Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Rules and Regulations 32707

for inspection and copying during

normal business hours in the FCC

Reference Center (room 239), 1919 M

Street, N.W., Washington, DC, and also

may be purchased from the

Commission’s copy contractor,

International Transcription Services,

Inc. (‘‘ITS Inc.’’) at (202) 857–3800, 2100

M Street, N.W., Suite 140, Washington,

DC 20017.

Synopsis of Order

1. The Telecommunications Act of

1996 added Section 653 to the

Communications Act of 1934,

establishing a new framework for entry

into the video programming

marketplace, the open video system.

The 1996 Act required that the

Commission, within six months after

the date of enactment of the 1996 Act,

‘‘complete all actions necessary

(including any reconsideration) to

prescribe regulations’’ to govern the

operation of open video systems. The

Commission issued a Notice of

Proposed Rulemaking on March 11,

1996. 61 FR 10496 (March 14, 1996). On

May 31, 1996, the Commission adopted

a Second Report and Order

implementing Section 653. Pursuant to

the 1996 Act, the Commission must

issue an order on reconsideration by

August 8, 1996.

2. The Communications Act, and the

Commission’s rules, require that

petitions for reconsideration of a

Commission order may be filed within

thirty days from the date upon which

public notice is given of the order.

Public notice of the Second Report and

Order was given on June 5, 1996, when

a summary of the order was published

in the Federal Register. 61 FR 28698

(June 5, 1996). Petitions for

reconsideration are due, therefore, on

July 5, 1996. In order to afford the

Commission sufficient time to review

the issues raised in the petitions and to

meet its statutory requirement to issue

an order on reconsideration by August

8, 1996, we believe it is in the public

interest for the Commission to waive its

rules regarding the filing of oppositions

to petitions for reconsideration and

replies to oppositions. We are waiving

Section 1.429(f) to provide that

oppositions must be filed by July 15,

1996. We are also waiving Section

1.429(g) and will not accept any replies

to oppositions. Finally, in order to

afford the fullest consideration possible

to the issues raised on reconsideration,

we strongly encourage parties to file

pleadings in advance of the deadlines.

List of Subjects in 47 CFR Part 76

Open video systems.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 96–16106 Filed 6–24–96; 8:45 am]

BILLING CODE 6712–01–P

47 CFR Part 76

[CS Docket No. 96–57; FCC 96–257]

Telecommunications Act of 1996

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Commission issues this

Report and Order to implement Section

623(a)(7)(A) of the Communications Act

of 1934, as amended (‘‘Communications

Act’’). The Report and Order is

necessary to fulfill the statutory

requirement in Section 301(j) of the

Telecommunications Act of 1996 (‘‘1996

Act’’) that the Commission allow cable

operators to aggregate, on a franchise,

system, regional, or company level, their

equipment costs into broad categories

regardless of the equipment’s level of

functionality. In the Report and Order,

the Commission also issues final rules.

EFFECTIVE DATE: July 25, 1996.

FOR FURTHER INFORMATION CONTACT: Tim

J. Bellamy, Cable Services Bureau, (202)

418–7200.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Report and Order in CS

Docket No. 96–57, FCC 96–257, adopted

June 6, 1996 and released June 7, 1996.

The complete text of this Report and

Order is available for inspection and

copying during normal business hours

in the FCC Reference Center (room 239),

1919 M Street N.W., Washington, DC,

and also may be purchased from the

Commission’s copy contractor,

International Transcription Services,

Inc. (‘‘ITS Inc.’’) at (202) 857–3800, 2100

M Street N.W., Suite 140, Washington,

DC 20017. This Report and Order

contains modified information

collection requirements approved by

OMB under control number 3060–0703

for use through June 30, 1999.

Synopsis of Report and Order

1. In this Report and Order, the

Commission amends its rules to

implement Section 301(j) of the 1996

Act which adds a new Section 623(a)(7)

to the Communications Act. Section

301(j) of the 1996 Act requires the

Commission to allow cable operators to

aggregate, on a franchise, system,

regional, or company level, their

equipment costs into broad categories

regardless of the varying levels of

functionality of the equipment within

each such broad category. That section

also provides that ‘‘[s]uch aggregation

shall not be permitted with respect to

equipment used by subscribers who

receive only a rate regulated basic tier.’’

