SA FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 News media information 202/418-0500 Fax-On-Demand 202/418-2830 Internet: http://www.fcc.gov DA 97-32 ftp.fcc.gov PLEADING CYCLE ESTABLISHED FOR COMMENTS ON NECA'S 1997 Comment Date: February 12, 1997 Reply Date: February 27, 1997 Released: January 10, 1997 On December 31, 1996, the National Exchange Carrier Association, Inc. ("NECA") filed modifications to the average schedule formulas that NECA proposes become effective July 1, 1997. These average schedule formulas compensate more than six hundred incumbant local exchange carriers for the use of their facilities in originating and terminating interstate common carrier communications. NECA projects an overall 0.8% decrease in the combined Common Line and Traffic Sensitive formula settlements, assuming demand levels are held constant. More specifically, Common Line settlements are expected to increase on average by 2.4% while Traffic Sensitive formula settlements are expected to decrease on average by 2.9%. The net effect of these changes is not simply additive because Traffic Sensitive settlements constitute a larger portion of total average schedule settlements. In addition to formula level changes due to the effects of cost and demand growth, NECA proposes changes in the Common Line formula to reflect recent deregulation of public pay telephones. A separate Public Notice, DA 96-132, Pleading Cycle Established for Comments on NECA's Supplemental Modification to the Interstate Average Schedule Formulas, was released December 31, 1996 to address the changes in the Common Line Formula due to payphone deregulation. NECA proposes two changes in its Traffic Sensitive Central Office ("TSCO") formula for settlement payments to average schedule companies. The TSCO formula is structured in tiers so that per minute payments progressively decrease. NECA proposes to change the formula so that one of the decreases in per minute payments occurs at a higher minutes per line threshold. NECA also proposes to change the High Volume Access Line Multiplier. NECA states that these proposed changes reflect the results of studies it conducted in response to the Commission's directive in its 1996 Memorandum Opinion and Order (National Exchange Carrier Association, Inc., Proposed Modifications to the Interstate Average Schedules, Memorandum Opinion and Order, AAD 96-2, DA 96-1040). NECA also proposes changing the structure of the Non-Distance Sensitive Line Haul formula to reflect the relationship between circuit group sizes and circuit termination costs. 651 receive higher settlements per circuit, while study areas with large numbers of circuits per exchange would, on average, receive lower settlements per circuit. Interested parties may file comments on the petition on or before February 12, 1997, and reply comments on or before February 27, 1997, with the Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 222, Washington, D.C. 20554. Comments and reply comments should reference AAD 97-2. An original and nine (9) copies of each pleading should be sent to the Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 222, Washington, D.C., 20554. A copy of the pleading should also be sent to George Williams and Abdel-Hamid Eqab, Competitive Safeguards Branch, Common Carrier Bureau, and to the Commission's contractor for public service record duplication: International Transcription Service (ITS), 2100 M Street, N.W., Suite 140, Washington, D.C. 20037. Copies of the petition may be obtained from the Accounting and Audits Division's public reference room, Room 812, 2000 L Street, N.W., Washington, D.C. Copies are also available from ITS at (202) 857-3800. We will treat this proceeding as non-restricted for purposes of the Commission's ex parte rules. See generally, 47 C.F.R. §§ 1.1200-1.1216. However, if this waiver petition is opposed, it will be treated as a restricted proceeding under the Commission's ex parte rules. See generally, 47 C.F.R. §§ 1.1208-1.1216. For further information contact George Williams or Abdel-Hamid Eqab at (202) 418-0830. FEDERAL COMMUNICATIONS COMMISSION This letter is in response to your letter on behalf of your client, the Cable Telecommunications Association.' You state that at a date on or before December 30, 1996, WWOR-TV ceased delivering its signal via satellite to cable operators around the country and that the satellite transponder commenced delivering Discovery's Animal Planet in its place. You state that this substitution took place in the absence of notice to many cable operators and was not voluntary