FCC 76.923 Revised as of October 1, 2006
Goto Year:2005 |
2007
Sec. 76.923 Rates for equipment and installation used to receive the basic
service tier.
(a) Scope. (1) The equipment regulated under this section consists of all
equipment in a subscriber's home, provided and maintained by the operator,
that is used to receive the basic service tier, regardless of whether such
equipment is additionally used to receive other tiers of regulated
programming service and/or unregulated service. Such equipment shall
include, but is not limited to:
(i) Converter boxes;
(ii) Remote control units; and
(iii) Inside wiring.
(2) Subscriber charges for such equipment shall not exceed charges based on
actual costs in accordance with the requirements set forth in this section.
Subscriber charges for such equipment shall not exceed charges based on
actual costs in accordance with the requirements set forth below.
(b) Unbundling. A cable operator shall establish rates for remote control
units, converter boxes, other customer equipment, installation, and
additional connections separate from rates for basic tier service. In
addition, the rates for such equipment and installations shall be unbundled
one from the other.
(c) Equipment basket. A cable operator shall establish an Equipment Basket,
which shall include all costs associated with providing customer equipment
and installation under this section. Equipment Basket costs shall be limited
to the direct and indirect material and labor costs of providing, leasing,
installing, repairing, and servicing customer equipment, as determined in
accordance with the cost accounting and cost allocation requirements of
Sec. 76.924, except that operators do not have to aggregate costs in a manner
consistent with the accounting practices of the operator on April 3, 1993.
The Equipment Basket shall not include general administrative overhead
including marketing expenses. The Equipment Basket shall include a
reasonable profit.
(1) Customer equipment. Costs of customer equipment included in the
Equipment Basket may be aggregated, on a franchise, system, regional, or
company level, into broad categories. Except to the extent indicated in
paragraph (c)(2) of this section, such categorization may be made, provided
that each category includes only equipment of the same type, regardless of
the levels of functionality of the equipment within each such broad
category. When submitting its equipment costs based on average charges, the
cable operator must provide a general description of the averaging
methodology employed and a justification that its averaging methodology
produces reasonable equipment rates. Equipment rates should be set at the
same organizational level at which an operator aggregates its costs.
(2) Basic service tier only equipment. Costs of customer equipment used by
basic-only subscribers may not be aggregated with the costs of equipment
used by non-basic-only subscribers. Costs of customer equipment used by
basic-only subscribers may, however, be aggregated, consistent with an
operator's aggregation under paragraph (c)(1) of this section, on a
franchise, system, regional, or company level. The prohibition against
aggregation applies to subscribers, not to a particular type of equipment.
Alternatively, operators may base its basic-only subscriber cost aggregation
on the assumption that all basic-only subscribers use equipment that is the
lowest level and least expensive model of equipment offered by the operator,
even if some basic-only subscribers actually have higher level, more
expensive equipment.
(3) Installation costs. Installation costs, consistent with an operator's
aggregation under paragraph (c)(1) of this section, may be aggregated, on a
franchise, system, regional, or company level. When submitting its
installation costs based on average charges, the cable operator must provide
a general description of the averaging methodology employed and a
justification that its averaging methodology produces reasonable equipment
rates. Installation rates should be set at the same organizational level at
which an operator aggregates its costs.
(d) Hourly service charge. A cable operator shall establish charges for
equipment and installation using the Hourly Service Charge (HSC)
methodology. The HSC shall equal the operator's annual Equipment Basket
costs, excluding the purchase cost of customer equipment, divided by the
total person hours involved in installing, repairing, and servicing customer
equipment during the same period. The HSC is calculated according to the
following formula:
[MATH: :MATH]
Where, EB=annual Equipment Basket Cost; CE=annual purchase cost of all
customer equipment; and H=person hours involved in installing and repairing
equipment per year. The purchase cost of customer equipment shall include
the cable operator's invoice price plus all other costs incurred with
respect to the equipment until the time it is provided to the customer.
(e) Installation charges. Installation charges shall be either:
(1) The HSC multiplied by the actual time spent on each individual
installation; or
(2) The HSC multiplied by the average time spent on a specific type of
installation.
(f) Remote charges. Monthly charges for rental of a remote control unit
shall consist of the average annual unit purchase cost of remotes leased,
including acquisition price and incidental costs such as sales tax,
financing and storage up to the time it is provided to the customer, added
to the product of the HSC times the average number of hours annually
repairing or servicing a remote, divided by 12 to determine the monthly
lease rate for a remote according to the following formula:
[MATH: :MATH]
Where, HR = average hours repair per year; and UCE = average annual unit
cost of remote.
(g) Other equipment charges. The monthly charge for rental of converter
boxes and other customer equipment shall be calculated in the same manner as
for remote control units. Separate charges may be established for each
category of other customer equipment.
(h) Additional connection charges. The costs of installation and monthly use
of additional connections shall be recovered as charges associated with the
installation and equipment cost categories, and at rate levels determined by
the actual cost methodology presented in the foregoing paragraphs (e), (f),
and (g) of this section. An operator may recover additional programming
costs and the costs of signal boosters on the customers premises, if any,
associated with the additional connection as a separate monthly unbundled
charge for additional connections.
