July 31, 2008
STATE REGULATION OF CABLE TV RATES
By: Kevin E. McCarthy, Principal Analyst
You asked whether the state passed legislation in 2007 eliminating the Department of Public Utility Control's (DPUC) ability to regulate cable TV rates.
PA 07-253 effectively eliminated DPUC's ability to regulate cable TV rates, which had already been significantly limited by federal law. Under federal law, DPUC and other cable franchising authorities can only regulate rates for the basic service tier (primarily the broadcast and public access channels) and related equipment fees for this tier; they cannot regulate the rates for other tiers that include channels such as ESPN and HBO. The franchising authorities must regulate basic service rates in accordance with regulations adopted by the Federal Communications Commission (FCC), which are very detailed. Finally, the franchising authorities' ability to regulate basic service rates ends once the FCC determines that a cable TV company is subject to effective competition, as defined by federal law. FCC had made this determination for several Connecticut cable TV franchises prior to 2007, and thus these franchises were not subject to any rate regulation.
PA 07-253 requires entities, other than cable companies, that seek to provide video services to file an application with DPUC for a competitive video service provider certificate. It requires DPUC to grant the certificate if certain conditions are met, and DPUC has granted this certificate to AT&T for its U-Verse service. The entities that receive such certificates are called certified competitive video service providers. Under the act, such providers are not subject to rate regulation.
Under the act, 30 days after a provider offers service in a cable company's franchise area, the cable company may seek a certificate of cable franchise authority from DPUC. A company may also apply for this certificate for any area that was outside of its franchise areas on or before October 1, 2007. Unlike cable franchises, the certificates are valid indefinitely and do not have to be renewed. Virtually all of the state's cable companies have applied for and received these certificates under these provisions. (The exception is Thames Valley Communications, which serves the Groton area; the area is also served by Comcast's Groton franchise, which has received a certificate.) Under the act, companies with this certificate are not subject to rate regulation except as “set forth in federal law.” Federal law allows but does not require franchising authorities to regulate basic service rates. Thus, the act appears to terminate DPUC's ability to regulate a cable company's basic service rates once it obtains a new certificate. In docket 08-04-02, DPUC concluded that cable companies that have been granted a certificate under PA 07-253 are no longer subject to basic service tier rate regulation by DPUC, effective the date the docket was decided (July 16, 2008).