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U.S. Code as of:
01/19/04
Section 543. Regulation of rates
(a) Competition preference; local and Federal regulation
(1) In general
No Federal agency or State may regulate the rates for the
provision of cable service except to the extent provided under
this section and section 532 of this title. Any franchising
authority may regulate the rates for the provision of cable
service, or any other communications service provided over a
cable system to cable subscribers, but only to the extent
provided under this section. No Federal agency, State, or
franchising authority may regulate the rates for cable service of
a cable system that is owned or operated by a local government or
franchising authority within whose jurisdiction that cable system
is located and that is the only cable system located within such
jurisdiction.
(2) Preference for competition
If the Commission finds that a cable system is subject to
effective competition, the rates for the provision of cable
service by such system shall not be subject to regulation by the
Commission or by a State or franchising authority under this
section. If the Commission finds that a cable system is not
subject to effective competition -
(A) the rates for the provision of basic cable service shall
be subject to regulation by a franchising authority, or by the
Commission if the Commission exercises jurisdiction pursuant to
paragraph (6), in accordance with the regulations prescribed by
the Commission under subsection (b) of this section; and
(B) the rates for cable programming services shall be subject
to regulation by the Commission under subsection (c) of this
section.
(3) Qualification of franchising authority
A franchising authority that seeks to exercise the regulatory
jurisdiction permitted under paragraph (2)(A) shall file with the
Commission a written certification that -
(A) the franchising authority will adopt and administer
regulations with respect to the rates subject to regulation
under this section that are consistent with the regulations
prescribed by the Commission under subsection (b) of this
section;
(B) the franchising authority has the legal authority to
adopt, and the personnel to administer, such regulations; and
(C) procedural laws and regulations applicable to rate
regulation proceedings by such authority provide a reasonable
opportunity for consideration of the views of interested
parties.
(4) Approval by Commission
A certification filed by a franchising authority under
paragraph (3) shall be effective 30 days after the date on which
it is filed unless the Commission finds, after notice to the
authority and a reasonable opportunity for the authority to
comment, that -
(A) the franchising authority has adopted or is administering
regulations with respect to the rates subject to regulation
under this section that are not consistent with the regulations
prescribed by the Commission under subsection (b) of this
section;
(B) the franchising authority does not have the legal
authority to adopt, or the personnel to administer, such
regulations; or
(C) procedural laws and regulations applicable to rate
regulation proceedings by such authority do not provide a
reasonable opportunity for consideration of the views of
interested parties.
If the Commission disapproves a franchising authority's
certification, the Commission shall notify the franchising
authority of any revisions or modifications necessary to obtain
approval.
(5) Revocation of jurisdiction
Upon petition by a cable operator or other interested party,
the Commission shall review the regulation of cable system rates
by a franchising authority under this subsection. A copy of the
petition shall be provided to the franchising authority by the
person filing the petition. If the Commission finds that the
franchising authority has acted inconsistently with the
requirements of this subsection, the Commission shall grant
appropriate relief. If the Commission, after the franchising
authority has had a reasonable opportunity to comment, determines
that the State and local laws and regulations are not in
conformance with the regulations prescribed by the Commission
under subsection (b) of this section, the Commission shall revoke
the jurisdiction of such authority.
(6) Exercise of jurisdiction by Commission
If the Commission disapproves a franchising authority's
certification under paragraph (4), or revokes such authority's
jurisdiction under paragraph (5), the Commission shall exercise
the franchising authority's regulatory jurisdiction under
paragraph (2)(A) until the franchising authority has qualified to
exercise that jurisdiction by filing a new certification that
meets the requirements of paragraph (3). Such new certification
shall be effective upon approval by the Commission. The
Commission shall act to approve or disapprove any such new
certification within 90 days after the date it is filed.
(7) Aggregation of equipment costs
(A) In general
The Commission shall allow cable operators, pursuant to any
rules promulgated under subsection (b)(3) of this section, to
aggregate, on a franchise, system, regional, or company level,
their equipment costs into broad categories, such as converter
boxes, regardless of the varying levels of functionality of the
equipment within each such broad category. Such aggregation
shall not be permitted with respect to equipment used by
subscribers who receive only a rate regulated basic service
tier.
(B) Revision to Commission rules; forms
Within 120 days of February 8, 1996, the Commission shall
issue revisions to the appropriate rules and forms necessary to
implement subparagraph (A).