Discussion

A. Equipment Aggregation

2. Section 301(j) of the 1996 Act

requires the Commission to allow

regulated operators to aggregate ‘‘their

[customer] equipment costs into broad

categories, such as converter boxes,

regardless of the varying levels of

functionality of the equipment within

each such broad category.’’ The

Commission concludes, and amends its

rules accordingly, that Congress

intended to permit operators to

aggregate equipment costs into broad

categories, limited only by the

requirement that equipment so

aggregated be of the same type. The

language in Sections 76.923 (f) and (g)

of the Commission’s rules that requires

separate charges for each significantly

different type of remote control device,

converter box, and other customer

equipment was eliminated. The

‘‘primary purpose’’ test, proposed in the

Notice of Proposed Rulemaking

(‘‘NPRM’’), 61 FR 13803 (March 28,

1996), for categorizing equipment will

not be used, nor will it be incorporated

into our rules. The term ‘‘level of

functionality’’ is not further defined.

3. Under the rules adopted in this

Report and Order, there are three types

of customer equipment: converter boxes,

remote controls and inside wiring.

Consistent with this fact, the

Commission concluded that costs of

equipment used in the installation of

initial and additional outlets may be

aggregated into the same broad category,

inside wiring. In addition, the

Commission will maintain a flexible

approach with respect to categorization

of new technology. Operators also have

the flexibility to average some

equipment of the same type, but not all

equipment of that type. In other words,

operators may choose how broadly to

categorize equipment if they choose to

do so at all.

4. Though the Commission tentatively

concluded otherwise in the NPRM,

Section 76.923(l) of the Commission’s

rules, which permits cost aggregation

specifically for small cable systems is

not eliminated. The Commission

believes eliminating that section might

increase regulatory burdens on some

smaller cable systems, a result Congress

did not intend.
32708 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Rules and Regulations

B. Organizational Levels

5. Section 76.923(c) of the

Commission’s rules is amended to

specifically permit operators to

aggregate its customer equipment costs

at the organizational level of its

choosing, namely, the franchise, system,

regional, or company level. To the

extent that current Commission rules

permit cost aggregation of equipment

only in a manner consistent with an

operator’s practices on April 3, 1993,

that date restriction is eliminated. Such

a restriction might have improperly

prevented an operator from aggregating

costs at higher organizational levels, as

specifically permitted in the 1996 Act.

6. The Commission concludes that

Congress intended that installation be

subsumed under its general statutory

reference to equipment and that the

same cost aggregation rules apply to

both. Cable operators are therefore

permitted to aggregate installation costs

at the same organizational level at

which the operator aggregates its

equipment costs. In addition, because

Commission rules require equipment

rates to be based on actual cost, those

rules are amended to state that

equipment and installation rates must

be set at the same organizational level

at which an operator chooses to

aggregate its costs.

C. Basic-Only Subscriber Equipment

7. The 1996 Act prohibits ‘‘[s]uch

aggregation * * * with respect to

equipment used by subscribers who

receive only a rate regulated basic

service tier.’’ The Commission

concludes that Congress was concerned

that basic-only subscribers not subsidize

the costs of equipment used by

subscribers taking services in addition

to basic. The Commission further

concludes that costs of equipment used

by basic-only subscribers may not be

aggregated into broad categories. An

operator is permitted, however, to

aggregate the costs of equipment used

by basic service-only customers at the

same organizational level at which the

operator chooses to aggregate its other

costs. Section 76.923(c) of the

Commission’s rules is amended

accordingly. As an alternative, for

purposes of establishing equipment

rates for basic-only subscribers, an

operator may assume that all basic-only

subscribers use equipment that is the

lowest level and least expensive model

of equipment offered by the operator,

even if some basic-only subscribers

actually have higher level, more

expensive equipment. Because there is

not always one type of equipment

which may be deemed ‘‘basic-only

equipment,’’ the Commission shall also

permit an operator to aggregate costs of

types of equipment used by non-basiconly subscribers with other non-basiconly equipment when setting rates for

non-basic-only subscribers, even if the

same type of equipment is also used by

basic-only subscribers.

