Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, May 5, 1993 TAG: 9305050037
SECTION: BUSINESS PAGE: B5 EDITION: METRO
SOURCE: MELANIE S. HATTER STAFF WRITER
DATELINE: LENGTH: Medium
The Federal Communications Commission issued the complex new regulations late Monday.
"Clearly, the details of the FCC's actions may have a significant effect on how our system does business," said Jim Matthews, general manager of Salem Cable TV.
Each of the 11,000 cable systems will be required to file work sheets with the FCC intended to show whether a system's rates are above or below the benchmark rates per channel.
The commission said in a 500-page report that the rollback will affect about 75 percent of the nation's cable systems, with a $1 billion benefit to consumers.
Once initial rates are established, the commission said, price caps will govern increases.
The only services free of regulatory oversight will be "pay cable" channels such as Cinemax or HBO that are sold separately and not part of a package.
Matthews said he has not yet seen the complete document, but added that his company will "determine any changes to our rate structure as quickly as possible" and convey them to Salem's customers.
Officials of Cox Cable Roanoke Inc. are heading to a workshop in Atlanta next week, said General Manager Gretchen Shine, "for all 24 [Cox] franchises to figure out what this document means."
An executive from the company's headquarters also will visit Roanoke to help determine how the regulations will affect Cox, Shine said. "It's not going to be simple."
The formulas use dozens of variables and will vary by size of cable system and number of subscribers, Shine said.
Accompanying the work sheets are more than 400 pages of explanations, instructions, definitions and sample tables and charts.
The work sheet is divided into five parts. Systems are required to calculate average base rates per channel against theoretical competitors with similar characteristics. They are allowed to adjust rates for inflation, based on Commerce Department figures.
After determining rates per channel - and what the benchmark would be - cable operators must separate equipment and installation rates from programming services, because the Cable Act, passed by Congress last fall, required that these costs be "unbundled" so pure programming costs could be assessed and compared across systems.
The FCC ordered the rollback in prices on April 1, saying the lower prices could show up in customer bills early this summer.
In addition, the FCC ordered cable companies to wipe out any price increases they imposed since Congress passed the law in October to regulate the industry.
Cable rates in the United States were deregulated at the end of 1986. Since then they have doubled on average to nearly $20 a month. In the same period, annual cable industry revenues have grown to about $22 billion from around $10 billion.
"For those of us who have acted prudently, we're asking, `Why has this happened?' " Shine said. " `Why are we in this boat right now?' "
Cox and many other cable companies, she argued, have continued to use their revenues to improve customer services. Both Cox and Salem are upgrading their systems with fiber-optic cable - Salem's is expected to be completed in the fall and Cox's by June 1994.
"The reason we became deregulated . . . was to allow cable companies to add channels and make improvements," she said. "We still have that commitment to ensure ongoing maintenance.
"If this reasonable rate is in, will we be able to have customer services and capital investments?" she said.
Some information in this story was provided by the New York Times News Service and the Chicago Tribune.
by CNB