Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Rules and Regulations 15121

15. We do not believe that the

amendments to the rules adopted in this

Report and Order will have a significant

economic impact on a substantial

number of small entities as defined by

statute, by our rules, or by the Small

Business Administration (SBA). See 47

U.S.C. 543(m)(2); 47 CFR 76.901(e); 13

CFR 121.201 (SIC 4841); 5 U.S.C. 605(b).

16. Our rules for regulating the rates

of small systems owned by small cable

companies were established in a

previous order, so this Report and Order

only concerns the permitted rates for

low-price systems. Based on the rule

changes adopted here, low-price

systems will be permitted to maintain

the rates originally established pursuant

to their status as systems subject to

transition relief. Further, the rules

adopted in this Report and Order will

allow low-price systems to increase

their rates in the same manner as our

previous transition rules for low-price

systems. The rules adopted herein do

not alter the method by which low-price

cable system rates currently are

regulated, and for this reason these

amendments will not have a significant

economic impact on a substantial

number of small cable operators, and

will not change the treatment of lowprice systems.

17. The Commission will send a copy

of this certification, along with this

Report and Order, in a report to

Congress pursuant to the Small Business

Regulatory Enforcement Fairness Act of

1996, 5 U.S.C. 801(a)(1)(A), and to the

Chief Counsel for Advocacy of the Small

Business Association, 5 U.S.C. 605(b). A

copy of this certification will also be

published in the Federal Register. Id.

V. Ordering Clauses

18. Accordingly, it is ordered that,

pursuant to sections 4(i), 4(j), 303(r),

and 623 of the Communications Act of

1934, as amended, 47 U.S.C. 154(i),

154(j), 303(r), and 543, the rules,

requirements and policies discussed in

this Report and Order are adopted and

§ 76.922 of the Commission’s rules, 47

CFR 76.922, is amended as set forth

below.

19. It is further ordered that the

Secretary shall send a copy of this

Report and Order, including the Final

Regulatory Flexibility Analysis, to the

Chief Counsel for Advocacy of the Small

Business Administration in accordance

with paragraph 603(a) of the Regulatory

Flexibility Act, Public Law 96–354, 94

Stat. 1164, 5 U.S.C. 601 et seq. (1981).

20. It is further ordered that the

requirements and regulations

established in this decision shall

become effective April 30, 1997.

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission

William F. Caton,

Acting Secretary.

Rule Changes

Part 76 of Title 47 of the Code of

Federal Regulations is amended as

follows:

PART 76—CABLE TELEVISION

SERVICE

1. The authority citation for Part 76

continues to read as follows:

Authority: 47 U.S.C. 151, 152, 153, 154,

301, 302, 303, 303a, 307, 308, 309, 312, 315,

317, 325, 503, 521, 522, 531, 532, 533, 534,

535, 536, 537, 543, 544, 544a, 545, 548, 552,

554, 556, 558, 560, 561, 571, 572, 573.

2. Section 76.922 is amended by

revising paragraph (b)(4)(ii) to read as

follows:

§ 76.922 Rates for the basic service tier

and cable programming services tiers.

* * * * *

(b) * * *

(4) * * *

(ii) Low-price systems. Low-price

systems shall be eligible to establish a

transition rate for a tier.

* * * * *

Note: This attachment will not be

published in the Code of Federal Regulations.

Attachment

CASH FLOW RATIOS

Category

Average operating revenues

(million)

Average operating expenses before interest, taxes,

depreciation

and amortization

(million)

Income before interest,

taxes, depreciation and

amortization

(IBITDA)

(million)

Cash flow

ratios 1

(percent)

(A) (B) (A¥B)

Low-price group (40 systems) ........................................................................................ $15.1 $9.6 $5.5 36.5

Non-low-price group (38 systems) ................................................................................. 12.5 7.5 5 39.7

Competitive group (2 systems) ...................................................................................... 76.4 46.2 30.2 39.5

All other 2 (279 systems) ................................................................................................ 8.3 5.3 3 36.7

1 Calculated on totals for each group prior to averaging (i.e., cash flow ratios equal total operating revenues minus total operating expenses

before interest, taxes, depreciation and amortization divided by total operating revenues). 2 Includes systems for which a cost-of-service showing was filed, systems regulated only at the local level, unregulated systems, and systems

subject to social contracts.

[FR Doc. 97–7976 Filed 3–28–97; 8:45 am]

BILLING CODE 6712–01–P

47 CFR Part 76

[CS Docket No. 95–174; FCC 97–86]

Uniform Cable Price-Setting

Methodology

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Report and Order

modifies rules and policies concerning

cable systems. The Report and Order

amends our regulations to permit the

establishment by a cable operator of

uniform rates for uniform services

offered across multiple franchise areas
15122 Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Rules and Regulations

on a case-by-case basis upon the

Commission’s finding that the cable

operator’s submission of a proposed

uniform rate proposal and supporting

justification demonstrates that the

proposed rate structure is reasonable.

This item fulfills Congress’ preference

that rates be set pursuant to competition

rather than regulation.

DATES: The amendments in this final

rule impose information collection

requirements and shall become effective

upon approval by OMB but no sooner

than April 30, 1997. The Commission

will publish a document at that time

confirming the effective date and

notifying parties that these requirements

and regulations have become effective.

