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6 <br />CPST Rate Regulation Expiration <br />A sunset provision within the Telecommunications Act of 1996 established March 31, 1999 as <br />the date which rate regulation for the upper cable service tiers ended. Thereafter, the cable <br />operator is allowed to change upper service tier rates at will upon 30 days notice to the franchise <br />authority and subscribers.. <br />Franchise Related Costs <br />Public Access Television <br />Time Warner Cable reported no franchise related expenses fox 1999. Franchise related expenses <br />are related to public, government and education access activities and may include direct costs, <br />such as grants, and indirect costs, such as signal transportation and headend accommodations. <br />Programming Costs <br />Time Warner will recover approximately $.56 monthly, per subscriber, during 2000 for <br />anticipated BST programming costs during the projected period. Time Warner representatives <br />state that program service providers customarily increase service fees annually. Time Warner <br />attributes its programming cost increase for increased program fees. <br />Inflation <br />Time Warner is claiming inflation adjustments in it's true up and projected period segments of its <br />FCC 1240 rate filing. Time Warner used the FCC true up period inflation figure of .7$% for the <br />period October-December, 1998; 1.60% for January-September, 1999. However, on October 1, <br />1999 the FCC announced that the true-up inflation rate far April -June, 1998 was 1.35%. <br />Pursuant to the FCC's rate rules, the company must use the "current" inflation figure when <br />calculating its true-up and projected rate increase due to inflation. <br />Staff recalculated Time Warner Cable's charges attributed to inflation using currently available <br />infonnation4. This resulted in a reduction of the overall inflation for 1999 from 1.0140%° to <br />1.0127% and set the projected period (2000) inflation index to 1.35%. The projected period <br />inflation figure is subject to correction in the operator's subsequent FCC 1240 rate filing. <br />Time Warner's FCC 1240 rate filing did not reflect the true up inflation factor for the second <br />quarter of 1999 released by the Commission on October 1, 1999. Had the operator used the <br />1.35% value to calculate the true-up period inflation rate instead to the previous quarter's value <br />(1.60%), the Maximum Permitted BST rates would have been $0.15 lower for Carrboro system <br />customers, $0.401ower for Durham system customers, and $0.2 lower far Chapel Hill system <br />4See FCC Form 1240 Instructions for Line C3. <br />3 <br />