FCC adds regs to back up its cable rate cuts

Cable TV operators who’ve grown weary of rate regulation have more reason to gripe today: the FCC late Wednesday unveiled more than 200 extra pages of rules designed to ensure that cablers meet the 17% federally mandated rate cuts.

The new regs had been promised for weeks by the FCC, which after slashing rates an average of 10% last year, ordered an additional 7% reduction on Feb. 22 .

Few changes

A cursory review of what are expected to be the FCC’s final rate reg rules indicates few changes from the Feb. 22 decision. By May 15, most cablers will be required to enact double-digit rate rollbacks from the Sept. 30, 1992, price levels for regulated services (defined as the broadcast basic and enhanced basic tiers).

Cable customers won’t automatically see a 17% reduction in prices, because the FCC allows systems to recover the cost of inflation from October 1992. In addition, systems that added new program channels in the last 18 months will be required to slash prices less than systems that kept the same lineup.

A la carte restrictions

The new rules could provide bad news to cablers who switched to “a la carte” programming lineups after the FCC first announced its 10% price reductions last April. Those companies thatswitched to a la carte program packaging will be deemed to have done so to evade rate regulation if:

an entire regulated tier was eliminated and shifted to a la carte;

a significant number of a la carte channels were moved from a regulated tier;

the package a la carte price was deeply discounted compared to the price of individual channels;

or the subscriber was forced to pay high equipment charges to be able to buy individual channels in the a la carte package.

Legitimate a la carte packages that would not be subject to rate regulation, per the FCC, would occur if:

the channels in the a la carte package had traditionally been offered a la carte;

subscribers were able to pick the channels that comprised the a la carte package;

subscribers are fully notified of service options and costs involved in a la carte programming options;

and cable operators conducted market research indicating that a shift to a la carte pricing could be profitable, rather than merely a means of evading rate regulation.

Cable operators found to have engaged in a la carte packaging merely to avoid rate regulation will be forced to recalculate the rates for all regulated services, the FCC said.

The new rules also permit cable operators who add additional programming to not only pass along the cost of the new service, but to add a 7.5% markup. One FCC official said the 7.5% is important because “we’re providing the proper incentive for the operator to add value to the subscriber.”

FCC staffers conceded the new rules are mind-numbing in their complexity, but the agency said it will sell an inexpensive computer disc to cablers wishing to crunch numbers on a spread sheet.

The FCC is also offering to perform all the rate regulation calculations for cable operators who fill out pricing information and fax in their forms.

FCC offers of assistance are expected to provide little solace for cable operators, per Decker Anstrom, president of the National Cable Television Assn.

He said that with “hundreds of pages of new regulations and complex forms expected, it will take weeks for the industry to decipher what the FCC is requiring.”

Anstrom repeated an NCTA pledge to challenge the rate regs in court.

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