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

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Analysis of the Proposed Rate Adjustments: Time Warner's FCC1240 rate adjustments reflect the following external cost elements: external costs for true-up and projected periods, inflation from true-up and projected periods; franchise related (peg) expenses, any program expense adjustments, generally FCC regulatory fees, franchise fees and sales taxes are external Co the calculation of the subscriber monthly bill. External Cost: Tithe Wamer's Form FCC1240 rate adjustments reflect multiple external cost elements. An external cost is an expense a cable operator incurs during the normal course of business and maybe included in rate calculations. External cost categories are state and local taxes; franchise fees; costs of complying with franchise requirements, including costs of providing public, educational, and governmental access channels; retransmission consent fees and copyright fees incurred for the carriage of broadcast signals; other programming costs; FCC regulatory fees, and costs associated with channel additions.. The FCC 1240 Form must be filed with the local franchise authority ninety (90) days before the rates are scheduled to take effect and may be f led no mote frequently than annually.. The FCC Form 1240 rate filing method represents a departure from the quarterly method of updating cable rates, in that it allows cable operators to estimate their future costs over a 12-month period: this is referred to as the projected period.' The FCC 1240 form allows operators to recover prior period expenses, refeued to as the true-up period. If a cable operator incorrectly estimates its costs for a projected period, it nmst correct those estimates by using the true-up process in the next FCC1240 rate filing. Time Warner's projected period covers the 12-month period of:January through December 2004.. The operator's true-up period covers the 12-month period of October 2002 through September 2003. Inflation Adjushnent: In its FCC 1240 rate filing, Time Warner used an inflation factor of 2..39% for the last nine months of the 2009 hue-up period, because that was the official rate published by the FCC. On October' 7, 2003, the FCC revised the official inflation figure for the 2003 Q2- Q4 true-up period to 1.00%. Time Warner did not use the new vahte in its calculations for the FCC 1240 submitted October 2, because the FCC requires cable operators to use the "then cutTent" rate prior Co the issuance of revised inflation figures Had TWC used the new inflation rates, Time Warner's Maximum Permitted BST rate would have decreased slightly. FCC t Z 10 Forms allow for the recovery of past costs, only, not Future costs. Future costs arc recoverable through the use of the FCC1340 Form only Action Audits, LLC Cuble Rate, Franchise Fee, Utility Tax Auditing & Telecommunication Administration I OI Pocono Lane, Cary, North Carolina 27513-5316 Voice ;. 919 467.5392 Pax ,f 919A60 G868