FACT SHEET
September 1997
CABLE TELEVISION FACT SHEET
THE CONSUMER'S ROLE IN RATE REGULATION
Q: Does the Commission regulate all cable television rates?
A: No. This authority is shared between the Commission and your local franchising authority, which is the local city, county, or other government organization that granted the cable operator the right to provide cable service to your community. The name of your local franchising authority should be on your cable bill. If it is not, contact your cable company or your local government.
Q: What do local franchising authorities regulate?
A: In most instances, your local franchising authority is responsible for regulating:
- Rates for basic cable service, equipment used to receive basic cable service, and installation and service charges related to basic cable service. The term "basic cable service" refers to the lowest level of cable service you can buy, and is the program package that includes signals from local television stations (such as ABC, CBS, and NBC affiliates; educational stations; and independent television stations) and public, educational and governmental access channels. Your cable system may use other terms to describe this service.
- Customer service--for instance, complaints about bills, a cable system's response to inquiries about signal quality, and a cable system's response to service requests.
- Franchise fees--the fees paid by the cable system to the franchising authority for the right to offer cable service.
You should contact your local franchising authority, and not the FCC, with complaints regarding rates for basic cable service, customer service and franchise fees.
Q: What cable rates does the FCC regulate?
A: The FCC regulates the rates you pay for certain programming that the FCC refers to as "cable programming service." "Cable programming service" includes all program channels on your cable system that are not included in basic service and are not separately offered as pay-per-channel programming or pay-per-program services.
The FCC also regulates rates for equipment used solely to receive cable programming service, as well as installation and service charges related solely to cable programming service. However, since most equipment used to receive cable programming service is also used to receive basic service, equipment complaints should generally be directed to your local franchising authority.
Q: Are there some rates that neither the FCC nor local franchising authorities regulate?
A: Yes. Neither the FCC nor your local franchising authority regulates rates for pay-per-channel programming (for instance, a premium movie channel such as HBO or Showtime) and pay-per-program services (for instance, pay-per-view sports events). This means that your cable company may charge what it chooses for these services.
Q: How are the rates of my cable company regulated?
A: The rates for the basic service tier are regulated by your local franchising authority. The rate regulations your local authority enforces are regulations the FCC has adopted. Basically, the FCC has established a benchmark system for use by the local authorities in their determinations of rate reasonableness. Under the benchmark system, a cable operator's rates are compared to a set of rates designed to approximate the rates an operator facing competition would charge.
Cable programming services--that is, all video programming provided over a cable system not including basic service or per-channel or per-program service--is subject to regulation directly by the FCC, and not by your local authority. The Commission will consider whether rates are reasonable for such video programming services, if, within 90 days of a rate increase, more than one cable subscriber complains to their local franchise authority, and the local franchise authority files a formal rate complaint with the Commission. The Commission may only consider those rate complaints which are filed by a local franchise authority, and may not accept a rate complaint filed directly by a subscriber.
Per-channel or per-program services, which are those services for which the cable system charges a separate fee, as stated above, are not subject to rate regulation.
Pursuant to Commission rules, cable operators are permitted to offer a new type of cable programming service called a New Product Tier (NPT). Cable operators are permitted to price these new tiers of programming at market rates. Cable operators are also permitted to collect a flat fee for adding new channels to the cable programming service tier (often referred to as "expanded basic" service). Operators are allowed -- but not required -- to take a per channel mark-up of up to 20 cents for each channel added to the cable programming service tier. However, the Commission's rules place a price cap on the new charges so that generally, a cable operator may not make per-channel adjustments to monthly rates totalling more than $1.20.
If a cable company believes that its rates must be permitted to exceed the benchmark, or its rate increase must be allowed to exceed the price cap, it can elect to justify higher rates by making a cost of service showing. This more complicated method for determining the reasonableness of a cable company's rates is based on the company's higher costs of providing service. If the cable company can make the case that its higher costs require higher rates, its rates will be allowed to exceed the benchmark and price cap maximums.
Q: May my local franchising authority begin immediately to regulate my cable system's basic rates?
A: No. In order to exercise its authority to regulate basic cable rates, your local franchising authority must be certified to do so by the Commission. Your local franchising authority must certify to the Commission that it has the legal authority and the personnel necessary to regulate rates, that it will adopt rules consistent with Commission rules governing the basic service tier, and that it will adopt procedural rules providing for notice and comment in rate regulation proceedings. Your franchising authority's certification becomes effective 30 days after it is filed with the Commission, unless the Commission notifies your franchising authority to the contrary. Your franchising authority must adopt the rules referred above within 120 days of certification.
Should your local franchising authority's certification be denied or revoked, the Commission will assume jurisdiction to regulate rates for basic cable service and associated equipment of a given system. The Commission will not intervene to regulate basic cable service rates should your local franchising authority choose not to seek certification from the Commission nor request that the Commission assume jurisdiction.
Q: How do I file a complaint with the FCC?
A: Pursuant to the Telecommunications Act of 1996, only a local franchise authority may file a rate complaint with the Commission. Cable subscribers may, however, file a complaint with their local franchise authority within 90 days of an increase in the cable programming services rates. Once a local franchise authority has received complaints from more than one subscriber, it may file a complaint with the Commission on behalf of subscribers.
Q: How does the complaint process work?
A: The local franchise authority's complaint begins a legal process that requires your cable company to demonstrate that its rates are reasonable under the law. The FCC requires your cable company to respond in writing to the complaint within 30 days of the date it is filed with the Commission. In its response, your cable company must show that its rates are reasonable under the law. The cable company must provide the local franchise authority with a copy of its response. The FCC will examine the information submitted by the cable company and determine whether its rates for cable programming service are too high. If so, the FCC may order a refund and/or a rate reduction for the cable programming service. The franchising authority will receive a copy of the FCC's final ruling on the reasonableness of the cable programming service rate charged by your cable company.
Q: How can I obtain copies of the Commission's cable regulations?
A: Due to budgetary considerations, the Commission does not supply free copies of its regulations. You can purchase copies of the Commission's decisions and specific regulations by calling International Transcription Service [ITS] at (202) 857-3800. When you call ITS, ask for cable regulations and specify whether you want information regarding rates or other areas. If you wish to purchase copies of the 1992 Cable Act, the entire Communications Act, or Commission rules and regulations, call the Government Printing Office [GPO] at (202) 512-1800. There may also be a GPO outlet in a major city close to you. The FCC's cable television rules and regulations are contained in Title 47 of the Code of Federal Regulations, Part 76.
Q: How can I obtain further information from the Commission?
A: The following mailing address may be used: Cable Services Bureau, General Cable Inquiries, 445 12th Street, S.W., Washington, D.C., 20554. The Commission's Consumer Assistance Branch also serves as a focal point for information dissemination and outreach to public interest and consumer organizations. It is also located in at 445 12th Street, S.W., Washington, D.C., 20554; telephone (202) 418-0190. Commission offices are normally open from 8:00 a.m. to 5:30 p.m., Monday through Friday, excluding federal legal holidays.
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