
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 47USC543]

 
          TITLE 47--TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS
 
                 CHAPTER 5--WIRE OR RADIO COMMUNICATION
 
                  SUBCHAPTER V-A--CABLE COMMUNICATIONS
 
                  Part III--Franchising and Regulation
 
Sec. 543. Regulation of rates


(a) Competition preference; local and Federal regulation

                           (1) In general

        No Federal agency or State may regulate the rates for the 
    provision of cable service except to the extent provided under this 
    section and section 532 of this title. Any franchising authority may 
    regulate the rates for the provision of cable service, or any other 
    communications service provided over a cable system to cable 
    subscribers, but only to the extent provided under this section. No 
    Federal agency, State, or franchising authority may regulate the 
    rates for cable service of a cable system that is owned or operated 
    by a local government or franchising authority within whose 
    jurisdiction that cable system is located and that is the only cable 
    system located within such jurisdiction.

                   (2) Preference for competition

        If the Commission finds that a cable system is subject to 
    effective competition, the rates for the provision of cable service 
    by such system shall not be subject to regulation by the Commission 
    or by a State or franchising authority under this section. If the 
    Commission finds that a cable system is not subject to effective 
    competition--
            (A) the rates for the provision of basic cable service shall 
        be subject to regulation by a franchising authority, or by the 
        Commission if the Commission exercises jurisdiction pursuant to 
        paragraph (6), in accordance with the regulations prescribed by 
        the Commission under subsection (b) of this section; and
            (B) the rates for cable programming services shall be 
        subject to regulation by the Commission under subsection (c) of 
        this section.

             (3) Qualification of franchising authority

        A franchising authority that seeks to exercise the regulatory 
    jurisdiction permitted under paragraph (2)(A) shall file with the 
    Commission a written certification that--
            (A) the franchising authority will adopt and administer 
        regulations with respect to the rates subject to regulation 
        under this section that are consistent with the regulations 
        prescribed by the Commission under subsection (b) of this 
        section;
            (B) the franchising authority has the legal authority to 
        adopt, and the personnel to administer, such regulations; and
            (C) procedural laws and regulations applicable to rate 
        regulation proceedings by such authority provide a reasonable 
        opportunity for consideration of the views of interested 
        parties.

                     (4) Approval by Commission

        A certification filed by a franchising authority under paragraph 
    (3) shall be effective 30 days after the date on which it is filed 
    unless the Commission finds, after notice to the authority and a 
    reasonable opportunity for the authority to comment, that--
            (A) the franchising authority has adopted or is 
        administering regulations with respect to the rates subject to 
        regulation under this section that are not consistent with the 
        regulations prescribed by the Commission under subsection (b) of 
        this section;
            (B) the franchising authority does not have the legal 
        authority to adopt, or the personnel to administer, such 
        regulations; or
            (C) procedural laws and regulations applicable to rate 
        regulation proceedings by such authority do not provide a 
        reasonable opportunity for consideration of the views of 
        interested parties.

    If the Commission disapproves a franchising authority's 
    certification, the Commission shall notify the franchising authority 
    of any revisions or modifications necessary to obtain approval.

                   (5) Revocation of jurisdiction

        Upon petition by a cable operator or other interested party, the 
    Commission shall review the regulation of cable system rates by a 
    franchising authority under this subsection. A copy of the petition 
    shall be provided to the franchising authority by the person filing 
    the petition. If the Commission finds that the franchising authority 
    has acted inconsistently with the requirements of this subsection, 
    the Commission shall grant appropriate relief. If the Commission, 
    after the franchising authority has had a reasonable opportunity to 
    comment, determines that the State and local laws and regulations 
    are not in conformance with the regulations prescribed by the 
    Commission under subsection (b) of this section, the Commission 
    shall revoke the jurisdiction of such authority.

             (6) Exercise of jurisdiction by Commission

        If the Commission disapproves a franchising authority's 
    certification under paragraph (4), or revokes such authority's 
    jurisdiction under paragraph (5), the Commission shall exercise the 
    franchising authority's regulatory jurisdiction under paragraph 
    (2)(A) until the franchising authority has qualified to exercise 
    that jurisdiction by filing a new certification that meets the 
    requirements of paragraph (3). Such new certification shall be 
    effective upon approval by the Commission. The Commission shall act 
    to approve or disapprove any such new certification within 90 days 
    after the date it is filed.

