[Federal Register Volume 61, Number 61 (Thursday, March 28, 1996)]
[Proposed Rules]
[Pages 13803-13809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7221]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[CS Docket No. 96-57; FCC 96-117]
Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission is issuing this Notice of Proposed Rulemaking
(``NPRM'') in order to solicit comment on the proper implementation of
Section 623(a)(7)(A) of the Communications Act. This NPRM is necessary
to fulfill the statutory requirement in Section 301(j) of the
Telecommunications Act of 1996 that the Commission allow cable
operators to aggregate, on a franchise, system, regional, or company
level, their equipment costs into broad categories regardless of the
varying levels of functionality of the equipment within each such broad
category. This proceeding will permit the Commission to issue final
rules.
DATES: Comments are due April 12, 1996. Reply comments are due April
22, 1996.
FOR FURTHER INFORMATION CONTACT: Ibn Spicer, Cable Services Bureau,
Financial Analysis Division (202) 418-2296.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Notice of Proposed
Rulemaking in CS Docket No. 96-57, FCC 96-117, adopted March 18, 1996
and released March 20, 1996. The complete text of this Notice of
Proposed Rulemaking is available for inspection and copying during
normal business hours in the FCC Reference Center (room 239), 1919 M
Street N.W., Washington, DC, and also may be purchased from the
Commission's copy contractor, International Transcription Services,
Inc. (``ITS Inc.'') at (202) 857-3800, 2100 M Street N.W., Suite 140,
Washington, DC 20017.
Synopsis of Notice of Proposed Rulemaking
1. In this Notice of Proposed Rulemaking (``NPRM''), we propose to
amend our rules to implement Section 301(j) of the Telecommunications
Act of 1996 (``1996 Act'') which adds a new Section 623(a)(7) to the
Communication Act of 1934, as amended (``Communications Act''). Section
301(j) of the 1996 Act requires that the Commission allow cable
operators to aggregate, on a franchise, system, regional, or company
level, their equipment costs into broad categories regardless of the
varying levels of functionality of the equipment within each such broad
category. That section also provides that ``[s]uch aggregation shall
not be permitted with respect to equipment used by subscribers who
receive only a rate regulated basic tier.''
Discussion
A. Cost Categorization
2. Section 301(j) of the 1996 Act requires the Commission to allow
regulated operators to aggregate ``their [customer] equipment costs
into broad categories, such as converter boxes, regardless of the
varying levels of functionality of the equipment within each such broad
category.'' We tentatively conclude that the statute intends that
equipment be classified and placed in categories based on the primary
purpose of the equipment.
3. We propose to amend the Equipment Basket provisions in Section
76.923(c) to allow categorization of customer equipment costs into
broad categories. We further propose eliminating the language in
Sections 76.923(f) and (g) that requires separate charges for each
significantly different type of remote control device, converter box,
and other customer equipment. We propose amending the rules to require
that equipment be categorized based on its primary purpose. Thus,
customer equipment, except equipment used by basic-only subscribers,
that is used for the same purpose may be aggregated into the same broad
category and priced at the same rate, regardless of the level of
functionality. We seek comment on whether the Commission should
establish a definition of the term ``level of functionality'' in order
to bring more certainty to these new rules. If commenters believe we
should do so, they should propose a definition of that term. Because
equipment rates to subscribers must be based on actual costs, operators
must base equipment charges on the same aggregation level as their
costs. We propose amending our rules to make this explicit. Section
76.923(l) currently permits small systems to average costs for
``similar types of equipment'' on a company-wide basis. We propose
eliminating this section since all systems shall be permitted to
aggregate equipment
[[Page 13804]]
pursuant to the new provisions in the 1996 Act.
4. Section 76.923(h) currently contains language that effectively
requires separate charges for connections, which includes inside wire,
additional outlets and signal boosters, if needed, used to provide
cable service to additional television receivers. That language was
included to implement Section 623(b)(3) of the Communications Act of
1934, as amended, which specifically required rates for installation
and monthly use of connections for additional television receivers be
separate from rates for the initial receiver. Therefore, we tentatively
conclude that additional connections may not be aggregated with initial
connections into a broad category.
B. Organizational Levels
5. In light of new section 623(a)(7), we propose that Section
76.923(c) of our rules be amended to specifically permit customer
equipment cost aggregation at the franchise, system, regional, or
company level. Because equipment rates to subscribers must be based on
actual costs, operators must base equipment charges on the same
aggregation level as their costs. We propose amending our rules to make
this explicit. Furthermore, to the extent that our current rules permit
cost aggregation of equipment only in a manner consistent with an
operator's practices on April 3, 1993, we propose eliminating this date
restriction. We tentatively conclude that such a restriction would
improperly prevent an operator from aggregating costs at higher
organizational levels, as specifically permitted in the statute.
