the HSC times the average number of

hours annually repairing or servicing a remote, divided by 12 to

determine the monthly lease rate for a remote according to the

following formula:

[GRAPHIC] [TIFF OMITTED] TP28MR96.005

Where, HR = average hours repair per year; and UCE = average annual

unit cost of remote.

(g) Other equipment charges. The monthly charge for rental of

converter boxes and other customer equipment shall be calculated in the

same manner as for remote control units. Separate charges may be

established for each category of other customer equipment.

* * * * *

(l) Cable operators shall set charges for equipment and

installations to recover Equipment Basket costs. Such charges shall be

set, consistent with the level at which Equipment Basket costs are

aggregated as provided in Sec. 76.923(c). Cable operators shall

maintain adequate documentation to demonstrate that charges for the

sale and lease of equipment and for installations have been developed

in accordance with the rules set forth in this section.

* * * * *

Attachment--Changes to the Instructions for FCC Form 1205

Note: This attachment will not appear in the Code of Federal

Regulations.

FCC Form 1205--Instructions for Determining Costs of Regulated Cable

Equipment and Installation

``Equipment Form''

Schedule B: Annual Operating Expenses for Service

Installation and Maintenance of Equipment. This schedule collects

total annual operating expenses for installation and maintenance of

cable facilities. The costs collected here include salaries,

benefits, and supplies.

Schedule C: Capital Costs of Leased Customer Equipment.

This schedule computes the annual capital costs for each type or

category of customer premises equipment that you offer in connection

with regulated service. The method of computing capital costs is the

same as that used in Schedule A.

Schedule D: Average Hours Per Installation. This

schedule is used only if you choose to charge average rates for

different types of installation services, as opposed to an hourly

service charge. This schedule collects the average hours required to

complete various types of installations.

Worksheet for Calculating Permitted Equipment and

Installation Charges. You must complete this worksheet only if you

are calculating the costs of specific equipment and installations to

derive the maximum rates you may charge for regulated equipment and

installations.

Worksheet for Calculating Total Equipment and

Installation Costs. Utilizing

[[Page 13807]]

the data collected and computed in Schedules A through D, this

worksheet calculates a monthly per subscriber cost of regulated

equipment and installations that is used to separate these costs

from cable services rates. You must complete this worksheet only if

you are filing this form in conjunction with a FCC Form 1200, Form

1220, or Form 1225 to establish maximum permitted rates for

regulated cable services.

Summary Schedule: Current Equipment and Installation

Rates. This Schedule collects information determined on the

Worksheet for Calculating Permitted Equipment and Installation

Charges and presents it in summary form together with your actual

equipment and installation charges.

General Instructions

You should complete this Form using financial data from the

company's general ledger and subsidiary records maintained in

accordance with generally accepted accounting principles. The

Commission's cost accounting rules require that cable operators

maintain their accounts in accordance with these requirements and in

a manner that will enable identification of appropriate costs and

application of the Commission's cost assignments and allocation

procedures (see 47 CFR Sec. 76.924). The data submitted in this Form

1205 should be from the operator's fiscal year indicated on the

cover sheet. However, when there has been an unusual change in

operations, data from a representative month may be used for the

calculation of rates, subject to acceptance by the franchising

authority or, when applicable, by the FCC. You must attach

justification for this approach.

To the extent you have not previously maintained accounts in a

manner consistent with our rules, and do not have fully developed

cost data, you must indicate on this Form that you are using

estimates, where necessary, in calculating equipment and

installation costs and rates, and provide justification that the

estimates are reasonable.

The data for installations (includable in Schedules A and C) may

be identified only for a specific service area, to the extent that

the costs of providing installations are substantially similar

throughout all franchises in that service area. The data for

customer equipment (includable in Schedule C) may be identified on a

franchise, system, regional, or company level. For purposes of

calculating cable service rates on an FCC Form 1200, 1220, or 1225,

the cost data developed on this Form 1205 must be adjusted to the

franchise area level (see Worksheet for Calculating Permitted

Equipment and Installation Charges or Worksheet for Calculating

Total Equipment and Installation Costs below for instructions).

Cable operators completing this Form in conjunction with FCC

Form 1200 should be aware that the figure entered on line 14 of the

Worksheet for Calculating Total Equipment and Installation Costs

will be entered on either line D2 or line E2, and on line I2 of FCC

Form 1200.