                 (7) Aggregation of equipment costs

        (A) In general

            The Commission shall allow cable operators, pursuant to any 
        rules promulgated under subsection (b)(3) of this section, to 
        aggregate, on a franchise, system, regional, or company level, 
        their equipment costs into broad categories, such as converter 
        boxes, regardless of the varying levels of functionality of the 
        equipment within each such broad category. Such aggregation 
        shall not be permitted with respect to equipment used by 
        subscribers who receive only a rate regulated basic service 
        tier.

        (B) Revision to Commission rules; forms

            Within 120 days of February 8, 1996, the Commission shall 
        issue revisions to the appropriate rules and forms necessary to 
        implement subparagraph (A).

(b) Establishment of basic service tier rate regulations

              (1) Commission obligation to subscribers

        The Commission shall, by regulation, ensure that the rates for 
    the basic service tier are reasonable. Such regulations shall be 
    designed to achieve the goal of protecting subscribers of any cable 
    system that is not subject to effective competition from rates for 
    the basic service tier that exceed the rates that would be charged 
    for the basic service tier if such cable system were subject to 
    effective competition.

                     (2) Commission regulations

        Within 180 days after October 5, 1992, the Commission shall 
    prescribe, and periodically thereafter revise, regulations to carry 
    out its obligations under paragraph (1). In prescribing such 
    regulations, the Commission--
            (A) shall seek to reduce the administrative burdens on 
        subscribers, cable operators, franchising authorities, and the 
        Commission;
            (B) may adopt formulas or other mechanisms and procedures in 
        complying with the requirements of subparagraph (A); and
            (C) shall take into account the following factors:
                (i) the rates for cable systems, if any, that are 
            subject to effective competition;
                (ii) the direct costs (if any) of obtaining, 
            transmitting, and otherwise providing signals carried on the 
            basic service tier, including signals and services carried 
            on the basic service tier pursuant to paragraph (7)(B), and 
            changes in such costs;
                (iii) only such portion of the joint and common costs 
            (if any) of obtaining, transmitting, and otherwise providing 
            such signals as is determined, in accordance with 
            regulations prescribed by the Commission, to be reasonably 
            and properly allocable to the basic service tier, and 
            changes in such costs;
                (iv) the revenues (if any) received by a cable operator 
            from advertising from programming that is carried as part of 
            the basic service tier or from other consideration obtained 
            in connection with the basic service tier;
                (v) the reasonably and properly allocable portion of any 
            amount assessed as a franchise fee, tax, or charge of any 
            kind imposed by any State or local authority on the 
            transactions between cable operators and cable subscribers 
            or any other fee, tax, or assessment of general 
            applicability imposed by a governmental entity applied 
            against cable operators or cable subscribers;
                (vi) any amount required, in accordance with paragraph 
            (4), to satisfy franchise requirements to support public, 
            educational, or governmental channels or the use of such 
            channels or any other services required under the franchise; 
            and
                (vii) a reasonable profit, as defined by the Commission 
            consistent with the Commission's obligations to subscribers 
            under paragraph (1).

                            (3) Equipment

        The regulations prescribed by the Commission under this 
    subsection shall include standards to establish, on the basis of 
    actual cost, the price or rate for--
            (A) installation and lease of the equipment used by 
        subscribers to receive the basic service tier, including a 
        converter box and a remote control unit and, if requested by the 
        subscriber, such addressable converter box or other equipment as 
        is required to access programming described in paragraph (8); 
        and
            (B) installation and monthly use of connections for 
        additional television receivers.

                 (4) Costs of franchise requirements

        The regulations prescribed by the Commission under this 
    subsection shall include standards to identify costs attributable to 
    satisfying franchise requirements to support public, educational, 
    and governmental channels or the use of such channels or any other 
    services required under the franchise.