(i) Charges for equipment sold. A cable operator may sell customer premises
equipment to a subscriber. The equipment price shall recover the operator's
cost of the equipment, including costs associated with storing and preparing
the equipment for sale up to the time it is sold to the customer, plus a
reasonable profit. An operator may sell service contracts for the
maintenance and repair of equipment sold to subscribers. The charge for a
service contract shall be the HSC times the estimated average number of
hours for maintenance and repair over the life of the equipment.
(j) Promotions. A cable operator may offer equipment or installation at
charges below those determined under paragraphs (e) through (g) of this
section, as long as those offerings are reasonable in scope in relation to
the operator's overall offerings in the Equipment Basket and not
unreasonably discriminatory. Operators may not recover the cost of a
promotional offering by increasing charges for other Equipment Basket
elements, or by increasing programming service rates above the maximum
monthly charge per subscriber prescribed by these rules. As part of a
general cost-of-service showing, an operator may include the cost of
promotions in its general system overhead costs.
(k) Franchise fees. Equipment charges may include a properly allocated
portion of franchise fees.
(l) Company-wide averaging of equipment costs. For the purpose of developing
unbundled equipment charges as required by paragraph (b) of this section, a
cable operator may average the equipment costs of its small systems at any
level, or several levels, within its operations. This company-wide averaging
applies only to an operator's small systems as defined in Sec. 76.901(c); is
permitted only for equipment charges, not installation charges; and may be
established only for similar types of equipment. When submitting its
equipment costs based on average charges to the local franchising authority
or the Commission, an operator that elects company-wide averaging of
equipment costs must provide a general description of the averaging
methodology employed and a justification that its averaging methodology
produces reasonable equipment rates. The local authority or the Commission
may require the operator to set equipment rates based on the operator's
level of averaging in effect on April 3, 1993, as required by Sec. 76.924(d).
(m) Cable operators shall set charges for equipment and installations to
recover Equipment Basket costs. Such charges shall be set, consistent with
the level at which Equipment Basket costs are aggregated as provided in
Sec. 76.923(c). Cable operators shall maintain adequate documentation to
demonstrate that charges for the sale and lease of equipment and for
installations have been developed in accordance with the rules set forth in
this section.
(n) Timing of filings. An operator shall file FCC Form 1205 in order to
establish its maximum permitted rates at the following times:
(1) When the operator sets its initial rates under either the benchmark
system or through a cost-of-service showing;
(2) Within 60 days of the end of its fiscal year, for an operator that
adjusts its rates under the system described in Section 76.922(d) that
allows it to file up to quarterly;
(3) On the same date it files its FCC Form 1240, for an operator that
adjusts its rates under the annual rate adjustment system described in
Section 76.922(e). If an operator elects not to file an FCC Form 1240 for a
particular year, the operator must file a Form 1205 on the anniversary date
of its last Form 1205 filing; and
(4) When seeking to adjust its rates to reflect the offering of new types of
customer equipment other than in conjunction with an annual filing of Form
1205, 60 days before it seeks to adjust its rates to reflect the offering of
new types of customer equipment.
(o) Introduction of new equipment. In setting the permitted charge for a new
type of equipment at a time other than at its annual filing, an operator
shall only complete Schedule C and the relevant step of the Worksheet for
Calculating Permitted Equipment and Installation Charges of a Form 1205. The
operator shall rely on entries from its most recently filed FCC Form 1205
for information not specifically related to the new equipment, including but
not limited to the Hourly Service Charge. In calculating the annual
maintenance and service hours for the new equipment, the operator should
base its entry on the average annual expected time required to maintain the
unit, i.e., expected service hours required over the life of the equipment
unit being introduced divided by the equipment unit's expected life.
[ 58 FR 29753 , May 21, 1993, as amended at 59 FR 17960 , 17973, Apr. 15, 1994;
60 FR 52118 , Oct. 5, 1995; 61 FR 32709 , June 25, 1996]
Effective Date Note: At 60 FR 52118 , Oct. 5, 1995, in Sec. 76.923, paragraphs
(n) and (o) were added. This amendment contains information collection and
recordkeeping requirements and will not become effective until 30 days after
approval has been given by the Office of Management and Budget.
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:MATH]
Where, EB=annual Equipment Basket Cost; CE=annual purchase cost of all
customer equipment; and H=person hours involved in installing and repairing
equipment per year. The purchase cost of customer equipment shall include
the cable operator's invoice price plus all other costs incurred with
respect to the equipment until the time it is provided to the customer.
(e) Installation charges. Installation charges shall be either:
(1) The HSC multiplied by the actual time spent on each individual
installation; or
(2) The HSC multiplied by the average time spent on a specific type of
installation.