Written comments by the public on the

proposed and/or modified information

collections are due on or before May 30,

1997.

ADDRESSES: A copy of any comments on

the information collection contained

herein should be submitted to Dorothy

Conway, Federal Communications

Commission, Room 234, 1919 M Street,

NW., Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:

Larry Walke, Cable Services Bureau,

(202) 418–7200. For additional

information concerning the information

collections contained herein, contact

Dorothy Conway at 202–418–0217, or

via the Internet at dconway@fcc.gov.

SUPPLEMENTARY INFORMATION:

This is a synopsis of the

Commission’s Report and Order in CS

Docket No. 95–174, FCC No. 97–86,

adopted March 13, 1997 and released

March 14, 1997. The full text of this

decision is available for inspection and

copying during normal business hours

in the FCC Reference Center (room 239),

1919 M Street, NW, Washington, D.C.

20554, and may be purchased from the

Commission’s copy contractor,

International Transcription Service,

(202) 857–3800, 1919 M Street, NW,

Washington, D.C. 20554.

This Report and Order contains a new

information collection. The

Commission, as part of its continuing

effort to reduce paperwork burdens,

invites the general public to comment

on the information collection contained

in this Report and Order, as required by

the Paperwork Reduction Act of 1995,

Public Law 104–13. Public comments

are due May 30, 1997. 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.

A copy of any comments on the

information collection contained herein

should be submitted to Dorothy

Conway, Federal Communications

Commission, Room 234, 1919 M Street,

N.W., Washington, D.C. 20554, or via

the Internet to dconway@fcc.gov. For

additional information, contact Dorothy

Conway at 202–418–0217 or via the

Internet at the above address.

OMB Approval Number: 3060–XXXX.

Title: Implementation of Sections of

the Cable Television Consumer

Protection and Competition Act of 1992;

Rate Regulation; Uniform Rate-Setting

Methodology.

Type of Review: New Collection.

Respondents: Businesses and other

for-profit entities; state, local and tribal

governments.

Number of Responses: 60 (10 rate

proposals and 50 LFA reviews).

Estimated Time Per Response: 20–50

hours.

Total Annual Burden to Respondents:

1,500 hours estimated as follows: We

estimate that on an annual basis, cable

operators will file no more than 10

uniform rate proposals with the

Commission. We estimate that each

operator will undergo an average burden

of 50 hours to draft the rate proposal

and to reply to comments received from

interested parties. 10 rate proposals × 50

hours = 500 hours. We estimate that

each rate proposal will affect an average

of five local franchise areas. The average

burden for each LFA to review each rate

proposal and file comments is estimated

to be 20 hours. 10 rates proposals × 5

LFAs per proposal × 20 hours = 1,000

hours.

Total Estimated Cost to Respondents:

$400, estimated as follows: Cable

operators will have postage and

stationery expenses of $15 per rate

proposal to serve copies of the proposal

and each set of replies on the

Commission and affected LFAs. 10 ×

$15 = $150. We estimate that postage

and stationery expenses for each LFA

will be $5 to file comments on each

proposal. 10 proposals × 5 LFAs per

proposal × $5 = $250.

Needs and Uses: The information

collections contained herein are

necessary to implement the statutory

provisions for cable operators contained

in the 1992 Cable Act. Uniform rate

proposals will be filed with the

Commission and served on all affected

LFAs. The rate proposals, comments

received from LFAs and replies received

from cable operators will be reviewed

by the Commission in considering

whether the interests of subscribers will

be protected under the new rate

proposal.

I. Introduction

1. On November 29, 1995, the

Commission issued a Notice of

Proposed Rulemaking (‘‘NPRM’’) in

which we explored the establishment of

an optional rate-setting methodology

where a cable operator could establish

uniform rates for uniform cable service

tiers offered in multiple franchise areas.

Notice of Proposed Rulemaking in CS

Docket No. 95–174 (Implementation of

Sections of the Cable Television

Consumer Protection and Competition

Act of 1992—Rate Regulation, Uniform

Rate-Setting Methodology), 60 FR 63492

(December 11, 1995). We find that the

establishment of such uniform rates

would benefit both cable service

subscribers and cable operators. We also

find, however, that the implementation

of uniform rates raises several complex

case-by-case issues. Accordingly, we

hereby permit the establishment of

uniform rates across multiple franchise

areas on a case-by-case basis upon the

Commission’s finding that the cable

operator’s submission of a proposed

uniform rate proposal and supporting

justification demonstrates that the

proposed rate structure will be

reasonable, taking into account all

critical factors relevant to its

implementation, and subject to one

important condition. Under any uniform

rates approach permitted by the

Commission, rates for regulated basic

service tiers (’’BSTs’’) may not exceed

the BST rates that would be established

under our existing regulations; thus,

BST rates will either decrease or remain

the same under a uniform rates

mechanism.

