[Federal Register Volume 59, Number 233 (Tuesday, December 6, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29444]


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[Federal Register: December 6, 1994]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MM Docket No. 92-266 and 93-215, FCC 94-286]

 

Cable Television Act of 1992

AGENCY: Federal Communications Commission.

ACTION: Seventh Notice of Proposed Rulemaking.

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SUMMARY: This seventh notice of proposed rulemaking is one segment of 
the Sixth Order on Reconsideration, Fifth Report and Order and Seventh 
Notice of Proposed Rulemaking in this proceeding. The final rules 
adopted in this decision may be found elsewhere in this issue. In the 
Seventh Notice of Proposed Rulemaking, the Commission sought comment on 
whether cable operators electing to use the per channel adjustment 
under the Commission's new rules should be allowed to take the 7.5% 
mark-up on programming cost increases for channels added to the system 
before May 15, 1994; and whether operators electing to use the current 
going forward rules should be permitted to pass-through the 7.5% mark-
up on new programming cost increases after the initial mark-up on 
programming costs of new channels. The intended effect of this proposal 
is to eliminate the pass-through to subscribers of unnecessary cost 
increases.

DATES: Comments are due on or before January 13, 1995 and reply 
comments are due on or before February 13, 1995.

ADDRESSES: Federal Communications Commission, Washington, DC, 20554.

FOR FURTHER INFORMATION CONTACT:
Paul D'Ari or Joel Kaufman, (202) 416-0800.

SUPPLEMENTARY INFORMATION: This is the proposed rules segment of the 
Commission's Sixth Order on Reconsideration, Fifth Report and Order and 
Seventh Notice of Proposed Rulemaking in MM Docket No. 92-266 and MM 
Docket No. 93-215, FCC 94-286, adopted November 10, 1994, and released 
November 18, 1994. The complete text of this document 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 Services, Inc. (``ITS, Inc.'') at (202) 
857-3800, 2100 M Street, NW., Suite 140, Washington, DC 20037.

Seventh Notice of Proposed Rulemaking

Background

    A. The Commission's existing rate regulation rules permit operators 
to increase rates by a per channel amount when channels are added to 
basic service tiers (BSTs) and cable programming service tiers (CPSTs), 
with the per channel amount decreasing as the number of channels on a 
system increases. 47 CFR 76.922(e). These rules also permit operators 
to pass through to subscribers the costs of obtaining programming plus 
a 7.5% mark-up on new programming costs. 47 CFR 76.922(d)(3)(xi).
    B. The revised regulations adopted pursuant to the Sixth Order on 
Reconsideration and Fifth Report and Order provide that operators may 
adjust their rates after December 31, 1994, for channel additions 
occurring after May 14, 1994. Operators electing to use the new rules 
will be allowed to take a per channel mark-up of up to 20 cents for 
each channel added to cable programming service tiers (``CPSTs). 
Operators may make rate adjustments under this rule at any time during 
the three-year period beginning on January 1, 1995. They may not make 
per channel adjustments to monthly rates totalling more than $1.20 per 
subscriber over the first two years of the three-year period for new 
channels added on CPSTs or by more than $1.40 over the full three-year 
period. Operators may use any portion of the Operator's Cap to recover 
license fees associated with adding new channels to CPSTs. In addition, 
operators may recover an additional amount of not more than 30 cents 
per subscriber per month for license fees associated with adding new 
channels during the first and second years the Operator's Cap is in 
effect. In the third year, license fees will not be subject to special 
rules, but will be subject to the general rate rules.
    C. In addition, the Commission determined that operators electing 
to use the 20 cent per channel adjustment may not take the 7.5% mark-up 
on programming cost increases, including retransmission consent fees 
and copyright fees incurred for carriage of broadcast signals, for 
channels added on or after May 15, 1994. The Commission made this 
determination because its analysis indicates that the 20 cent per 
channel adjustment will provide full and fair compensation to operators 
adding new channels to CPSTs.

Discussion

    D. The Commission believes that for operators using the per channel 
adjustment of up to 20 cents, maintaining the 7.5% mark-up on 
programming cost increases for channels offered before May 15, 1994, 
may no longer be necessary given the total incentive structure provided 
in the revised going forward rules. In addition, the 7.5% mark-up on 
such channels may create an artificial incentive for the operator to 
continue to offer programming that the operator would not otherwise 
continue to offer. For these reasons, the Commission tentatively 
concludes that the 7.5% mark-up is unnecessary for such operators with 
respect to increases in programming costs for channels offered before 
May 15, 1994. The Commission solicits comment on whether operators 
electing to use the per channel adjustment of up to 20 cents under the 
new rules should be allowed to take the 7.5% mark-up on increases in 
programming costs, including retransmission consent fees and copyright 
fees incurred for carriage of broadcast signals, for channels added 
before May 15, 1994. If the Commission decides that such operators may 
not take a 7.5% mark-up on increases in programming costs, it will not 
consider requiring cable operators to prospectively remove from rates 
any 7.5% mark-up added prior to the effective date of a final rule on 
this issue.
    E. The Commission believes that the 7.5% mark-up on new programming 
costs when channels are initially added to a system ought be preserved 
for systems that continue to use the existing going forward rules 
because the 7.5% mark-up is an important part of the total package of 
incentives to add new programming under the existing rules. The 
Commission's rules permitting operators to pass through external costs 
are generally intended to compensate for added costs outside the 
operators' control and not to provide an additional mark-up without a 
clear policy purpose. In contrast to the situation where the goal of 
providing incentives to add new programming services justifies a mark-
up, there appears to be no strong reason to allow a mark-up programming 
cost increases for a service already being offered. The Commission 
therefore solicits comment on whether operators electing to use the 
current going forward rules should be permitted to pass-through the 
7.5% mark-up on programming cost increases after the initial mark-up on 
the programming cost of new channels. The Commission will not, however, 
consider prospectively removing from rates any 7.5% mark-up that was 
reflected in rates prior to our reaching a decision on this issue.