6. We tentatively conclude that Congress did not intend that cost
aggregation be permitted to the same extent for installation charges.
We reach this tentative conclusion because Section 301(j) of the 1996
Act refers only to equipment and not to installations, whereas the 1992
Cable Act separately mentions installations. Consistent with our small
system rules, we believe that customer equipment charges are less
likely to vary significantly between systems, whereas installation
charges are more dependent on local labor and other costs that can vary
between communities. We recognize, however, that this requirement could
impose additional burdens on cable operators, since customer equipment
rates could be set at higher organizational levels than installation
rates. We therefore propose that operators be permitted to aggregate
installation costs based on specific service areas designated for the
aggregation of those costs. Under this approach, a rate could be
established for installation for a specific service area that is chosen
by the operator because the costs of providing installation are
substantially similar throughout all franchises in that chosen service
area. We seek comment on this approach. We also seek comment on whether
there are alternative levels at which installation costs could be
identified that would ease burdens on operators, yet still comport with
Congressional intent.
C. Basic-Only Subscriber Equipment
7. The 1996 Act prohibits ``[s]uch aggregation * * * with respect
to equipment used by subscribers who receive only a rate regulated
basic service tier.'' We tentatively conclude that Congress was
concerned that basic-only subscribers not subsidize the costs of more
sophisticated equipment used by subscribers taking services in addition
to basic. Therefore, we tentatively conclude that equipment used by
basic-only subscribers may not be aggregated into broad categories. We
propose amending Section 76.923(c) to provide that the cost of
equipment used by basic service-only customers may not be averaged with
other customer equipment. However, the statute is not clear as to
whether a cable operator may aggregate the costs of equipment used by
basic-only customers at higher organizational levels and developing
system, regional, or company average prices for such equipment.
Although we recognize this ambiguity, we believe that allowing cable
companies to aggregate the costs of equipment used by basic service-
only customers at a higher organizational level and develop a rate
based upon such aggregation does not contravene Congress' concern that
basic-only subscribers not subsidize the costs of more sophisticated
equipment used by subscribers taking other services in addition to
basic. Any aggregation of the costs of basic service-only equipment at
a higher organizational level will still only include equipment for
that level of service. We seek comment on this issue.
D. Equipment Rates Jurisdiction and Review
8. Affected local franchising authorities will continue to review
the equipment rates and supporting aggregated cost data as part of the
review of the cable operators' rate justifications for basic rates. We
recognize that the review of aggregated cost data regarding equipment
by each of the affected local franchising authorities could lead to
varying analyses and potentially inconsistent orders regarding that
data. We seek comment on whether there is an alternative that could be
more administratively efficient for local franchising authorities and
cable operators alike.
E. FCC Form 1205
9. Because of our above tentative conclusions and proposed rules
changes, we believe that FCC Form 1205 will need to be modified. We are
proposing revisions to Form 1205 and seek comment on these revisions.
The pages of Form 1205 containing revisions are set forth below.
Procedural Provisions
A. Ex Parte Presentations
10. This is a non-restricted notice-and-comment rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided that they are disclosed as provided in
the Commission's rules. See generally 47 CFR Sections 1.1202, 1.1203,
1.1206(a).
B. Initial Regulatory Flexibility Analysis
11. Pursuant to Section 603 of the Regulatory Flexibility Act, the
Commission has prepared the following initial regulatory flexibility
analysis (``IRFA'') of the expected impact of these proposed policies
and rules on small entities. Written public comments are requested on
the IRFA. These comments must be filed in accordance with the same
filing deadlines as comments on the rest of the NPRM, but they must
have a separate and distinct heading designating them as responses to
the IRFA. Our initial regulatory flexibility analysis under the
Regulatory Flexibility Act indicates that if the proposed rule changes
are promulgated, there will not be a significant economic impact on a
substantial number of small business entities, as defined by Section
601(3) of the Regulatory Flexibility Act and that any impact will be to
give operators new, less burdensome options to comply with our rules.
We are committed to reducing the regulatory burdens on small cable
operators whenever possible, consistent with our other public interest
responsibilities. The Secretary shall send a copy of this NPRM of
Proposed Rulemaking to the Chief Counsel for Advocacy of the Small
Business Administration in accordance with Section 603(a) of the
Regulatory Flexibility Act, 5 U.S.C. Sections 601 et seq. (1981).