(b) Establishment of basic service tier rate regulations
(1) Commission obligation to subscribers
The Commission shall, by regulation, ensure that the rates for
the basic service tier are reasonable. Such regulations shall be
designed to achieve the goal of protecting subscribers of any
cable system that is not subject to effective competition from
rates for the basic service tier that exceed the rates that would
be charged for the basic service tier if such cable system were
subject to effective competition.
(2) Commission regulations
Within 180 days after October 5, 1992, the Commission shall
prescribe, and periodically thereafter revise, regulations to
carry out its obligations under paragraph (1). In prescribing
such regulations, the Commission -
(A) shall seek to reduce the administrative burdens on
subscribers, cable operators, franchising authorities, and the
Commission;
(B) may adopt formulas or other mechanisms and procedures in
complying with the requirements of subparagraph (A); and
(C) shall take into account the following factors:
(i) the rates for cable systems, if any, that are subject
to effective competition;
(ii) the direct costs (if any) of obtaining, transmitting,
and otherwise providing signals carried on the basic service
tier, including signals and services carried on the basic
service tier pursuant to paragraph (7)(B), and changes in
such costs;
(iii) only such portion of the joint and common costs (if
any) of obtaining, transmitting, and otherwise providing such
signals as is determined, in accordance with regulations
prescribed by the Commission, to be reasonably and properly
allocable to the basic service tier, and changes in such
costs;
(iv) the revenues (if any) received by a cable operator
from advertising from programming that is carried as part of
the basic service tier or from other consideration obtained
in connection with the basic service tier;
(v) the reasonably and properly allocable portion of any
amount assessed as a franchise fee, tax, or charge of any
kind imposed by any State or local authority on the
transactions between cable operators and cable subscribers or
any other fee, tax, or assessment of general applicability
imposed by a governmental entity applied against cable
operators or cable subscribers;
(vi) any amount required, in accordance with paragraph (4),
to satisfy franchise requirements to support public,
educational, or governmental channels or the use of such
channels or any other services required under the franchise;
and
(vii) a reasonable profit, as defined by the Commission
consistent with the Commission's obligations to subscribers
under paragraph (1).
(3) Equipment
The regulations prescribed by the Commission under this
subsection shall include standards to establish, on the basis of
actual cost, the price or rate for -
(A) installation and lease of the equipment used by
subscribers to receive the basic service tier, including a
converter box and a remote control unit and, if requested by
the subscriber, such addressable converter box or other
equipment as is required to access programming described in
paragraph (8); and
(B) installation and monthly use of connections for
additional television receivers.
(4) Costs of franchise requirements
The regulations prescribed by the Commission under this
subsection shall include standards to identify costs attributable
to satisfying franchise requirements to support public,
educational, and governmental channels or the use of such
channels or any other services required under the franchise.
(5) Implementation and enforcement
The regulations prescribed by the Commission under this
subsection shall include additional standards, guidelines, and
procedures concerning the implementation and enforcement of such
regulations, which shall include -
(A) procedures by which cable operators may implement and
franchising authorities may enforce the regulations prescribed
by the Commission under this subsection;
(B) procedures for the expeditious resolution of disputes
between cable operators and franchising authorities concerning
the administration of such regulations;
(C) standards and procedures to prevent unreasonable charges
for changes in the subscriber's selection of services or
equipment subject to regulation under this section, which
standards shall require that charges for changing the service
tier selected shall be based on the cost of such change and
shall not exceed nominal amounts when the system's
configuration permits changes in service tier selection to be
effected solely by coded entry on a computer terminal or by
other similarly simple method; and
(D) standards and procedures to assure that subscribers
receive notice of the availability of the basic service tier
required under this section.
(6) Notice
The procedures prescribed by the Commission pursuant to
paragraph (5)(A) shall require a cable operator to provide 30
days' advance notice to a franchising authority of any increase
proposed in the price to be charged for the basic service tier.
(7) Components of basic tier subject to rate regulation
(A) Minimum contents
Each cable operator of a cable system shall provide its
subscribers a separately available basic service tier to which
subscription is required for access to any other tier of
service. Such basic service tier shall, at a minimum, consist
of the following:
(i) All signals carried in fulfillment of the requirements
of sections 534 and 535 of this title.
(ii) Any public, educational, and governmental access
programming required by the franchise of the cable system to
be provided to subscribers.
(iii) Any signal of any television broadcast station that
is provided by the cable operator to any subscriber, except a
signal which is secondarily transmitted by a satellite
carrier beyond the local service area of such station.
