2006-02-22 CC Packet - Laserfiche WebLink

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RaTe RevIew A bit of background from 2004, will be helpful in understanding the results of the challenges the Commission participated in. The first pertained to the methodology for reporting non-subscriber franchise fees and the FCC regulatory fee, and the second the rates Comcast proposed charging for equipment and installation, related to basic 1 service. As they do nearly every year, Comcast filed two FCC forms, a 1240 (programming services) and a 1205 (equipment and installation rates), indicating to what level they intended to raise the maximum permitted rates for basic cable service, installation, and related equipment costs. The Commission was charged with determining whether the proposed rates were justified. The Commission chose. not to do a substantive. review of the form 1240. However, related to the examination of the FCC form 1240, which is used to support Comcast's proposed maximum permitted rate for basic 1 cable service, the Commission chose to examine the methodology utilized by Comcast for charging subscribers for franchise fees paid on non-subscriber related income, such as advertising and shopping channel sales. In conjunction with several other area Commissions a consultant was hired to examine the methodology. After a great deal of deliberation and examination the consultant recommended requiring Comcast to include non-subscriber franchise fees and the FCC regulatory fee as a part of their annual form 1240 filing. The primary justification was that the FCC form 1240 already contained a process for trueing up costs and receipts, and that it would make reviewing these costs easier for the Commission going forward. The Commission adopted rate orders that included the recommended change for determining non-subscriber revenues and the FCC regulatory fee, and Comcast, as expected, requested that the FCC decide the matter. In the end the FCC did not decide in our favor on the non-subscriber revenue issue, meaning that we cannot include non-subscriber franchise fees in the form 1240. The FCC did, however, decide in our favor on whether the FCC regulatory fee should be included in the Form 1240. The second part of the Commission's rate review responsibility included an examination of the FCC form 1205 that was filed by Comcast. This form is utilized to justify proposed costs for equipment and installation charges related to the basic service tier. Because Comcast determines these costs based on national averages and not on the actual local costs, determining whether the charges were justified was very difficult. As such, the Commission joined a national examination of Comcast's costs. Comcast felt that some of the information requested by the consultant was not necessary for determining the costs, so they petitioned the FCC for relief. According to our consultants there was justification for a refund to subscribers. 21