[Federal Register Volume 67, Number 172 (Thursday, September 5, 2002)]
[Proposed Rules]
[Pages 56882-56890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-22427]



  Federal Register / Vol. 67, No. 172 / Thursday, September 5, 2002 / 
Proposed Rules  

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 02-144; FCC 02-177]
RIN: 4102


Revisions to Cable Television Rate Regulations

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document the Commission proposes to update its cable 
television rate regulations to reflect the end of its jurisdiction over 
rates for cable programming services pursuant to the Telecommunications 
Act of 1996. The Commission proposes to review and update its rules 
governing rate regulation of basic services and associated equipment by 
local franchising authorities.

DATES: Comments are due on or before November 4, 2002; reply comments 
are due on or before December 4, 2002. Written comments by the public 
on the proposed information collection(s) are due November 4, 2002. 
Written comments must be submitted by the Office of Management and 
Budget (OMB) on the proposed information collection(s) on or before 
November 4, 2002.

FOR FURTHER INFORMATION CONTACT: John Norton, Media Bureau, 202-418-
7037 or via e-mail at [email protected]; Wanda Hardy, Media Bureau, 202-
418-2129 or via e-mail at [email protected]. For additional information 
concerning the information collection(s) contained in this document, 
contact Judith B. Herman at 202-418-0214, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION:
    1. This is a summary of the Media Bureau's Notice of Proposed 
Rulemaking (``NPRM'') MB 02-144; FCC 02-177, adopted June 13, 2002 and 
released June 19, 2002 and revised by Order MB 02-144, FCC 02-228, 
adopted August 6, 2002 and released August 14, 2002. The complete texts 
of this NPRM and Order are available for inspection and copying during 
normal business hours in the FCC Reference Center, Room CY-A257, 445 
12th Street, SW., Washington, DC and may also be purchased from the 
Commission's copy contractor, Qualex International, Portals II, 445 
12th Street SW., Room CY-B-402, Washington, DC 20554, telephone (202) 
863-2893, facsimile (202) 863-2898, or via e-mail [email protected]. 
Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 
1.415 and 1.419 comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies. See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (May 1, 
1998). This NPRM contains proposed information collection(s) subject to 
the Paperwork Reduction Act of 1995 (PRA). It has been submitted to OMB 
for review under the PRA. OMB, the general public, and other Federal 
agencies are invited to comment on the proposed information 
collection(s) contained in this proceeding.
    2. Comments filed through the ECFS can be sent as an electronic 
file via the Internet to http://www.fcc.gov/e-file/ecfs.html. 
Generally, only one copy of an electronic submission must be filed. 
Although multiple docket numbers appear in the caption of this 
proceeding, commenters should transmit one electronic copy of the 
comments only to MB Docket No. 02-144, Revisions to Cable Television 
Rate Regulations. In completing the transmittal screen, commenters 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet e-mail. To get filing instructions 
for e-mail comments, commenters should send an e-mail to [email protected], 
and should include the following words in the body of the message, 
``get form .'' A sample form and 
directions will be sent in reply. Parties who choose to file by paper 
must file an original and four copies of each filing. Although more 
than one docket number appears in the caption of this proceeding, 
commenters should submit copies only to MB Docket No. 02-144, Revisions 
to Cable Television Rate Regulations. Filings can be sent by hand or 
messenger delivery, by commercial overnight courier, or by first-class 
or overnight U.S. Postal Service mail (although we continue to 
experience delays in receiving U.S. Postal Service mail). The 
Commission's contractor, Vistronix, Inc., will receive hand-delivered 
or messenger-delivered paper filings for the Commission's Secretary at 
236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The 
filing hours at this location are 8:00 a.m. to 7:00 p.m. All hand 
deliveries must be held together with rubber bands or fasteners. Any 
envelopes must be disposed of before entering the building. Commercial 
overnight mail (other than U.S. Postal Service Express Mail and 
Priority Mail) must be sent to 9300 East Hampton Drive, Capitol 
Heights, MD 20743. U.S. Postal Service first-class mail, Express Mail, 
and Priority Mail should be addressed to 445 12th Street, SW, 
Washington, DC 20554. All filings must be addressed to the Commission's 
Secretary, Marlene H. Dortch, Office of the Secretary, Federal 
Communications Commission. One copy of each filing also must be filed 
with Qualex International, Portals II, 445 12th Street, SW, Room CY-
B402, Washington, DC 20554. In addition, parties must also send four 
(4) copies of each paper filing to Wanda Hardy, Media Bureau, 445 12th 
Street, SW, Room 3-A862, Washington, DC 20554. Parties filing 
electronically must send one electronic copy via e-mail to 
[email protected].

Synopsis of the Notice of Proposed Rulemaking

    3. This NPRM was initiated to reflect the March 31, 1999 sunset of 
Commission jurisdiction to regulate rates for cable programming 
services (``CPS'') enacted by the Telecommunications Act of 1996 
(``1996 Act''). 47 U.S.C. 543(c)(4). The NPRM also proposes to update 
the rules governing franchising authority rate regulation of the basic 
service tier (``BST'') and associated equipment pursuant to authority 
in 47 U.S.C. 543(a)(2)(A), (b) for cable systems not subject to 
effective competition.

Background

    4. The Commission carried out its ratemaking responsibility 
pursuant to 47 U.S.C. 543 by developing a common set of ``tier 
neutral'' benchmarks and regulations so that the same methodology was 
used to set rates for both the BST and the CPS tier (``CPST'') and the 
Commission's rate rules would not create an incentive to place services 
in any particular rate-regulated tier. Although the sunset of CPST rate 
regulation has changed one of the predicates of the rate rules, the 
Commission proposes to concentrate on improving the existing process 
rather than create a new one for the BST. However, comments suggesting 
broader changes are solicited.

