Cablers may be regulated like utilities

The Federal Communications Commission Thursday proposed allowing cable systems that opt to have their prices regulated like a utility to receive an annual rate of return on capital of 10%-14%.

In proposing a utility-like, “cost-of-service” pricing scheme, the FCC said it would prefer that cablers opt instead for a “benchmark” pricing alternative the agency unveiled in April.

Choosing the cost-of-service regulation will require a huge contingent of accountants and lawyers to argue the case before the FCC, the agency warned.

Those cablers who choose cost-of-service regulation will not be permitted to pass some costs along to consumers as part of their rate base, the FCC said. For example, companies that assumed heavy debt when overpaying for a cable system may not be permitted to pass the cost of debt service on to customers, the FCC said.

A cabler would be permitted to include costs in base rate calculations.

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