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I~' <br />-11- <br />(In its 1996 Final Cost of Service Report and Order, the FCC reduced these categories to basic <br />service, cable programrning service and "all other" services.'0 Basic and cable progamming <br />service tiers were the regulated service tiers at that time.) <br />in its 1994 Cost of Service Report and Order, as part of its specific discussion of'upgrade cost of <br />service filings, the FCC reiterated the separation of regulated from unregulated cost principle: <br />To ,justify an increase in the rates for regulated services, the <br />operator will be required to demonstrate that the capital investment <br />actually will benefit subscribers tlrrough improvements in the <br />regulated services subject to the rate increase. This requirement <br />will help assure that operators do not abuse the abbreviated <br />filing option by requiring regulated service customers to pay <br />higher rates to fund upgrades that actually only benefit other <br />services?' <br />And fifth, as we said in the Notice, the operator must also allocate <br />the net increase in costs in conformance with the cost allocation <br />rules for cost of service showing, to assure that only costs <br />allocable to regulated services are imposed on subscribers of <br />those services.-= <br />In its 1996 Final Cost of Service Order, the Cornmission reiterated this principle: <br />As noted, the interim rules also allow the operator to recover all <br />operating expenses normally incurred by cable operators in the <br />provision of regulated cable service, An operator may not <br />recover through regulated rates other expenses, such as costs <br />associated with non-regulated service, lobbying expenses or club <br />memberships." <br />In this same Order, the Comrnission specifically clarified the requirement that costs attributed to <br />cable plant in service must be allocated between current regulated and unregulated services. <br />'0In r e Implementation of Sections of the Cable Television Consumer Protection and Competition Act of <br />1992: Rate Regulation and Adoption of a Uniform Accounting System for Provision of Regulated Cable Service, <br />D~IIvI Doc]<et 93-215, Second Report and Order, First Order on Reconsideration, and Further Notice of Proposed <br />Ru]emalting, Released .January 26, 1996 at ¶121. [ 1996 Fina] Cost of Service Order] <br />'`~ 1994 Cost of Service Order at ¶ZS 7. <br />''ZId at ¶290. <br />'`31996 Final Cost of Service Report and Order at ¶1 I <br />