Deletion or Modification of the Rules That Address CPS Tier Rates

    5. The NPRM proposes to eliminate all rules that pertain solely to 
the regulation of CPS rates. It seeks comment on what rules should be 
changed or eliminated and asks whether there are linkages between the 
BST and CPST rules or forms that might not readily be recognized and 
that would need to be accounted for.
    6. The NPRM seeks comment on removing the following rule sections 
or

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paragraphs: 47 CFR 76.901(d); 76.922(c)(4); 76.924(e)(1)(ii); 
76.924(e)(2)(ii); 76.934(c)(2); 76.934(d); 76.934(h)(3)(iii); 
76.934(h)(6); 76.934(h)(10); 76.950; 76.951; 76.953; 76.954; 76.955; 
76.956; 76.957; 76.960; 76.961; 76.962; 76.963(b); 76.980(b), (d) 
through (f); 76.985 (FCC Form 329 and Instructions); 76.986; 76.987; 
76.1402; 76.1605; and 76.1606. The NPRM seeks comment on other rules 
that continue to be applicable to BST ratemaking but should be updated 
or amended to eliminate references to CPST or to reflect the end of 
CPST rate regulation. These are: 47 CFR 76.922(a); 76.922(b)(5); 
76.922(b)(7); 76.922(e)(2)(iii)(C); 76.922(f)(4); 76.922(f)(8); 
76.922(g); 76.922(i)(1), (2); 76.922(k); 76.924(a); 76.924(e)(1)(iii); 
76.933(e); 76.933(g)(5); 76.934(c)(3); 76.934(e); 76.934(f); 
76.934(g)(1); 76.934(g)(2) (retaining the last sentence); 
76.934(h)(2)(ii)(A); 76.934(h)(4)(i), (v); 76.934(h)(8)(ii); 76.963(a); 
76.990(a); 76.990(b)(3); 76.1800. The NPRM also seeks comment on 
whether the sunset of CPST rate regulation should be reflected by 
changes to other rules. The NPRM seeks comment on eliminating the 
following rules as obsolete: 47 CFR 76.922(b)(6)(ii); 76.922(e)(3)(ii); 
76.922(e)(4); and 76.934(h)(8)(ii)(last sentence). The NPRM asks 
whether additional rules have become obsolete and should be removed. 
The Commission's rules also refer to FCC Form 1211. This form is not in 
use and references will be deleted from the Commission's rules. See 47 
CFR 6.922 and 76.934.
    7. The NPRM also proposes to modify or eliminate the rate forms and 
rate form instructions consistent with changes made to the rules in 
this proceeding and asks about changes needed to reflect the end of 
CPST rate regulation. The forms used for rate regulation are FCC Forms 
1200, 1205, 1210, 1220, 1230, 1235, and 1240. FCC Forms 1215, A La 
Carte Channel Offerings (May 1994), and 1225, Cost of Service Filing 
for Regulated Cable Services for Small Systems (Apr. 1994), were 
dropped from the Commission's information collection budget effective 
April 30, 1997. The NPRM proposes to eliminate references to these 
forms from the rules, including 47 CFR 76.922(b)(6) and 76.934(g).

Rate Adjustments When Channels Are Added to or Deleted From the BST

1. Calculating Rate Adjustments
    8. 47 CFR 76.922(g) governed how rates were to be adjusted when 
channels were added to or deleted from a tier or moved between tiers. 
The intent of language in Sec.  76.922(g)(8) providing for the sunset 
of this section has been debated. This provision and the sunset of CPST 
rate regulation, have left questions about how BST rates should be 
adjusted for these channel changes.
    9. The NPRM seeks comment on the following possibilities. One 
possibility would be to adjust BST rates only for changes in the number 
of BST channels by adding or subtracting the specific ``external'' 
costs associated with the added or deleted channel and the associated 
7.5% mark-up adjustment provided in 47 CFR 76.922(f). Another possible 
approach would be to adjust rates further for changes in the number of 
channels by adding or subtracting the ``per-channel adjustment factor'' 
from the table in 47 CFR 76.922(g)(2), but identifying the specific 
amount of adjustment not by reference to the number of ``regulated 
channels'' but by reference to the current number of channels that 
would be subject to regulation if CPST rate regulation had not ended.
    10. Alternatively, the NPRM seeks comment on whether rate 
adjustments for changes in the number of channels on the BST should 
include some other adjustment to the tier residual and whether the type 
of adjustment should depend on whether channels are added to or deleted 
from the BST. The tier residual is the tier charge after external costs 
and other per channel adjustments have been subtracted. Paragraph (g) 
provided that cable systems could add channels to the BST by adjusting 
for external cost changes, including the 7.5% markup, and using the 
chart in paragraph (g)(2) to reflect the incremental change to the 
total tier residual from the added channel or channels, but were to 
adjust rates for dropped channels based on the pro rata share of the 
tier residual for the dropped channel or channels in addition to 
external cost and markup adjustments. Cable systems dropping channels 
that had been added using the alternative ``caps'' channel adjustment 
incentive in 47 CFR 76.922(g)(3) would adjust rates based on the actual 
per channel adjustment taken when the channel was added to the tier. 
Should this approach be reinstated or should something similar be 
adopted? Alternatively, if some adjustment to the residual is 
appropriate when channels are added to the BST, should an adjustment be 
made other than a per-channel adjustment like that in the chart in 47 
CFR 76.922(g)(2)? If some other residual adjustment is appropriate, how 
should that adjustment be determined?
    11. The NPRM also seeks comment as to whether the movement of 
channels to the BST from previously regulated programming tiers is 
relevant in determining the BST rate adjustments associated with those 
channels. Section 76.922(g) provided that systems moving channels 
between regulated tiers would move the external costs and residual 
value with the channel on a revenue neutral basis. Systems moving 
previously unregulated channels, such as premium channels, would not 
move any residual value to the BST. Channels added to the CPST pursuant 
to the caps incentives could not be moved to the BST.
    12. The NPRM asks whether new BST per-channel values should, 
instead, be established through new benchmarks based on an updated 
comparison of BST rates charged by competitive and non-competitive 
systems? If so, should the Commission look only at cable system rates, 
or should it also consider the rates of alternative providers, such as 
DBS? Could a simple formula be developed? Should the operator's base 
rate be recalibrated using new benchmarks or should new per-channel 
values be applied only to channels added to and deleted from the BST 
after this rulemaking? Or should the Commission consider adjusting tier 
rates for changes in the number of channels based on rates at 
competitive systems with comparable market and channel characteristics? 
How would comparability be evaluated? Should the Commission allow 
channels added to the CPST pursuant to the caps methodology to be moved 
to the BST?
2. ``Single Tier'' Systems
    13. The Commission's rules currently provide that cable operators 
using the annual rate adjustment methodology may make an additional 
rate adjustment to reflect channel additions if the operator offers 
only a BST and does not offer a CPS tier. Should this option be 
retained for ``single tier'' systems? In determining whether a cable 
operator offers a single tier or multiple tiers of service, should 
digital service tiers be considered?

