Who regulates cable rates?
Under state and federal law, the Department of Telecommunications and Cable ("Department") regulates rates for basic service tier programming, equipment, and installation. Rates for expanded basic, on-demand programming, pay-per-view, and premium services are unregulated.
Basic cable service is the most basic level of cable service available to subscribers. Basic service usually consists of broadcast channels, any local access public, educational, or governmental channels available to a community, and any other channels a cable operator chooses to include. The Department regulates basic service tier rates for communities that have requested rate regulation and that are not exempt from rate regulation on account of the cable operator facing effective competition.
How does the Department regulate rates?
The Department reviews basic service tier rates according to specific guidelines established by the Federal Communications Commission ("FCC") and state law. A cable operator submits to the Department rates calculated by using FCC forms. The Department reviews the filing, holds public and evidentiary hearings, and may send the cable operator written questions regarding its calculations or methodology in preparing the forms. Once it has enough information the Department issues a decision setting a "maximum permitted rate" (the highest rate an operator can charge under FCC regulations).
How do cable operators justify a basic service tier rate?
The FCC allows cable operators to recover costs associated with the following:
- Inflation
- Channel additions
- Programming costs and copyright fees
- Franchise costs
- Non license required upgrades
When these costs increase, rates may increase as well.
What role do residents and municipalities play in the rate regulatory process?
As a part of the Department's review of cable operators' filings, it conducts a public hearing. Any municipal official or 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 in the proceeding as a full party.
Why do cable rates vary from community to community?
There are several factors that could 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.
- The size of the cable operator and the number of subscribers in the community.
Are any cable operators exempt from this process?
Cable systems serving 15,000 or fewer subscribers that are owned by small cable companies with 400,000 or fewer subscribers overall are eligible for relief through streamlined rate regulations. In addition, cable operators that are subject to effective competition in a community, as determined by the FCC are exempt from rate regulation in that community.