(B) Permitted additions to basic tier
A cable operator may add additional video programming signals
or services to the basic service tier. Any such additional
signals or services provided on the basic service tier shall be
provided to subscribers at rates determined under the
regulations prescribed by the Commission under this subsection.
(8) Buy-through of other tiers prohibited
(A) Prohibition
A cable operator may not require the subscription to any tier
other than the basic service tier required by paragraph (7) as
a condition of access to video programming offered on a per
channel or per program basis. A cable operator may not
discriminate between subscribers to the basic service tier and
other subscribers with regard to the rates charged for video
programming offered on a per channel or per program basis.
(B) Exception; limitation
The prohibition in subparagraph (A) shall not apply to a
cable system that, by reason of the lack of addressable
converter boxes or other technological limitations, does not
permit the operator to offer programming on a per channel or
per program basis in the same manner required by subparagraph
(A). This subparagraph shall not be available to any cable
operator after -
(i) the technology utilized by the cable system is modified
or improved in a way that eliminates such technological
limitation; or
(ii) 10 years after October 5, 1992, subject to
subparagraph (C).
(C) Waiver
If, in any proceeding initiated at the request of any cable
operator, the Commission determines that compliance with the
requirements of subparagraph (A) would require the cable
operator to increase its rates, the Commission may, to the
extent consistent with the public interest, grant such cable
operator a waiver from such requirements for such specified
period as the Commission determines reasonable and appropriate.
(c) Regulation of unreasonable rates
(1) Commission regulations
Within 180 days after October 5, 1992, the Commission shall, by
regulation, establish the following:
(A) criteria prescribed in accordance with paragraph (2) for
identifying, in individual cases, rates for cable programming
services that are unreasonable;
(B) fair and expeditious procedures for the receipt,
consideration, and resolution of complaints from any
franchising authority (in accordance with paragraph (3))
alleging that a rate for cable programming services charged by
a cable operator violates the criteria prescribed under
subparagraph (A), which procedures shall include the minimum
showing that shall be required for a complaint to obtain
Commission consideration and resolution of whether the rate in
question is unreasonable; and
(C) the procedures to be used to reduce rates for cable
programming services that are determined by the Commission to
be unreasonable and to refund such portion of the rates or
charges that were paid by subscribers after the filing of the
first complaint filed with the franchising authority under
paragraph (3) and that are determined to be unreasonable.
(2) Factors to be considered
In establishing the criteria for determining in individual
cases whether rates for cable programming services are
unreasonable under paragraph (1)(A), the Commission shall
consider, among other factors -
(A) the rates for similarly situated cable systems offering
comparable cable programming services, taking into account
similarities in facilities, regulatory and governmental costs,
the number of subscribers, and other relevant factors;
(B) the rates for cable systems, if any, that are subject to
effective competition;
(C) the history of the rates for cable programming services
of the system, including the relationship of such rates to
changes in general consumer prices;
(D) the rates, as a whole, for all the cable programming,
cable equipment, and cable services provided by the system,
other than programming provided on a per channel or per program
basis;
(E) capital and operating costs of the cable system,
including the quality and costs of the customer service
provided by the cable system; and
(F) the revenues (if any) received by a cable operator from
advertising from programming that is carried as part of the
service for which a rate is being established, and changes in
such revenues, or from other consideration obtained in
connection with the cable programming services concerned.
(3) Review of rate changes
The Commission shall review any complaint submitted by a
franchising authority after February 8, 1996, concerning an
increase in rates for cable programming services and issue a
final order within 90 days after it receives such a complaint,
unless the parties agree to extend the period for such review. A
franchising authority may not file a complaint under this
paragraph unless, within 90 days after such increase becomes
effective it receives subscriber complaints.
(4) Sunset of upper tier rate regulation
This subsection shall not apply to cable programming services
provided after March 31, 1999.
(d) Uniform rate structure required
A cable operator shall have a rate structure, for the provision
of cable service, that is uniform throughout the geographic area in
which cable service is provided over its cable system. This
subsection does not apply to (1) a cable operator with respect to
the provision of cable service over its cable system in any
geographic area in which the video programming services offered by
the operator in that area are subject to effective competition, or
(2) any video programming offered on a per channel or per program
basis. Bulk discounts to multiple dwelling units shall not be
subject to this subsection, except that a cable operator of a cable
system that is not subject to effective competition may not charge
predatory prices to a multiple dwelling unit. Upon a prima facie
showing by a complainant that there are reasonable grounds to
believe that the discounted price is predatory, the cable system
shall have the burden of showing that its discounted price is not
predatory.
