MUNICIPALITIES MUST ACT TO RECEIVE BASIC
CABLE RATE REGULATION UNDER 1992 CABLE ACT

By MARTIN C. ROTHFELDER

The Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act") was enacted with much fanfare about the reregulation of cable rates. Under the regulations recently issued by the FCC, franchising authorities, which are usually municipalities, share responsibility for regulating rates for "basic" service. Basic service is the service that includes broadcast television stations. However, no regulation of basic service will occur in a franchise authority's area if the franchising authority takes no action to certify its ability (or inability) to regulate basic cable rates.

Under the 1992 Cable Act, regulation of basic service is allowed where there is no "effective competition" under the standard set forth in the 1992 Cable Act. Under the FCC rules, the lack of effective competition is presumed and rate regulation is allowed unless the cable operator shows that there is effective competition. However, franchising authorities may not just go ahead and regulate. The FCC will also not automatically go ahead and regulate. Instead, actions by the franchising authority are required to begin regulation by either.

More specifically, under the FCC rules the franchising authority may not regulate basic cable rates unless it certifies in writing to the FCC on FCC approved forms the following three items:

1. It will adopt and administer rules with respect to the rate subject to regulation that are consistent with the rules prescribed by the FCC;

2. It has the legal authority to adopt and the personnel to administer such rules; and

3. The procedural laws and rules governing rate regulation proceedings by the franchising authority provide a reasonable opportunity for consideration of the views of interested parties.

If a franchising authority files such a certification with the FCC, it will automatically become effective thirty days after filing unless the FCC finds, after notice and a reasonable opportunity for the franchising authority to comment, that the franchising authority has not met one of the three criteria listed above. There is no deadline for filing a certification.

Regulation of basic cable rates under the 1992 Cable Act will begin on October 1, 1993. The FCC will begin accepting certifications and other relating filings beginning on that date. The FCC has frozen basic service rates until November 15, 1993.

If the FCC disapproves or revokes the certification of a franchising authority, the FCC will assume jurisdiction over basic rate regulation in that franchising authority's area until the franchising authority meets the certification criteria. In addition, the FCC will exercise jurisdiction over basic rates if the franchising authority does not have the necessary legal authority to regulate rates or does not have the resource available for basic rate regulation. However, the FCC has indicated that it is not aware of any situation where a local franchising authority does not have the authority to regulate rates. In addition, the FCC will presume that any franchising authority seeking to have the FCC exercise jurisdiction has sufficient resources to regulate rates if it receives franchise fees. Any franchising authority which receives franchise fees will have to rebut this presumption with evidence showing why the proceeds of the franchise fees it obtains cannot be used to cover the cost of rate regulation. If the FCC determines that the franchise fees of a franchise authority cannot be expected to cover the franchising authority's present cable regulatory program, plus basic rate regulation, then the FCC will exercise rate jurisdiction. The FCC will not exercise jurisdiction over basic rate regulation in a franchise authority's area other than for the reasons described above.

In sum, franchising authorities must make a filing to self-certify in order to regulate basic cable service rates. In addition, franchising authorities that seek to have the FCC regulate basic rates in the franchising authority's area must still file a certification with the FCC. Those franchising authorities that take no action to certify or show why it cannot meet the certification criteria will not be allowed to regulate basic cable rates. Similarly, the FCC will not exercise jurisdiction over basic cable rates in the area of a franchising authority that has taken no action.

About the Author

Mr. Rothfelder is a partner in the law firm of McManimon & Scotland which has offices in Washington, D.C. and Newark, Mt. Laurel, and Atlantic City, New Jersey. Mr. Rothfelder previously served as General Counsel to the New Hampshire Public Utilities Commission and Assistant General Counsel to the Missouri Public Service Commission.

August 1993 / Illinois Municipal Review / Page 7