Policy

Comcast to Challenge Rate Rollback

4/03/2005 8:00 PM Eastern

Comcast Corp. officials said the MSO will appeal rate-rollback orders approved by local franchising authorities representing about 1 million of the operator’s customers.

The LFAs ordered the rollbacks based on an analysis of Comcast’s 2004 national rate filings. The communities, which range in size from Los Angeles to small suburban towns, hired Front Range Consulting Inc. of Colorado and Florida-based Ashpaugh & Sculco CPA to check Comcast’s math.

Most major cable operators, with the exception of Cox Communications Inc., collect rates from all of their systems, then average them and generate a rate report for their systems throughout the country.

COSTS OMITTED

But the auditors said this formulation results in improper rates, for the national filing excludes costs in some categories and adds them in others.

The report concluded that Comcast ignored Federal Communications Commission precedents and specific federal instructions for filling out the forms, specifically the form addressing service charges and equipment costs. The report asserted that Comcast systems might be overcharging by as much as $13.35 to install cable at a previously unwired house. It claimed the operator overcharges for hourly service charges, HDTV receivers, basic receivers and remotes, as well. Comcast vehemently opposes the conclusions of the report.

“We think the conclusions of these municipal consultants about our equipment and installation prices are arbitrary and flat wrong,” company spokesman Tim Fitzpatrick said. Franchisors in 700 other communities approved the rates, he said, adding that Comcast will appeal the rate orders to the Federal Communications Commission in May.

But the communities that paid for the report are adopting its findings and demanding that Comcast roll back its rates to match those of the auditors.

City officials said they weren’t surprised by the consultancy’s findings, said Sarah Hackett, senior communications analyst for the Metropolitan Area Communications Commission in Beaverton, Ore. The MACC challenged the rates of its then-operator, AT&T Broadband, in 1997.

AT&T appealed the rate rollback to the FCC, which affirmed part of the regulator’s findings. Eventually, AT&T Broadband issued a partial refund, she said.

MACC unanimously supported the findings of this latest report, she said, adding regulators continue to talk with Comcast in hopes of a resolution without an appeal to the FCC, which could take as long as two years.

MARCH DEADLINE

Despite the fact that Comcast’s national averaging methodology is the same as used by Time Warner Cable, Adelphia Communications Corp. and Charter Communications Inc., there will be no similar analysis of their rate-setting math, according to Dick Treich of Front Range.

Federal policy gave regulators until March 1 of this year to fault 2004 rates, so the deadline has passed.

The only reason the consortium of Comcast cities was able to act this month is because its members negotiated to extend the deadline to April 1.

September