FCC Releases Benchmarks for Cable TV Rate Cuts : Media: The rules on how much operators can charge for basic service somewhat favor smaller systems.

WASHINGTON —  Adding muscle to the cable-fee rollback it ordered last month, the Federal Communications Commission on Monday released complex new “benchmark” cable rates that impose sharper price cutbacks on large cable systems than on small ones.

The benchmark rates will serve as the government-established yardstick that cable operators must use to calculate their rates. Theoretically, they represent the rate that would be charged by a cable operator if there were competition. Most of the nation’s 11,000 cable systems are local monopolies.

Based on the number of channels and subscribers in a given system, the benchmarks are an outgrowth of congressional efforts to resume federal regulation of cable pricing after deregulating the industry in 1986.

In a concession to smaller cable operators, which said they have higher operating costs, the FCC will allow them to charge higher fees, on average, than larger systems. The FCC hopes that by doing so it can encourage smaller operators to offer more programming.

For example, a cable system with 250 subscribers, 20 satellite channels such as MTV and CNN and 30 cable channels on regulated tiers could charge $21.39 for basic cable service. By contrast, a cable system with the same number of channels but 10,000 subscribers could only charge $20.79. In both cases, though, the new rates would be lower than what cable companies such as these are charging now.

While most cable systems in urban markets have more than 10,000 subscribers, 17% of all cable systems have between 1,000 and 3,500 subscribers, according to Kagan Associates, a Carmel, Calif.-based consulting firm.

The price controls apply only to basic cable service, such as retransmission of local broadcast stations and public access channels. They won’t apply to pay per view channels or premium channels, such as HBO and Showtime. Critics of the new rules have speculated that many cable operators will be able to profitably reorganize the basic service they now offer, which often includes MTV and other popular add-ons.

The benchmark rates are aimed at rolling back cable prices to their Sept. 30, 1992, level--a reduction that, on average, will save America’s 57 million cable households $1 billion a year, or 3% to 5% on their monthly cable bill.

To determine the actual amount of the overall rollback, a cable operator would have to perform more than a dozen price calculations, including figuring the benchmark rate, determining any deduction for the franchise fee paid to a local municipality and adjusting for cable equipment revenue and inflation.

There was little reaction to the new regulations, since few industry officials had reviewed the new rates. But cable officials, who bitterly opposed government regulation of their industry, were studying the new rules late Monday with trepidation.

“We’ve known these rules were coming from a long time and at this point the industry is going to evaluate them to see how much they are going to affect consumers and programming . . . and the variety of services we now provide,” said Peggy Laramie, a spokeswoman for the National Cable Television Assn. in Washington.