Sec. 76.1403  Small cable operators.

    (a) Effective February 8, 1996, a small cable operator is exempt 
from rate regulation on its cable programming services tier, or on its 
basic service tier if that tier was the only service tier subject to 
rate regulation as of December 31, 1994, in any franchise area in which 
that operator services 50,000 or fewer subscribers.
    (b) A small cable operator is an operator who, directly or through 
an affiliate, serves in the aggregate fewer than 617,000 subscribers in 
the United States and whose annual revenues, when combined with the 
total annual revenues of all of its affiliates, do not exceed $250 
million in the aggregate.
    (c) As used in this section, an operator shall be deemed affiliated 
with another entity if that entity holds a 20 percent or greater equity 
interest, passive or active, in the operator or exercises de jure or de 
facto control over the operator.
    (d) Procedures. (1) If a small cable operator has only a single tier 
that is subject to regulation, the operator, at any time, may certify in 
writing to its local franchise authority that it meets all criteria 
necessary to qualify as a small operator. Upon request of the local 
franchising authority, the operator shall identify in writing all of its 
affiliates that provide cable service, the total subscriber base of 
itself and each affiliate, and the aggregate gross revenues of its cable 
and non-cable affiliates. Within 90 days of receiving the original 
certification, the local franchising authority shall determine whether 
the operator qualifies for deregulation and shall notify the operator in 
writing of its decision, although this 90-day period shall be tolled for 
so long as it takes the operator to respond to a proper request for 
information by the local franchising authority. If the local franchising 
authority finds that the operator does not qualify for deregulation, its 
notice shall state the grounds for that decision. The operator may 
appeal the local franchising authority's decision to the Commission 
within 30 days.
    (2) Once the operator has certified its eligibility for deregulation 
on the basic service tier, the local franchising authority shall not 
prohibit the operator from taking a rate increase and shall not order 
the operator to make any refunds unless and until the local franchising 
authority has rejected the certification in a final order that is no 
longer subject to appeal or that the Commission has affirmed. The 
operator shall be liable for refunds for revenues gained (beyond 
revenues that could be gained under regulation) as a result of any rate 
increase taken during the period in which it claimed to be deregulated, 
plus interest, in the event the operator is later found not to be 
deregulated. The one-year limitation on refund liability will not be 
applicable during that period to ensure that the filing of an invalid 
small operator certification does not reduce any refund liability that 
the operator would otherwise incur.
    (3) Within 30 days of being served with a local franchising 
authority's notice that the local franchising authority intends to file 
a cable programming services tier rate complaint, an operator may 
certify to the local franchising authority that it meets the criteria 
for qualification as a small cable operator. This certification shall be 
filed in accordance with the cable programming services rate complaint 
procedure set forth in Sec. 76.1402. Absent a cable programming services 
rate complaint, the operator need not file for small cable operator 
certification in order to treat its cable programming services tier as 
deregulated.
    (4) If a pending CPST rate complaint was filed with the Commission 
before April 30, 1996 the operator should file its certification of 
small cable operator status directly with the Commission within 15 days 
of that date.

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