NEWSNEWSReport No. DC- 2651ACTION IN DOCKET CASE         September 13, 1994

     COMMISSION DECIDES NOT TO ADOPT PRODUCTIVITY OFFSET FOR 
                         CABLE SERVICE PRICE CAPS 
                            (MM DOCKET 93-215)

     The Commission has declined to incorporate a productivity offset into the price cap
mechanism governing regulated cable service rates.  

     A productivity offset serves to reflect the difference between productivity gains
experienced by cable operators and those productivity gains produced in the economy as a
whole.  

     In the initial Rate Order in this proceeding, released in May 1993, the Commission
adopted a price cap mechanism to govern rates for regulated cable service after initial rates have
been established.  Under the price cap, cable operators are permitted to adjust their capped rates
to reflect costs attributable to inflation as measured by the Gross National Product - Price Index
(GNP-PI), as well as for changes in external costs.  At that time, however, it declined to adopt
a productivity offset to the GNP-PI because the record did not provide a basis for determining
productivity gains in the cable industry.

     In a Further Notice in this proceeding, released in March 1994, the Commission
tentatively concluded that cable operators should reasonably expect to achieve productivity gains
comparable to those realized by other communications firms and proposed and sought comment
on a two percent productivity offset.

     The Commission concluded that, while a productivity offset should be based, to the
extent possible, on observed efficiency gains, the current record does not provide an adequate
factual basis for the inclusion of a productivity offset at this time.  The Commission noted,
however, that future developments in cable service technology and services offered could
warrant renewed consideration of a productivity offset for regulated cable service rates.  At such
time, it could reconsider this issue.

     Action by the Commission September 2, 1994, by Memorandum Opinion and Order
(FCC 94-226).  Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong.

                                                            - FCC -

     Cable Services Bureau News Media contact: Morgan Broman (202) 416-0856
     Cable Services Bureau contact:  Larry Walke at (202) 416-0847.