D. Equipment Rates Jurisdiction and

Review

8. Local franchising authorities

affected by the new cost aggregation

rules will continue to review the

equipment and installation rates and

supporting aggregated cost data as part

of the review of the cable operators’ rate

justifications for basic rates, with the

operator retaining the right to appeal the

local rate order to the Commission.

E. FCC Form 1205

9. Because of the Commission’s

conclusions and revisions to its rules,

FCC Form 1205 is modified accordingly.

Procedural Provisions

A. Final Regulatory Flexibility Analysis

10. Pursuant to Section 603 of the

Regulatory Flexibility Act, the

Commission has prepared the following

final regulatory flexibility analysis

(‘‘FRFA’’) of the expected impact of

these proposed policies and rules on

small entities. The Commission’s final

regulatory flexibility analysis under the

Regulatory Flexibility Act indicates that

the rule changes adopted in the Report

and Order will not cause a significant

economic impact on a substantial

number of small business entities, as

defined by Section 601(3) of the

Regulatory Flexibility Act and that any

impact will be to give operators new,

less burdensome options to comply with

our rules. The Commission is

committed to reducing the regulatory

burdens on small cable operators

whenever possible, consistent with our

other public interest responsibilities.

The Secretary shall send a copy of this

Report and Order to the Chief Counsel

for Advocacy of the Small Business

Administration in accordance with

Section 603(a) of the Regulatory

Flexibility Act, 5 U.S.C. Sections 601, et

seq. (1981).

11. The Commission issues this

Report and Order to effectuate the

changes needed to permit cable

operators to aggregate equipment costs

into broad categories and at the

organizational level of their choice, as

required by Section 301(j)) of the 1996

Act.

12. Objective. To implement Section

301(j) of the 1996 Act.

13. Legal Basis. Action adopted in this

Report and Order is contained in

Section 301(j) of the 1996 Act.

14. Description, Potential Impact and

Number of Small Entities Affected. The

rule changes in this Report and Order

will not have a significant effect on a

substantial number of small entities.

The rule changes provide all regulated

entities with new options and do not

require them to change the methodology

by which they currently justify

equipment rates. Thus, any economic

impact of the rule changes will be

positive.

15. Reporting, Recordkeeping and

Other Compliance Requirements. None.

16. Federal Rules which Overlap,

Duplicate of Conflict with these Rules.

None

17. Any Significant Alternatives

Minimizing Impact on Small Entities

and Consistent with Stated Objectives.

None.

C. Paperwork Reduction Act

18. Final Paperwork Reduction Act of

1995 Analysis. This Report and Order

has been analyzed with respect to the

Paperwork Reduction Act of 1995 and

found to contain modified information

collection requirements on the public.

The information collection requirements

contained herein have been approved by

the Office of Management and Budget

under control number 3060–0703 for

use through June 30, 1999.

Ordering Clauses

19. Accordingly, it is ordered,

pursuant to Sections 4(i), 4(j) and 623(a)

of the Communications Act of 1934, as

amended, 47 U.S.C. §§ 154(i), 154(j) and

543, the rules, requirements and

policies discussed in this Report and

Order are adopted and Sections

76.923(a), (c), (f), (g) and (m) of the

Commission’s rules, 47 CFR

§§ 76.923(a), (c), (f), (g) and (m), are

amended as set forth below.

20. It is further ordered that the

requirements and regulations

established in this decision shall

become effective July 25, 1996.

21. 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 No. 96–354,

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

List of Subjects in 47 CFR Part 76

Cable television.
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Rules and Regulations 32709

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 76.923 is amended by

revising paragraphs (a), (c), (f), (g) and

(m) to read as follows:

§ 76.923 Rates for equipment and

installation used to receive the basic

service tier.

(a) Scope. (1) The equipment

regulated under this section consists of

all equipment in a subscriber’s home,

provided and maintained by the

operator, that is used to receive the

basic service tier, regardless of whether

such equipment is additionally used to

receive other tiers of regulated

programming service and/or

unregulated service. Such equipment

shall include, but is not limited to:

(i) Converter boxes;

(ii) Remote control units; and

(iii) Inside wiring.

(2) Subscriber charges for such

equipment shall not exceed charges

based on actual costs in accordance

with the requirements set forth in this

section.

