Vol. 5, No. 6, Pg. 32. LOCAL RATE REGULATION UNDER THE 1992 CABLE ACT.

• Author: By James G. Hodge Jr.

South Carolina Lawyer

1994.

Vol. 5, No. 6, Pg. 32.

LOCAL RATE REGULATION UNDER THE 1992 CABLE ACT

32LOCAL RATE REGULATION UNDER THE 1992 CABLE ACTBy James G. Hodge Jr."For many consumers who are disgruntled with the rising rates of cable television, local regulation is the obvious solution. Yet local governments representing these consumers should seriously consider whether getting into the cable regulation business is in the community's best interests."

In 1992, Congress passed the Cable Television and Consumer Protection and Competition Act, 47 U.S.C.A. § 325 et seq., which amended in part the Cable Communications Policy Act of 1984 (the Acts). Id. at §§ 521-611. Under the guidance of these Acts and accompanying regulations from the Federal Communications Commission (FCC), county and municipal governments have been directed to become involved voluntarily in the regulation of cable television in their local communities. The FCC has frozen basic cable rates since April 1993 to encourage regulation by local governments.

Through their involvement as "franchise authorities," local governments have the ability to regulate basic cable rates, services and equipment. Basic cable service is comprised of those channels, many of which are retransmissions of local broadcast signals, offered by the cable provider in its initial cable subscription. Id. at § 522(3); FCC Rate Regulation Rules, 47 C.F.R § 76.901(a) (1993). Basic cable does not include: extended cable programming service, which is regulated solely by the FCC; or services offered on a pay-per-channel or pay-per-view basis. 47 C.F.R. § 76.901(b)(2).

Refunds of overpaid basic rates can be ordered in suitable situations. The franchise authority can also require cable providers to upgrade their systems as a condition of renewal of the franchise agreement. To partially fund its own costs of regulation, the local government can collect a franchise fee from the cable provider (not to exceed 5% of the cable provider's gross revenues). 47 U.S.CA § 542(b).

34 "If a local government chooses to certify itself as a franchise authority, often it will have to handle additional duties beyond the regulation of rates."

For many consumers who are disgruntled with the rising rates of cable television, local regulation is the obvious solution. Yet local governments representing these consumers should seriously consider whether getting into the cable regulation business is in the community's best interests. To regulate cable rates at the local level is to venture into longterm relationships with the FCC and cable providers that, especially for smaller local governments, may be overly burdensome.

As of December 1993, over 65 local governments in South Carolina had petitioned to regulate cable television. However, no local government in South Carolina can acquire, construct or operate a cable television system. Sheppard v. City of Orangeburg, No. 24035 (S.C. Sup. Ct. March 21, 1994) (Davis Adv. Sheet #7).

Franchise Authority

Local governments do not automatically have authority to regulate the cable television industry but first must register with the FCC in their capacities as franchise authorities. Id. at § 543. A "franchise authority" is any governmental entity empowered by federal, state or local law to grant a franchise to construct and operate a cable television system. Id. at § 522(8) and (9). Thus, any local government with the power to franchise, which usually stems from the power to control public rights-of-way, is capable of...