Sec. 76.942 Refunds.
(a) A franchising authority (or the Commission, pursuant to
Sec. 76.945) may order a cable operator to refund to subscribers that
portion of previously paid rates determined to be in excess of the
permitted tier charge or above the actual cost of equipment, unless the
operator has submitted a cost-of-service showing which justifies the
rate charged as reasonable. An operator's liability for refunds shall be
based on the difference between the old bundled rates and the sum of the
new unbundled program service charge(s) and the new unbundled equipment
charge(s). Where an operator was charging separately for program
services and equipment but the rates were not in compliance with the
Commission's rules, the operator's refund liability shall be based on
the difference between the sum of the old charges and the sum of the
new, unbundled program service and equipment charges. Before ordering a
cable operator to refund previously paid rates to subscribers, a
franchising authority (or the Commission) must give the operator notice
and opportunity to comment.
(b) An operator's liability for refunds in limited to a one-year
period, except that an operator that fails to comply with a valid rate
order issued by a franchising authority or the Commission shall be
liable for refunds commencing from the effective date of such order
until such time as it complies with such order.
(c) The refund period shall run as follows:
(1) From the date the operator implements a prospective rate
reduction back in time to September 1, 1993, or one year, whichever is
(2) From the date a franchising authority issues an accounting order
pursuant to Sec. 76.933(c), to the date a prospective rate reduction is
issued, then back in time from the date of the accounting order to the
effective date of the rules; however, the total refund period shall not
exceed one year from the date of the accounting order.
(3) Refund liability shall be calculated on the reasonableness of
the rates as determined by the rules in effect during the period under
review by the franchising authority or the Commission.
(d) The cable operator, in its discretion, may implement a refund in
the following manner:
(1) By returning overcharges to those subscribers who actually paid
the overcharges, either through direct payment or as a specifically
identified credit to those subscribers' bills; or
(2) By means of a prospective percentage reduction in the rates for
the basic service tier or associated equipment to cover the cumulative
overcharge. This shall be reflected as a specifically identified, one-
time credit on prospective bills to the class of subscribers that
currently subscribe to the cable system.
(e) Refunds shall include interest computed at applicable rates
published by the Internal Revenue Service for tax refunds and additional
(f) Once an operator has implemented a rate refund to subscribers in
accordance with a refund order by the franchising authority (or the
Commission, pursuant to paragraph (a) of this section), the franchising
authority must return to the cable operator an amount equal to that
portion of the franchise fee that was paid on the total amount of the
refund to subscribers. The franchising authority must promptly return
the franchise fee overcharge either in an immediate lump sum payment, or
the cable operator may deduct it from the cable system's future
franchise fee payments. The franchising authority has the discretion to
determine a reasonable repayment period, but interest shall accrue on
any outstanding portion of the franchise fee starting on the date the
operator has completed implementation of the refund order. In
determining the amount of the refund, the franchise fee overcharge
should be offset against franchise fees the operator holds on behalf of
the franchising authority for lump sum payment. The interest rate on any
refund owed to the operator presumptively shall be .25%.
[58 11 FR 29753 , May 21, 1993, as amended at 58 FR 46736 , Sept. 2, 1993; 59 FR 17974 , Apr. 15, 1994; 60 FR 52120 , Oct. 5, 1995]
Effective Date Note: At 60 FR 52120 , Oct. 5, 1995, in Sec. 76.942,
paragraph (f) was revised. Paragraph (f) contains information collection
and recordkeeping requirements and will not beecome effective until 30
days after approval has been given by the Office of Management and
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