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A cable industry cost survey was commenced pursuant to this  X -  jauthority in the Fall of 1995.!  {OX-#C\  P6QIP#эSee Order, in MM Docket No. 92266, 11 FCC Rcd 4003 (rel. September 29, 1995). This Report and Order analyzes data from our cost survey, and   zcompares the cost and revenue data of noncompetitive lowprice systems with the cost and   jrevenue data received for nonlowprice systems that are already regulated by the Commission under the revised benchmark approach.  X>- III.DISCUSSION  X-A.` ` Data  X-  8.` ` The cost survey we initiated in September of 1995 was based upon a random   Lsample of cable systems. Specifically, the survey was mailed to cable operators owning 660 of  X-  the total 2,271 nonsmall cable systems in the U.S. Small systems were not included in our" !,&&ZZ"  X-  survey because their treatment was previously determined in the Small System Order." {Oy-#C\  P6QIP#эSee Small System Order, 10 FCC Rcd 7393 (1995). The   Commission received 359 usable questionnaires from the cable operators surveyed. Of these 359   questionnaires, 40 were received for lowprice systems ("lowprice group") and 38 were received   Kfor systems regulated by the Commission under the revised benchmark approach ("nonlowprice   Mgroup"). Of the remaining 281 usable questionnaires, two were received for systems facing   jeffective competition as defined in the 1992 Cable Act, and the remaining 279 were received for   several categories of cable systems including those regulated only at the local level, those for   which a costofservice showing was filed, those unregulated, and those subject to social contracts.  X -  O9.` ` Data provided in response to the cost survey included information regarding system   kplant and equipment costs, intangible assets, operating revenues and expenses, and capital   structure as of year end 1992 and year end 1994. We also received information regarding system characteristics.  X - B.` ` Analysis  X{-  B 10.` ` The data received from our cost survey was analyzed to determine the relative   profitability of the lowprice group compared with the nonlowprice group. In our analysis, we   used a standard measure of "accounting" profitability as a means of determining the relative   profitability of these two groups. Specifically, we used cash flow ratios, which are commonly   kused in financial analyses of the cable industry. One of the more frequently used cash flow   -measures is income before interest, taxes, depreciation and amortization ("IBITDA"). We applied   this measure in the form of the following ratio: operating revenues minus operating expenses before interest, taxes, depreciation, and amortization divided by operating revenues.  X-   X-  _ 11.` ` We compared the average cash flow ratio of our lowprice group with the average   cash flow ratio of our nonlowprice group. We found that the average cash flow ratio of our   Mlowprice group was 36.5% and the average cash flow ratio of our nonlowprice group was  Xg-  39.7%.#gZ {Or-#C\  P6QIP#эSee Appendix A for derivation of these percentages. These findings indicate that, on average, the operators of systems in our lowprice   group received lower profit margins for their lowprice systems than the operators of systems in   our nonlowprice group received for their nonlowprice systems. Based on these findings, we   believe that the operators of lowprice systems generally receive lower profit margins for their   lowprice systems than the operators of systems already regulated under the Commission's revised   ibenchmark approach. Under these conditions we believe that rates charged by lowprice systems   iare reasonable. We therefore find it unnecessary for the operators of these systems to reduce the rates on these systems by the full competitive differential or by any lesser amount. "!#,&&ZZ "Ԍ X-   12.` ` We believe that the transition relief afforded lowprice systems was appropriate,   <however, we see no need to maintain the transition status of lowprice systems now that we have   icompleted an analysis of the necessary cost data particular to these systems. Therefore, we make   that relief permanent. We will allow lowprice systems to continue charging the rates they   established under transition relief and making appropriate rate increases in accordance with our  X-current rules.$ {O-  #C\  P6QIP#э47 C.F.R.  76.922; See also Ninth Order on Reconsideration, in MM Docket No. 92266, 10 FCC Rcd 5198, 520204 (1995).  X_- IV.FINAL REGULATORY FLEXIBILITY CERTIFICATION  X1-   13.` ` As required by the Regulatory Flexibility Act, 5 U.S.C. 603 (RFA), an Initial  X -  Regulatory Flexibility Analysis (IRFA) for the Fifth Notice of Proposed Rulemaking was  X -  incorporated in the Second Order on Reconsideration, Fourth Report and Order, and Fifth Notice  X -  of Proposed Rulemaking in MM Docket 92266. The Commission therein provided notice of its   intent to establish further requirements concerning the rates permitted for systems subject to   .transition treatment, and sought written public comments on the IRFA. 9 FCC Rcd 4119, 4247,   [4250 (1994). Comments regarding the treatment of "small" transition systems were received by  X-  the Commission and addressed in a previous order. 10 FCC Rcd 7393 (1995).