NEWSReport No. DC 96-70    ACTION IN DOCKET CASE              July 25, 1996

            COMMISSION ADOPTS CABLE PRICING FLEXIBILITY ITEM
              (MM Docket No. 92-266, CS Docket No. 96-157)

       The Commission has adopted a Memorandum Opinion and Order, and Notice of
Proposed Rulemaking (MM Docket No. 92-266, CS Docket No. 96-157) regarding flexibility
in cable rate pricing.  The Commission believes that cable consumers will benefit from
flexible rates that allow an operator to offer a lower priced basic service tier.  This option
will allow cable operators to react to competitive changes in the marketplace.

       In the Notice, the Commission proposes to give operators more flexibility with respect
to the relative pricing of different tiers of service.  This proposal would give an operator the
option, once it has set rates in accordance with existing regulations, to decrease  its basic
service tier ("BST") rate and then take a corresponding increase in its cable programming
service tier ("CPST") rate to offset the lost revenue on the BST.  If an operator implemented
this approach, all subscribers would see a decrease in BST rates.  
Although CPST subscribers could experience a rate increase, all CPST subscribers are also
BST subscribers for whom the increase in CPST rates would be offset by the decrease in BST
rates.  CPST penetration rates are high, thus, generally, any rate increase would be minimal. 
The Notice also seeks comment on whether the Commission should place a limit on the
amount of any CPST rate increase or otherwise limit the amount by which the BST and
CPST rates may be adjusted in order to ensure that consumers are protected from more than
minimal rate increases. 

       The Commission believes this proposal would promote competition.  The proposal
would give operators rate structure flexibility enjoyed by alternative providers of video
services that are, or soon will be, attempting to compete with cable but are not subject to the 
rate regulation imposed by statute on cable operators.  Notably, for consumers who currently
subscribe to only BST, rates would decrease.  As some consumers who currently are unable
to afford BST would now find that tier to be affordable, more consumers would have access,
at lower rates, to the broadcast channels and public, educational, and government access
channels that generally make up the BST.  A reduced-rate BST should allow cable operators
to increase their penetration generally, in preparation for the developing marketplace where
access to nonvideo services, such as telephony, is becoming increasingly important.  This
proposal may enhance competition in these nonvideo areas as well.

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       Additionally, the Order extends the Commission's requirement that a cable operator
use consistent methodologies for all tiers of regulated service.

       Action by the Commission by Report and Order and Notice of Proposed Rulemaking   
 (FCC 96-316).

                                  - FCC -

News Media Contact: Morgan Broman at (202) 418-2358
Cable Services Bureau Contact: Nancy Stevenson at (202) 418-7200