NEWSReport No. DC- 2657             ACTION IN DOCKET CASE   October 5, 1994

         CABLE OPERATORS AUTHORIZED TO PASS THROUGH INCREASES IN
                   FRANCHISE FEES AND REGULATORY FEES
                            (MM DOCKET 92-266)

     The Commission has  amended its price cap rules governing regulated cable service rates
to permit cable operators to revise rates for regulated cable services to reflect increases in
franchise fees without receiving prior franchising authority or Commission approval.  It also
amended the rules to permit external cost treatment of Commission regulatory fees applicable
to cable operators and to permit these fees to be passed through to subscribers under the same
procedures as increases in franchise fees.

     The Commission took these actions on its own motion to establish a more complete
implementation of the 1992 Cable Act.  

     The Commission said that increases in franchise fees are determined by a government
entity that is aware of and sensitive to the fees' impact upon consumers.  Since franchising
authorities set the franchise fees, prior regulatory review is unnecessary from a consumer
protection standpoint.  Therefore operators may adjust rates to reflect increases in franchise
fees without prior approval from the franchising authorities.  Operators will continue to be
required to give subscribers and the franchising authorities 30 days' advance notice of any
such change and must provide documentation that demonstrates that the rate increase has
been properly calculated.  The franchising authority, or the Commission, as appropriate, may
then review the pass-through of increases in franchise fees and may order a prospective rate
reduction and refund if appropriate. 

     The Commission noted that cable system regulatory fees are mandated by Congress
and collected by the Commission and will be used by the Commission to administer its
regulatory program.  As such, they are governmentally-assessed fees that further the
purposes of the Communications Act.  They are beyond the control of the cable operator and
easily measurable in amount.  Accordingly, the Commission determined that its regulatory
fees should be accorded external cost treatment under the price cap rules governing cable
service rates and passed through to consumers under the same procedures as franchise fees.

     The Commission further determined that its regulatory fees should be allocated to the
basic service tier because they are assessed on a per subscriber basis and all subscribers
receive the basic service tier.  

                                                            (over)

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     Action by the Commission September 30, 1994, by Fourth Order on Reconsideration
(FCC 94-254).  Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong. 

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     Cable Services Bureau news media contact:  Morgan Broman at (202) 416-0852.
     Cable Services Bureau contact: Leora Hochstein at (202) 416-0980.