2. As discussed more fully below, we

have concluded that permitting

operators serving multiple franchise

areas to establish uniform services at

uniform rates in all areas would be

beneficial for subscribers, franchising

authorities (‘‘LFAs’’), and cable

operators. Whether to seek to implement

uniform rates, however, will be left to

the discretion of cable operators. A

uniform rates approach could facilitate

an operator’s ability to promote its

service on a regional basis. This

approach could better inform consumers

and enable them to compare packages of

services offered by competitors, thereby

improving competition among

providers. Increased competition could

result in improved service and reduced

rates for subscribers.
Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Rules and Regulations 15123

II. Background

3. As stated in the NPRM, under the

Cable Television Consumer Protection

and Competition Act of 1992 (the ‘‘1992

Cable Act’’), Cable Television Consumer

Protection and Competition Act, Public

Law 102–385, 106 Stat. 1460 (1992), and

the Commission’s implementing

regulations, 47 CFR §§ 76.901–86, a

cable operator serving multiple

franchise areas must establish maximum

permitted rates independently in each

franchise area. Rate-regulated services

consist of the basic service tier (‘‘BST’’),

which includes, at a minimum, all local

broadcast stations and public,

educational, and governmental (‘‘PEG’’)

access channels carried on the system,

and the cable programming services tier

(‘‘CPST’’), which includes all non-BST

programming offered over the cable

system, other than programming offered

on a per channel or per program basis.

4. We noted that enforcement of the

rate regulations is divided between

qualified local franchising authorities

(‘‘LFAs’’) and the Commission. BST rate

regulation is generally enforced by

qualified LFAs. An operator’s CPST, on

the other hand, is subject to rate

regulation directly by the Commission.

5. We also discussed the situation

where a cable operator acquires a

number of contiguous systems from

other entities and seeks to establish

uniform rates and services for those

systems. We stated that, under the

Commission’s ‘‘going-forward’’ rules,

the operator will typically have the

flexibility to add channels to certain

systems and delete channels from others

to establish a uniform programming

line-up. The operator’s efforts, however,

to set a uniform rate will be constrained

because the going-forward rules

specifically dictate permitted rate

changes that must accompany changes

in the level of service and do not permit

regional averaging of the data used to

compute rates.

6. In the NPRM we tentatively

concluded that permitting operators

serving multiple franchise areas to

establish uniform services at uniform

rates in all areas would be beneficial for

subscribers, franchising authorities, and

operators. We stated that such an

approach could facilitate an operator’s

advertisement of a single rate for cable

service over a broad geographic region,

which could lower its marketing costs

and enhance its ability to respond to

competition from alternative service

providers that may establish and market

uniform services without regard to

franchise area boundaries.

7. In the NPRM we requested

suggestions for an appropriate method

for the establishment of uniform rates,

and offered for comment two specific

alternatives that would be revenueneutral to an operator. Under the first

approach, an operator generally would

set BST rates equal to the lowest BST

rate for any one franchise area as

determined under our existing rate

regulations and recoup the resulting

foregone BST revenue in a new uniform

CPST rate charged to CPST subscribers.

Under the second approach, an operator

would generally determine a blended

average rate for BSTs and CPSTs,

respectively, pursuant to a formula

designed by the Commission.

8. In the context of both approaches,

we sought comment on various aspects

of a cable operator’s establishment of

uniform rates for uniform services,

including: (1) How an operator would

determine equipment rates; (2) the costs

and benefits of requiring an operator, if

it chose to set the uniform rate in

unregulated franchise areas, to base the

uniform rate in part on data from

unregulated areas; (3) how an operator

would apply our going-forward policies;

(4) whether this approach would protect

cable subscribers from unreasonable

rates in accordance with the 1992 Cable

Act, and whether an operator should be

required to phase-in any resulting CPST

rate increases; (5) whether a cable

operator’s setting of uniform rates

should be restricted to franchise areas

located within some level of proximity

to each other, such as the Area of

Dominant Influence, the same county or

state, or whether a cable operator should

be permitted to select the region in

which to set uniform rates; and (6) how

PEG and other franchise-related

expenses should be addressed in the

context of uniform rates.

III. Discussion

9. Much of the record submitted in

response to the NPRM generally

endorses our proposal to establish an

optional approach under which a cable

operator could set uniform rates for

uniform services offered in multiple

franchise areas, as stated in the NPRM.

As a general matter, we believe that,

under certain conditions, allowing a

cable operator to establish uniform

regulated cable service rates across

multiple franchise areas could benefit

consumers, LFAs and the cable

operator. The record, however, indicates

that the Commission’s adoption of a

specific methodology that would be

applicable to all cable operators

nationwide may not be the most feasible

course of action, given variations in

factors from system to system. We will,

therefore, establish procedures to permit

uniform rates across multiple franchise

areas through the Commission’s case-bycase review of a cable operator’s

proposed uniform rate structure. These

procedures will permit the Commission

to take account of the variations

between cable systems and of the

comments of affected LFAs.

Accordingly, a cable operator seeking to

establish uniform rates will be required

to submit a proposal with supporting

justification that states fully and

precisely all pertinent facts and

considerations relied on to demonstrate

that the proposed rates will not be

unreasonable.

