[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]
[[Page Unknown]]
[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