Administrative Matters

    F. Initial Regulatory Flexibility Analysis. 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 Notice, but they must have a separate and distinct 
heading designating them as responses to the regulatory flexibility 
analysis. The Secretary shall cause a copy of the Notice, including the 
initial regulatory flexibility analysis, to be sent to the Chief 
Counsel for Advocacy of the Small Business Administration in accordance 
with Section 603(a) of the Regulatory Flexibility Act, Pub. L. No. 96-
354, 94 Stat. 1164, 5 U.S.C. Section 601 et seq. (1981).
    I. Reason for action. The Cable Television Consumer Protection and 
Completion Act of 1992 requires the Commission to prescribe rules and 
regulations for determining reasonable rates for basic tier cable 
service and to establish criteria for identifying unreasonable rates 
for cable programming services. The Commission's existing rate 
regulations permit operators to pass through to subscribes the costs of 
obtaining programming plus a 7.5% mark-up on new programming costs. The 
revised rules, adopted pursuant to the Sixth Order on Reconsideration 
and Fifth Report and Order, permit operators to use a new per channel 
adjustment methodology for channels added on or after May 15, 1994, and 
to eliminate the 7.5% mark-up on new programming costs for those 
channels. This Notice proposes to determine extent to which cable 
operators electing to use either the existing or the new going forward 
rules, can continue to pass through to subscribers a 7.5% mark-up on 
increases on new programming costs.
    II. Objectives. To propose rules to implement Section 3 of the 
Cable Television Consumer Protection and Competition Act of 1992. The 
Commission also desires to adopt rules that will be easily interpreted 
and readily applicable and, whenever possible, minimize the regulatory 
burden on affected parties.
    III. Legal Basis. Action as proposed for this rulemaking is 
contained in Sections 4(j), 303(r) and 623 of the Communications Act of 
1934, as amended.
    IV. Description, potential impact and number of small entities 
affected. The Commission anticipates a possible impact on small 
entities because the Notice addresses the extent to which cable 
operators, including small cable operators, electing to use either the 
existing or the new going forward rules, can continue to pass through 
to subscribers a 7.5% mark-up on increases on new programming costs.
    V. Reporting, record keeping and other compliance requirements. 
None.
    VI. Federal rules which overlap, duplicate or conflict with this 
rule. None.
    VII. Any significant alternatives minimizing impact on small 
entities and consistent with stated objectives. None.
    G. 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.

Procedural Provisions

    H. Ex parte Rules-Non-Restricted Proceeding. 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 Commission rules. See 
generally 47 CFR 1.11202, 1.1203, and 1.1206(a).
    I. Pursuant to applicable procedures set forth in 1.415 and 1.419 
of the Commission's Rules, 47 CFR Sections 1.415 and 1.419, interested 
parties may file comments on or before January 13, 1995, and reply 
comments on or before February 13, 1995. To file formally in this 
proceeding, you must file an original plus four copies of all comments, 
reply comments, and supporting comments. If you want each Commissioner 
to receive a personal copy of your comments and reply comments, you 
must file on original plus nine copies. You should send comments and 
reply comments to Office of the Secretary, Federal Communications 
Commission, 1919 M Street, N.W. Washington, D.C. 20554. Comments and 
reply comments will be available for public inspection during regular 
business hours in the FCC Reference Center, Room 239, Federal 
Communications Commission, 1919 M Street N.W., Washington D.C. 20554.

Ordering Clauses

    J. Authority for this Further Notice of Proposed Rulemaking is 
contained in Sections 4(i), 4(j), 303(r), 612, 622(c) and 623 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 
303(r), 532(c) and 543.
    K. It is ordered, That, pursuant to Sections 4(i), 4(j), 303(r), 
and 623 of the Communications Act of 1934, 47 U.S.C. Secs. 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 this Further Notice of Proposed Rulemaking, and 
that Comment is Sought regarding such proposals, discussion, and 
statement of issues.

List of Subjects in 47 CFR Part 76

    Cable television
Federal Communications Commission.
LaVera F. Marshall,
Acting Secretary.
[FR Doc. 94-29444 Filed 12-5-94; 8:45 am]
BILLING CODE 6712-01-M