12. The Commission issues this NPRM to consider the changes needed
to permit cable operators to aggregate equipment costs into broad
categories
[[Page 13805]]
and at the organizational level of their choice, as required by Section
301(j)) of the 1996 Act.
13. Objectives. To solicit comments on the rule changes needed to
implement Section 301(j) of the 1996 Act.
14. Legal Basis. Action as proposed for this rulemaking is
contained in Section 301(j) of the 1996 Act.
15. Description, Potential Impact and Number of Small Entities
Affected. The proposals, if adopted, will not have a significant effect
on a substantial number of small entities. The proposed rules changes
would provide all regulated entities with new options, but would not
require them to change the methodology by which they currently justify
equipment rates. Thus, any economic impact of the rule changes will be
positive.
16. Reporting, Recordkeeping and Other Compliance Requirements.
None.
17. Federal Rules which Overlap, Duplicate or Conflict with these
Rules. None.
18. Any Significant Alternatives Minimizing Impact on Small
Entities and Consistent with Stated Objectives. None.
C. Comment Filing Procedures
19. Pursuant to applicable procedures set forth in Sections 1.415
and 1.419 of the Commission's rules, 47 CFR Sections 1.415, 1.419,
interested parties may file comments on April 12, 1996, and reply
comments on April 22, 1996. To file formally in this proceeding,
interested parties must file an original and four copies of all
comments, reply comments, and supporting comments. We find these
periods for the filing of comments and reply comments to be reasonable
in light of the 1996 Act's mandate that the Commission issue revisions
to the appropriate rules and forms concerning the aggregation of
equipment costs within 120 days of enactment. See Florida Power & Light
Co. v. United States, 846 F.2d 765 (D.C. Cir. 1988) cert. denied, 490
U.S. 1045 (1989). Any party that wishes each Commissioner to receive a
personal copy of its comments, must file an original and nine copies.
Comments and reply comments should be limited to 25 pages, with
reasonable margins and font size of at least 12 points, and sent to
Office of the Secretary, Federal Communications Commission, 1919 M
Street, N.W., Room 222, Washington, D.C. 20554, with a copy to Lenworth
Smith, Jr. of the Cable Services Bureau, 2033 M Street, N.W., Room
805E, Washington, D.C. 20554. Comments and reply comments will be
available for public inspection during regular business hours in the
FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C.
20554.
D. Paperwork Reduction Act
20. Initial Paperwork Reduction Act of 1995 Analysis. This NPRM
proposes a modified information collection for FCC Form 1205. As part
of its continuing effort to reduce paperwork burdens, we invite the
general public and the OMB to take this opportunity to comment on the
information collections contained in this NPRM, as required by the
Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency
comments are due at the same time as other comments on this NPRM; OMB
comments are due 60 days from date of publication of this NPRM in the
Federal Register. Comments should address: (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
burden estimates; (c) ways to enhance the quality, utility, and clarity
of the information collected; and (d) ways to minimize the burden of
the collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology.
21. Written comments by the public on the proposed and/or modified
information collections are due on or before 15 days after publication
in the Federal Register, and reply comments on or before 10 days after
the comment due date. Written comments must be submitted by the Office
of Management and Budget (``OMB'') on the proposed and/or modified
information collections on or before 60 days after date of publication
in the Federal Register. In addition to filing comments with the
Secretary, a copy of any comments on the information collections
contained herein should be submitted to Dorothy Conway, Federal
Communications Commission, Room 234, 1919 M Street, N.W., Washington,
DC 20554, or via the Internet to dconway@fcc.gov and to Timothy Fain,
OMB Desk Officer, 10236, NEOB, 725 - 17th Street, N.W., Washington, DC
20503 or via the Internet to fain__t@al.eop.gov.
OMB Approval Number: 3060-0603.
Title: Rates for equipment and installation used to receive the
basic service tier
Type of Review: Revision of existing collection
Respondents: Businesses or other for profit; state, local or tribal
government
Number of Respondents: 2,000.
Estimated Time Per Response: The commission estimates an average
burden of 4 hours for cable operators to maintain in-house accounting
records pertaining to 76.923. The Commission estimates a burden of 1
hour for cable operators contracting out for accounting services.
Total Annual Burden: We estimate 75% of respondents maintain
records in-house and 25% contract out. 1,500 (75% in-house) x 4 hours
= 6,000. 500 (25% contracted out) x 1 hour = 500. 6,000 + 500 = 6,500
hours.