(f) Remote charges. Monthly charges for rental of a remote control unit
shall consist of the average annual unit purchase cost of remotes leased,
including acquisition price and incidental costs such as sales tax,
financing and storage up to the time it is provided to the customer, added
to the product of the HSC times the average number of hours annually
repairing or servicing a remote, divided by 12 to determine the monthly
lease rate for a remote according to the following formula:
[MATH: 
:MATH]
Where, HR = average hours repair per year; and UCE = average annual unit
cost of remote.
(g) Other equipment charges. The monthly charge for rental of converter
boxes and other customer equipment shall be calculated in the same manner as
for remote control units. Separate charges may be established for each
category of other customer equipment.
(h) Additional connection charges. The costs of installation and monthly use
of additional connections shall be recovered as charges associated with the
installation and equipment cost categories, and at rate levels determined by
the actual cost methodology presented in the foregoing paragraphs (e), (f),
and (g) of this section. An operator may recover additional programming
costs and the costs of signal boosters on the customers premises, if any,
associated with the additional connection as a separate monthly unbundled
charge for additional connections.
(i) Charges for equipment sold. A cable operator may sell customer premises
equipment to a subscriber. The equipment price shall recover the operator's
cost of the equipment, including costs associated with storing and preparing
the equipment for sale up to the time it is sold to the customer, plus a
reasonable profit. An operator may sell service contracts for the
maintenance and repair of equipment sold to subscribers. The charge for a
service contract shall be the HSC times the estimated average number of
hours for maintenance and repair over the life of the equipment.
(j) Promotions. A cable operator may offer equipment or installation at
charges below those determined under paragraphs (e) through (g) of this
section, as long as those offerings are reasonable in scope in relation to
the operator's overall offerings in the Equipment Basket and not
unreasonably discriminatory. Operators may not recover the cost of a
promotional offering by increasing charges for other Equipment Basket
elements, or by increasing programming service rates above the maximum
monthly charge per subscriber prescribed by these rules. As part of a
general cost-of-service showing, an operator may include the cost of
promotions in its general system overhead costs.
(k) Franchise fees. Equipment charges may include a properly allocated
portion of franchise fees.
(l) Company-wide averaging of equipment costs. For the purpose of developing
unbundled equipment charges as required by paragraph (b) of this section, a
cable operator may average the equipment costs of its small systems at any
level, or several levels, within its operations. This company-wide averaging
applies only to an operator's small systems as defined in Sec. 76.901(c); is
permitted only for equipment charges, not installation charges; and may be
established only for similar types of equipment. When submitting its
equipment costs based on average charges to the local franchising authority
or the Commission, an operator that elects company-wide averaging of
equipment costs must provide a general description of the averaging
methodology employed and a justification that its averaging methodology
produces reasonable equipment rates. The local authority or the Commission
may require the operator to set equipment rates based on the operator's
level of averaging in effect on April 3, 1993, as required by Sec. 76.924(d).
(m) Cable operators shall set charges for equipment and installations to
recover Equipment Basket costs. Such charges shall be set, consistent with
the level at which Equipment Basket costs are aggregated as provided in
Sec. 76.923(c). Cable operators shall maintain adequate documentation to
demonstrate that charges for the sale and lease of equipment and for
installations have been developed in accordance with the rules set forth in
this section.
(n) Timing of filings. An operator shall file FCC Form 1205 in order to
establish its maximum permitted rates at the following times:
(1) When the operator sets its initial rates under either the benchmark
system or through a cost-of-service showing;
(2) Within 60 days of the end of its fiscal year, for an operator that
adjusts its rates under the system described in Section 76.922(d) that
allows it to file up to quarterly;
(3) On the same date it files its FCC Form 1240, for an operator that
adjusts its rates under the annual rate adjustment system described in
Section 76.922(e). If an operator elects not to file an FCC Form 1240 for a
particular year, the operator must file a Form 1205 on the anniversary date
of its last Form 1205 filing; and
(4) When seeking to adjust its rates to reflect the offering of new types of
customer equipment other than in conjunction with an annual filing of Form
1205, 60 days before it seeks to adjust its rates to reflect the offering of
new types of customer equipment.
(o) Introduction of new equipment. In setting the permitted charge for a new
type of equipment at a time other than at its annual filing, an operator
shall only complete Schedule C and the relevant step of the Worksheet for
Calculating Permitted Equipment and Installation Charges of a Form 1205. The
operator shall rely on entries from its most recently filed FCC Form 1205
for information not specifically related to the new equipment, including but
not limited to the Hourly Service Charge. In calculating the annual
maintenance and service hours for the new equipment, the operator should
base its entry on the average annual expected time required to maintain the
unit, i.e., expected service hours required over the life of the equipment
unit being introduced divided by the equipment unit's expected life.
[ 58 FR 29753 , May 21, 1993, as amended at 59 FR 17960 , 17973, Apr. 15, 1994;
60 FR 52118 , Oct. 5, 1995; 61 FR 32709 , June 25, 1996]
Effective Date Note: At 60 FR 52118 , Oct. 5, 1995, in Sec. 76.923, paragraphs
(n) and (o) were added. This amendment contains information collection and
recordkeeping requirements and will not become effective until 30 days after
approval has been given by the Office of Management and Budget.