Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of:                | ) | CSR-5424                     |
|                                  |   |                              |
| Request for Clarification of     | ) |                              |
| Rate                             |   |                              |
|                                  | ) |                              |
| Regulatory Rules                 |   |                              |
|                                  | ) |                              |
| Inside Wire Maintenance          |   |                              |
|                                  | ) |                              |
|                                  |   |                              |
|                                  | ) |                              |
+----------------------------------+---+------------------------------+

**MEMORANDUM OPINION AND ORDER**

**Adopted: January 18, 2001 Released: January 22, 2001**

By the Chief, Cable Services Bureau:

I.  INTRODUCTION

```{=html}
<!-- -->
```
1.  Charter Communications ("Charter") has requested clarification that
    the monthly service fee for an inside wire maintenance service plan
    that covers all communications lines in a customer's home, including
    satellite, telephone and cable (the "whole house" plan), would not
    be subject to cable television rate regulation.[^1] The Commission
    issued a Public Notice seeking comment on the request.[^2] The
    National Cable Television Association ("NCTA") commented in support
    of the request.[^3] No comments opposing the request were filed.

    II\. PETITION

2.  Under Charter's "whole house" plan, it would provide inside wire
    maintenance to consumers as an alternative to telephone inside wire
    maintenance offered by local exchange carriers ("LECs").[^4]
    However, the "whole house" plan would cover not only telephone
    inside wire maintenance, but would also extend to other home
    communications lines, such as cable television and satellite.[^5]
    Charter states that consumers who choose Charter's "whole house"
    plan would pay a monthly fee for the service at "a lower price than
    telephone inside wire maintenance alone."[^6] Charter indicates that
    it would continue to offer consumers, who do not opt for the "whole
    house" plan, transactional cable wire maintenance at the regulated
    hourly service charge ("HSC") under 47 C.F.R. § 67.923.[^7]

3.  Charter states that while the offering of telephone inside wire
    maintenance has been deregulated, there are still few products that
    compete with the LECs' inside wire maintenance services.[^8] Charter
    notes that the Commission has stated that the deregulation of
    telephone inside wiring was intended to "foster competition in the
    inside wiring installation and maintenance markets, to promote new
    entry into those markets, to produce cost savings that would be
    passed on to consumers, and to foster the development of an
    unregulated, competitive telecommunications marketplace."[^9] NCTA
    asserts that the "whole house" plan would not only result in lower
    prices for consumers but would also help reduce subscriber confusion
    over which communications provider to contact regarding wire
    problems.[^10]

    III\. DISCUSSION

4.  The Cable Television Consumer Protection and Competition Act of 1992
    (\"1992 Act\")[^11] provides that where competition is absent, cable
    rates are to be regulated to protect subscribers.[^12] The
    legislative history of the 1992 Act states that the Commission
    should adopt policies that will protect consumers against the
    imposition of unnecessary charges, including, for example, charges
    for home wiring maintenance.[^13] Accordingly, the Commission
    established a system of rate regulation for cable rates that used a
    cost‑based formula for regulated equipment and installation
    services, including inside wiring, resulting in rates that are
    "comparable to those that would exist in a competitive
    environment."[^14] However, as explained below, the Commission has
    recognized limits or exceptions to the regulated status of
    equipment. These findings support a conclusion that Charter's "whole
    house" wiring plan is not subject to rate regulation.

5.  In previous decisions, including *Southeast Mississippi,* we
    explained that the regulatory treatment of inside wiring, and the
    costs associated with its maintenance, depend on who owns the
    wiring.[^15] We found that a cable operator could offer to maintain
    the inside wiring of customers who own their wiring through a
    cost‑based cable wire maintenance contract that is priced according
    to Commission rules, or through a similarly cost-based, as‑needed,
    HSC‑based repair option.[^16] We noted that consumer owners of cable
    inside wiring could also maintain their wiring themselves or
    contract with an outside vendor for these services.[^17] We stated
    that, if an operator offers a monthly cable wire maintenance
    contract, that contract should be subject to cable rate regulation
    even though the operator also offers a regulated, as-needed HSC
    option.[^18] We so found because the service alternative in
    *Southeast Mississippi* (*i.e.,* the regulated HSC) could not be
    expected to provide competitive pressures on prices for inside
    wiring maintenance contracts since the regulated, as-needed HSC
    option is not comparable to or competitive with monthly service fees
    under a maintenance contract.[^19]

6.  We recognized in *Southeast Mississippi* that the task of comparing
    the costs and benefits over time of purchasing an inside wiring
    maintenance plan for a flat monthly fee, versus relying on the HSC
    if and when inside wire maintenance or repair is needed, is a
    "difficult, if not amorphous, task."[^20] We stated that the
    analysis involved in this task would require a subscriber "to make
    assumptions about future events that even the cable operator may be
    unable to predict reliably for a particular subscriber."[^21]
    Accordingly, we concluded that the two types of maintenance, both
    offered by the cable company, were not comparable and could not be
    expected to exert competitive pressures upon one another.

