FCC Grants Emergency Stay in Comcast Rate Order Case
The FCC granted an emergency stay Tues. in a rate order case involving nearly $5 million in subscriber refunds from about 100 communities across the U.S. The case’s scope reflects the breadth of outreach by consultants Richard Treich and Garth Ashpaugh. Treich, a former TCI executive and an expert in rate order filings, conducted extensive market research on the Comcast rate orders.
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“A stay of the local orders, pending a review and determination of Comcast’s appeals on the merits, is in the public interest,” FCC said in its order. The order requires Comcast to place in an interest-bearing escrow account refunds due under each local franchising authority (LFA), a figure Comcast pegs at around $5 million (CD April 12 p 3).
Treich said he reviewed “6 feet of material” related to Comcast’s calculations for cost of equipment and other items assessed in rate order filings. Based on that research, he said he devised a study he used as a blueprint to approach local franchising authorities with upcoming rate order reviews.
After completing the research, Treich contacted localities through a public bidding process, asking for 10 cents per subscriber, he said. “It’s an efficient process since the same research can be applied to each market, and it saves the communities the expense of conducting their own research,” Treich said: “Everybody’s getting cheaper legal fees and from the FCC standpoint it’s the same amount of work because it’s exactly the same analysis.”
“NATOA is quite comfortable with the concept,” said Exec. Dir. Libby Beaty, “It’s waste of government resources to do an independent review.” “FCC and Congress have always encouraged consortiums of local govts. to work together,” she said, adding that NATOA didn’t endorse or encourage any localities to join.
“This was the first time we've ever done this in some form of a coalition,” Treich said. Many localities are “wary of what’s going on” with all of the impending changes in the market -- particularly those that would be affected by the Adelphia sale to Time Warner and Comcast, he said. Some cities have staff to handle the paperwork involved in rate filings, but others do not, he said.
“Sometimes it’s more difficult to work cooperatively with cable companies as they get bigger and their corporate offices get more distant,” Treich said. “It’s up to both parties to be willing to sit and work together.” One pressure communities are facing is price, he said. Despite increased competition, particularly from satellite, “we've seen prices going out of control.”
Comcast defended its rate filing process, saying its prices for equipment and installation meet federal guidelines. “These prices have been approved by over 700 communities across the nation. We think the conclusions of these municipal consultants about our equipment and installation prices are arbitrary and flat wrong,” said a Comcast spokesperson: “We fully intend to appeal this rate decision which is based upon the consultants'’ report.”
Treich said his study cost “well over $75,000” -- something one city could not afford alone. Generally he found that Comcast had “overstated” the basis for increases. “I don’t think Comcast expected us to go into this amount of detail,” Treich said. “I'd say they're not happy.”