%" yOi-#C\  P6QIP#эNo further comments were received regarding this matter. No comments, however, were received regarding the matter of "lowprice" transition cable systems.  XQ-  n 14.` ` Although we performed an IRFA in the Fifth Notice of Proposed Rulemaking, we   xreceived no comments in response to the IRFA with respect to "lowprice" transition systems and   upon further consideration we now believe that we can certify that no regulatory flexibility   <analysis is necessary. This certification conforms to the RFA, as amended by the Small Business  X-Regulatory Enforcement Fairness Act of 1996 (SBREFA).& yOZ-  ԍSBREFA is Title II of the Contract with America Advancement Act of 1996, Pub. L. No. 104121, 110 Stat.  {O"-847, 857 (1996), codified at 5 U.S.C.  601 et seq.  X-  15.` ` We do not believe that the amendments to the rules adopted in this Report and  X-  Order will have a significant economic impact on a substantial number of small entities as  X-  defined by statute, by our rules, or by the Small Business Administration (SBA).'  {O\!-ԍSee 47 U.S.C.  543(m)(2); 47 C.F.R.  76.901(e); 13 C.F.R.  121.201 (SIC 4841). 5 U.S.C.  605(b).  XZ-  16.` ` Our rules for regulating the rates of small systems owned by small cable companies  XC-  were established in a previous order, so this Report and Order only concerns the permitted rates   for lowprice systems. Based on the rule changes adopted here, lowprice systems will be".',&&ZZ"   permitted to maintain the rates originally established pursuant to their status as systems subject  X-  to transition relief. Further, the rules adopted in this Report and Order will allow lowprice   systems to increase their rates in the same manner as our previous transition rules for lowprice   Zsystems. The rules adopted herein do not alter the method by which lowprice cable system rates   currently are regulated, and for this reason these amendments will not have a significant economic   impact on a substantial number of small cable operators, and will not change the treatment of lowprice systems.  XJ-  217.` ` The Commission will send a copy of this certification, along with this Report and  X5-  Order, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness   NAct of 1996, 5 U.S.C.  801(a)(1)(A), and to the Chief Counsel for Advocacy of the Small   Business Association, 5 U.S.C.  605(b). A copy of this certification will also be published in  X -the Federal Register. Id.  X - V.ORDERING CLAUSES  X-  18.` ` 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.  154(i), 154(j), 303(r), and  Xj-  543, the rules, requirements and policies discussed in this Report and Order  ARE ADOPTED  XU-  and Section 76.922 of the Commission's rules, 47 C.F.R. Section 76.922, IS AMENDED as set forth in Appendix B.  X-  19.` ` IT IS FURTHER ORDERED that the Secretary shall send a copy of this Report  X-  and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for   kAdvocacy of the Small Business Administration in accordance with paragraph 603(a) of the  X-Regulatory Flexibility Act, Pub. L. No. 96354, 94 Stat. 1164, 5 U.S.C.  601 et seq. (1981).  X-  20.` ` IT IS FURTHER ORDERED that the requirements and regulations established  X-  in this decision shall become effective thirty (30) days after publication of this Report and Order in the Federal Register. ` ` hh,FEDERAL COMMUNICATIONS COMMISSION ` ` hh,William F. Caton ` ` hh,Acting Secretary "#',&&ZZG""  X-A APPENDIX A ĐlU  X-5 Cash Flow Ratios  l lU ^ ddx !9ddx 9p ^       XL-U Category Đr@Eg  XL-  Average  operating  revenues X   X  X   X - (A) ĐX     XL-'A Average operating /expenses before 2interest, taxes, -depreciation and 98amortization b`$ X(B) X -b`$b` $   XL- Income before interest, taxes, #depreciation and amortization X(IBITDA)   X - (AB) Đ   XL-? Cash flow ratios*w";4  X -w" ;4 ,     WLowprice bVgroupr@EP=(40 systems)r@r@r@E  3 $15.1 millionX    Dm$9.6 millionb`$   $5.5 million  g|!36.5%w";4, ,   LNonlowprice bVgroup O (38 systems)r@E  3 $12.5 millionX    Dm$7.5 millionb`$  U$5 million  g|!39.7%w";4, ,  RRCompetitive bVgroup So(2 systems)r@E  3 $76.4 millionX    A;$46.2 millionb`$  $30.2 million  g|!39.5%w";4, s    W  SmAll other** M (279 systems)r@EW e $8.3 millionX  W Dm$5.3 millionb`$W U$3 millionW g|!36.7%w";4s  W * Calculated on totals for each group prior to averaging (i.e., cash flow ratios equal total operating revenues minus total operating expenses before interest, taxes, depreciation and  XF-amortization divided by total operating revenues). ** Includes systems for which a costofservice showing was filed, systems regulated only at the local level, unregulated systems, and systems subject to social contracts." ',&&ZZR"   X-A APPENDIX B ĐlU  X-? Revised Rules ĐlU(#U Part 76 of Title 47 of the Code of Federal Regulations is amended as follows: g PART 76 CABLE TELEVISION SERVICE  X -1.` ` The authority citation for Part 76 continues to read as follows:   AUTHORITY: 47 U.S.C. Secs. 151, 152, 153, 154, 301, 302, 303, 303a, 307, 308, 309, 312,   315, 317, 325, 503, 521, 522, 531, 532, 533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 552, 554, 556, 558, 560, 561, 571, 572, 573.  Xy-2.` ` Section 76.922 is amended by revising paragraph (b)(4)(ii) to read as follows: Sec. 76.922 Rates for the basic service tier and cable programming services tiers. * * * * * (b)(4) * * *  l(ii) Lowprice systems. Lowprice systems shall be eligible to establish a transition rate for a tier. * * * * *