7.  However, in the instant case, Charter seeks to offer a "whole house"
    inside wiring maintenance plan which will be in direct competition
    with monthly maintenance plans offered by LECs. We believe that,
    unlike an as-needed HSC provided by the cable company, a LEC-offered
    telephone monthly maintenance plan will exert competitive pressure
    on the "whole house" monthly maintenance plan offered by the cable
    company. Consumers should have little difficulty comparing the
    monthly price of the LEC telephone maintenance plan to the monthly
    price of the cable operator "whole house" maintenance plan. We find
    that the comparability and competitive pressures that were not
    evidenced in *Southeast Mississippi* are present in the instant
    case.[^22]

8.  Charter will continue to offer consumers, who do not opt for the
    "whole house" plan, wire maintenance pursuant to the regulated HSC
    under 47 C.F.R. § 67.923. The 1992 Cable Act[^23] and Commission
    rules require cable operators to offer equipment and installation
    services at rate levels that reflect actual costs.[^24] Charter's
    alternative, "whole house" offering, however, since it is subject to
    competition, is not subject to rate regulation. The Commission
    concluded similarly when confronted with the regulatory status of
    equipment offered both for lease and for sale. In the
    *Reconsideration Order,* the Commission found that when a cable
    operator offers the same equipment for lease and for sale, the lease
    price is subject to rate regulation and the sale price is not.[^25]
    This finding was based on the fact that subscriber purchase of
    equipment is a close, competitive substitute for an equipment lease
    rate. Conversely, in *Southeast Mississippi*, we found that while a
    subscriber can readily ascertain the relative costs and benefits of
    a lease versus the purchase of equipment, the same could not be said
    for consumers analyzing a monthly service charge for cable wire
    maintenance versus an as-needed HSC. In the instant case, Charter's
    "whole house" offering is subject to competition. In addition,
    Charter's regulated, as-needed HSC service will provide a regulated
    wire maintenance option to safeguard consumers.

9.  As evidenced by the above discussion, we find that the "whole house"
    maintenance plan is comparable to the LEC-offered telephone
    maintenance plans, and that the LEC-offered plans will exert
    competitive market pressure on the "whole house" plan. Consumers
    will continue to have the option of a cost-based HSC rate for cable
    wire maintenance.

10. Accordingly, IT IS ORDERED that Charter Communication's "whole
    house" wire maintenance plan, as described in the Cole, Raywid &
    Braverman letter, is not subject to our cable rate regulations.

    11\. This action is taken pursuant to authority delegated by section
    0.321 of the Commission's rules. 47 C.F.R. § 0.321.

    FEDERAL COMMUNICATIONS COMMISSION

Deborah A. Lathen

Chief, Cable Services Bureau

[^1]: Letter from Cole, Raywid & Braverman to Nancy Stevenson, dated
    January 15, 1999 (CSR-5424)("Cole, Raywid letter"). Petitioners
    subsequently indicated orally that the request was filed on behalf
    of Charter Communications.

[^2]: Public Notice, DA 99-1735 (August 31, 1999).

[^3]: *See* comments of the National Cable Television Association.

[^4]: Cole, Raywid letter at 1.

[^5]: *Id*.

[^6]: *Id*.

[^7]: *Id*. at 2.

[^8]: *Id*.

[^9]: *Id*. citing *Memorandum Opinion and Order*, CC Docket No. 79-105,
    1 FCC Rcd 1190, 1195 (1986).

[^10]: NCTA at 2.

[^11]: Pub. L. No. 102‑385, 106 Stat. 1460.

[^12]: 47 U.S.C. Sec. 543(a). *See also,* TCI of Southeast Mississippi
    ("Southeast Mississippi"), 13 FCC Rcd. 11080 (1998).

[^13]: S. Rep. No. 92, 102d Cong., 1^st^ Sess. 23 (1991).

[^14]: *Report and Order and Further Notice of Proposed Rulemaking*, MM
    Docket 92-266, 8 FCC Rcd 5631 (1993); *Report and Order*, CS Docket
    96-57, 11 FCC Rcd 6778 (1996); *First Order on Reconsideration,
    Second Report and Order, and Third Notice of Proposed Rulemaking*
    ("Reconsideration Order"), MM Docket No. 92-266, 9 FCC Rcd. 1164,
    1192 n.80 (1993) (\"a competitive rate is generally one that
    reflects actual cost including a reasonable profit\").

[^15]: Southeast Mississippi at 11081. *See also* TCI TKR of Houston,
    Inc., 11 FCC Rcd 20929, 20937-38 (1996); TCI Cablevision of
    California, Inc., 11 FCC Rcd 11298, 11302-03 (1996); Continental
    Cablevision of Ohio, 11 FCC Rcd 508, 508 (1996); TCI Cablevision of
    Oregon, Inc., 10 FCC Rcd 12547, 12551 (1995); Comcast Cablevision of
    Mount Clemens, Inc. v. City of Mount Clemens, MI, 10 FCC Rcd 11046,
    11048 (1995); Comcast Cablevision of Tallahassee, Inc., 10 FCC Rcd
    7686, 7698 (1995).

[^16]: *Id.* Because we have held that a cable operator may not charge a
    separate wire maintenance fee for operator owned wiring, and because
    the operator described in the Cole, Raywid letter currently offers a
    maintenance plan at the regulated HSC rate, we will assume that the
    inside wiring at issue here is subscriber owned.

[^17]: *Southeast Mississippi* at para. 14.

[^18]: *Id*. at para. 21.

[^19]: *Id.* at para. 18.

[^20]: *Id*. at para. 17.

[^21]: *Id*.

[^22]: *See also, In the Matter of SBC Media Ventures, Inc*., 9 FCC Rcd.
    7175, 7180 (1994), in which we concluded that A/B switches were not
    subject to rate regulation because, *inter alia,* "competitive
    sources for such switches exist in the community through which
    subscribers may obtain them."

[^23]: The Cable Television Consumer Protection and Competition Act of
    1992 ("1992 Cable Act"), Pub. L. No. 102-385, 106 Stat. 1460.

[^24]: 47 U.S.C. § 543(b)(3); 47 C.F.R. § 76.923(a)(2).

[^25]: *Reconsideration Order* at 1192.