Agenda - 02-17-2004-9b - Laserfiche WebLink

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11 Time Warner calculated the FCC1205 maximum permitted equipment12 and installation" rates by aggregating its costs on a national basis. The prior year costs were aggregated on a regional basis,''' The guiding principle of the Cable Act of 1992,15 is to protect subscribers from unreasonable rates by ensuring that cable rate levels are equivalent to rates that would be charged in the presence of effective competition 1° Anecdotal evidence of rates examined in various markets where Time Warner faces taste effective competition reveals that Time Warner's BST rates are between 15'% to 78 % higher than those in these competitive markets and that basic cable installation rates are between 200% - 4500 % higher than effectively competitive markets. The GAO recently reported that "cable rates are substantially lower (by 15%) than in markets without competition."t' It is the Consultant's opinion the FCC's rate malting process no longer yields rates that would be '"'§76.923 (c)(I) Costs of custmner equipment may 6e aggregated, on a franchise, system, regional, or company level When submitting its equipment costs based on average charges, the cable operator must provide n general description of the averaging methodology employed mid a justification that its averaging methodology produces reasonnble equipment rates. 13¢76.923 (c)(3) Instnllation costs may be aggregated, on a franchise, system, regional, or company level When snbmitting its installation costs based on average charges, the cable operator must provide a general description of the averaging methodology employed and a justification tlmt its averaging methodology produces reasonable equipment rates t't7 ime Warner is treated as a single company for FCC 1205 rate-making purposes TWC tiles a single FCC 1205 throughout the United States with over 3000 local franchise authorities, LFAs, to establish uniform rates for equipment and installation charges 15Specitically, the 1992 Cable Act requires the Commission's regulations "shall be designed to achieve the goal of protecting subscribers of any cable system that is not subject to effective competition from rotes for the basic service tier that exceed the rates that would be charged for the basic service tier if'such cable system were subject to effective competition." Communications Act, ~ 623(6)(1), 47 U.S C. § 543(6)(1) 1~As the FCC stated in its first rate rulemaking order: "The priority established in the Act is clearly to protect the interests of subscribers An important focus for both basic tier and cable programming service rates, consistent with providing system operators a fair retunr, is the establishment of rate levels equivalent to rates that would be charged in the presence of effective competition The criteria to be applied in setting both basic tier and cable programming service rates include a comparison with 'the rates for cable systems, if any, that are subject to effective competition "'See Implementation of Sections of the Cable Television Consmner Protection and Competition Act of 1992, 8 FCC Rcd 56.31 at pars Band footnote 10 [April 1993 Report and Order] l~tssues Related to Competitimt and Subscriber Rates in the Cable Television Industry, United States General Accounting Office, October 2003. Action Audits, LLC Cabte Rate, Franchise Fee, Utility Tax Auditing & Telecommunication Administration I OI Pocono Lane, Cary, North Carolinas 27513-5316 Voice tli 919 467.5392 Fax t! 919 460.6868