                 (5) Implementation and enforcement

        The regulations prescribed by the Commission under this 
    subsection shall include additional standards, guidelines, and 
    procedures concerning the implementation and enforcement of such 
    regulations, which shall include--
            (A) procedures by which cable operators may implement and 
        franchising authorities may enforce the regulations prescribed 
        by the Commission under this subsection;
            (B) procedures for the expeditious resolution of disputes 
        between cable operators and franchising authorities concerning 
        the administration of such regulations;
            (C) standards and procedures to prevent unreasonable charges 
        for changes in the subscriber's selection of services or 
        equipment subject to regulation under this section, which 
        standards shall require that charges for changing the service 
        tier selected shall be based on the cost of such change and 
        shall not exceed nominal amounts when the system's configuration 
        permits changes in service tier selection to be effected solely 
        by coded entry on a computer terminal or by other similarly 
        simple method; and
            (D) standards and procedures to assure that subscribers 
        receive notice of the availability of the basic service tier 
        required under this section.

                             (6) Notice

        The procedures prescribed by the Commission pursuant to 
    paragraph (5)(A) shall require a cable operator to provide 30 days' 
    advance notice to a franchising authority of any increase proposed 
    in the price to be charged for the basic service tier.

       (7) Components of basic tier subject to rate regulation

        (A) Minimum contents

            Each cable operator of a cable system shall provide its 
        subscribers a separately available basic service tier to which 
        subscription is required for access to any other tier of 
        service. Such basic service tier shall, at a minimum, consist of 
        the following:
                (i) All signals carried in fulfillment of the 
            requirements of sections 534 and 535 of this title.
                (ii) Any public, educational, and governmental access 
            programming required by the franchise of the cable system to 
            be provided to subscribers.
                (iii) Any signal of any television broadcast station 
            that is provided by the cable operator to any subscriber, 
            except a signal which is secondarily transmitted by a 
            satellite carrier beyond the local service area of such 
            station.

        (B) Permitted additions to basic tier

            A cable operator may add additional video programming 
        signals or services to the basic service tier. Any such 
        additional signals or services provided on the basic service 
        tier shall be provided to subscribers at rates determined under 
        the regulations prescribed by the Commission under this 
        subsection.

              (8) Buy-through of other tiers prohibited

        (A) Prohibition

            A cable operator may not require the subscription to any 
        tier other than the basic service tier required by paragraph (7) 
        as a condition of access to video programming offered on a per 
        channel or per program basis. A cable operator may not 
        discriminate between subscribers to the basic service tier and 
        other subscribers with regard to the rates charged for video 
        programming offered on a per channel or per program basis.

        (B) Exception; limitation

            The prohibition in subparagraph (A) shall not apply to a 
        cable system that, by reason of the lack of addressable 
        converter boxes or other technological limitations, does not 
        permit the operator to offer programming on a per channel or per 
        program basis in the same manner required by subparagraph (A). 
        This subparagraph shall not be available to any cable operator 
        after--
                (i) the technology utilized by the cable system is 
            modified or improved in a way that eliminates such 
            technological limitation; or
                (ii) 10 years after October 5, 1992, subject to 
            subparagraph (C).

        (C) Waiver

            If, in any proceeding initiated at the request of any cable 
        operator, the Commission determines that compliance with the 
        requirements of subparagraph (A) would require the cable 
        operator to increase its rates, the Commission may, to the 
        extent consistent with the public interest, grant such cable 
        operator a waiver from such requirements for such specified 
        period as the Commission determines reasonable and appropriate.

(c) Regulation of unreasonable rates

                     (1) Commission regulations

        Within 180 days after October 5, 1992, the Commission shall, by 
    regulation, establish the following:
            (A) criteria prescribed in accordance with paragraph (2) for 
        identifying, in individual cases, rates for cable programming 
        services that are unreasonable;
            (B) fair and expeditious procedures for the receipt, 
        consideration, and resolution of complaints from any franchising 
        authority (in accordance with paragraph (3)) alleging that a 
        rate for cable programming services charged by a cable operator 
        violates the criteria prescribed under subparagraph (A), which 
        procedures shall include the minimum showing that shall be 
        required for a complaint to obtain Commission consideration and 
        resolution of whether the rate in question is unreasonable; and
            (C) the procedures to be used to reduce rates for cable 
        programming services that are determined by the Commission to be 
        unreasonable and to refund such portion of the rates or charges 
        that were paid by subscribers after the filing of the first 
        complaint filed with the franchising authority under paragraph 
        (3) and that are determined to be unreasonable.