Estimated costs per respondent: We estimate that operators
contracting out accounting assistance will pay $100 per hour for the
maintenance of their accounting systems. 500 (25% contracted out)
accounting systems x 4 hours @ $100 per hour = $200,000.
Needs and Uses: The information is used by cable operators in their
accounting systems to justify rates for equipment and installations.
OMB Approval Number: 3060-0592.
Title: FCC Form 1205 Determining Costs of Regulated Cable Equipment
and Installation.
Form No.: FCC Form 1205.
Type of Review: Revision of existing collection
Respondents: Business and other for profit; state, local and tribal
government
Number of Respondents: 8,800.
Estimated Time Per Response: The Commission estimates an average
burden of 12 hours for operators to complete the FCC Form 1205 in-
house. For operators contracting out accounting and legal assistance
for completing the FCC Form 1205, we estimate an average burden of 1
hour.
Total Annual Burden: We estimate 75% of operators complete the FCC
Form 1205 in-house and 25% contract out for assistance. 6,600 (75% in-
house) x 12 hours = 79,200. 2,200 (25% contracted out) x 1 hour =
2,200 hours. 79,200 + 2,200 = 81,400 hours. The average burden to local
franchising authorities to review FCC Form 1205s is estimated to be 8
hours per filing. We estimate local franchising authorities review
approximately 8,000 FCC Form 1205 filings annually. 8,000 x 8 hours =
64,000. 81,400 + 64,000 = 145,400 hours.
Estimated costs per respondent: We estimate postage and
photocopying costs of $2 per filing. 8,800 x $2 = $17,600. We
estimate that operators contracting out accounting assistance will pay
$100 per hour to complete FCC Form 1205. 2,200 (25% contracted out) x
12 hours @ $100 per hour = $2,640,000. $17,600 + $2,640,000 =
$2,657,600.
[[Page 13806]]
Needs and Uses: Information derived from FCC Form 1205 filings
facilitates the review of equipment and installation rates when
reviewed by applicable local franchising authorities.
Ordering Clauses
22. Accordingly, it is Ordered that, pursuant to Sections 4(i),
4(j), 303(r), and 623 of the Communications Act of 1934, as amended, 47
U.S.C. Sections 154(i), 154(j), 303(r), and 543, Notice is Hereby Given
of proposed amendments to Part 76, in accordance with the proposals,
discussions, and statement of issues in the Notice of Proposed
Rulemaking, and that Comment is Sought regarding such proposals,
discussion, and statement of issues.
23. It is Further Ordered that, the Secretary shall send a copy of
this Notice of Proposed Rulemaking, including the regulatory
flexibility certification, to the Chief Counsel for Advocacy of the
Small Business Administration, in accordance with paragraph 603(a) of
the Regulatory Flexibility Act, 5 U.S.C. Sections 601 et seq. (1981).
List of Subjects in 47 CFR Part 76
Cable television.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Proposed Amendatory Text
Part 76 of Title 47 of the Code of Federal Regulations is proposed
to be amended as follows:
PART 76--[AMENDED]
1. The authority citation for Part 76 continues to read as follows:
Authority: Secs. 2, 3, 4, 301, 303, 307, 308, 309, 48 Stat. as
amended, 1064, 1065, 1066, 1081, 1082, 1083, 1084, 1085, 1101; 47
U.S.C. Secs. 152, 153, 154, 301, 303, 307, 308, 309, 532, 535, 542,
543, 552, as amended, 106 Stat. 1460.
2. Section 76.923 is amended by revising paragraphs (c), (f), and
(g), removing paragraph (l) and redesignating paragraphs (m) through
(o) as as paragraphs (l) through (n)and revising redesignated paragraph
(l) to read as follows:
Sec. 76.923 Rates for equipment and installation used to receive the
basic service tier.
* * * * *
(c) Equipment basket. A cable operator shall establish an Equipment
Basket, which shall include all costs associated with providing
customer equipment and installation under this section. Equipment
Basket costs shall be limited to the direct and indirect material and
labor costs of providing, leasing, installing, repairing, and servicing
customer equipment, as determined in accordance with the cost
accounting and cost allocation requirements of Sec. 76.924, except that
operators do not have to aggregate costs in a manner consistent with
the accounting practices of the operator on April 3, 1993. The
Equipment Basket shall not include general administrative overhead
including marketing expenses. The Equipment Basket shall include a
reasonable profit.
