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Cable Companies Still Waiting for FCC Formula to Figure New Rates

March 31, 1994

WASHINGTON (AP) _ Six weeks before the Federal Communications Commission’s new cable price rules take effect, cable operators are still waiting for the forms necessary to calculate new rates.

The FCC released new rules Wednesday designed to cut cable rates an average of 7 percent, but not the formula that cable companies need to calculate their new rates.

Even with the formula in hand, operators said, new rates won’t be figured out for weeks.

Once they are, there’s no guarantee that every cable subscriber’s monthly bill will be reduced. In fact, some could go up.

That’s because the new rate structure intended to reduce cable bills is only one of two changes to take effect on May 15.

The other: A yearlong rate freeze will be lifted and cable companies will be able for the first time in a year to raise rates to account for inflation and increases in business costs. They also would have to cut their rates to reflect any decreases in those costs.

How much any of these possible increases may eat into rate reductions for consumers is a wild card that will vary by system and by subscriber, cable executives and FCC officials said.

Meantime, cable companies are waiting for the paperwork from the FCC, a stack of documents and forms more than 500 pages long.

FCC spokeswoman Susan Sallet said the Office of Management and Budget, the government’s paperwork police, could approve release of the forms as early as Friday.

According to the FCC’s own estimate, the three new forms most operators are likely to use to calculate new rates will take 40 hours - a standard work week - to complete. A spreadsheet version on computer disc should take only 10 hours.

″The rules cable operators and cities must now wade through are so complicated they require over 1,000 pages of explanation,″ said Steve Effros, president of the Cable Telecommunications Association, whose members are cable companies. ″Operators must fill out both an old and a new form, constituting more than 60 pages, just to begin to understand what their rate is supposed to be.″

The FCC ordered the 7 percent reduction in February following a rate change intended to cut rates by an average of 10 percent last year.

The new formula is based on a number of variables, including the average income of people in the area served and whether the system is affiliated with a large cable company.

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