10. Under the rate-setting approach

adopted herein, a cable operator may

submit to the Commission a proposal for

establishing uniform rates for uniform

services offered in multiple franchise

areas. The Commission, however, will

not specify a particular methodology for

setting uniform rates. The only

condition we place on any proposed

uniform rates mechanism is that the

BST rates may not exceed the BST rates

that would be established under our

existing regulations. In addition, below

we offer general guidelines that the

Commission will consider in deciding

whether to approve a particular

proposed mechanism.

11. A cable operator will be required

to submit with its proposal a certificate

of service showing that the proposal and

its supporting justification have been

served on all affected LFAs. The

Commission will place the operator’s

filing on public notice. Interested

persons, including the affected LFAs,

may submit comments on the proposal

within sixty days after the date of the

public notice. The cable operator may

file a reply to the comments within

thirty days thereafter. The Commission

will consider the justification, as well as

all other submitted materials, and

determine whether the proposed

uniform rates will not be unreasonable.

Pursuant to this Order and any

conditions established in a Commission

decision on a particular proposal, the

Commission may approve uniform rates

notwithstanding any differences

between the uniform rates and the rates

that would be determined under our

existing benchmark rate formula.

12. Some LFAs express concern that

a uniform rates mechanism will not

protect subscribers from unreasonable

cable service rates, as required under

the 1992 Cable Act. On the contrary, we

believe that, in any event, rates will

remain reasonable under any uniform

rates approach approved by the

Commission. First, it is important to

note that, while the benchmark formula

is the most widely used method for

determining rates in compliance with
15124 Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Rules and Regulations

our rules, we have found rates other

than, or that vary from, benchmark rates

to be reasonable. For example, an

operator may elect to justify BST and

CPST rates based on a cost-of-service

showing. The Commission has also

eliminated the ‘‘all rates in play’’

approach so that, if no complaint

concerning a CPST rate or rate increase

was filed before November 6, 1995, the

cable operator’s CPST rate as of that

date would be deemed not unreasonable

under our rules. This may lead to a rate

being deemed not unreasonable

although the rate might not be accepted

under our benchmark formula. We also

note that the Commission has an ongoing proceeding in which we are

considering increased pricing flexibility

for operators that may result in

somewhat higher CPST and lower BST

rates. See Memorandum Opinion and

Order, and Notice of Proposed

Rulemaking, MM Docket No. 92–266

and CS Docket No. 96–157, 61 FR 45356

(August 29, 1996) (‘‘Cable Pricing

Flexibility NPRM’’). Finally, the

Commission has allowed, subject to

certain conditions, agreements among

LFAs and small cable operators to serve

as yet another alternative method or

process for establishing reasonable rates

for regulated tiers of cable service.

13. We further address the concerns of

LFAs regarding the reasonableness of

uniform rates by placing a condition on

an operator’s setting of uniform rates.

That is, under any uniform rates

structure established pursuant to this

Order, BST rates for any subscriber in

the affected areas may not exceed the

BST rates that would be established

under our existing regulations. Thus,

LFAs can be assured that, at a

minimum, BST rates will either

decrease or remain unchanged. For

example, if an operator sought to

implement uniform rates for three

franchise areas where the maximum

permitted BST rates are $10.00, $11.00

and $12.00, respectively, any uniform

rates proposal that resulted in a uniform

BST rate greater than $10.00 would be

disapproved.

14. The fair implementation of a

uniform rate approach is facilitated if

the Commission can examine the

methodology to be employed and the

impact of that methodology on

subscribers in advance of its

implementation. Our approach will

provide the Commission with the ability

to render an informed and accurate

decision on whether an operator’s

proposed uniform rates are not

unreasonable. An operator’s supporting

justification must include a specific,

detailed description of all relevant

financial and economic data, and other

factors (including particularly local

factors) that demonstrate the impact of

the proposal on subscriber rates, and

that justify the uniform rates as not

unreasonable. This approach also will

allow the Commission to consider the

views of LFAs and consider whether the

interests of subscribers will be protected

under the new rate structure.

15. On a going-forward basis, we will

require operators that establish initial

uniform rates under the regulations we

set forth here to adjust future rates on

an annual basis, pursuant to FCC Form

1240. We believe that allowing rate

changes no more frequently than

annually will enhance the efficiency of

rate review by LFAs. As under our

current rules, review of adjustments to

BST rates will be the responsibility of

LFAs while the Commission will be

responsible for review of CPST rates.

16. We seek to provide guidance in

this Order to cable operators that

propose uniform rates. First, as we

already have indicated, implementing

any uniform rate approach across

multiple franchise areas inevitably

raises issues that do not lend themselves

to a global resolution. The most difficult

and common issue arises when a cable

operator is regulated by multiple LFAs,

as compared to a single state-level or

regional regulatory body. A

methodology that would produce

uniform rates throughout multiple

franchise areas and would be applicable

in one particular franchise area, for

example, would be based in part on

information that is particular to other

franchise areas.

17. The NPRM sought comment on

how review by one LFA of a proposed

uniform rate may affect implementation

of that rate in other franchise areas.

First, some LFAs contend that a uniform

rate approach could increase their

administrative burden by requiring

them to review the underlying data and

rates for all local franchising areas

where the uniform rate is charged in

order to review the uniform rate charged

in its local franchising area. We

disagree. The condition specified above,

that requires that BST rates determined

under a uniform rate approach may not

exceed those established under our

existing regulations, will ease LFAs’

regulatory burdens by ensuring LFAs

that any BST rates they must review

will either decrease or remain

unchanged. LFAs’ administrative

burdens therefore will not significantly

increase.

