NEWSReport No. DC-95-7                ACTION IN DOCKET CASE                    January 6, 1995

    COMMISSION ADOPTS ADDITIONAL INCENTIVES FOR SMALLER CABLE SYSTEM
                        OPERATORS TO ADD CHANNELS
                            (MM DOCKET 92-266)

     The Commission has, on its own motion, adopted a Seventh Order on Reconsideration
("Seventh Order") which provides smaller cable operators with further incentives to add new
channels to cable programming services tiers ("CPSTs") and to single-tier systems. 
Operators electing the smaller system option can recover a 20 cent markup, plus license fees
(subject to caps) plus headend costs.  The order also expands the number of operators
entitled to use the option.

     In its Going Forward Order adopted on November 10, 1994, the Commission created
an additional channel adjustment method for operators adding channels to CPSTs and to
single-tier systems.  The Commission also adopted a streamlined cost-of-service procedure
permitting independent small systems and small systems owned by small multiple system
operators ("MSOs") to elect to recover the costs of upgrading their headend equipment and
license fees when they added new channels, rather than to receive the incentives otherwise
provided in the Going Forward Order.  Headend recovery was limited to the lesser of the
actual cost of the headend equipment or $5,000.

     The Commission believes the small system relief it adopted in the Going Forward
Order did not provide sufficient incentives for smaller cable operators to add channels. 
Therefore, the Seventh Order allows independent small systems and small systems owned by
small MSOs to recover by using the per channel adjustment methodology available to all
operators and also by using the streamlined cost-of-service procedure for upgrading headend
equipment in the following manner.  First, as provided for all operators in the Going
Forward Order, such operators may make the rate adjustments to reflect per channel
additions and programming that all operators are permitted to make under the Going Forward
Order.  Specifically, operators may make per channel adjustments under either the new or
the "old" going forward rules.  Operators that elect the new going forward rules are allowed
to recover programming license fees associated with adding channels, subject to the License
Fee Reserve and the Operator's Cap.  Second, such operators may recover the lesser of the
actual cost of the headend equipment associated with the channel addition or $5,000 for up to
seven channels through December 31, 1997.  As provided in the Going Forward Order,
headend costs must be depreciated over the useful life of the equipment and the rate of return
on the investment must not exceed 11.25%.  
                                  (over)

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     The Seventh Order provides that systems having more than 1,000 subscribers that are
independent or are owned by a small MSO, and for which the monthly per subscriber cost of
the additional headend equipment necessary to receive an additional channel is one cent or
more, may take advantage of the relief afforded by the Order.

     Finally, the Seventh Order provides that the streamlined cost-of-service procedure for
headend upgrades associated with channel additions should also apply to single-tier systems.

     Action by the Commission, January 5, 1995, by Seventh Order on Reconsideration
(FCC 95-8).   Chairman Hundt, Commissioners Quello, Ness and Chong, with
Commissioner Barrett concurring in the result and issuing a statement. 

                                  - FCC -

     News Media contact: Morgan Broman at (202) 416-0852
     Cable Services Bureau contacts: Joel Kaufman, Meryl S. Icove (202) 416-0800

                                   -FCC-