WASHINGTON — The Federal Communications Commission reversed course Aug. 27 and decided to allow cable systems affiliated with a program supplier to pass through program costs to consumers at fair market value.
That was one of the few bits of good news for the cable industry in a 90-page order in which the FCC mostly reiterated rate regulation rules the agency issued earlier this year.
The regs are expected to result in at least a 10% rollback in cable prices nationwide.
The FCC originally ruled that program costs of vertically-integrated cable companies (such as TCI and Time-Warner) could be raised only at the rate of inflation. However, the new regs allow “recovery for programming cost increases that occur generally in the marketplace,” per the FCC.
The ruling was especially important for Turner Broadcasting, whose revenue potential from its various cable program webs could have been crippled had the original FCC decision stood. Turner representatives lobbied hard for the change, according to D.C. sources.
The FCC affirmed its original decision to set rates for regulated tiers of cable service at levels similar to the price charged in areas where a cabler faces competition from another cable provider or a “wireless” cable operation.
Further, the FCC said again that cable operators may not pass along the cost incurred from retransmission consent in the first year. However, retrans costs in the second and third years may be passed on to consumers, the FCC said.