18. Other LFAs responded to this

inquiry by arguing that their jurisdiction

over basic cable rates could be

compromised under a uniform rates

approach. We also reject these

arguments. First, we note the discussion

above concerning an LFA’s option to

participate vigorously in the

Commission’s review of an operator’s

proposed uniform rates approach.

Second, an LFA’s authority will not be

undermined because the overall process

for establishing and regulating uniform

rates will be parallel to that of our

current regulatory framework. In the

development of the benchmark formula,

for example, the Commission, after

notice and comment and the

participation of LFAs, established and

approved the regulatory methodology

that sets forth reasonable rates for the

BST. Using the benchmark formula, the

operator then submits proposed initial

BST rates for review by each affected

LFA. If the BST rate is rejected by an

LFA, the operator may appeal to the

Commission, where the relevant LFA

receives ample opportunity to defend its

calculations and review of the operator’s

proposed BST rates. With respect to the

optional rate-setting approach adopted

herein, and as with our existing

regulations, the Commission merely

approves the general methodology to be

employed by an operator, while

jurisdiction over an operator’s

implementation of a BST rate remains

the exclusive responsibility of LFAs.

Thus, contrary to some commenting

LFAs’ arguments, LFAs’ statutory

responsibility and obligation with

respect to BSTs will not be hindered

under a uniform approach.

19. Commenters suggest a variety of

approaches for resolving conflicts that

could arise if one LFA tolled the

effectiveness of the proposed uniform

rate in its franchise area while another

LFA permitted the rate to take effect in

its area. Generally, commenting LFAs

seek to maintain their existing authority

over BST rates. Although they do not

specifically address the tolling of

proposed uniform rates, presumably

these parties might argue that uniform

rates could be disapproved by any one

of the affected LFAs, and that rates

would be tolled in all the franchise

areas until an appeal of the relevant rate

decision was resolved. Cable operators,

on the other hand, support allowing the

proposed uniform rate to take effect

immediately, subject to a later ‘‘true-up’’

of any discrepancies which the

Commission subsequently finds to exist.

We believe that the current authority of

LFAs should be preserved, and that

subscribers must remain fully protected

from unreasonable rate increases.

Moreover, an operator seeking to take

advantage of the benefits of establishing

(or adjusting) uniform rates must also

shoulder the risks of implementing
Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Rules and Regulations 15125

uniform rates. We therefore will

prohibit a proposed uniform rate to take

effect subject only to a subsequent trueup. Rather, an LFA that rejects a

proposed uniform rate may toll the

effectiveness of that rate in that

particular franchise area. Alternatively,

if the LFA so chooses, the rate may take

effect, however, but only subject to

refunds as later determined by the LFA.

An LFA’s decision with respect to

proposed rates will only have effect

within the LFA’s particular local

franchise area, and not the

implementation of rates in other

franchise areas.

20. As indicated above, an operator

may elect to implement a uniform rates

structure in a region that covers both

regulated and unregulated local

franchise areas. Under this approach, an

operator would include data from both

the unregulated and regulated areas, and

determine a uniform rate applicable in

all such areas. We believe that

permitting uniform rates to include

unregulated franchise areas could

benefit subscribers living in the uniform

rate region. With respect to systems

subject to effective competition,

Congress determined that rate regulation

was not necessary to ensure reasonable

rates. With respect to cable systems

potentially subject to regulation, but

which are currently unregulated

because no complaint has been filed,

there is no evidence to suggest that

these systems have unreasonable rates.

Indeed, we would expect that if rates

were unreasonable in these franchise

areas, complaints would have been filed

(especially prior to passage of the

Telecommunications Act of 1996 when

a single complaint was enough to trigger

CPST rate review). Accordingly, we do

not believe that including unregulated

systems for purposes of determining

uniform rates is more likely to lead to

unreasonable rates than using

exclusively regulated systems to

determine uniform rates.

21. With respect to the BST in

regulated local franchise areas, the

operator would submit to the LFA its

proposed initial rates, and the regulating

LFA would have authority to review

and approve or disapprove the proposed

rates. If the LFA determined that a

reduction in BST rates is necessary to

comply with the rules, the operator

would be required to reflect this

reduction in the rate charged in the

region, if necessary. Again, nothing in

this Order is intended to compromise

LFAs’ authority to regulate BST rates.

With respect to CPST rates, we

emphasize that, in reviewing a uniform

rates proposal, we will closely examine

the impact of the proposal on

subscribers’ rates, and would be

disinclined to approve any scheme that

results in a more than minimal increase

in CPST rates for a large proportion of

the affected subscribers.

22. Commenting cable operators argue

that they will require broad discretion

with respect to several aspects of setting

uniform rates, including: (1) the size of

the region in which to establish uniform

rates; (2) whether all franchise areas

located within the uniform rate region

must be included for purposes of

calculating and offering the uniform

rate; (3) which tiers of regulated cable

service should be offered at a uniform

rate; (4) the methodology employed to

determine the uniform rate; (5) how to

address variances in the numbers of

channels offered in various franchise

areas; and (6) how and whether to

establish uniform rates for the

installation or maintenance of

equipment. Below we offer some general

guidance regarding what a cable

operator should follow to accomplish

these goals.

