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Orlc'(~,F f!("-'...,.\- '. -:- ORlC'(~,f"~L Before the '-' ., ; \:. \ FEDERAL COMMUNICATIONS COMMISSION Washington, DC In the Matter of Implementation ) of sections of the Cable Television ) MM DOCke~ Consumer Protection and Competition ) Act of 1992 ) o.f\~ ) vI ... J D Rate Regulation ) FEDtR,d' 'X C().(IJUM '99."t.I OFFICEor t'AT~s REPLY COMMENTS OF BELLSOUTH IN RESPONSE TO~f~~[~~~~ THIRD NOTICE OF PROPOSED RULEMAKING ' BellSouth Telecommunications, Inc. ("BellSouth") will limit its Reply Comments to one issue in this proceE~ding: whether external treatment should be accorded to the cost of cable system upgrades required by local franchise authorities. A number of cable commenters argue that any facility upgrade required by a local franchising authority, E~ither explicitly or implicitly, should qualify for external cost treatment under the Commission's cable price cap regulations, even if those upgrades are for the purpose of providing non-cable services. I At least one cable operator argues that facility upgrades merely agreed to but not I For example, see Comments of TKR Cable Company arguing for external treatment of "costs of voluntary upgrade features if undertaken as part of the required upgrade" (p.S) and the cost of expanded channel capacity to provide "a broadband communications platform" that will "eventually allow delivery of a fully interactive service to all customers" (po 13). required by local franchising authorities should qualify for external cost treatment. 2 Such expansive and self-serving definitions of which upgrades should qualify for external cost treatment would undermine the efficacy of price cap regulation and lead to anti-competitive cost shifting; and, as such, would be contrary to the pUblic interest goals of Congress and the Commission. As is more fully explained by BellSouth in an earlier filing in this Docket,3 the Commission generally should reject requests for external (exogenous) treatment of capital costs of system improvements under its cable price cap regulations. Those regulations already accomodate the reasonable capital investment needs of most cable upgrades. On the other hand, where specific upgrade costs associated with providing one-way cable services are mandated by local franchising authorities, it is appropriate to afford such costs external treatment to the extent they would not have been incurred otherwise and are not already reflected in the Commission's cable price cap regulations. Indeed, BellSouth would expect the same exogenous treatment under the Commission's price cap regulations for telephone companies 2 See, Comments of -Time Warner Entertainment Company, L.P. at p. 11. 3 See BellSouth Comments On Petitions For Reconsideration, filed July 21, 1993, pp. 3-8. 2 should upgrade requirements be imposed upon it by regulators. Notwithstanding the above, the Commission should not allow cable operators to abuse this narrow exception by interpreting it so broadly as to apply to upgrade costs incurred to provide non-cable services (two-way interactive video and telecommunications services) or those simply agreed to by local franchising authorities. BellSouth joins in the Comments of the Local Governments to the extent they argue that cable operators should be prevented from seeking to justify regulated rates above the benchmark based on upgrades for non-cable services. 4 Such non-cable costs include upgrades to provide two-way interactive services, new personal communications and telephone services, including the cost of related electronics (switches, file servers, etc.) and support systems. The fact that a local franchise authority may agree to such investment is a legally insufficient reason for requiring cable ratepayers to pay for it. Moreover, such services are not even subject to the jurisdiction of local franchising authorities. Conclusion For the above reasons, BellSouth urges the Commission to reject the self-serving arguments of those cable operators who seek to use the local franchise requirement 4 See Comments of the Local Government, p. 9. 3 argument •• a "bsck door" to cross-suosidize upqrades to provide non-oable service•. Respectfully submitted, BELLSOUTH TELECO~ICATIONS, INC. By: October 7, 1993 4 I hereby certity that I have this 7th day or October, 1993 aerv1ceO all parties to this action with a copy of the foregoing REPLY COMMENTS OF 8ELLSOUTH IN RESPONSE TO THIRD NOTICE OF PROPOSED RULEMAKING by placing a true and correct copy of &lame in the United states mail, postaqe prepaid, addressed to the parties as ••t forth on the attached service list. Gordana Coley SERVICE LIST MM 92-266 Dick Glass, CETar William J. Catto President Cities of Inverness, crystal Satellite Dealers Assoc. River, Dunnellon and McIntosh 602 N. Jackson 452 Pleasant Grove Road Greencastle, IN 46135 Inverness, FL 3445:2 Frank Smith Herb Longware Conroller Cable Communications of Media General Cabla of Willsboro Fairfax county, Inc. P.O. Box 625 14650 L.. Road Willsboro, NY 12996 Chantilly, VA 