(1) Customer Equipment. Costs of customer equipment included in the
Equipment Basket may be aggregated, on a franchise, system, regional,
or company level, into broad categories. Except to the extent indicated
in paragraph (c)(2) of this section, such categorization may be made,
provided that each category includes only equipment having the same
primary purpose, regardless of the levels of functionality of the
equipment within each such broad category. When submitting its
equipment costs based on average charges, the cable operator must
provide a general description of the averaging methodology employed and
a justification that its averaging methodology produces reasonable
equipment rates.
(2) Basic Service Tier Only Equipment. Costs of customer equipment
included in the Equipment Basket, which is used by subscribers who
receive only a rate regulated basic service tier, shall not be
aggregated into broad cost categories. Costs of each significantly
different type of equipment must be classified into specific equipment
cost categories. The costs shall not be averaged with the costs of
equipment that is used by subscribers who receive only a rate regulated
basic service tier.
(3) Installation Costs. Installation costs may be aggregated only
for a specific service area, to the extent that the costs of providing
installation are substantially similar throughout all franchises in
that service area.
* * * * *
(f) Remote charges. Monthly charges for rental of a remote control
unit shall consist of the average annual unit purchase cost of remotes
leased, including acquisition price and incidental costs such as sales
tax, financing and storage up to the time it is provided to the
customer, added to the product of the HSC times the average number of
hours annually repairing or servicing a remote, divided by 12 to
determine the monthly lease rate for a remote according to the
following formula:
[GRAPHIC] [TIFF OMITTED] TP28MR96.005
Where, HR = average hours repair per year; and UCE = average annual
unit cost of remote.
(g) Other equipment charges. The monthly charge for rental of
converter boxes and other customer equipment shall be calculated in the
same manner as for remote control units. Separate charges may be
established for each category of other customer equipment.
* * * * *
(l) Cable operators shall set charges for equipment and
installations to recover Equipment Basket costs. Such charges shall be
set, consistent with the level at which Equipment Basket costs are
aggregated as provided in Sec. 76.923(c). Cable operators shall
maintain adequate documentation to demonstrate that charges for the
sale and lease of equipment and for installations have been developed
in accordance with the rules set forth in this section.
* * * * *
Attachment--Changes to the Instructions for FCC Form 1205
Note: This attachment will not appear in the Code of Federal
Regulations.
FCC Form 1205--Instructions for Determining Costs of Regulated Cable
Equipment and Installation
``Equipment Form''
Schedule B: Annual Operating Expenses for Service
Installation and Maintenance of Equipment. This schedule collects
total annual operating expenses for installation and maintenance of
cable facilities. The costs collected here include salaries,
benefits, and supplies.
Schedule C: Capital Costs of Leased Customer Equipment.
This schedule computes the annual capital costs for each type or
category of customer premises equipment that you offer in connection
with regulated service. The method of computing capital costs is the
same as that used in Schedule A.
Schedule D: Average Hours Per Installation. This
schedule is used only if you choose to charge average rates for
different types of installation services, as opposed to an hourly
service charge. This schedule collects the average hours required to
complete various types of installations.
Worksheet for Calculating Permitted Equipment and
Installation Charges. You must complete this worksheet only if you
are calculating the costs of specific equipment and installations to
derive the maximum rates you may charge for regulated equipment and
installations.
Worksheet for Calculating Total Equipment and
Installation Costs. Utilizing
[[Page 13807]]
the data collected and computed in Schedules A through D, this
worksheet calculates a monthly per subscriber cost of regulated
equipment and installations that is used to separate these costs
from cable services rates. You must complete this worksheet only if
you are filing this form in conjunction with a FCC Form 1200, Form
1220, or Form 1225 to establish maximum permitted rates for
regulated cable services.
Summary Schedule: Current Equipment and Installation
Rates. This Schedule collects information determined on the
Worksheet for Calculating Permitted Equipment and Installation
Charges and presents it in summary form together with your actual
equipment and installation charges.
General Instructions
You should complete this Form using financial data from the
company's general ledger and subsidiary records maintained in
accordance with generally accepted accounting principles. The
Commission's cost accounting rules require that cable operators
maintain their accounts in accordance with these requirements and in
a manner that will enable identification of appropriate costs and
application of the Commission's cost assignments and allocation
procedures (see 47 CFR Sec. 76.924). The data submitted in this Form
1205 should be from the operator's fiscal year indicated on the
cover sheet. However, when there has been an unusual change in
operations, data from a representative month may be used for the
calculation of rates, subject to acceptance by the franchising
authority or, when applicable, by the FCC. You must attach
justification for this approach.