Precision of Calculation; Rounding

If you are performing the calculations required by this form by

hand, you must display at least four decimal places. If you are

using a calculator or computer, you must carry out the calculation

to the full precision afforded by your calculator or computer and

display at least four decimal places. If you are using the

spreadsheet version of this form, the spreadsheet will round

calculations for you; you do not need to display additional decimal

places.

The only place you should round the figures is in the Summary

Schedule. These figures should be rounded to the nearest cent.

About the Spreadsheet

The FCC has developed an electronic spreadsheet to assist you in

making the necessary calculations on the Form 1205. We strongly

recommend that you make use of this spreadsheet.

If you use the spreadsheet, the values for the shaded boxes on

the Form 1205 will be calculated automatically and filled in for

you. Instructions for the corresponding line numbers are italicized.

You may submit a completed version of an official Form 1205, an

exact photocopy of that form, or a copy generated by Commission

software, provided that it has the appearance of an actual Form

1205.

If You Need Help

If you have any questions while completing this Form, please

call the FCC's Cable Services Bureau between 9:30 a.m. and 5:30 p.m.

Eastern Standard Time on Monday through Friday at (202) 418-2381.

FCC Notice to Individuals Required by the Privacy Act and the Paperwork

Reduction Act

The solicitation of personal information in this form is

authorized by the Communications Act of 1934, as amended. The

Commission and/or the local franchising authority will use the

information provided in this form to determine the reasonableness of

a cable company's rates. In reaching that determination, or for law

enforcement purposes, it may become necessary to provide personal

information contained in this form to another government agency. If

information requested on this form is not provided, processing may

be delayed. All information provided in this form will be available

for public inspection. Your response is required to apply the

Commission's cable rate standards and to provide a response to

consumer complaints. Respondents are not required to respond to this

collection of information unless it displays a currently valid

Office of Management and Budget control number.

Public reporting burden for this information is estimated to

average 20 hours per response, including the time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information. Send comments regarding this burden

estimate or any other aspect of this collection of information,

including suggestions for reducing the burden, to the Federal

Communications Commission, Records Management Division, Washington,

D.C. 20554. Do not send completed forms to this address.

The foregoing notice is required by the Privacy Act of 1974,

Pubic Law 93-579, December 31, 1975, 5 U.S.C. 522a(e)(3) and the

Paperwork Reduction Act of 1995, 104-13, May 22, 1995, 47 U.S.C.

3507.

Instructions for Schedule C--Capital Costs of Leased Customer Equipment

Schedule C computes the annual capital costs of equipment leased

to customers. Follow the instructions below for each type or

category of leased equipment.

Note: Subscriber drops up to the Commission-defined cable

network demarcation point at the customer's premises are considered

network equipment and may not be included as customer equipment on

Schedule C.

Line A--Equipment. List all customer equipment for which you

wish there to be a separate charge. You may calculate separate

charges for specific types of equipment including different models

of remote control units, different types of converter boxes, and

other equipment (e.g., splitters and amplifiers). However, at your

option, customer equipment may instead be listed in broad

categories, provided that each category includes only equipment

having the same primary purpose, regardless of the levels of

functionality of the equipment within each broad category. Except,

customer equipment which is used by subscribers who receive only a

rate regulated basic service tier, shall not be aggregated into

broad cost categories. Costs of each significantly different type of

equipment must be classified into specific equipment cost

categories.

The costs shall not be averaged with the costs of equipment that

is used by subscribers who receive only a rate regulated basic

service tier. In addition, with respect to the lease of cable

connections, the cost of additional connections may not be

aggregated with the cost of initial connections.

On an attached sheet, list separately each type or category of

other equipment for which you plan to develop a separate charge and

provide the necessary information as required on lines A through K

of Schedule C to compute the charge. A separate charge must be

developed for each type or category of other customer equipment.

Enter in the ``Other Equipment'' column of Schedule C the total

figures for the equipment included on your attachment.

Line B--Total Maintenance/Service Hours. Enter the total

maintenance and/or service hours. Attach a Schedule explaining how

you calculated these figures.