Headend Upgrades

    14. The NPRM states that the Commission plans to modify 47 CFR 
76.922(g)(7) to reflect the sunset of special incentives for single 
tier small systems to add channels by recovering for headend upgrade 
adjustments.

Digital Broadcast Television Rate Adjustment Issues

    15. 47 CFR 76.922(f)(1)(vii) allows operators to recover headend 
equipment costs necessary for the carriage of digital broadcast 
television (``DTV'') signals as

[[Page 56884]]

an external cost. 47 CFR 76.922(j)(1) also allows cable operators to 
recover costs of improvements necessary for carriage of digital signals 
through the network upgrade surcharge. So that operators cannot recover 
more than once for the same cost, the NPRM seeks comment on a proposal 
to clarify that operators may use either method for adjusting rates, 
but not both.
    16. In Carriage of Digital Television Broadcast Signals, CS Docket 
No. 98-120, 66 FR 16533 (March 26, 2001), the Commission proposed to 
allow cable operators adding digital broadcast signals to their channel 
line-ups to increase rates for each 6 MHz of capacity devoted to such 
carriage and solicited comment on the proper adjustment methodology. 
The NPRM asks commenters to update the record with comments in this 
proceeding regarding rate adjustments for carrying digital broadcast 
services on a rate regulated BST.

Initial Regulated Rates

    17. The Notice also seeks comment on how initial rate levels should 
be determined for systems first becoming subject to regulation. Under 
the current rules, the initial regulated rate, if the system was in 
operation in 1992, would be calculated using rate and subscribership 
data from 1992 and 1994 and external cost data from 1994 and adjusted 
to a current permissible rate level using the price caps methodology. 
Should the Commission consider alternatives to this process? One option 
would be to eliminate franchising authority review of the operator's 
entire rate structure and, instead, limit review to the operator's most 
recent rate increase or its next rate increase after the franchising 
authority becomes certified to regulate rates. Should the Commission be 
concerned that the policy of reviewing an operator's entire rate 
structure at this point could create an uncertain business environment 
for affected cable operators and could discourage the investment 
necessary for upgrading networks and adding new services? Would 
limiting review be consistent with the statutory directive in section 
623(b)(1) that regulations be designed to protect subscribers from BST 
rates that exceed rates that would be charged if the system were 
subject to effective competition? Another option would be to impute a 
rate from another regulated system with as nearly comparable 
characteristics as possible. The Notice asks how comparability should 
be evaluated and how disputes should be resolved under this option. For 
systems subject to effective competition in the past, another option 
would be to use the last ``competitive'' rate as the starting point for 
regulation with the price caps methodology followed thereafter. Are 
there other ways to determine initial regulated rates when unregulated 
systems are brought under rate regulation? If the approach in the 
current rules is no longer required, is there any reason to retain the 
methods for determining the permitted rate for a tier on May 15, 1994, 
as set forth in 47 CFR 76.922(b) of the Commission's rules and referred 
to in the last five sentences of Sec.  76.922(d)(2)? Can other rules or 
paragraphs also be eliminated if the current approach is no longer 
required?
    18. If the Commission were to retain the current approach to 
establishing initial regulated rates, can the Commission continue to 
use the current Form 1200? Form 1200 applies the competitive 
differential to the operator's total revenues from sources that were 
subject to regulation when the form was developed, including the CPST. 
The NPRM seeks comment as to whether the end of CPST rate regulation 
requires any revision to Form 1200 when that form is used as the first 
step in determining the current maximum permitted BST rate.

Rate Structures and Uniform Regional Rates

    19. The Commission has previously explored techniques of permitting 
greater rate structure flexibility. In Implementation of Sections of 
the Cable Television Consumer Protection and Competition Act of 1992--
Rate Regulation, Uniform Rate Setting Methodology, CS Docket No. 95-
174, 62 FR 15121 (March 31, 1997), the Commission adopted rule changes 
to facilitate operators having rates that could be uniform on a 
regional basis. See 47 CFR 76.922(n). In Implementation of Sections of 
the Cable Television Consumer Protection and Competition Act of 1992, 
Rate Regulation, Cable Pricing Flexibility, CS Docket No. 96-157, 61 FR 
45387 (August 29, 1996) (docket remains open), comment was sought on 
techniques allowing operators, on a revenue neutral basis, to adjust 
BST and CPST prices on a more flexible basis when both tiers were 
subject to rate regulation. Has Docket 96-157 been by-passed by the 
sunset of CPST tier rate regulation? The NPRM asks whether there are 
other changes in the rules that might be useful in order to create 
greater flexibility in rate structures or more uniform regional rates 
while continuing to maintain rules designed to keep BST rates 
reasonable.

Rates for Commercial Subscribers

    20. Issues relating to the establishment of commercial rates in the 
Commission's 5th NPRM in MM Docket No. 92-266, 59 FR 51869 (October 13, 
1994), are unresolved. See Implementation of Sections of the Cable 
Television Consumer Protection and Competition Act of 1992: Rate 
Regulation, 60 FR 54815 (October 26, 1995). That proceeding generally 
explored three basic questions. First, to what extent was 47 U.S.C. 543 
intended to apply to commercial rates? Second, how should commercial 
rates be defined in the cable context? And third, because commercial 
subscribers may have greater access to competitive sources of supply, 
are market forces sufficient to ensure that rates are reasonable in the 
absence of direct regulation? Interested parties are invited to update 
the record on these or related issues regarding commercial rates.

Small System Issues

    21. Recognizing the continuing difficulties faced by operators of 
smaller systems, the NPRM seeks comment on any changes in the rate 
rules that might address the problems associated with the simultaneous 
growth in competition and the need for additional investment to upgrade 
facilities. Will changes proposed in this NPRM, such as elimination of 
consideration of the CPST from our rules and rate forms, have an 
untoward effect on small systems? Should the presumptively reasonable 
per channel rate in 47 CFR 76.934(h)(5) be reexamined if CPST channels, 
expenses, and rate base are no longer included on FCC Form 1230?
    22. The Commission has asked for comment about the process for 
setting initial regulated rates. 47 CFR 76.922(b)(5) allows small 
systems owned by small cable companies to use streamlined rate 
reductions for setting initial regulated rates. Do small systems have 
need for streamlined rate reductions in light of the availability of 
small system rate relief in 47 CFR 76.934, including the small system 
cost-of-service methodology in Sec.  76.934(h) and FCC Form 1230?