                    (2) Factors to be considered

        In establishing the criteria for determining in individual cases 
    whether rates for cable programming services are unreasonable under 
    paragraph (1)(A), the Commission shall consider, among other 
    factors--
            (A) the rates for similarly situated cable systems offering 
        comparable cable programming services, taking into account 
        similarities in facilities, regulatory and governmental costs, 
        the number of subscribers, and other relevant factors;
            (B) the rates for cable systems, if any, that are subject to 
        effective competition;
            (C) the history of the rates for cable programming services 
        of the system, including the relationship of such rates to 
        changes in general consumer prices;
            (D) the rates, as a whole, for all the cable programming, 
        cable equipment, and cable services provided by the system, 
        other than programming provided on a per channel or per program 
        basis;
            (E) capital and operating costs of the cable system, 
        including the quality and costs of the customer service provided 
        by the cable system; and
            (F) the revenues (if any) received by a cable operator from 
        advertising from programming that is carried as part of the 
        service for which a rate is being established, and changes in 
        such revenues, or from other consideration obtained in 
        connection with the cable programming services concerned.

                     (3) Review of rate changes

        The Commission shall review any complaint submitted by a 
    franchising authority after February 8, 1996, concerning an increase 
    in rates for cable programming services and issue a final order 
    within 90 days after it receives such a complaint, unless the 
    parties agree to extend the period for such review. A franchising 
    authority may not file a complaint under this paragraph unless, 
    within 90 days after such increase becomes effective it receives 
    subscriber complaints.

              (4) Sunset of upper tier rate regulation

        This subsection shall not apply to cable programming services 
    provided after March 31, 1999.

(d) Uniform rate structure required

    A cable operator shall have a rate structure, for the provision of 
cable service, that is uniform throughout the geographic area in which 
cable service is provided over its cable system. This subsection does 
not apply to (1) a cable operator with respect to the provision of cable 
service over its cable system in any geographic area in which the video 
programming services offered by the operator in that area are subject to 
effective competition, or (2) any video programming offered on a per 
channel or per program basis. Bulk discounts to multiple dwelling units 
shall not be subject to this subsection, except that a cable operator of 
a cable system that is not subject to effective competition may not 
charge predatory prices to a multiple dwelling unit. Upon a prima facie 
showing by a complainant that there are reasonable grounds to believe 
that the discounted price is predatory, the cable system shall have the 
burden of showing that its discounted price is not predatory.

(e) Discrimination; services for the hearing impaired

    Nothing in this subchapter shall be construed as prohibiting any 
Federal agency, State, or a franchising authority from--
        (1) prohibiting discrimination among subscribers and potential 
    subscribers to cable service, except that no Federal agency, State, 
    or franchising authority may prohibit a cable operator from offering 
    reasonable discounts to senior citizens or other economically 
    disadvantaged group discounts; or
        (2) requiring and regulating the installation or rental of 
    equipment which facilitates the reception of cable service by 
    hearing impaired individuals.

(f) Negative option billing prohibited

    A cable operator shall not charge a subscriber for any service or 
equipment that the subscriber has not affirmatively requested by name. 
For purposes of this subsection, a subscriber's failure to refuse a 
cable operator's proposal to provide such service or equipment shall not 
be deemed to be an affirmative request for such service or equipment.

(g) Collection of information

    The Commission shall, by regulation, require cable operators to file 
with the Commission or a franchising authority, as appropriate, within 
one year after October 5, 1992, and annually thereafter, such financial 
information as may be needed for purposes of administering and enforcing 
this section.

(h) Prevention of evasions

    Within 180 days after October 5, 1992, the Commission shall, by 
regulation, establish standards, guidelines, and procedures to prevent 
evasions, including evasions that result from retiering, of the 
requirements of this section and shall, thereafter, periodically review 
and revise such standards, guidelines, and procedures.

(i) Small system burdens

    In developing and prescribing regulations pursuant to this section, 
the Commission shall design such regulations to reduce the 
administrative burdens and cost of compliance for cable systems that 
have 1,000 or fewer subscribers.