23. First, we anticipate that an

operator’s uniform rates proposal will

be based on some meaningful neutral

geographic measure, such as the Area of

Dominant Influence (ADI), the

Designated Market Area, the Basic

Trading Area, or the Standard

Metropolitan Statistical Area. Where the

operator proposes to include additional

franchise areas outside of such a region

or measure, our case-by-case review will

examine the operator’s proposal and

justification.

24. Second, with respect to which

franchise areas should be included in a

uniform rate structure, we would be

disinclined to approve a scheme in

which an operator selects some of its

franchise areas in a contiguous

geographic region, but excludes others,

unless compelling circumstances were

shown to justify such an approach. An

example of a situation presenting such

circumstances could be one in which an

upgrade was in progress and the

uniform rates became applicable as the

upgrade progressed. In this vein, we

note that some commenting LFAs argue

that a uniform rate structure may result

in cross-subsidization among

subscribers living in franchise areas

where a cable operator’s costs of

providing service are relatively low

costs and those subscribers in franchise

areas where costs are higher. Any crosssubsidization that may occur under a

uniform rates structure, however, will

be neither significant nor unique. In

addition, as stated above, we will be

disinclined to approve any proposal that

results in a more than minimal increase

in CPST rates for a significant

proportion of the affected subscribers.

25. Third, with respect to which tiers

of regulated service should be offered at

uniform rates, we would be inclined

generally to ratify a uniform rate

proposal that covers all of an operator’s

BSTs within the proposed uniform rate

region. Furthermore, any uniform rate

proposal in which BST rates decrease

likely will include offsetting CPST rate

increases, assuming an operator’s

overall rates and revenues remain close

to neutral under the uniform rate

scheme. We believe that in light of the

high penetration of at least one CPST in

most multi-tiered systems, it will be

possible to effect these offsets with

minimal CPST rate increases. We also

would entertain proposals to offer

uniform rates on CPSTs generally,

regardless of their penetration.

26. Fifth, we note that in the NPRM

we sought comment on whether the

particular packages of programming

services offered at a uniform rate in

multiple franchise areas must be

identical. In response, cable operators

urge the Commission to allow an

operator broad discretion in dealing

with variances among numbers of

channels offered in various areas. With

respect to the cable operators’

comments, we believe generally that the

establishment of uniform rates across

multiple franchise areas should be

permitted where the cable operator is

offering the same number of channels

on its regulated tiers of programming

services. Generally, subscribers in one

franchise area should not pay the same

rates as those in another franchise area

if the amount of programming services

received are not the same. Therefore, we

would be inclined to accept uniform

rate proposals that apply only to

franchise areas that have identical

numbers of channels on the respective

BSTs and CPSTs.

27. However, with respect to whether

the packages of services need be

identical, we recognize that there may

be circumstances beyond the operator’s

control that cause dissimilarities among

tiers of programming services. For

instance, differences in PEG access and

must-carry requirements or leased

access use are factors that might create

deviations in the channel line-ups

received by subscribers in a contiguous

geographic area. Indeed, because of

these circumstances, certain LFAs argue

that any uniform rates mechanism

implemented pursuant to this Order

will not result in truly uniform rates,

and thus will not succeed in reducing

confusion for a subscriber moving

between different parts of the same

uniform rates region. In order to address
15126 Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Rules and Regulations

these concerns, as well as provide

operators with a measure of flexibility

in implementing a uniform rates

structure, we will take care when

evaluating a proposal for uniform rates

across franchise areas that do not

receive identical programming services

to consider the extent and nature of the

deviation in programming services, and

whether the deviation’s impact on

subscriber rates is significant. In the

event that a deviation based on PEG

access costs or other external costs

(including franchise-related external

costs) is significant, we would consider

a requirement that an operator’s uniform

rates be determined exclusive of such

costs; in which case the operator likely

would be permitted to add these costs

onto the uniform rate on a franchise-byfranchise basis. In this vein, we note

that our existing regulations have

always permitted cable systems that

cover multiple franchise areas having

differing franchise fees or other

franchise costs to advertise a ‘‘fee plus’’

rate that indicates the core rate plus the

range of possible additions, depending

on the particular location of the

subscriber.

28. Finally, we note that, under the

Telecommunications Act of 1996, cable

operators may aggregate their equipment

costs on a franchise, system, regional, or

company level. The Commission has

adopted regulations implementing this

provision that, among other things, ease

the burden of cable rate regulation on

operators and increase administrative

efficiency for both LFAs and cable

operators. Cable operators seeking to

implement uniform rates may avail

themselves of those rules to bring

uniformity to their equipment rates.

29. Accordingly, we find that

implementation of any uniform rate

approach as offered in the NPRM

requires resolving several issues,

including those of a local nature, that do

not lend themselves to global resolution.