22021 Porter Arneill Rita K. B10011 Executive Director Cable Franchise Coordinator FUSE City ot Atlanta 2590 Walnut Street, Suite 5 68 Mitchell street, sw Boulder, CO 80302 suite 2500 Atlanta, GA 30335-0319 City of Denison Frederick E. Turnage City council Mayor P.O. Box 347 City of Rocky Mount Denison, TX 15021-0347 P.O. Box 1180 Rocky Mount, Ne 27802-1180 Kate Horsfield George Lonqmeyer Executive Director Village Manager Video Data Bank Village of Schaumburg 37 South Wabash Avenue 101 Schaumburg Court Chicaqo, IL 60603 Schaumbur9, IL 60193-1899 Robert J. Sachs William Lilley III Howard B. Homonoff Policy Communications, Inc. Continental Cablevision 1615 L street, N.W. The Pilot House suite 4550 Lewis Wharf Washington, D.C. 20036 Boston, MA 02110 Paul Glist Judy Rabeau steven J. Horvitz Public Information OtticQr Susan W. Westfall city of Commeroe Continental cableviaion 2535 Commerce Way 1919 pennsylvania, AV•. ~ N.W. Commerce, CA 90040 Suite 200 Washington, D.C. 20006 Gene KimmQlman Perry Daniel Bradley Stillman ElIily ZSrub4ker Consumer Federation of America John Risk 14~4 16th st., N.W. communications support Group suite 604 P.O. Box 10968 Washinqton, D.C. 20036 Santa Ana, CA 92711-0968 Suzanne M. Heaton Bruce A. Larkin Georg. A. Hanover Director, Department of Consumer Electronics Group Administrative Services Electronic Industries Assoc. City of For Lauderdale 2001 Pennsylvania Avenue, N.W. 100 N. Andrews Aveune Washington, D.C. 20006 Fort Lauderdale, FL 33301 Carole Stannard-Gabor Richard F Alteri, President Executive Director Charles B. Stockdale, Counsel Northwest Municipal Cable Television Assoc. ot NY cable Council 126 state street 112 N. Belmont Avenue Albany, NY 12207 Arlington Heights, lL 60004 Bruce Crest Martin T. McCUe AdIlinistrator USTA Metropolitan Area Communications 900 19th Street, N.W. Commiaaion suite 800 1815 NW 169th Place Waahington, D.C. 20006-2105 suite 6020 Beaverton, OR 98006-4886 Ivan C. Evilsizer Willie Wong Montana Public Service Mayor Commission City of Mesa P.O. Box 202601 P.O. Box 1466 Helena, NT 69620-2601 Mesel, AZ 85211 Norman E. Det~ra, Jr. Henry L. Baumann Township of Sprinq Benjamin F.P. Ivins The Berk.hire Jack N. Goodman P.O. Box 877 National Association of Readinq, PA 19603 Broadcasters 1771 N street, N.W. washinqton, D.C. 20036 John H. Midlen, Jr. Loui. A. Ieakoff MGB Associates, Inc. International Family 3238 Prospect street, N.W. Entertainment, Inc. washinqton, D.C. 2000, 1000 Centerville Turnpike Virqinia Beach, VA 23463 Riohard M. Kes.el Diane M. Bunk Exeoutive Director Cable Agent New York state Consumer city ot Fall River Protection Board One Government Center 99 washinqton Avenue Fall River, KA 02722 Albany, NY 12210 Edwin Peck John W. witt Town of North Redington 8each curti. M. Pitzpatrick 259 4th Avenue North Deborah L. Berqer S~. Petersburq, FL 33701 City of San oieqo 525 "B" street, Suite 2100 San Diego, CA 92101-4411 Thomas D. creighton, #1980X William M. Marticorena political Subdivision. ot League of california citi•• State of Minn••ota and the Associated Entities 1200 The Colonnade P.O. Box 1950 5500 Wayzata Boulevord Costa MeSA, CA 92628-19~O Minneapoli., MN 55416 St.ephen R. RolSS Patrick L. Willis Xathryn A. Hutton City of Manitowoc Intermedia Partners P.O. Box 1597 888 16th street, NW Manitowoc, WI 54221-1597 Suite 300 Washington, D.C. 20006 Riohard H. Berman Bruce D. Solder Karen Gartenberg Lisa w. Schoen~hal.r LeBoeut, Lamb, Leiby & MacRae Turner Broadcasting System 125 West 55th Street 701 Pennsylvania Ave., N.W. New York, NY 10019 Suite 900 Washington, D.C. 20004 Pre.ton Padden William J. Ray, P.E. Molly Pauker superintendent Fox Broadcasting Company Glasqow Electric Plant Board 5151 Wisconsin Avenue, N.W. P.O. Box 1809 Washington, D.C. 20016 Glasqow, Kentucky 42142-1809 Susan Rester Miles H. Russel Frisby, Jr. Citi•• of Minnesota Barbara L. Waite 4700 IDS Center Counsel tor Xayor an~ City of Minneapolis, MN 55402 council ot Baltimore 1201 New York Avenue, N.W. suite 1000 Washington, D.C. 20005 Robert A. Ginsburg Howard D. Friedman Metropolitan Dada county Dispute Resolution Group, Inc. Metro Dade Center S5 Park Street suite 2801 Montclair, NJ 01042 111 N.W. 1st street Miami, FL 33128-1993 Dr. Edward H. Salmon Riohard Blumenthal Jeremiah F. O'Conner Attorney General of state Carmen J. Armenti of Connecticut state of New Jersey Office of Attorney General Board of Regulatory commissioner S5 Elm Street Two Gateway Center Hartford, CT 06106 Newark, NJ 07102 Ernest D. Preate, Jr. Lorna Veraldi Thomas L. Welch Assistant Professor David R. weyl School of Journalism and Attorney General of pennsylvania Mass Communication 14th Floor, strawberry Square Florida International Univ. Harrisburg, PA 17120 North Miami Campus Academic Bldg. II, 130-A North Miami, PL 331.81 James A. Penney David J. Bruqger Northland communications corp. Marilyn Kohrman-Gillis 1201 Third Avenue America'S Public Television Suite 3600 stations Seattle, WA 98101 1350 connecticut Ave., N.W.
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