Cost-of-Service Rate Process

    23. Another rate issue concerns the information and labor intensive 
``cost-of-service'' rate setting process available for high cost 
systems that could not receive a constitutionally adequate rate of 
return under the benchmark system. The Commission adopted interim cost 
rules to permit operators to recover operating expenses and a fair 
return on investment for regulated services, while

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protecting subscribers from unreasonable rates. It finalized the rules 
with adjustments in Implementation of Sections of the Cable Television 
Consumer Protection and Competition Act of 1992: Rate Regulation, and 
Adoption of a Uniform Accounting System for Provision of Regulated 
Cable Service (``Final Cost Order''), 61 FR 9411 (March 8, 1996). The 
Commission addressed issues concerning the rate base, including used 
and useful plant, intangible assets, start-up losses, and tangible 
assets. It also addressed issues concerning a presumptive rate of 
return, depreciation, taxes, cost allocation, accounting requirements, 
affiliate transactions, and hardship relief. At the same time, it 
issued a Further Notice of Proposed Rulemaking (``FNPRM''), 59 FR 51869 
(October 13, 1994), to explore an optional alternative to the 
presumptive unitary rate of return for cost-of-service filings. This 
FNPRM as well as petitions for reconsideration of the Final Cost Order 
remain pending. (See Jones Intercable, Inc. and Benchmark 
Communications, Inc., Petition for Reconsideration (filed April 8, 
1996) (addressing the straight channel allocator for allocating the 
cost of commonly used plant, the treatment of unactivated channels, and 
distributions by non-subchapter C corporations; seeking clarification 
that adjustments for depreciation expense also be made to accumulated 
depreciation; and advocating application of a First Amendment 
intermediate scrutiny test to the rate-setting process); Petition by 
the Southern New England Telephone Company for Partial Reconsideration 
of the Second Report and Order (filed February 26, 1996) (addressing 
affiliate transactions). An appeal of the adopted rules in Comcast 
Cable Communications, Inc. v. FCC (D.C. Cir. Case No. 96-1148), has 
been held in abeyance.)
    24. With the demise of CPST regulation, is the cost-of-service 
process no longer needed as an alternative for BST regulation? What 
further actions should be taken in the pending ``COS'' docket in light 
of the end of CPST rate regulation? We also seek comment on any impact 
these questions will have on determinations of equipment and 
installation rates pursuant to 47 CFR 76.923 and FCC Form 1205, 
Determining Regulated Equipment and Installation Costs (June 1996), and 
on determinations of rate increases for network upgrade surcharges 
pursuant to 47 CFR 76.922(j) and FCC Form 1235, Abbreviated Cost of 
Service Filing For Cable Network Upgrades (February, 1996). Both 
incorporate cost-of-service components and cost allocation categories 
from 47 CFR 76.924.

Abbreviated Cost-of-Service Showing on FCC Form 1235

    25. The NPRM seeks comment as to whether the abbreviated cost-of-
service option, which is permitted for significant network upgrades, 
continues to meet a need in light of the breadth of unregulated 
services that can now be delivered over cable systems, including CPST. 
Should the Commission continue to allow operators to file abbreviated 
cost-of-service showings? Even if the option is eliminated for most 
cable systems, should the option continue to be available for systems 
that meet the definition of ``small system'' under the Commission's 
rules?
    26. If the Commission retains the abbreviated cost-of-service 
option for the BST, the NPRM proposes to modify FCC Form 1235 to remove 
the requirement that cost assignments to the CPST and a CPST revenue 
requirement be shown. The NPRM also proposes to modify FCC Form 1235 so 
that rate base recoveries will be limited to an operator's average 
upgrade investment over the life of the upgrade rather than its total 
investment over the life of the upgrade. The NPRM also asks whether 
other adjustments to the abbreviated cost-of-service showing are 
needed.

Rates of Interest

    27. Operators using the annual rate adjustment methodology 
calculated on FCC Form 1240 must correct for over- and underestimations 
of projected costs, with interest at 11.25%. The NPRM seeks comment as 
to whether the Commission should revise the rate of interest in 47 CFR 
76.922(e)(3)(i) and the Instructions for Form 1240, Module H, Lines H4 
and H8, and what an appropriate rate of interest should be. Should it 
be fixed in the rules and rate form calculation or tied to some kind of 
indicator? If the latter, what should the indicator be? If the rate of 
interest in Sec.  76.922(e)(3)(i) is revised, should that revised rate 
of interest be used for the interest on franchise fee refunds owed by 
the franchising authority to the cable operator pursuant to 47 CFR 
76.942(f)? The interest rate currently specified in Sec.  76.942(f) is 
11.25%.
    28. 47 CFR 76.942(e) currently provides that refunds for subscriber 
rate overcharges shall be ``computed at applicable rates published by 
the Internal Revenue Service for tax refunds and additional tax 
payments.'' Should the rule specify which rate should be used or 
whether the higher (or lower) of the two rates is to be used?

Unbundling

    29. Operators setting initial regulated rates were required to 
unbundle equipment costs from programming rates. The Commission has 
expressed concern about evasions of rate regulation, such as charging 
for services previously provided without extra charge, unless the value 
of that service, as reflected in new charges, ``was removed from the 
base rate number when calculating the reduction in rates necessary to 
establish reasonable [programming service] rates.'' Implementation of 
Sections of the Cable Television Consumer Protection and Competition 
Act of 1992: Rate Regulation, Third Order on Reconsideration, MM Docket 
No. 92-266, 59 FR 17961 (April 15, 1994). Questions have been raised 
about the continued applicability or the appropriate response to this 
Commission concern. The NPRM requests comment on this matter.

Refunds

    30. 47 CFR 76.942 addresses refunds of previously paid rates in 
excess of maximum permitted rates. The NPRM asks whether and, if so, 
how this rule should be updated.

