§543 Regulation of rates

Summary

Limits who can set the prices for cable service and explains when the federal government, states, or local franchising authorities may step in. The Federal Communications Commission (the Commission) and states may only regulate cable rates as this law allows and under section 532. A local franchising authority may set rates only in the ways this law allows. If the Commission finds a cable system faces “effective competition,” then its rates cannot be regulated by the Commission, a State, or a franchising authority. If the Commission finds a system is not under effective competition, then local authorities (or the Commission if it chooses) may regulate basic service tier rates under rules the Commission makes, and the Commission will set rules for rates of cable programming services. A franchising authority that wants to regulate basic tier rates must file a written certification with the Commission saying it will follow the Commission’s rules, has the legal power and staff to do the work, and offers fair procedures for public input. That certification becomes effective 30 days after filing unless the Commission finds problems such as inconsistent rules, lack of legal authority or staff, or poor procedures. The Commission will review complaints and can revoke a franchising authority’s power if it finds the authority did not follow the requirements. If the Commission disapproves or revokes a local certification, the Commission will take over that local regulatory power until the local authority files a new certification and the Commission approves it. The Commission must approve or disapprove such new certifications within 90 days. The law allows cable operators to group equipment costs into broad categories for rate work under rules the Commission sets, but not for equipment used by subscribers who get only a regulated basic tier. The Commission had to update rules and forms to allow this within 120 days of February 8, 1996. The Commission must make rules to keep basic service tier rates reasonable and to try to match what would be charged if there were effective competition. It had to issue those rules within 180 days after October 5, 1992 and revise them from time to time. In making rules the Commission must try to reduce paperwork and may use formulas. The Commission must consider several factors when setting or reviewing rates, including rates in competitive systems, direct costs to provide basic signals, the share of joint costs properly assigned to basic service, advertising revenue tied to the basic tier, franchise fees and other taxes or charges, amounts needed to meet franchise requirements for public, educational, or governmental channels, and a reasonable profit as the Commission defines it. The Commission must set standards, based on actual cost, for installation and rental of equipment used to get the basic tier (like converter boxes and remote controls) and for adding extra TV connections. The rules must also identify costs tied to meeting franchise public-access requirements, set procedures for operators to follow and for franchising authorities to enforce the rules, provide fast dispute resolution between operators and franchising authorities, stop unreasonable charges when subscribers change services or equipment, and make sure subscribers are told about the basic service tier. Cable operators must give 30 days’ advance notice to a franchising authority before raising basic tier prices. Every cable operator must offer a separate basic service tier that subscribers must have to get any other tier. That basic tier must at least include the signals required by sections 534 and 535, any franchise-required public, educational, and governmental access programming, and any local broadcast station signals the operator provides to subscribers (with a limited satellite-related exception). Operators may add other video programming to the basic tier, but such additions are priced under the Commission’s rules. Operators may not force customers to buy a higher tier just to get programming sold per channel or per program, and they must not charge different per-channel or per-program rates for basic-tier subscribers, unless the system lacks addressable equipment or other technical limits. That technical exception ends when technology is fixed or 10 years after October 5, 1992, unless the Commission grants a temporary waiver if complying would force the operator to raise rates. The Commission must also set rules, within 180 days after October 5, 1992, for identifying and handling complaints that specific cable programming service rates are unreasonable, including fair procedures for complaints, minimum showings, ways to reduce rates and refund amounts found unreasonable, and timelines. For complaints about increases in programming service rates filed by franchising authorities after February 8, 1996, the Commission must issue a final order within 90 days unless the parties agree to more time. The rules about programming service rates do not apply to programming provided after March 31, 1999. Cable operators must keep rate structures uniform across the area served by their system, unless that area faces effective competition or the charge is for per-channel or per-program video. Bulk discounts to apartment buildings are allowed, but a system that is not under effective competition may not charge predatory prices to a multiple dwelling unit; if someone shows reasonable grounds to believe a discount is predatory, the operator must prove it is not. Federal, State, or local authorities may ban unfair discrimination among subscribers, but they may not stop reasonable discounts for seniors or other low-income groups. They may require equipment to help hearing-impaired customers receive service. Operators may not bill subscribers for services or equipment the subscriber did not specifically ask for by name. Operators must file financial information with the Commission or the franchising authority within one year after October 5, 1992 and then every year after that. The Commission must make rules within 180 days after October 5, 1992 to stop attempts to evade these rules, including by reshuffling service tiers, and must review those rules over time. The Commission must make rules that reduce burdens for systems with 1,000 or fewer subscribers. Agreements made before July 1, 1990 that regulate basic cable rates in areas without effective competition remain effective and are not cut short by these rules. The Commission must include statistical reports on average basic and other programming rates and equipment costs in its report under section 163, and must report the total amount cable systems pay under section 325. Definitions (one line each): Effective competition — situations described in the law where a system faces real market rivals, including when fewer than 30 percent of households in the area subscribe to the cable system; or when at least two unaffiliated multichannel video programming distributors serve at least 50 percent of households and other distributors (besides the largest) have more than 15 percent; or when the franchising authority itself offers service to at least 50 percent of households; or when a local phone company or its affiliate offers comparable video service directly in the area. Cable programming service — any video programming provided over a cable system other than programming on the basic service tier or programming sold per channel or per program. Small cable operator rules and exceptions: Subsections (a), (b), and (c) do not apply to a “small cable operator” for cable programming services or for a basic tier that was the only regulated tier as of December 31, 1994. A “small cable operator” is one that serves, directly or through an affiliate, fewer than 1 percent of all US subscribers and is not affiliated with entities whose combined annual revenues exceed $250,000,000. Losses from before September 4, 1992 for systems owned by the original franchisee may be counted when deciding lawful rates. Finally, the Commission had to complete, within 180 days after December 4, 2014, a rulemaking to create a simpler way for small cable operators (especially rural ones) to file effective competition petitions; such operators still must prove they face effective competition.