We find that it is preferable to base our

approval of any uniform rate approach

on data that accurately reflects the

situation of a particular cable operator

seeking to establish uniform rates, and

the predicted impact on consumers of

the operator’s proposal. We therefore

decline to specify a particular

methodology for implementing uniform

rates. Rather, as described above, cable

operators may submit information in

accordance with the procedures

outlined above demonstrating that the

proposed uniform rates will not be

unreasonable. In light of this finding, we

decline to reach the arguments

presented by the commenters with

respect to the appropriate methodology,

region, and other aspects of uniform

rates offered for comment in the NPRM.

IV. Regulatory Flexibility Act

Certification

30. As required by the Regulatory

Flexibility Act, 5 U.S.C. § 603 (RFA), an

Initial Regulatory Flexibility Analysis

(IRFA) was incorporated in the Notice of

Proposed Rulemaking in CS Docket 95–

174 (the ‘‘NPRM’’). The Commission

sought written public comments on the

proposals in the NPRM including

comments on the IRFA. No Comments

were received.

31. Although we performed an IRFA

in the NPRM, there were no comments

received in response to the IRFA and we

believe that we can certify that no

Regulatory Flexibility Act Analysis is

now necessary.

32. We do not believe that the final

rule adopted in the Report and Order

will have a significant economic impact

on a substantial number of small

entities, 5 U.S.C. § 605(b). The uniform

rate option described in this Report and

Order gives cable operators an

additional option when setting rates,

and is not mandatory. This rate

adjustment option will not force

operators to forgo revenues as it is

designed to be revenue neutral to cable

operators. The Communications Act at

47 U.S.C. § 543(m)(2) defines a small

cable operator as ‘‘a cable operator that,

directly or through an affiliate, serves in

the aggregate fewer than 1 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.’’ Under

the Communications Act, at 47 U.S.C.

§ 543(m)(1), a small cable operator is not

subject to the rate regulation

requirements of Sections 543(a), (b) and

(c) on cable programming services tiers

(‘‘CPSTs’’) in any franchise area in

which it serves 50,000 or fewer

subscribers.

33. The Regulatory Flexibility Act

defines at 5 U.S.C. § 601(5) ‘‘small

governmental jurisdictions’’ as

‘‘governments of cities, counties, towns,

townships, villages, school districts or

special districts with populations of less

than 50,000.’’ Under the Commissions

current rules, if a local franchising

authority (‘‘LFA’’) has elected to rate

regulate the basic service tier (‘‘BST’’),

a cable operator must submit rate

justifications to the LFA on FCC Forms.

We do not believe that small LFAs will

face a significant economic impact due

to this Report and Order. The change in

our rules adopted herein would not

have a significant economic effect on

small LFAs because the burden

associated with reviewing a uniform

rate approach should be no more than

the burden under the current

regulations. If other rate adjustments are

made to the BST at the time of the

uniform rate adjustment, or at some

time thereafter, the cable operator will

be required to submit a rate justification

to the LFA that is based on the

operator’s ‘‘underlying rate,’’ i.e., the

rate the operator would be charging in

the absence of the uniform rate

adjustment. The LFA will engage in the

same rate review process as would have

otherwise occurred for these other rate

adjustments. LFA review of the

underlying rate entails the same rate

review process that would occur

normally, without the uniform pricing

option adopted herein. Responsibility

for the determination of the correctness

of the uniform rate adjustment to CPST

rates will rest with the Commission

because the Commission, and not LFAs,

is responsible for insuring that CPST

rates are not unreasonable.

34. The Commission will send a copy

of this certification, along with this

Report and Order, in a report to

Congress pursuant to the Small Business

Regulatory Enforcement Fairness Act of

1996, 5 U.S.C. § 801(a)(1)(A), and to the

Chief Counsel for Advocacy of the Small

Business Administration. A copy of this

certification will also be published in

the Federal Register.

V. Final Paperwork Reduction Act of

1995 Analysis

35. This Report and Order contains a

new information collection. The

Commission, as part of its continuing

effort to reduce paperwork burdens,

invites the general public to comment

on the information collection contained

in this Report and Order, as required by

the Paperwork Reduction Act of 1995,

Public Law 104–13. Public comments

are due May 30, 1997. 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.

36. A copy of any comments on the

information collection contained herein

should be submitted to Dorothy

Conway, Federal Communications

Commission, Room 234, 1919 M Street,

NW., Washington, DC 20554, or via the

Internet to dconway@fcc.gov. For
Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Rules and Regulations 15127

additional information, contact Dorothy

Conway at 202–418–0217 or via the

Internet at the above address.

VI. Ordering Clauses

37. Accordingly, it is ordered that,

pursuant to the authority granted in

sections 4(i), 4(j), 303(r) and 623 of the

Communications Act of 1934, as

amended, 47 U.S.C. 154(i), 154(j), 303(r)

and 543, part 76 of the Commission’s

rules is amended as set forth below. The

amendments impose information

collection requirements and shall

become effective upon approval of the

Office of Management and Budget

(‘‘OMB’’) but no sooner than April 30,

1997. The Commission will issue a

document at that time notifying parties

that the regulations adopted herein have

become effective.