Re-evaluation of the BST Rate Regulation Process

    31. The foregoing discussion has addressed adjustments to the 
Commission's rate rules based on the assumption that the current 
benchmark/price cap process should continue. The NPRM seeks comment as 
to whether a more fundamental change to the rate regulations should be 
enacted, for example, by recalibrating the ``competitive differential'' 
between monopoly systems (those subject to regulation) and competitive 
systems (those not subject to regulation because of the presence of 
effective competition) focusing specifically on basic tier service. The 
initial process of attempting to calculate the competitive differential 
was based on 1992 data for a relatively small sample of competitive 
systems and did not focus on basic tier service separate from CPST 
service. Would there now be significant value in attempting to 
recalibrate the whole process through a new rate comparison? Would it 
be possible to find appropriate samples, and how should the resulting 
differential be used in the resulting rate setting process? Should the 
Commission consider data from all four types of systems reflected in 
the statutory effective competition test in 47 U.S.C. 543(l) or focus 
on particular types of systems? Should the Commission take

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upgrades into account as a separate factor? This task could conceivably 
be accomplished (although with some considerable effort) by expanding 
the annual price survey process pursuant to 47 U.S.C. 543(g), (k), and 
47 CFR 76.1800 Note 2.
    32. Is there another method for regulating BST rates that will 
ensure reasonable rates for basic service through a simplified 
regulatory process? For any alternatives proposed, commenters should 
discuss how the alternative would be implemented. Commenters should 
also address the regulatory costs to cable operators and franchising 
authorities from implementing a proposed alternative, and how the 
Commission would review the reasonableness of a franchising authority's 
rate action. If an alternative is adopted, should it replace the 
traditional approach to rate regulation or be available as an 
alternative to traditional rate regulation?

Equipment and Inside Wiring Rate Regulation

    33. Associated with basic service tier rate regulation is the 
regulation of certain charges for equipment that is used with the 
provision of basic service. The Commission has regarded virtually all 
equipment used for the receipt of video service as associated with the 
basic tier of service. See 47 CFR 76.923(a). Two changes warrant a new 
a look at this issue. One is the introduction of tiers of digital video 
service that involve the use of a digital set-top box, the functions 
and cost of which are largely associated with non-basic service 
offerings. The other is the adoption of 47 U.S.C. 549, entitled 
``Competitive Availability of Navigation Devices,'' which is intended 
to create a competitive market for equipment used to access cable and 
other MVPD services. In light of these changes, should the 
categorization of equipment be reconsidered? In particular, would it be 
appropriate to associate digital equipment or other equipment that 
involves investments very largely used to receive CPST or other 
unregulated services with the non-regulated tiers for rate regulation 
purposes? If it is appropriate, should this association be 
discretionary or mandatory for the cable operator?
    34. Alternatively, the NPRM seeks comment on whether a process 
should be established so that when a competitive market for equipment 
or wiring can be demonstrated to exist, governmental rate setting 
should cease and the presence of competitive alternatives allowed to 
ensure that the rates in question meet the statutory ``actual cost'' 
standard. Would this be consistent with existing precedent, such as the 
treatment of ``new product'' CPS tiers and an inside wire maintenance 
service plan covering both cable television and telephone wiring? Are 
there other changes in the equipment rate regulation rules that might 
be used to assist in the creation of a more competitive market for 
equipment in a manner consistent with 47 U.S.C. 549? Operators might, 
it has been suggested, avoid regulation of a type of equipment by 
certifying that a particular type of equipment is available for sale or 
lease from third party sources and that subscribers have been advised 
of that fact. Would or should substitution of marketplace regulation 
for direct regulation of equipment rates affect the regulation of rates 
for installing or maintaining the affected equipment and charges for 
customer-initiated changes in equipment pursuant to 47 CFR 76.923, 
76.980(c)?
    35. The NPRM also seeks comment on whether FCC Form 1205 can be 
simplified in any way to ease the burden of regulation on both cable 
operators and franchising authorities. Once an operator has established 
equipment rates based on its costs, is there a less burdensome way to 
adjust equipment or installation rates that would be consistent with 
the statutory actual cost standard in 47 U.S.C. 543(b)(3)? Can any 
information used in setting rates be standardized based on industry-
wide information? If so, how would that process work?

Recovery of Lost Revenues for Equipment and Installation Due to 
Subsequently Reversed Rate Orders

    36. If a franchising authority disallows any or all of a proposed 
increase for equipment and installation rates and the local rate order 
is reversed on appeal to the Commission, the cable operator may be 
unable to recoup revenues lost or refunds paid pursuant to the 
erroneous rate order. Should the Commission allow cable operators to 
recover the amount of revenues lost or excess refunds paid due to local 
rate orders subsequently reversed by the Commission through an entry on 
Form 1205, perhaps as an ``other'' expense on Form 1205, Schedule B? 
The Notice does not propose to allow operators voluntarily setting 
rates below the permitted rate to recover the shortfall.

Charges for Changes in Service Tiers

    37. Charges for changes in service tiers initiated by the 
subscriber have been limited to actual costs by 47 CFR 76.980. What is 
the effect of the end of CPST rate regulation on regulation of rates 
for service tier changes?

Effective Competition Showings

    38. 47 U.S.C. 543(a) provides that rate regulation in a community 
ends when effective competition is present. 47 CFR 76.906 states that 
cable systems are presumed not to be subject to effective competition, 
and 47 CFR 76.907(b) gives the cable operator the burden of rebutting 
this presumption. The NPRM seeks comment on whether there are 
techniques consistent with the Communications Act to improve and 
expedite effective competition showings and review as competition, 
particularly from satellite service, becomes more prevalent.

Procedures for Commission Review of Local Rate Decisions

    39. The NPRM seeks comment on whether there are procedural aspects 
of the Commission's review of local rate decisions that might be 
improved. In particular, should the deference already given to these 
local rate decisions be increased so that the Commission would 
intervene only when there were significant deviations from the 
established rules?

Interim Rate Adjustments for BST Channel Changes

    40. At the conclusion of the rulemaking proceeding, the Commission 
will consider whether BST rates should be adjusted to conform to the 
structure adopted by the Commission.