(e) Discrimination; services for the hearing impaired
Nothing in this subchapter shall be construed as prohibiting any
Federal agency, State, or a franchising authority from -
(1) prohibiting discrimination among subscribers and potential
subscribers to cable service, except that no Federal agency,
State, or franchising authority may prohibit a cable operator
from offering reasonable discounts to senior citizens or other
economically disadvantaged group discounts; or
(2) requiring and regulating the installation or rental of
equipment which facilitates the reception of cable service by
hearing impaired individuals.
(f) Negative option billing prohibited
A cable operator shall not charge a subscriber for any service or
equipment that the subscriber has not affirmatively requested by
name. For purposes of this subsection, a subscriber's failure to
refuse a cable operator's proposal to provide such service or
equipment shall not be deemed to be an affirmative request for such
service or equipment.
(g) Collection of information
The Commission shall, by regulation, require cable operators to
file with the Commission or a franchising authority, as
appropriate, within one year after October 5, 1992, and annually
thereafter, such financial information as may be needed for
purposes of administering and enforcing this section.
(h) Prevention of evasions
Within 180 days after October 5, 1992, the Commission shall, by
regulation, establish standards, guidelines, and procedures to
prevent evasions, including evasions that result from retiering, of
the requirements of this section and shall, thereafter,
periodically review and revise such standards, guidelines, and
procedures.
(i) Small system burdens
In developing and prescribing regulations pursuant to this
section, the Commission shall design such regulations to reduce the
administrative burdens and cost of compliance for cable systems
that have 1,000 or fewer subscribers.
(j) Rate regulation agreements
During the term of an agreement made before July 1, 1990, by a
franchising authority and a cable operator providing for the
regulation of basic cable service rates, where there was not
effective competition under Commission rules in effect on that
date, nothing in this section (or the regulations thereunder) shall
abridge the ability of such franchising authority to regulate rates
in accordance with such an agreement.
(k) Reports on average prices
The Commission shall annually publish statistical reports on the
average rates for basic cable service and other cable programming,
and for converter boxes, remote control units, and other equipment,
of -
(1) cable systems that the Commission has found are subject to
effective competition under subsection (a)(2) of this section,
compared with
(2) cable systems that the Commission has found are not subject
to such effective competition.
(l) Definitions
As used in this section -
(1) The term "effective competition" means that -
(A) fewer than 30 percent of the households in the franchise
area subscribe to the cable service of a cable system;
(B) the franchise area is -
(i) served by at least two unaffiliated multichannel video
programming distributors each of which offers comparable
video programming to at least 50 percent of the households in
the franchise area; and
(ii) the number of households subscribing to programming
services offered by multichannel video programming
distributors other than the largest multichannel video
programming distributor exceeds 15 percent of the households
in the franchise area;
(C) a multichannel video programming distributor operated by
the franchising authority for that franchise area offers video
programming to at least 50 percent of the households in that
franchise area; or
(D) a local exchange carrier or its affiliate (or any
multichannel video programming distributor using the facilities
of such carrier or its affiliate) offers video programming
services directly to subscribers by any means (other than
direct-to-home satellite services) in the franchise area of an
unaffiliated cable operator which is providing cable service in
that franchise area, but only if the video programming services
so offered in that area are comparable to the video programming
services provided by the unaffiliated cable operator in that
area.
(2) The term "cable programming service" means any video
programming provided over a cable system, regardless of service
tier, including installation or rental of equipment used for the
receipt of such video programming, other than (A) video
programming carried on the basic service tier, and (B) video
programming offered on a per channel or per program basis.
(m) Special rules for small companies
(1) In general
Subsections (a), (b), and (c) of this section do not apply to a
small cable operator with respect to -
(A) cable programming services, or
(B) a basic service tier that was the only service tier
subject to regulation as of December 31, 1994,
in any franchise area in which that operator services 50,000 or
fewer subscribers.
(2) "Small cable operator" defined
For purposes of this subsection, the term "small cable
operator" means a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than 1 percent of all
subscribers in the United States and is not affiliated with any
entity or entities whose gross annual revenues in the aggregate
exceed $250,000,000.
(n) Treatment of prior year losses
Notwithstanding any other provision of this section or of section
532 of this title, losses associated with a cable system (including
losses associated with the grant or award of a franchise) that were
incurred prior to September 4, 1992, with respect to a cable system
that is owned and operated by the original franchisee of such
system shall not be disallowed, in whole or in part, in the
determination of whether the rates for any tier of service or any
type of equipment that is subject to regulation under this section
are lawful.
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