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Mr. Shris Sherwood <br />City of Pleasanton <br />July 25, 1994 <br />Page 4 <br /> <br /> Although this answer does not specifically address the <br />issue of channels which are shared between regulated and <br />unregulated use (the example given involves two types of <br />regulated services), it Would appear reasonable that the <br />"preponderance of use" standard would apply to this <br />situation. In this case, assuming that the 1992 hours of <br />carriage were reasonably comparable to the hours utilized in <br />1993, this would reduce the regulated channels in December <br />1993 to 32 (16 satellite) and in September 1992 to 31 (16 <br />satellite). <br /> <br /> The impact on the permitted rate is indicated below <br />(Note: Rates listed are exclusive of the franchise fee): <br /> <br /> Current Rate Permitted Difference <br /> Rate <br /> <br />Basic Service $ 12.93 $ 12.34 -0.59 <br />(17 Channels) <br /> <br />Tier 2 10.13 10.89 +0.76 <br />{15 channels) <br /> <br />Total 23.06 23.23 +0.17 <br /> <br /> As can be seen, the total rate could have been higher <br />than charged by Viacom. This is due to the inverse ratio of <br />channels to the benchmark rate. However, it is possible <br />that the rote charged to subscribers could result in being <br />reduced. <br /> <br /> Before explaining how this may be possible, it is very <br />important for the Cities to understand that the FCC rules <br />are less than clear cut in this area. Despite repeated <br />requests from both cable operators and franchising <br />authorities, the FCC has been slow in responding to many <br />specific questions regarding implementation of the rules. <br /> <br /> The FCC's regulations for review of Form 393 appear to <br />permit the regularcry authority (either a city or the FCC) <br />to reduce rates which exceed the permitted amount, or freeze <br />rates which are less than the permitted amount. In the <br />specific case before the cities, this may mean that the <br />Cities could order the Basic Service rate to be reduced to <br />$12.34. Upon notification to the FCC by the cities, the FCC <br />may ~hen "freeze" the Tier 2 rate at $10.13. <br /> <br /> This would be significant because the second round of <br />rate regulation utilizes the rates which were in place on <br /> <br /> <br />