Initial Regulatory Flexibility Analysis

    41. As required by the Regulatory Flexibility Act of 1980, 5 U.S.C. 
601 et seq., as amended (``RFA''), the Commission has prepared an 
Initial Regulatory Flexibility Analysis (``IRFA'') of the possible 
significant economic impact on a substantial number of small entities 
by the policies and rules proposed in the NPRM. Written public comments 
are requested on this IRFA. Comments must be identified as responses to 
the IRFA and must be filed by November 4, 2002. The Commission will 
send a copy of the NPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (``SBA'').
    42. Need for, and Objectives of, the Proposed Rules. The Commission 
developed rules and forms for the regulation of cable television rates 
when both the basic service tier (``BST'') and the cable programming 
service tiers (``CPST'') were subject to rate regulation. The 
Commission proposes to update these regulations and rate forms. 
Updating is needed so that the rules and

[[Page 56887]]

rate forms will reflect the end of CPST rate regulation pursuant to 47 
U.S.C. 543(c)(4). Updating is also needed because 47 CFR 76.922(g), the 
Commission's rule for adjusting rates for changes in the number of 
channels on the BST has sunset, and cable operators and franchising 
authorities need guidance about how to adjust rates when the number of 
BST channels changes. Updating would be needed for rules and rate forms 
available specifically to small cable systems owned by small cable 
operators as well as for rules and rate forms used by large systems.
    43. The Commission also proposes changes in the regulation of both 
BST and equipment rates with the objective of improving the existing 
regulatory structure for all cable systems. For small cable systems 
owned by small cable operators, the Commission proposes to consider 
rule changes with the additional objectives of: (1) Ensuring that the 
regulatory process does not impede the ability of small systems to 
raise capital and respond to competitive challenges, and (2) avoiding 
an untoward effect on small systems from other changes being considered 
for the rate rules generally. The Commission also proposes to 
discontinue the streamlined rate reduction ratemaking method that may 
no longer be useful for small systems in order to eliminate unneeded 
requirements.
    44. For cable systems in general, including small cable systems, 
the Commission proposes changes to its rules and rate forms with the 
objectives of: resolving whether the rates charged to commercial 
subscribers are regulated rates; eliminating some of the regulatory 
burdens associated with equipment and inside wiring rates; and reducing 
the regulatory burden associated with showings that a cable system is 
no longer subject to rate regulation. The Commission also proposes 
changes that would streamline the setting of initial regulated rates 
for previously unregulated systems, which would be available to small 
systems not choosing to use one of the special small system ratemaking 
options.
    45. In addition, the Commission proposes broader changes to the 
regulatory process with the objective of ensuring reasonable BST rates 
through a simplified regulatory process. Change could be accomplished 
by recalibrating the competitive differential that forms the basis for 
determining regulated rates or by another alternative proposed by 
commenters.
    46. Legal Basis. The authority for the action proposed in this 
rulemaking is contained in Sec. Sec.  1, 2(a), 3, 4(i), 4(j), 303(r), 
601(3), 602, and 623 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 152(a), 153, 154(i), 154(j), 303(r), 521, 522, and 543.
    47. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply. The RFA directs agencies to 
provide a description of, and where feasible, an estimate of the number 
of small entities that may be affected by the proposed rules, if 
adopted. 5 U.S.C. 603(b)(3). Section 601(6) generally defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' Section 601(3) provides that the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act., 15 U.S.C. 632, unless the agency has a 
more appropriate definition of the term. A ``small business concern'' 
under 15 U.S.C. 632 is one which: (1) Is independently owned and 
operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the SBA.
    48. The SBA has developed a small business size standard for cable 
and other program distribution, which includes all such companies 
generating $11 million or less in revenue annually. 13 CFR 121.201. The 
IRFA invites cable operators to provide a more precise estimate of the 
affected small cable entities.
    49. The Commission has developed its own small business size 
standard for a small cable operator for the purposes of rate 
regulation. Under 47 CFR 76.901(e), a ``small cable company'' is one 
serving fewer than 400,000 subscribers nationwide. Based on the 
Commission's most recent information, it estimates that there were 
1,439 cable operators that qualified as small cable companies at the 
end of 1995 and that the number has decreased since then. A ``small 
system'' under the Commission's rules is one serving ``15,000 or fewer 
subscribers. The service area of a small system shall be determined by 
the number of subscribers that are served by the system's principal 
headend, including any other headends or microwave receive sites that 
are technically integrated to the principal headend.'' 47 CFR 
76.901(c).
    50. 47 U.S.C. 543(m)(2) also contains a size standard for a ``small 
cable operator,'' which is ``a cable operator that, directly or through 
an affiliate, serves in the aggregate fewer than one percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that the number of 
systems meeting the subscribership limit totals approximately 1,450. 
The Commission does not have information gross annual revenues, and 
therefore is unable to estimate accurately the number of cable system 
operators that would qualify as small cable operators under the 
definition in the Communications Act.
    51. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements for Small Entities. Cable operators whose basic 
service tier rates are regulated must justify their basic service tier 
and associated equipment and installation rates using FCC Forms 1200, 
1205, 1210, 1220, 1230, 1235, and/or 1240. (The Commission's rules also 
reference FCC Forms 1211, 1215, and 1225. Form 1211 is not in use and 
references will be deleted from the Commission's rules. The Commission 
advised the Office of Management and Budget that it would no longer 
support use of FCC Forms 1215 and 1225, and dropped these forms from 
its information collection budget effective April 30, 1997. The 
Commission proposes to drop references to these forms from its rules.) 
When changes to the rate rules are determined, rate forms will be 
modified accordingly. Elimination of information regarding the CPST is 
anticipated, because CPST is no longer subject to rate regulation. One 
of the affected forms would be FCC Form 1230 used for small system 
cost-of-service showings pursuant to 47 CFR 76.934(h). Entities using 
FCC Form 1230 have previously aggregated data for CPST and BST. If CPST 
data is no longer included, they would bear the burden of excluding 
CPST data from the data included on the rate form. In addition, the 
presumptively reasonable rate in 47 CFR 76.934(h) of the Commission's 
rules may change to reflect the elimination of CPST data from the 
relevant data on FCC Form 1230.
    52. The Commission's rules currently offer regulatory options to 
small systems owned by small cable operators that are less burdensome 
than the regulations applicable to larger cable systems and operators. 
One option, the streamlined rate reduction for systems first becoming 
subject to rate regulation in 47 CFR 76.922(b)(5), could be eliminated 
as unnecessary pursuant to proposals in the NPRM. Form 1230 will 
continue to be available.
    53. Steps Taken to Minimize Significant Impact on Small Entities 
and Significant Alternatives Considered. The RFA requires an agency to 
describe any significant, specifically small business, alternatives 
that it has

