FOR RECORD ONLY //$ Letter, US Cable Of Paterson, DA 94-1472//$ /$ 76.922(d)(3)(iii) Rates for the basic service tier and the cable programming services tier /$ DA 94-1472 December 19, 1994 Released: December 21, 1994 US Cable of Paterson, L.P. c/o Mr. Rinaldo M. D'Argenio, Esq. Smith, Don, Alampi & D'Argenio 210 Sylvan Avenue Englewood Cliffs, N.J. 07632 Dear Mr. D'Argenio: This letter is in response to your November 18, 1994 letter on behalf of US Cable of Paterson, L.P. ("US Cable"), seeking a clarification of Section 76.922(d)(3)(iii) of the Commission's rules as applied to US Cable's addition on July 4, 1994 of the new program service America's Talking to its regulated basic service tier. You ask whether a prior waiver granted by the Cable Services Bureau that permitted cable operators to begin recovering the external costs resulting from the introduction of America's Talking immediately, rather than waiting until their next filing of FCC Form 1210, applies equally where the operator added America's Talking to the basic service tier rather than the cable programming services tier. For the reasons described below, we clarify that prior waiver as you request. Section 76.922(d)(3)(iii) of our rules provides, inter alia, that rate adjustments made to reflect changes in external costs shall be based on any changes in those external costs that occurred from the end of the last quarter for which an adjustment was previously made through the end of the quarter that has most recently closed preceding the filing of the FCC Form 1210. FCC Form 1210 contains the calculations for cable operators seeking to reflect additional external costs in subscriber rates. Cable operators may file FCC Form 1210 no more often than quarterly. You state that US Cable added America's Talking to its basic service tier on July 4, 1994. Therefore, under Section 76.922(d)(3)(iii) of our rules, US Cable generally would have been required to wait to recover the external costs associated with America's Talking until its filing of FCC Form 1210 at the end of the third quarter on October 1, 1994. However, you state that US Cable included these costs in calculating the initial maximum permitted rate for its basic service tier on the FCC Form 1210 submitted by US Cable to its local franchising authority, the New Jersey Board of Public Utilities ("NJBPU"), on or about July 13, 1994. Under the 1992 Cable Act, the basic cable service tier is regulated in most cases by local franchising authorities, while cable programming services tiers are regulated by the Commission. You state that US Cable adjusted its regulated basic tier rates to include the costs of America's Talking, as set forth on its initial FCC Form 1210 -- rather than waiting to reflect the costs on its FCC Form 1210 filed at the end of the third quarter -- based upon a waiver of Section 76.922(d)(3)(iii) of the Commission's rules issued on May 23, 1994 by the Cable Services Bureau. This waiver permitted cable operators to reflect on their initial FCC Form 1210 the passed through external costs resulting from the addition of America's Talking prior to July 14, 1994. You assert that this waiver concerning America's Talking did not explicitly indicate whether the waiver of Section 76.922(d)(3)(iii) of the Commission's rules applies to the addition of America's Talking to basic service tiers as well as to cable programming services tiers. We understand that the majority of cable operators adding America's Talking to their service offerings added the service to cable programming services tiers. However, you state that US Cable added the service to its basic tier. Therefore, in response to a suggestion from the NJBPU, you seek a clarification and/or waiver of Section 76.922(d)(3)(iii) of the Commission's rules such that the waiver granted in our May 23rd letter concerning the addition of America's Talking will apply equally to cable operators adding the service to basic service tiers. The cable service rate regulations adopted by the Commission, which are contained in Section 76.922 of our rules and which implement the rate regulation provisions of the 1992 Cable Act, apply equally to regulation of both basic service and cable programming services tiers, despite this separation of jurisdiction. Similarly, any waivers or clarifications of these regulations, unless otherwise specified, generally also will apply equally to regulation of both service tiers. Therefore, we clarify that our waiver of Section 76.922(d)(3)(iii) of our rules to permit operators that added America's Talking and other similarly situated program services to basic cable service tiers prior to July 14, 1994 to pass through the costs of adding the program service during the third quarter, and to reflect these costs in their initial filing of FCC Form 1210 at the local level applies equally to basic service tiers. This decision is limited to the circumstances described in your letter and is subject to the same limitations and considerations set out in our previous letters concerning fX and America's Talking. Sincerely, Meredith J. Jones Chief, Cable Services Bureau