on the part of the cable operators. You ask whether a cable operator using FCC Form 1240 ("Form 1240") annually must also file a FCC Form 1210 ("Form 1210") to reflect this channel adjustment in the quarter following the quarter that WWOR-TV ceased being carried, or if a cable operator can instead include the channel adjustment in the true-up portion of its next annual Form 1240 filing. In addition, you ask if a cable operator may, subject to its contractual obligations, move the programming substituted for WWOR to a New Product Tier ("NPT").3 You note that Section 76.922(g)(1) of the Commission's rules indicates that when a system deletes channels in a calendar quarter, the system must adjust the residual component in the next calendar quarter to reflect that deletion. However, you also note that Section 76.922(e) of the rules provides that operators that use the annual rate adjustment Form 1240 may not adjust their rates more than once annually to reflect changes regulated channels." You ask for clarification that the Form 1240, and not a Form 1210, should be used to reflect the channel adjustment you describe. 'Letter from Mark J. Palchick to Meredith J. Jones (January 6, 1997). 2Id. at 2-3. See also Thirteenth Order on Reconsideration ("Thirteenth Order") in MM Docket 92-266, 11 FCC Rcd 388 (1995) for a detailed description of the Form 1240 and Form 1210 rate adjustment methodologies. 'Letter at 2-3. See also Sixth Order on Reconsideration, Fifth Report and Order, and Seventh Notice of Proposed Rulemaking ("Sixth Reconsideration Order"), MM Docket 92-266, 10 FCC Rcd 1226 (1994) for a detailed description of NPTs. 447 C.F.R. § 76.922(g)(1). $47 C.F.R. § 76.922(e). January 8, 1997 Page 2 Accordingly, we hereby clarify that, for operators using the annual Form 1240 rate adjustment method, channel deletions should be reflected on an operators next annual Form 1240 filing. Such an operator need not file a Form 1210 in the quarter following the channel deletion. As we have stated, the annual adjustment was designed to reduce the number of rate adjustments experienced by subscribers by allowing operators to project estimated costs annually. If actual and projected costs are different during the rate year, a true up mechanism is available to correct differences between the revenues the operator collected with actual cost changes." The true up requires operators to decrease their rates or alternatively, permits them to increase their rates to make adjustments for over or under estimations of these cost changes. Any overestimation of costs must be returned to subscribers, plus interest, in an operators next Form 1240 filing.' You also ask if an operator may move the programming substituted for WWOR-TV to an NPT from either the basic service tier ("BST") or the cable programming services tier ("CPST"). You state that the Commission's rules provide that, prior to a channel addition to an NPT, the channel may be temporarily placed on a CPST for marketing purposes. 10 You note that the rule does not specifically mention movement of a channel to an NPT that was temporarily placed on the BST."1 Given the circumstances you describe, we find that an operator may move the channel substituted for WWOR-TV, from the BST or a CPST, to an NPT. As we have previously stated, operators may place new programming services on existing CPSTs and, at any time, move them to an NPT.2 In addition, operators may drop channels from a tier entirely, as long as the changes ao not constitute a fundamental change to the BST or CPST(s).13 You state that the deletion of WWOR-TV and the substitution of another channel was not within the control of the 12 See Sixth Reconsideration Order at ¶5. In note 5 to the Sixth Reconsideration Order, we define "new programming services" as programming services not offered on an operator's cable system prior to October 1, 1994. 13 Id. at ¶ 26. January 8, 1997 cable operators, and many of the operators received no notice of the change. Because some of the affected operators had offered WWOR-TV on the BST, while others had offered WWOR-TV on a CPST, the substituted channel is now offered on either the operators' BST or CPST. As you note in your letter, our rules provide that, prior to a channel addition to an NPT, the channel may be temporarily placed on a CPST. While our rules do not specifically address temporary placement of a channel on the BST, we believe that the operators currently in the position of offering the substitute channel on the BST should likewise be able to move that channel from the BST to an NPT. |