38. It is further ordered that, the

Secretary shall send a copy of this

Report and Order, including the Final

Regulatory Flexibility Analysis, to the

Chief Counsel for Advocacy of the Small

Business Administration in accordance

with paragraph 603(a) of the Regulatory

Flexibility Act. Public Law 96–354, 94

Stat. 1164, 5 U.S.C. §§ 601 et seq. (1981).

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 76 of the Title 47 of the Code of

Federal Regulations is amended as

follows:

PART 76—CABLE TELEVISION

SERVICE

1. The authority citation for part 76

continues to read as follows:

Authority: 47 U.S.C. 151, 152, 153, 154,

301, 302, 303, 303a, 307, 308, 309, 312, 315,

317, 325, 503, 521, 522, 531, 532, 533, 534,

535, 536, 543, 544, 544a, 545, 548, 552, 554,

556, 558, 560, 561, 571, 572, 573.

2. Section 76.922 is amended by

revising paragraph (c)(2) and adding a

new paragraph (n) to read as follows:

§ 76.922 Rates for the basic service tier

and cable programming services tiers.

* * * * *

(c) * * *

(2) The Commission’s price cap

requirements allow a system to adjust

its permitted charges for inflation,

changes in the number of regulated

channels on tiers, or changes in external

costs. After May 15, 1994, adjustments

for changes in external costs shall be

calculated by subtracting external costs

from the system’s permitted charge and

making changes to that ‘‘external cost

component’’ as necessary. The

remaining charge, referred to as the

‘‘residual component,’’ will be adjusted

annually for inflation. Cable systems

may adjust their rates by using the price

cap rules contained in either paragraph

(d) or (e) of this section. In addition,

cable systems may further adjust their

rates using the methodologies set forth

in paragraph (n) of this section.

* * * * *

(n) Further rate adjustments—

Uniform rates. A cable operator that has

established rates in accordance with this

section may then be permitted to

establish a uniform rate for uniform

services offered in multiple franchise

areas. This rate shall be determined in

accordance with the Commission’s

procedures and requirements set forth

in CS Docket No. 95–174.

[FR Doc. 97–8041 Filed 3–28–97; 8:45 am]

BILLING CODE 6712–01–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Part 679

[Docket No. 960531152–7062–03; I.D.

031297C]

RIN 0648–AI18

Fisheries of the Exclusive Economic

Zone Off Alaska; Technical

Amendment; Correction

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Final rule; technical

amendment.

SUMMARY: NMFS is correcting

regulations that contain inadvertent

omissions that resulted from NMFS’

consolidation of six parts in title 50 of

the CFR, related to the Alaska

regulations, into one CFR part in

response to the President’s Regulatory

Reform Initiative. This action corrects

regulations that authorize the release of

pollock, flatfish, and Pacific cod

reserves in the Gulf of Alaska.

EFFECTIVE DATE: March 31, 1997.

FOR FURTHER INFORMATION CONTACT:

Patsy A. Bearden, 907–586–7228.

SUPPLEMENTARY INFORMATION: When the

consolidated rule was published in the

Federal Register on June 19, 1996 (61

FR 31228), it was intended to contain no

substantive changes to the existing

regulations. Inadvertently, text that had

existed at § 672.20(d)(1)(ii) was omitted.

This technical amendment is reinstating

the omitted text into the regulation.

NMFS is correcting the regulations as

follows:

(1) Section 679.20(b)(2) is revised by

changing the word ‘‘flounder’’ to read

‘‘flatfish.’’

(2) Section 679.20(b)(2)(i) and (ii) are

added to include inshore/offshore

pollock and Pacific cod provisions to

the Gulf of Alaska (GOA) reserves.

(3) Section 679.20(3) is revised by

adding text that was inadvertently

omitted to include the GOA in the

apportionment text.

Classification

Because this technical amendment

makes only non-substantive corrections

to an existing rule, notice and public

procedure thereon and a delay in

effective date would serve no purpose.

Accordingly, under 5 U.S.C. 553(b)(B)

and (d), notice and public procedure

thereon and a delay in effective date are

unnecessary.

Because this rule is being issued

without prior comment, it is not subject

to the Regulatory Flexibility Act

requirement for a regulatory flexibility

analysis and none has been prepared.

This rule makes minor technical

changes to a rule that has been

determined to be not significant under

E.O. 12866. No changes in the

regulatory impact previously reviewed

and analyzed will result from

implementation of this technical

amendment.

List of Subjects in 50 CFR Part 679

Fisheries, Reporting and

recordkeeping requirements.

Dated: March 24, 1997.

Rolland A. Schmitten,

Assistant Administrator for Fisheries,

National Marine Fisheries Service.

For reasons set forth in the preamble,

50 CFR part 679 is amended as follows:

PART 679–-FISHERIES OF THE

EXCLUSIVE ECONOMIC ZONE OFF

ALASKA

1. The authority citation for part 679

continues to read as follows:

Authority: 16 U.S.C. 773 et seq., 1801 et

seq.

2. In § 679.20, paragraphs (b)(2)(i) and

(ii) are added, the introductory text of

(b)(2), the heading for (b)(3), paragraphs

(b)(3)(i)(A), and (b)(3)(ii)(A) and (B) are

revised to read as follows:

§ 679.20 General limitations.

* * * * *

(b) * * *