Line C--Total Number of Units in Service. Enter the total number

of units in service for leased remotes and converter boxes. For

other leased equipment, list the total number of units in service or

the total number of subscribers using this equipment, whichever is

appropriate. Use either the number of units or subscribers for the

last day of the fiscal year covered by this Form 1205.

Line D--Gross Book Value. Enter the gross book value of the

listed equipment as of the date you closed books for the time period

covered by the filing of this Form. The gross book value includes

the cost of a reasonable number of spare customer equipment units

that the operator keeps on-hand as replacements for broken

equipment.

Schedule D asks for information about four categories of

installations: (a) installations of

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unwired homes; (b) installations of already wired homes; (c)

installations of additional connections at the time of initial

installation; and (d) installations of additional connections after

initial installation. These data are needed in the first worksheet

below to calculate the four separate average charges that the

Commission requires for an operator choosing to exercise the average

charge option. Spaces also are included for other specific types of

installations (such as those requiring extra long drops to the

home). Attach additional sheets as needed.

Worksheet for Calculating Permitted Equipment and Installation Charges

Step A: Hourly Service Charge (HSC).

The Hourly Service Charge (HSC) is designed to recover the costs

of service installation and maintenance of customer equipment. The

HSC will be used as a factor in developing permitted charges for

installation and monthly lease of individual pieces of equipment. To

calculate the HSC, you will compute your annual capital costs plus

expenses for the maintenance of customer equipment and the

installation of basic tier service. You will divide the total costs

and expenses by the total number of person-hours spent on those

activities over the past year.

The HSC includes the annual capital costs for installing,

maintaining, and repairing customer equipment for the specific

service area to which this filing applies; the capital cost of the

customer equipment itself, however, is not recovered through the

HSC. That cost is recovered through the lease of that type of

equipment (see Steps C through E of the Worksheet for Calculating

Permitted Equipment and Installation Charges).

Note 1: If an expense amount is included on Schedule B for

equipment sent out for repair, an appropriate adjustment to the

total labor hours reported on this Form must be made. This

adjustment adds ``equivalent labor hours'' to the total company

labor hours. This may be calculated, for example, as total costs

included on Schedule B for work sent out for repair divided by the

average company technician wage rate. The total cost may be

recovered by including the average hours in the computation for the

appropriate equipment charges computed in Steps C through E. In any

case that an amount is included on Schedule B for work sent out for

repair, explain all the adjustments made on the Worksheet. This

explanation must include the number of hours added on line 6 below

as well as a description of and the number of hours added into the

charges developed in Steps C through E.

Note 2: With respect to the calculation for labor costs

associated with installation of the drop up to the Commission-

defined cable network demarcation point at the customer's premises,

you have two options. The first option is to include the labor costs

associated with subscriber drops in the charges for installations.

The second option is to capitalize such costs in distribution plant

as part of the cost of drops. (In this case, the labor cost for

drops is recovered in the charges for cable services only--not in

installation or customer equipment charges.) If the second option is

chosen, the costs and the associated hours must be eliminated from

the charges for all customer equipment and installation charges.

Line 9d1--HSC. Enter the HSC from line 7.

Line 9d2--Average Hours Per Additional Connection Installation

Requiring Separate Installation. Enter the figure from line D of

Schedule D.

Line 9d3--Charge per Additional Connection Installation

Requiring Separate Installation. Multiply line 9d1 by line 9d2.

Line 9e--Other Installations (As specified in Schedule D, Line

E).

If there are more than three other types of installations,

attach a separate sheet showing how the charges for these other

installations are calculated.

Line 9e1--HSC. Enter the HSC from line 7.

Line 9e2--Average Hours Per Installation of Item 1. Enter the

figure on Schedule D, line E, Item 1.

Line 9e3--Charge per Installation of Item 1. Multiply line 9e1

by line 9e2.

Line 9e4--HSC. Enter the HSC from line 7.

Line 9e5--Average Hours Per Installation of Item 2. Enter the

figure on Schedule D, line E, Item 2.

Line 9e6--Charge per Installation of Item 2. Multiply line 9e4

by line 9e5.

Line 9e7--HSC. Enter the HSC from line 7.

Line 9e8--Average Hours Per Installation of Item 3. Enter the

figure on Schedule D, line E, Item 3.

Line 9e9--Charge per Installation of Item 3. Multiply line 9e7

by line 9e8.

