PUBLIC NOTICE
FEDERAL COMMUNICATIONS COMMISSION
1919 M STREET, N.W.
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News media information 202/418-0500  Recorded listing of releases and texts 202/632-0002.

     DA 95-2462
     December 13, 1995

REQUEST FOR WAIVER OF REQUIREMENTS CONCERNING THE TREATMENT
OF CO     STS INCURRED BEFORE THE EFFECTIVE DATE OF AN INITIAL
ANNUA                       L RATE ADJUSTMENT


Several cable operators have requested a waiver of the requirements contained in the Thirteenth
Order on Reconsideration (MM Docket 92-266; 60 FR 52106 (Oct. 5, 1995)) concerning the
treatment of costs which are incurred between the last date for which actual historical cost data is
available and the effective date of a proposed rate adjustment (Willkie Farr & Gallagher letter to
Meredith J. Jones, dated November 22, 1995).  

The Order provides for an optional annual adjustment methodology which permits operators to
adjust their rates once per year to reflect reasonably certain and reasonably quantifiable changes in
external costs, inflation and the number of regulated channels that are projected for the twelve
months following the rate change.  The Order also provides for a "true-up" mechanism to correct
differences between charges the operator has actually collected and charges which reflect costs
which were actually incurred by the operator.  The annual projection and true-up will be reflected
on an FCC Form 1240.  Regulated operators using the annual methodology must file Form 1240
with local franchising authorities a minimum of 90 days before the rate adjustment is scheduled to
go into effect, and with the Commission a minimum of 30 days before the rate adjustment is
scheduled to go into effect (See Order, paras. 92-104 for a more detailed explanation of filing
requirements). 

The Order states that, because the true-up examines costs which were actually incurred, it can only
examine costs as of the date the Form 1240 is filed.  For basic service tier regulated operators, for
example, this date will be at least 90 days before the rate adjustment is scheduled to go into effect,
because the rules require an operator to file the Form 1240 with a local franchising authority 90
days prior to the proposed effective date.  In addition, operators may lack actual cost data for the
time period preceeding the date the Form 1240 is filed.  

The operators request a waiver, for first time filers of Form 1240, of the Commission's requirement
that only costs that have actually been incurred may be included in the true-up period.  Specifically,
the operators request that first time filers be permitted to include projected changes in costs,
inflation, channels and subscriber information attributable to the period between the last date for
which historical cost data is available and the effective date of the new rates.  The operators
stipulate that these projections must be accompanied by a separate calculation and explanation of
the basis for the costs.  The operators' waiver request applies solely to an operator's first Form
1240 filing; true-ups in subsequent filings will only encompass the period for which actual cost data
is available.

Interested parties may file comments on the waiver request and whether, if granted, the waiver
should extend beyond 1996.  Comments are due by January 5, 1996 and the operators may file
reply comments no later than January 12, 1996.  


Media Contact: Morgan Broman, (202) 416-0852
Cable Services Bureau Contacts: Nancy Stevenson and Alexander Byron, (202) 416-0800.