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Comcast Seeks Rate Relief

Comcast, in one of the larger requests of its kind, asked the Federal Communications Commission to remove the last vestiges of rate regulation in nearly 150 communities across the country, the agency said last Monday in a public notice that lacked key details.

Comcast sought deregulation in nearly 50 petitions for effective competition submitted to the agency, including such places as Salt Lake City, the Chicago suburb of Du Page County, Ill., and Tuscaloosa, Ala.

The request appeared to be one of the largest the FCC has received from a single cable company at one time since the onset of rate regulation under the 1992 Cable Act. The agency did not reveal the number of Comcast subscribers potentially affected by the filings.

While Congress has acted to remove some rate controls on cable, key elements remained in place until incumbent providers actually faced competition.

In March 1999, the FCC lost authority to regulate the price of expanded basic, the programming tier that typically includes all the popular cable channels, such as Fox News Channel, Discovery Channel, ESPN and The Weather Channel.

Basic-cable rates were still subject to price controls, however, until the operator could demonstrate that pay TV competitors were serving 15% of the households in the relevant franchise area. Where the multichannel-video competitor is a landline service affiliated with a phone company, no penetration test applies.

The basic tier must include local TV signals and must be purchased first by the cable customer.

In last Monday’s public notice, the FCC didn’t indicate the legal basis for Comcast’s request for deregulation.

The vast majority of petitions granted by the FCC over the years was based on the joint subscriber penetration of direct-broadcast satellite providers DirecTV and EchoStar Communications.

Increasing the so-called phone-company test, created by the Telecommunications Act of 1996, has come about with the entry of AT&T and Verizon Communications into pay TV.

According to Comcast, it is seeking deregulation in Salt Lake City based on the household penetration of the two satellite-TV providers. In that franchise area, Comcast said DirecTV and EchoStar combined to serve at least 16% of the households, exceeding the legal threshold.

When the FCC grants a petition for effective competition, the local government loses authority to cap the price of the basic tier, which all cable subscribers must buy. According to the FCC’s most recent cable price survey, the national average price for basic cable is about $14 per month.

In addition, the cable operator is not required to offer a uniform rate structure, and it may require subscribers to purchase any number of programming tiers before they may access premium and pay-per-view offerings.

The FCC doesn’t face a formal statutory deadline to act on Comcast’s filings.