[[Page 56888]]

considered in reaching its proposed approach, which may include the 
following four alternatives (among others): ``(1) The establishment of 
differing compliance or reporting requirements or timetables that take 
into account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.'' 5 U.S.C. 603(c)(1)-(c)(4).
    54. The Commission will consider potential revisions to cable 
television rate regulations in order to conform the rules to the sunset 
of CPST rate regulation and to improve the existing regulatory 
structure. Alternatively, the Commission will consider broader changes.
    55. The Commission will consider amending 47 CFR 76.934, the rule 
addressing small system cost of service showings, to reflect the end of 
CPST rate regulation, and making conforming changes to its FCC Form 
1230, which is used for establishing permitted rates on small systems. 
Except for possibly requiring elimination of CPST data from the data 
used to complete the form, these changes should not increase the 
regulatory burden small systems face as a result of rate regulation, 
but eliminating CPST-associated costs and expenses from the rate base 
could have an impact on the resulting BST per channel rate. An 
alternative is to consider changes in the rate rules that might address 
continuing difficulties faced by operators of small systems, such as 
the problems associated with the simultaneous growth in competition and 
the need for additional investment to upgrade facilities.
    56. Small systems owned by small cable companies can choose to 
adjust their regulated rates using the price cap methodology included 
in 47 CFR 76.922(d), (e), 76.934(h)(8). 47 CFR 76.922(g), the rule 
governing changes in the number of channels has sunset and is under 
review in the NPRM. The approach ultimately adopted in this proceeding 
could require revisions to FCC Forms 1210 and 1240. While an increase 
in the burden of computing rate adjustments on rate forms is not 
anticipated, the approach adopted in the rulemaking proceeding could 
affect the maximum permitted rate computed on the rate forms, 
particularly for systems moving a large number of channels from or to 
the BST. A corollary issue is the appropriate adjustment to rates for 
adding or removing digital television broadcast signals from the BST.
    57. The Commission also has under consideration a less burdensome 
way to set initial regulated rates than the way currently provided in 
the rules when a previously unregulated system first becomes subject to 
rate regulation. Options include limiting the period addressed in the 
rate review and looking to the rates of comparable systems. These 
changes would apply to large systems, but any changes made by the 
Commission would be available to small systems. The Commission will 
consider whether there is a continued need for the streamlined rate 
reduction method in 47 CFR 76.922(b)(5) that is available only to small 
systems setting initial regulated rates.
    58. With respect to equipment rates, the Commission has three 
matters under consideration: the definition of equipment that is 
subject to regulation; whether reliance can be placed on competitive 
forces to ensure reasonable rates; and the rate form used primarily by 
large cable companies. Because small cable systems owned by small cable 
companies have the option of using the small cable cost of service 
ratemaking methodology on FCC Form 1230, the regulatory burden of 
equipment rate regulation is currently less than that experienced by 
large cable systems. The regulatory approaches addressed in the NPRM 
with respect to equipment look toward easing the regulatory burden on 
cable operators generally and, if adopted, should not result in 
increased burdens on small cable systems.
    59. Finally, the Commission is considering the showing needed to 
establish effective competition. Only cable systems that are not 
subject to effective competition are subject to rate regulation by 
franchising authorities. Small systems would benefit from any 
efficiencies in demonstrating effective competition.
    60. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposed Rules. None.

Procedural Provisions

Ex Parte Rules

    61. This proceeding will be treated as a ``permit-but-disclose'' 
proceeding, subject to the ``permit-but-disclose'' requirements under 
47 CFR 1.1206(b) of the Commission's rules. Ex parte presentations are 
permissible if disclosed in accordance with Commission rules, except 
during the Sunshine Agenda period when presentations, ex parte or 
otherwise, are generally prohibited. Persons making oral ex parte 
presentations are reminded that a memorandum summarizing a presentation 
must contain a summary of the substance and not merely a listing of the 
subjects discussed. Pursuant to 47 CFR 1.1206(b)(2), more than a one or 
two sentence description of the views and arguments presented is 
generally required. Additional rules pertaining to oral and written 
presentations are set forth in Sec.  1.1206(b) of the Commission's 
rules. Finally, one copy of each disclosure filing also must be filed 
with other offices, as follows: (1) Qualex International, Portals II, 
445 12th Street, SW, Room CY-B402, Washington, DC, 20554; (2) John 
Norton, Media Bureau, 445 12th Street, SW, Room 4-C764, Washington, DC, 
20554; (3) Wanda Hardy, Media Bureau, 445 12th Street, SW., Room 3-
A862, Washington, DC, 20554.
    62. This document is available in alternative formats (computer 
diskette, large print, audio cassette, and Braille). Persons who need 
documents in such formats may contact Brian Millin at (202) 418-7426, 
TTY (202) 418-7365, or send an email to [email protected].

Paperwork Reduction Act

Initial Paperwork Reduction Act of 1995 Analysis

    63. This NPRM contains proposed information collection(s). The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and the Office of Management and 
Budget (OMB) to comment on the information collection(s) contained in 
this NPRM, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13 (``PRA''). Public and agency comments are due at the same 
time as other comments on this NPRM; OMB notification of action is due 
60 days from date of publication of this NPRM in the Federal Register.
    64. Comments should address: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.