* * * * *

(c) Equipment basket. A cable

operator shall establish an Equipment

Basket, which shall include all costs

associated with providing customer

equipment and installation under this

section. Equipment Basket costs shall be

limited to the direct and indirect

material and labor costs of providing,

leasing, installing, repairing, and

servicing customer equipment, as

determined in accordance with the cost

accounting and cost allocation

requirements of § 76.924, except that

operators do not have to aggregate costs

in a manner consistent with the

accounting practices of the operator on

April 3, 1993. The Equipment Basket

shall not include general administrative

overhead including marketing expenses.

The Equipment Basket shall include a

reasonable profit.

(1) Customer equipment. Costs of

customer equipment included in the

Equipment Basket may be aggregated,

on a franchise, system, regional, or

company level, into broad categories.

Except to the extent indicated in

paragraph (c)(2) of this section, such

categorization may be made, provided

that each category includes only

equipment of the same type, regardless

of the levels of functionality of the

equipment within each such broad

category. When submitting its

equipment costs based on average

charges, the cable operator must provide

a general description of the averaging

methodology employed and a

justification that its averaging

methodology produces reasonable

equipment rates. Equipment rates

should be set at the same organizational

level at which an operator aggregates its

costs.

(2) Basic service tier only equipment.

Costs of customer equipment used by

basic-only subscribers may not be

aggregated with the costs of equipment

used by non-basic-only subscribers.

Costs of customer equipment used by

basic-only subscribers may, however, be

aggregated, consistent with an operator’s

aggregation under paragraph (c)(1) of

this section, on a franchise, system,

regional, or company level. The

prohibition against aggregation applies

to subscribers, not to a particular type

of equipment. Alternatively, operators

may base its basic-only subscriber cost

aggregation on the assumption that all

basic-only subscribers use equipment

that is the lowest level and least

expensive model of equipment offered

by the operator, even if some basic-only

subscribers actually have higher level,

more expensive equipment.

(3) Installation costs. Installation

costs, consistent with an operator’s

aggregation under paragraph (c)(1) of

this section, may be aggregated, on a

franchise, system, regional, or company

level. When submitting its installation

costs based on average charges, the

cable operator must provide a general

description of the averaging

methodology employed and a

justification that its averaging

methodology produces reasonable

equipment rates. Installation rates

should be set at the same organizational

level at which an operator aggregates its

costs.

* * * * *

(f) Remote charges. Monthly charges

for rental of a remote control unit shall

consist of the average annual unit

purchase cost of remotes leased,

including acquisition price and

incidental costs such as sales tax,

financing and storage up to the time it

is provided to the customer, added to

the product of the HSC times the

average number of hours annually

repairing or servicing a remote, divided

by 12 to determine the monthly lease

rate for a remote according to the

following formula:

Monthly Charge = UCE + (HSC × HR)

12

Where, HR=average hours repair per

year; and UCE=average annual unit

cost of remote.

(g) Other equipment charges. The

monthly charge for rental of converter

boxes and other customer equipment

shall be calculated in the same manner

as for remote control units. Separate

charges may be established for each

category of other customer equipment.

* * * * *

(m) Cable operators shall set charges

for equipment and installations to

recover Equipment Basket costs. Such

charges shall be set, consistent with the

level at which Equipment Basket costs

are aggregated as provided in

§ 76.923(c). Cable operators shall

maintain adequate documentation to

demonstrate that charges for the sale

and lease of equipment and for

installations have been developed in

accordance with the rules set forth in

this section.

* * * * *

[FR Doc. 96–16104 Filed 6–24–96; 8:45 am]

BILLING CODE 6712–01–P

47 CFR Part 90

[PR Docket No. 93–144; PP Docket No. 93–

253; FCC 95–501]

The Future Development of SMR

Systems in the 800 MHz Frequency

Band; Correction

AGENCY: Federal Communications

Commission.

ACTION: Correction to final rule.

SUMMARY: This document contains

corrections to the final rule, which was

published Friday, February 16, 1996,

(61 FR 6138). The rule related to the

special limitations on amendment of

applications for assignment and transfer

of authorizations for radio systems

above 800 MHz in § 90.609 paragraphs

(c) and (d).

EFFECTIVE DATE: June 25, 1996.

FOR FURTHER INFORMATION CONTACT: Lisa

Warner, Wireless Telecommunications

Bureau, at (202) 418–0620.