1983-07-20 Public Hearings and Regular Meeting

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0 Page 5 RATE REGULATION 0 Regulation of basic service rates. Subscriber rates for basic service and related charges such as installation charges and con- verter rentals may be subject to rate regulation under section 607(a)(1). Basic service is defined in section 603(1) as the "lowest cost tier other than a tier offered at a discounted fee" which includes local broadcast signals, public, educational, and governmental access channels and any other programming service offered in the operator's proposal as basic service. This language, which is somewhat ambiguous, is intended to ensure that the tier which actually serves as the entry tier to the sys- tem and, as a result, is purchased by all the system's subscrib- ers is categorized as basic service for regulatory purposes. Basic ' service rates may be increased annually without the approval of the franchising authority by the increase in the regional Consumer Price Index for the prior 12 months (Sec. 607 (b) (1) ) unless rates have been frozen or specified in the fran- chise for a period of time (Sec. 607(b)(2)). Unused increases may be accumulated for no more than three years. Under section 607(i), this provision will not affect basic service rates under any franchise issued by a California city for five years or the remaining life of the franchise, whichever is greater. Deregulation of basic service rates. The regulation of basic • service rates is gradually phased out in communities in which the signals of four or more full power television stations, including all .three networks, can be received over the air (Sec. 607(d) (1)). Existing franchises, however, will not be affected by this provision for five years or one half the remaining life of the franchise, whichever is greater (Sec. 607(d)(2)). This provision will not affect any California franchise for five years or the remaining life of the franchise, whichever is greater (Sec. 607 (i)). Consequently, cities in California would remain subject to existing state law governing the regulation of basic service rates during that time period. Even if basic service rates are deregulated under section 607(d) (1), a franchising authority may reimpose rate regulation when- ever 80 percent of the households passed by a cable system are subscribers unless the cable operator can show that there is adequate over the air reception of the signals of four broadcast stations (Sec. 607 (d) (3)) . Regulation of,two-way service rates. Basic telephone service provided over a cable system, defined as "two-way voice grade communications that is held out to the public," may be'subject to regulation. The rates for other intrastate telecommunications services (e.g., data transmission, security services, telemetry, •