To the extent you have not previously maintained accounts in a
manner consistent with our rules, and do not have fully developed
cost data, you must indicate on this Form that you are using
estimates, where necessary, in calculating equipment and
installation costs and rates, and provide justification that the
estimates are reasonable.
The data for installations (includable in Schedules A and C) may
be identified only for a specific service area, to the extent that
the costs of providing installations are substantially similar
throughout all franchises in that service area. The data for
customer equipment (includable in Schedule C) may be identified on a
franchise, system, regional, or company level. For purposes of
calculating cable service rates on an FCC Form 1200, 1220, or 1225,
the cost data developed on this Form 1205 must be adjusted to the
franchise area level (see Worksheet for Calculating Permitted
Equipment and Installation Charges or Worksheet for Calculating
Total Equipment and Installation Costs below for instructions).
Cable operators completing this Form in conjunction with FCC
Form 1200 should be aware that the figure entered on line 14 of the
Worksheet for Calculating Total Equipment and Installation Costs
will be entered on either line D2 or line E2, and on line I2 of FCC
Form 1200.
Precision of Calculation; Rounding
If you are performing the calculations required by this form by
hand, you must display at least four decimal places. If you are
using a calculator or computer, you must carry out the calculation
to the full precision afforded by your calculator or computer and
display at least four decimal places. If you are using the
spreadsheet version of this form, the spreadsheet will round
calculations for you; you do not need to display additional decimal
places.
The only place you should round the figures is in the Summary
Schedule. These figures should be rounded to the nearest cent.
About the Spreadsheet
The FCC has developed an electronic spreadsheet to assist you in
making the necessary calculations on the Form 1205. We strongly
recommend that you make use of this spreadsheet.
If you use the spreadsheet, the values for the shaded boxes on
the Form 1205 will be calculated automatically and filled in for
you. Instructions for the corresponding line numbers are italicized.
You may submit a completed version of an official Form 1205, an
exact photocopy of that form, or a copy generated by Commission
software, provided that it has the appearance of an actual Form
1205.
If You Need Help
If you have any questions while completing this Form, please
call the FCC's Cable Services Bureau between 9:30 a.m. and 5:30 p.m.
Eastern Standard Time on Monday through Friday at (202) 418-2381.
FCC Notice to Individuals Required by the Privacy Act and the Paperwork
Reduction Act
The solicitation of personal information in this form is
authorized by the Communications Act of 1934, as amended. The
Commission and/or the local franchising authority will use the
information provided in this form to determine the reasonableness of
a cable company's rates. In reaching that determination, or for law
enforcement purposes, it may become necessary to provide personal
information contained in this form to another government agency. If
information requested on this form is not provided, processing may
be delayed. All information provided in this form will be available
for public inspection. Your response is required to apply the
Commission's cable rate standards and to provide a response to
consumer complaints. Respondents are not required to respond to this
collection of information unless it displays a currently valid
Office of Management and Budget control number.
Public reporting burden for this information is estimated to
average 20 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding this burden
estimate or any other aspect of this collection of information,
including suggestions for reducing the burden, to the Federal
Communications Commission, Records Management Division, Washington,
D.C. 20554. Do not send completed forms to this address.
The foregoing notice is required by the Privacy Act of 1974,
Pubic Law 93-579, December 31, 1975, 5 U.S.C. 522a(e)(3) and the
Paperwork Reduction Act of 1995, 104-13, May 22, 1995, 47 U.S.C.
3507.
Instructions for Schedule C--Capital Costs of Leased Customer Equipment
Schedule C computes the annual capital costs of equipment leased
to customers. Follow the instructions below for each type or
category of leased equipment.
Note: Subscriber drops up to the Commission-defined cable
network demarcation point at the customer's premises are considered
network equipment and may not be included as customer equipment on
Schedule C.
Line A--Equipment. List all customer equipment for which you
wish there to be a separate charge. You may calculate separate
charges for specific types of equipment including different models
of remote control units, different types of converter boxes, and
other equipment (e.g., splitters and amplifiers). However, at your
option, customer equipment may instead be listed in broad
categories, provided that each category includes only equipment
having the same primary purpose, regardless of the levels of
functionality of the equipment within each broad category. Except,
customer equipment which is used by subscribers who receive only a
rate regulated basic service tier, shall not be aggregated into
broad cost categories. Costs of each significantly different type of
equipment must be classified into specific equipment cost
categories.
The costs shall not be averaged with the costs of equipment that
is used by subscribers who receive only a rate regulated basic
service tier. In addition, with respect to the lease of cable
connections, the cost of additional connections may not be
aggregated with the cost of initial connections.