FCC Forms: Individual Information

    65. OMB Control Number: 3060-0601.
    Title: Setting Maximum Initial Permitted Rates for Regulated Cable

[[Page 56889]]

Services Pursuant to Rules Adopted February 22, 1994, ``First Time 
Filers Form''.
    Form Number: FCC Form 1200.
    Type of Review: Revision of currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 20.
    Estimated Time per Response: 6-10 hours.
    Frequency of Response: One-time reporting requirement; third party 
disclosure.
    Total Annual Burden: 200 hours.
    Total Annual Costs: $30,000.
    Needs and Uses: The FCC Form 1200 is used by cable operators when 
they first become subject to rate regulation in order to establish the 
cable system's maximum initial permitted rate based on the Commission's 
benchmark methodology. This rate is adjusted for subsequent changes in 
external costs, inflation, and channel changes. On average, only about 
15-20 franchising authorities file for certification to regulate rates 
each year, so we expect that FCC Form 1200 will be required for about 
the same number of systems each year. The form is filed with and 
reviewed by local franchising authorities that have exercised 
jurisdiction over BST rates.
    66. OMB Control Number: 3060-0703.
    Title: Determining Regulated Equipment and Installation Costs, 
``Equipment Form''.
    Form Number: FCC Form 1205.
    Type of Review: Revision of a currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 4,000. 47 U.S.C. 543(a)(7) allows cable 
operators to aggregate equipment costs into broad categories on a 
company, regional, system, or franchise level, so the number of forms 
prepared by an operator with multiple systems may be substantially less 
than the number of copies of the completed form that the operator files 
with franchising authorities. Thus, the estimate of the number of 
respondents and the total annual burden and costs may be high.
    Estimated Time per Response: 4-12 hours.
    Frequency of Response: Annual reporting requirements; third party 
disclosure.
    Total Annual Burden: 48,000 hours.
    Total Annual Costs: $7,200,000.
    Needs and Uses: Cable operators use FCC Form 1205 to justify their 
equipment and installation rates. The form is filed with and reviewed 
by local franchising authorities that have exercised regulatory 
jurisdiction over those rates. The form is to be completed using 
financial data from the company's general ledger and subsidiary records 
maintained in accordance with generally acceptable accounting 
principles.
    67. OMB Control Number: 3060-0595.
    Title: Updating Maximum Permitted Rates for Regulated Cable 
Services.
    Form Number: FCC Form 1210.
    Type of Review: Revision of a currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 1500.
    Estimated Time per Response: 8-10 hours.
    Frequency of Response: Quarterly and annual reporting requirements; 
third party disclosure.
    Total Annual Burden: 15,000 hours.
    Total Annual Costs: $2,250,000.
    Needs and Uses: Cable operators use FCC Form 1210 for justifying 
BST rate adjustments due to changes in external costs, inflation, and 
the number of channels on the BST. The form is filed with and reviewed 
by franchising authorities that have exercised jurisdiction over BST 
rates. Operators may elect to use FCC Form 1240 instead of FCC Form 
1210.
    68. OMB Control Number: 3060-0594.
    Title: Cost of Service Filing for Regulated Cable Services.
    Form Number: FCC Form 1220.
    Type of Review: Revision of a currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 30.
    Estimated Time per Response: 40 hours.
    Frequency of Response: Once and on occasion reporting requirements 
after 2 years; third party disclosure.
    Total Annual Burden: 1200 hours.
    Total Annual Costs: $180,000.
    Needs and Uses: Operators may elect to use the cost-of-service 
methodology computed on FCC Form 1220 in lieu of FCC Forms 1200, 1210, 
or 1240 when setting the maximum initial permitted BST rate or 
adjusting the BST rate in order to justify a rate above the levels 
determined by the Commission's benchmark and price cap methodologies. 
The form is filed with and reviewed by franchising authorities that 
have exercised jurisdiction over BST rates.
    69. OMB Control Number: 3060-0644.
    Title: Establishing Maximum Permitted Rates for Regulated Cable 
Services on Small Cable Systems.
    Form Number: FCC Form 1230.
    Type of Review: Revision of a currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 5.
    Estimated Time per Response: 2.25 hours.
    Frequency of Response: On occasion reporting requirements; third 
party disclosure.
    Total Annual Burden: 11.25 hours.
    Total Annual Costs: $16,875.
    Needs and Uses: The Commission's rules allow a small cable system 
(15, 000 or fewer subscribers) owned by a small cable company (no more 
than 400,000 subscribers) to use a very simplified cost-of-service 
method to set its maximum permitted rate. The form for this, FCC Form 
1230, is filed with and reviewed by franchising authorities that have 
exercised jurisdiction over BST rates.
    70. OMB Control Number: 3060-0688.
    Title: Abbreviated Cost of Service Filing for Cable Network 
Upgrades.
    Form Number: FCC Form 1235.
    Type of Review: Revision of a currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 200.
    Estimated Time per Response: 10-20 hours.
    Frequency of Response: On occasion reporting requirements; third 
party disclosure.
    Total Annual Burden: 4000 hours.
    Total Annual Costs: $600,000.
    Needs and Uses: Operators that have undertaken significant network 
upgrades may use FCC Form 1235 to justify a surcharge to the BST rate 
to recover the costs of the upgrade. The form is filed with and 
reviewed by franchising authorities that have exercised jurisdiction 
over BST rates.
    71. OMB Control Number: 3060-0685.
    Title: Updating Maximum Permitted Rates for Regulated Cable 
Services.
    Form Number: FCC Form 1240.
    Type of Review: Revision of a currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 5500.
    Estimated Time per Response: 8-10 hours.
    Frequency of Response: Annual reporting requirements; third party 
disclosure.
    Total Annual Burden: 55,000 hours.
    Total Annual Costs: $8,250,000.
    Needs and Uses: FCC Form 1240 is used by cable operators as an 
alternative to FCC Form 1210 to compute annual BST rate adjustments for 
changes in external costs, inflation, and the number of channels. 
Because it enables cable operators to project cost changes and include 
past unrecovered costs in a true-up, it is substantially more popular 
with cable operators than FCC Form 1210.

[[Page 56890]]

The form is filed with and reviewed by franchising authorities that 
have exercised jurisdiction over BST rates.

Contact For Further Information

    72. For additional information concerning the information 
collections contained in this document, contact Judith B. Herman at 
(202) 418-0214, or via the Internet at [email protected].

Ordering Clause

    73. This NPRM is issued pursuant to the authority contained in 
sections 1, 2(a), 3, 4(i), 4(j), 303(r), 601(3), 602, and 623 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 153, 
154(i), 154(j), 303(r), 521, 522, and 543.

List of Subjects in 47 CFR Part 76

    Cable television.

    Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 02-22427 Filed 9-4-02; 8:45 am]
BILLING CODE 6412-01-P