NCTA suggested many revisions in FCC’s regulations for basic serv...

NCTA suggested many revisions in FCC’s regulations for basic service tier (BST) and equipment. Nevertheless, it said in comments filed late Mon., “there is no evidence that the benefits of a dramatic shift in rate regulation methodology outweighs the significant costs that would be imposed on the FCC, LFAs [local franchise authorities] and operators.” Comments were due Mon. in rulemaking that would update FCC’s rules on regulation of basic rates and related equipment by LFAs. Replies are due Dec. 4. NCTA suggested FCC presume all cable operators faced effective competition, which would shift burden of proof on cable operators to prove they're in competitive market. Burden should be on LFAs to show there’s no competition, NCTA said. It said that as result of competition from DBS and others, number of systems not subject to effective competition and therefore, subject to basic rate regulations, would “be steadily diminishing.” FCC’s authority to regulate cable programming services tier (CPST) expired in 1999. Since then, there has been much confusion over how cable operators should calculate BST rates, NCTA said, so basic rate calculations for channels added or deleted during interim period should be grandfathered. It asked FCC to abandon practice of making operators reduce prices by greater amount when they remove channels from BST than they were permitted to boost price when services were added to BST. “The Commission instead should return to its earlier methodology and permit operators to increase and decrease their rates by the same amount when channels are added to or deleted from a tier,” NCTA said. Assn. said operators should continue to be able to factor in any increase or decrease in programming costs plus 7.5% markup for that channel. Basic per-channel adjustment factor should be based on number of channels in that tier, not CPST, NCTA said. It said cable companies should be allowed to adjust rates throughout year, not just at time of annual rate filing. As for digital broadcast TV rate adjustments, NCTA said rate rules should be based on channels, not bandwidth. “Cable’s ability to compress more than one digital channel into each 6 MHz is irrelevant to the value for customers receiving the service,” NCTA said. It said adopting different rate approach for digital than for analog would “artificially skew operators’ incentives against using basic tier capacity for digital services.” Commission also should clarify that when operators added digital signals to basic tier, they could increase rates for all basic subscribers, not just those taking digital broadcast signals, it said. “These signals still occupy capacity and operators still incur costs, regardless of how many customers choose” to get DTV sets or other equipment needed to view digital broadcast signals, NCTA said. Assn. said FCC didn’t go far enough in allowing operators to have uniform rate structures in regions or systems, saying individual LFAs shouldn’t have power to insist on franchise-specific filings. In cases where customers have been overcharged, operators should be allowed flexibility in refunds, NCTA said. Currently, operators can give one-time refund or credit. It told FCC that operators should be able to pay refunds in installments over reasonable period of time or use in-kind refunds. NCTA said FCC should deregulate equipment, such as converter boxes, used primarily to access nonbasic services and limit regulation to equipment destined for basic-only service. If FCC must regulate boxes used to access analog tiers, it said, then Commission should provide operators with option of pricing digital boxes without actual cost regulation. National Assn. of Telecom Officers & Advisors (NATOA) said in its comments that Commission’s current rate rules didn’t work. Rules are difficult and expensive to enforce, it said, and they don’t have effect of holding rates to reasonable levels for consumers. It recommended, among other things, that Commission: (1) Require that demonstration of effective competition show that all subscribers in area to be declared competitive actually had competitive alternatives, that programming offered was comparable in content with basic cable tier and that operator had verified necessary data. (2) Decline to find effective competition solely based on DBS, and require effective competition petitions to be submitted to local franchising authorities, which would submit them to FCC with its comments. (3) Establish straightforward fines or forfeitures for enforcement. (4) Provide for funding for implementation of Commission’s rules by local communities.