Consumer Fact Sheet on Rate Regulation pdf format of rates.pdf

Who regulates cable rates?

Under federal law, the Cable Division regulates rates for basic service and equipment. Expanded basic, pay-per-view and premium services are unregulated.

Basic cable service is the lowest level of cable service available to subscribers. Basic service usually consists of broadcast channels, any local channels available to a community, and any other channels an operator chooses to provide. The Cable Division regulates basic service rates for all communities in Massachusetts that have requested rate regulation. The Cable Division's review of basic rates is conducted according to specific guidelines established by the FCC.

In February 1996, Congress passed the Telecommunications Act of 1996 pdf format of telact.pdf
. The Act retained the Cable Division's role in setting basic cable programming and equipment rates until cable operators face effective competition in a franchise area.

Based on a mandate in the 1996 Telecommunications Act, the rates for cable programming services (sometimes called "expanded basic"), became unregulated as of March 31, 1999.

How Does the Cable Division regulate rates?

A cable operator submits an FCC form to the Cable Division for approval. The Cable Division reviews the filing, holds public and evidentiary hearings and sometimes sends the cable operator written questions regarding its calculations and/or methodology in preparing the form. Once it has enough information the Division issues a decision setting a "maximum permitted rate" (the highest rate an operator can charge under FCC regulations) and order refunds (as necessary) to subscribers.

How do Cable Operators justify a basic cable rate increase?

The FCC allows cable operators to recover costs associated with the following:

  • Inflation
  • Channel additions
  • Programming cost and copyright fee increases
  • Franchise costs
  • Non license required upgrades

When these costs fluctuate rates may increase as well.

What type of information are Cable Operators required to file when requesting a rate increase, and how is the information submitted?

Cable operators are required to submit cost data on FCC (Federal Communications Commission) Forms. The Forms are used to calculate a "maximum permitted rate" (the highest rate a Cable operator can charge under FCC Regulations) for a particular level of service. There are seven FCC Forms used in this process.

How often does a cable operator file the FCC Forms?

There are three forms that cable operators file on a continuing basis to justify the reasonableness of basic service tier rate increases or decreases. These are the FCC Form 1205 and 1210 or 1240. The FCC Form 1210 can be filed quarterly. The FCC Form 1240 is filed on an annual basis. The FCC Form 1205, which is used to justify equipment rates, is filed annually.

What role, if any, do citizens and towns play in the rate regulatory process?

In the process of reviewing Cable operators' filings a public hearing is conducted. The public hearing is an integral part of the process of reviewing the cable operator's filing. Any member of the public may attend the hearing and offer comment on the pending rate proposal. In addition, persons who are specifically and substantially affected by the proceeding may petition to intervene as a full party.

Why do cable rates from town to town vary?

There are several factors that cause rates to vary among communities:

  • Variations in the number of channels and the costs associated with providing programming.
  • Rates in effect at the initial date of regulation (i.e. if the rate was higher before regulation it would likely remain higher after regulation)
  • The amount of local (financial) franchise obligations.
  • The number of years a community has been wired for cable.
  • Which forms the cable operator chooses to file (i.e. what method the cable operator uses to justify its rates)
  • The size of the cable operator and the number of subscribers.

I heard all the talk about rate regulation and prices decreasing because of it. My rates never went down. Why?

Basic tier rate regulation was established through the 1992 Cable Act as a result of significant increases in cable rates between 1984 and 1992. The intent of the Act was to slow down the occurrence of rate increases by requiring the cable operator to justify rate changes.

The rules established are also designed to prevent cable operators from making basic-only subscribers pay for costs unrelated to providing basic service. Cable operators are required to separate all basic tier costs and rates. All basic tier increases must be related to inflation, external cost increases or channel additions and deletions and subject to review by the Cable Division.

Are any cable operators exempt from this process?

Systems serving 15,000 or fewer subscribers that are owned by a small cable companies of 400,00 or fewer subscribers are eligible for relief through streamlined rate regulations.