On an attached sheet, list separately each type or category of
other equipment for which you plan to develop a separate charge and
provide the necessary information as required on lines A through K
of Schedule C to compute the charge. A separate charge must be
developed for each type or category of other customer equipment.
Enter in the ``Other Equipment'' column of Schedule C the total
figures for the equipment included on your attachment.
Line B--Total Maintenance/Service Hours. Enter the total
maintenance and/or service hours. Attach a Schedule explaining how
you calculated these figures.
Line C--Total Number of Units in Service. Enter the total number
of units in service for leased remotes and converter boxes. For
other leased equipment, list the total number of units in service or
the total number of subscribers using this equipment, whichever is
appropriate. Use either the number of units or subscribers for the
last day of the fiscal year covered by this Form 1205.
Line D--Gross Book Value. Enter the gross book value of the
listed equipment as of the date you closed books for the time period
covered by the filing of this Form. The gross book value includes
the cost of a reasonable number of spare customer equipment units
that the operator keeps on-hand as replacements for broken
equipment.
Schedule D asks for information about four categories of
installations: (a) installations of
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unwired homes; (b) installations of already wired homes; (c)
installations of additional connections at the time of initial
installation; and (d) installations of additional connections after
initial installation. These data are needed in the first worksheet
below to calculate the four separate average charges that the
Commission requires for an operator choosing to exercise the average
charge option. Spaces also are included for other specific types of
installations (such as those requiring extra long drops to the
home). Attach additional sheets as needed.
Worksheet for Calculating Permitted Equipment and Installation Charges
Step A: Hourly Service Charge (HSC).
The Hourly Service Charge (HSC) is designed to recover the costs
of service installation and maintenance of customer equipment. The
HSC will be used as a factor in developing permitted charges for
installation and monthly lease of individual pieces of equipment. To
calculate the HSC, you will compute your annual capital costs plus
expenses for the maintenance of customer equipment and the
installation of basic tier service. You will divide the total costs
and expenses by the total number of person-hours spent on those
activities over the past year.
The HSC includes the annual capital costs for installing,
maintaining, and repairing customer equipment for the specific
service area to which this filing applies; the capital cost of the
customer equipment itself, however, is not recovered through the
HSC. That cost is recovered through the lease of that type of
equipment (see Steps C through E of the Worksheet for Calculating
Permitted Equipment and Installation Charges).
Note 1: If an expense amount is included on Schedule B for
equipment sent out for repair, an appropriate adjustment to the
total labor hours reported on this Form must be made. This
adjustment adds ``equivalent labor hours'' to the total company
labor hours. This may be calculated, for example, as total costs
included on Schedule B for work sent out for repair divided by the
average company technician wage rate. The total cost may be
recovered by including the average hours in the computation for the
appropriate equipment charges computed in Steps C through E. In any
case that an amount is included on Schedule B for work sent out for
repair, explain all the adjustments made on the Worksheet. This
explanation must include the number of hours added on line 6 below
as well as a description of and the number of hours added into the
charges developed in Steps C through E.
Note 2: With respect to the calculation for labor costs
associated with installation of the drop up to the Commission-
defined cable network demarcation point at the customer's premises,
you have two options. The first option is to include the labor costs
associated with subscriber drops in the charges for installations.
The second option is to capitalize such costs in distribution plant
as part of the cost of drops. (In this case, the labor cost for
drops is recovered in the charges for cable services only--not in
installation or customer equipment charges.) If the second option is
chosen, the costs and the associated hours must be eliminated from
the charges for all customer equipment and installation charges.
Line 9d1--HSC. Enter the HSC from line 7.
Line 9d2--Average Hours Per Additional Connection Installation
Requiring Separate Installation. Enter the figure from line D of
Schedule D.
Line 9d3--Charge per Additional Connection Installation
Requiring Separate Installation. Multiply line 9d1 by line 9d2.
Line 9e--Other Installations (As specified in Schedule D, Line
E).
If there are more than three other types of installations,
attach a separate sheet showing how the charges for these other
installations are calculated.
Line 9e1--HSC. Enter the HSC from line 7.
Line 9e2--Average Hours Per Installation of Item 1. Enter the
figure on Schedule D, line E, Item 1.
Line 9e3--Charge per Installation of Item 1. Multiply line 9e1
by line 9e2.
Line 9e4--HSC. Enter the HSC from line 7.
Line 9e5--Average Hours Per Installation of Item 2. Enter the
figure on Schedule D, line E, Item 2.