(j) Rate regulation agreements

    During the term of an agreement made before July 1, 1990, by a 
franchising authority and a cable operator providing for the regulation 
of basic cable service rates, where there was not effective competition 
under Commission rules in effect on that date, nothing in this section 
(or the regulations thereunder) shall abridge the ability of such 
franchising authority to regulate rates in accordance with such an 
agreement.

(k) Reports on average prices

    The Commission shall annually publish statistical reports on the 
average rates for basic cable service and other cable programming, and 
for converter boxes, remote control units, and other equipment, of--
        (1) cable systems that the Commission has found are subject to 
    effective competition under subsection (a)(2) of this section, 
    compared with
        (2) cable systems that the Commission has found are not subject 
    to such effective competition.

(l) Definitions

    As used in this section--
        (1) The term ``effective competition'' means that--
            (A) fewer than 30 percent of the households in the franchise 
        area subscribe to the cable service of a cable system;
            (B) the franchise area is--
                (i) served by at least two unaffiliated multichannel 
            video programming distributors each of which offers 
            comparable video programming to at least 50 percent of the 
            households in the franchise area; and
                (ii) the number of households subscribing to programming 
            services offered by multichannel video programming 
            distributors other than the largest multichannel video 
            programming distributor exceeds 15 percent of the households 
            in the franchise area;

            (C) a multichannel video programming distributor operated by 
        the franchising authority for that franchise area offers video 
        programming to at least 50 percent of the households in that 
        franchise area; or
            (D) a local exchange carrier or its affiliate (or any 
        multichannel video programming distributor using the facilities 
        of such carrier or its affiliate) offers video programming 
        services directly to subscribers by any means (other than 
        direct-to-home satellite services) in the franchise area of an 
        unaffiliated cable operator which is providing cable service in 
        that franchise area, but only if the video programming services 
        so offered in that area are comparable to the video programming 
        services provided by the unaffiliated cable operator in that 
        area.

        (2) The term ``cable programming service'' means any video 
    programming provided over a cable system, regardless of service 
    tier, including installation or rental of equipment used for the 
    receipt of such video programming, other than (A) video programming 
    carried on the basic service tier, and (B) video programming offered 
    on a per channel or per program basis.

(m) Special rules for small companies

                           (1) In general

        Subsections (a), (b), and (c) of this section do not apply to a 
    small cable operator with respect to--
            (A) cable programming services, or
            (B) a basic service tier that was the only service tier 
        subject to regulation as of December 31, 1994,

    in any franchise area in which that operator services 50,000 or 
    fewer subscribers.

                (2) ``Small cable operator'' defined

        For purposes of this subsection, the term ``small cable 
    operator'' means a cable operator that, directly or through an 
    affiliate, serves in the aggregate fewer than 1 percent of all 
    subscribers in the United States and is not affiliated with any 
    entity or entities whose gross annual revenues in the aggregate 
    exceed $250,000,000.

(n) Treatment of prior year losses

    Notwithstanding any other provision of this section or of section 
532 of this title, losses associated with a cable system (including 
losses associated with the grant or award of a franchise) that were 
incurred prior to September 4, 1992, with respect to a cable system that 
is owned and operated by the original franchisee of such system shall 
not be disallowed, in whole or in part, in the determination of whether 
the rates for any tier of service or any type of equipment that is 
subject to regulation under this section are lawful.

(June 19, 1934, ch. 652, title VI, Sec. 623, as added Pub. L. 98-549, 
Sec. 2, Oct. 30, 1984, 98 Stat. 2788; amended Pub. L. 102-385, 
Sec. 3(a), Oct. 5, 1992, 106 Stat. 1464; Pub. L. 104-104, title III, 
Sec. 301(b), (c), (j), (k)(1), Feb. 8, 1996, 110 Stat. 114, 116, 118.)


