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8 <br />Had TWC used the new inflation rates, Time Warner's Maximum Permitted BST rate would <br />have increased ever so slightly. Refreshment would not alter the rate paid by Time Warner's <br />customers. <br />Time Warner was correct to use the 1.21% in the October filing. The Franchise Authority cannot <br />compel the cable operator to submit a revised FCC 1240 with a refreshed BST MPR and use that <br />refreshed rate as the basis for preparing the FCC1240 rate filing for 2003. TWC should be <br />encouraged to refresh the 2003 rate in the interest of good business and consumer practices by <br />increasing the Maximum Permitted Rate for 2004. Rate refreshment allows the MPR to <br />accurately track the inflation rate. <br />Equipment & Installation Rates <br />Time Warner calculated the FCC1205 maximum permitted equipment2 and installation3 rates by <br />aggregating its costs on a national basis. The prior year costs were aggregated on a regional <br />basis. a <br />In 2001, Time Warner's North Carolina maximum installation Hourly Service Charge, (HSC) <br />was $28.39. For 2002, Company-wide expense aggregation increased the HSC $7.44 to $35.83, <br />a 26% boost. For 2003, the Company is requesting authority to raise the HSC $1.79 to $37.62. <br />Because TWC did not show that its averaging methodology produced a reasonable HSC rates for <br />2002 the Consultant recommended that the FCC 1205 form filed by Time Warner should be <br />disallowed because TWC was unable to demonstrate that it's national aggregation process <br />produces "just and reasonable rates." Time Warner submitted a letters to the County requesting <br />the County delay action on the Ron th same matteranOn January 23W2003, the FCC slued a <br />Smithfield, NC local Rate Order <br />z§76.923 (c)(1) Costs of customer equipment maybe aggregated, on a franchise, system, regional, or <br />company level. When submitting its equipment costs based on average charges, the cable operator must provide a <br />general description of the averaging methodology employed and a justification that its averaging methodology <br />produces reasonable equipment rates. <br />3§76.923 (c)(3) Installation costs maybe aggregated, on a franchise, system, regional, or company level. <br />When submitting its installation costs based on average charges, the cable operator must provide a general <br />description of the averaging methodology employed and a justification that its averaging methodology produces <br />reasonable equipment rates. <br />4Time Warner is treated as a single company for FCC 1205 rate-making purposes. TWC files a single FCC <br />1205 throughout the United States with over 30001oca1 franchise authorities, LFAs, to establish uniform rates for <br />equipment and installation charges. <br />SBrad Phillips' February 20021etter to the County <br />Action Audits, LLC Cable Rate, Franchise Fee, Utili Tax Auditin & Telecommunication Administration <br />101 Pocono Lane, Cary, North Carolina 27513-5316 Voice # 919.467.5392 Fax # 919.460.6868 <br />