Step C. Charges for Leased Remotes.

The rental charge for remote control units is designed to

recover the costs of providing and maintaining each type or category

of remote control unit leased by subscribers and includes a

reasonable profit. The charge determined in this step will not

reflect the costs of installation. You must repeat the following

substep calculations for each significantly different type or

category of remote listed in Schedule C. Describe each type or

category of remote in detail sufficient to identify differences

among types and/or categories. Attach extra sheets as needed.

Line 10--Total Maintenance/Service Hours. Enter the total

maintenance and/or service hours for each type or category of remote

from the corresponding column on Schedule C, line B.

Line 11--HSC. Enter the HSC from line 7.

Line 12--Total Maintenance and Service Cost. Multiply line 10 by

the HSC listed on line 11. The result is the total annual cost for

repairing and servicing each type or category of remote.

Line 13--Annual Capital Costs. Enter the annual capital costs

for each type or category of remote from the corresponding column of

line K on Schedule C.

Line 14--Total Cost of Remote. Add line 12 to line 13. The sum

is the total annual cost for each type or category of remote.

Line 15--Number of Units in Service. Enter the number of units

of each type or category of remote in service from the appropriate

column of line C on Schedule C.

Line 16--Unit Cost. Divide line 14 by 15. The result is the

annual unit cost of each type or category of remote.

Line 17--Rate per Month. Divide the figure from line 16 by the

number 12. The result will be the monthly cost of each type or

category of remote including a reasonable profit. This figure is the

maximum permitted monthly lease charge for each type or category of

remote.

Step D. Charges for Leased Converter Boxes.

The rental charge for a converter box is designed to recover the

costs of providing and maintaining that type or category of

converter box leased by a subscriber and includes a reasonable

profit. You must repeat the calculations in the following substeps

for each type or category of converter box listed in Schedule C.

Describe each type or category of converter box in detail sufficient

to identify differences among types and/or categories. Attach extra

sheets as needed.

Line 18--Total Maintenance/Service Hours. Enter the total

maintenance and/or service hours for each type or category of

converter box from the corresponding column of line B on Schedule C.

Line 19--HSC. Enter the HSC from line 7.

Line 20--Total Maintenance and Service Cost. Multiply the figure

from line 18 by the HSC listed on line 19. The result is the total

annual cost for repairing and servicing each type or category of

converter box.

Line 21--Annual Capital Costs. Enter the annual capital costs

for each type or category of converter box from the corresponding

column of line K on Schedule C.

Line 22--Total Cost of Converters. Add line 20 to line 21. The

sum is the total annual cost for each type or category of converter

box.

Line 23--Number of Units in Service. Enter the number of units

of each type or category of converter box from the corresponding

column of line C on Schedule C.

Line 24--Unit Cost. Divide line 22 by line 23. The result is the

annual unit cost of each type or category of converter box.

Line 25--Rate per Month. Divide the figure on line 24 by the

number 12. The result is the monthly cost of each type or category

of converter box including a reasonable profit. This figure is the

maximum permitted monthly lease charge for each type of converter

box.

Step E. Charges for Other Leased Equipment.

The rental charge for other leased equipment is designed to

recover the costs of providing and maintaining that equipment leased

by a subscriber and includes a reasonable profit. An operator

choosing to establish charges for different types of other equipment

must repeat the calculations in the following substeps for each type

or category of other equipment listed in Schedule C. Describe each

type or category of additional leased equipment in detail, e.g.,

additional connections. Attach extra sheets as needed.

Commission rules permit operators to charge for power boosters

installed in connection with additional connections. Operators may

establish a separate charge for the power boosters or may establish

a separate charge for additional connections with power boosters.

Such charges should be identified and included in Step E.

Line 26--Total Maintenance/Service Hours. Enter the total

maintenance and/or

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service hours for this other equipment. Enter the figure from the

corresponding column on Schedule C, line B.

Line 27--HSC. Enter the HSC from line 7.

Line 28--Total Maintenance and Service Cost. Multiply the figure

on line 26 by the HSC listed on line 27. The result is the total

annual cost for repairing and servicing other equipment.

[FR Doc. 96-7221 Filed 3-27-96; 8:45 am]

BILLING CODE 6712-01-P