Line 9e6--Charge per Installation of Item 2. Multiply line 9e4
by line 9e5.
Line 9e7--HSC. Enter the HSC from line 7.
Line 9e8--Average Hours Per Installation of Item 3. Enter the
figure on Schedule D, line E, Item 3.
Line 9e9--Charge per Installation of Item 3. Multiply line 9e7
by line 9e8.
Step C. Charges for Leased Remotes.
The rental charge for remote control units is designed to
recover the costs of providing and maintaining each type or category
of remote control unit leased by subscribers and includes a
reasonable profit. The charge determined in this step will not
reflect the costs of installation. You must repeat the following
substep calculations for each significantly different type or
category of remote listed in Schedule C. Describe each type or
category of remote in detail sufficient to identify differences
among types and/or categories. Attach extra sheets as needed.
Line 10--Total Maintenance/Service Hours. Enter the total
maintenance and/or service hours for each type or category of remote
from the corresponding column on Schedule C, line B.
Line 11--HSC. Enter the HSC from line 7.
Line 12--Total Maintenance and Service Cost. Multiply line 10 by
the HSC listed on line 11. The result is the total annual cost for
repairing and servicing each type or category of remote.
Line 13--Annual Capital Costs. Enter the annual capital costs
for each type or category of remote from the corresponding column of
line K on Schedule C.
Line 14--Total Cost of Remote. Add line 12 to line 13. The sum
is the total annual cost for each type or category of remote.
Line 15--Number of Units in Service. Enter the number of units
of each type or category of remote in service from the appropriate
column of line C on Schedule C.
Line 16--Unit Cost. Divide line 14 by 15. The result is the
annual unit cost of each type or category of remote.
Line 17--Rate per Month. Divide the figure from line 16 by the
number 12. The result will be the monthly cost of each type or
category of remote including a reasonable profit. This figure is the
maximum permitted monthly lease charge for each type or category of
remote.
Step D. Charges for Leased Converter Boxes.
The rental charge for a converter box is designed to recover the
costs of providing and maintaining that type or category of
converter box leased by a subscriber and includes a reasonable
profit. You must repeat the calculations in the following substeps
for each type or category of converter box listed in Schedule C.
Describe each type or category of converter box in detail sufficient
to identify differences among types and/or categories. Attach extra
sheets as needed.
Line 18--Total Maintenance/Service Hours. Enter the total
maintenance and/or service hours for each type or category of
converter box from the corresponding column of line B on Schedule C.
Line 19--HSC. Enter the HSC from line 7.
Line 20--Total Maintenance and Service Cost. Multiply the figure
from line 18 by the HSC listed on line 19. The result is the total
annual cost for repairing and servicing each type or category of
converter box.
Line 21--Annual Capital Costs. Enter the annual capital costs
for each type or category of converter box from the corresponding
column of line K on Schedule C.
Line 22--Total Cost of Converters. Add line 20 to line 21. The
sum is the total annual cost for each type or category of converter
box.
Line 23--Number of Units in Service. Enter the number of units
of each type or category of converter box from the corresponding
column of line C on Schedule C.
Line 24--Unit Cost. Divide line 22 by line 23. The result is the
annual unit cost of each type or category of converter box.
Line 25--Rate per Month. Divide the figure on line 24 by the
number 12. The result is the monthly cost of each type or category
of converter box including a reasonable profit. This figure is the
maximum permitted monthly lease charge for each type of converter
box.
Step E. Charges for Other Leased Equipment.
The rental charge for other leased equipment is designed to
recover the costs of providing and maintaining that equipment leased
by a subscriber and includes a reasonable profit. An operator
choosing to establish charges for different types of other equipment
must repeat the calculations in the following substeps for each type
or category of other equipment listed in Schedule C. Describe each
type or category of additional leased equipment in detail, e.g.,
additional connections. Attach extra sheets as needed.
Commission rules permit operators to charge for power boosters
installed in connection with additional connections. Operators may
establish a separate charge for the power boosters or may establish
a separate charge for additional connections with power boosters.
Such charges should be identified and included in Step E.
Line 26--Total Maintenance/Service Hours. Enter the total
maintenance and/or
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service hours for this other equipment. Enter the figure from the
corresponding column on Schedule C, line B.
Line 27--HSC. Enter the HSC from line 7.
Line 28--Total Maintenance and Service Cost. Multiply the figure
on line 26 by the HSC listed on line 27. The result is the total
annual cost for repairing and servicing other equipment.
[FR Doc. 96-7221 Filed 3-27-96; 8:45 am]
BILLING CODE 6712-01-P