                               Amendments

    1996--Subsec. (a)(7). Pub. L. 104-104, Sec. 301(j), added par. (7).
    Subsec. (c)(1)(B). Pub. L. 104-104, Sec. 301(b)(1)(A), substituted 
``franchising authority (in accordance with paragraph (3))'' for 
``subscriber, franchising authority, or other relevant State or local 
government entity''.
    Subsec. (c)(1)(C). Pub. L. 104-104, Sec. 301(b)(1)(B), substituted 
``the first complaint filed with the franchising authority under 
paragraph (3)'' for ``such complaint''.
    Subsec. (c)(3), (4). Pub. L. 104-104, Sec. 301(b)(1)(C), added pars. 
(3) and (4) and struck out heading and text of former par. (3). Text 
read as follows: ``Except during the 180-day period following the 
effective date of the regulations prescribed by the Commission under 
paragraph (1), the procedures established under subparagraph (B) of such 
paragraph shall be available only with respect to complaints filed 
within a reasonable period of time following a change in rates that is 
initiated after that effective date, including a change in rates that 
results from a change in that system's service tiers.''
    Subsec. (d). Pub. L. 104-104, Sec. 301(b)(2), inserted at end ``This 
subsection does not apply to (1) a cable operator with respect to the 
provision of cable service over its cable system in any geographic area 
in which the video programming services offered by the operator in that 
area are subject to effective competition, or (2) any video programming 
offered on a per channel or per program basis. Bulk discounts to 
multiple dwelling units shall not be subject to this subsection, except 
that a cable operator of a cable system that is not subject to effective 
competition may not charge predatory prices to a multiple dwelling unit. 
Upon a prima facie showing by a complainant that there are reasonable 
grounds to believe that the discounted price is predatory, the cable 
system shall have the burden of showing that its discounted price is not 
predatory.''
    Subsec. (l)(1)(D). Pub. L. 104-104, Sec. 301(b)(3), added subpar. 
(D).
    Subsec. (m). Pub. L. 104-104, Sec. 301(c), added subsec. (m).
    Subsec. (n). Pub. L. 104-104, Sec. 301(k)(1), added subsec. (n).
    1992--Pub. L. 102-385 amended section generally, substituting 
present provisions for former provisions which related in subsec. (a) to 
limitation on regulatory power of Federal agencies, States, or 
franchising authorities, in subsec. (b) to promulgation, scope, content, 
periodic review, and amendment of regulations, in subsec. (c) to 
regulation by franchising authority during initial 2-year period, in 
subsec. (d) to automatic granting of rate increase requests upon agency 
inaction within 180-day period, in subsec. (e) to additional increases 
in rates and to reduction by amount of increase under franchise 
provisions, in subsec. (f) to nondiscrimination and facilitation of 
reception by hearing-impaired individuals, in subsec. (g) to continued 
effectiveness of limitation or the preemption of regulation under prior 
State law, and in subsec. (h) to reports and recommendations to 
Congress.


                    Effective Date of 1996 Amendment

    Section 301(k)(2) of Pub. L. 104-104 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall take effect on the 
date of enactment of this Act [Feb. 8, 1996] and shall be applicable to 
any rate proposal filed on or after September 4, 1993, upon which no 
final action has been taken by December 1, 1995.''


                    Effective Date of 1992 Amendment

    Section 3(b) of Pub. L. 102-385 provided that: ``The amendment made 
by subsection (a) [amending this section] shall take effect 180 days 
after the date of enactment of this Act [Oct. 5, 1992], except that the 
authority of the Federal Communications Commission to prescribe 
regulations is effective on such date of enactment.''


                             Effective Date

    Section effective 60 days after Oct. 30, 1984, except where 
otherwise expressly provided, see section 9(a) of Pub. L. 98-549, set 
out as a note under section 521 of this title.


Restoration, Retierment and Repricing of Service Previously Eliminated, 
                          Retiered, or Repriced

    Section 9(b) of Pub. L. 98-549 provided that: ``Nothing in section 
623 or 624 of the Communications Act of 1934 [sections 543 and 544 of 
this title], as added by this Act, shall be construed to allow a 
franchising authority, or a State or any political subdivision of a 
State, to require a cable operator to restore, retier, or reprice any 
cable service which was lawfully eliminated, retiered, or repriced as of 
September 26, 1984.''

                  Section Referred to in Other Sections

    This section is referred to in sections 325, 532, 533, 534, 542, 
545, 552, 573 of this title.
