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10-K405
RENAISSANCE MEDIA GROUP LLC filed this Form 10-K405 on 03/31/1999
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   Several years ago, the FCC adopted detailed rate regulations, guidelines
and rate forms that the Company and the local franchising authority must use
in connection with the regulation of basic service and equipment rates. The
FCC adopted a benchmark methodology as the principal method of regulating
rates. However, if this methodology produces unacceptable rates, the Company
may also justify its rates using a detailed and complicated cost-of-service
methodology, which, among other things, permits the use of an industry-wide
11.25% after tax rate of return on the Company's allowable rate base. The
FCC's rules also require franchising authorities to regulate equipment rates
on the basis of actual cost plus a reasonable profit, as defined by the FCC.
 
   If the local franchising authority concludes that the Company's rates are
too high under the FCC's rate rules, the local franchising authority may
require the Company to reduce its rates and to refund overcharges to
subscribers with interest. The Company may appeal adverse local rate decisions
to the FCC, and the FCC may reverse any rate decision made by a local
franchising authority if the decision is inconsistent with the FCC's rules and
policies.
 
   The FCC also adopted several years ago comprehensive and restrictive
regulations that allow cable television systems to modify regulated rates on a
quarterly or annual basis using various methodologies that account for changes
in:
 
  . the number of regulated channels;
 
  . inflation; and
 
  . certain external costs, such as franchise and other governmental fees,
    copyright and retransmission consent fees, taxes, programming fees and
    franchise-related obligations.
 
   The Company cannot predict whether the FCC will modify these rate
regulations in the future.
 
   The Communications Act and FCC regulations also permit local franchising
authorities to file complaints with the FCC concerning rates the Company
charges for certain non-basic cable programming service tiers. The
Communications Act requires the FCC:
 
  . to issue a final order within 90 days after receipt of a rate complaint
    from a local franchising authority;
 
  . to reduce any rates found to be unreasonable; and
 
  . to order the operator to pay refunds to subscribers for any rate
    overcharges.
 
   The 1996 Act prohibits the regulation of non-basic cable programming
service tiers after March 31, 1999, except as noted below under the terms of
the Social Contract although Congress could consider legislation to delay,
eliminate altogether or reinstitute the regulation of non-basic rates.
 
   The Communications Act also:
 
  . prohibits the regulation of the rates charged by cable operators for
    programming offered on a per-channel or per-program basis, and for
    certain multi-channel groups of new non-basic programming that operators
    offered to subscribers after September 30, 1994;
 
  . requires operators to charge uniform rates throughout each franchise area
    that is not subject to effective competition, as defined by federal law;
 
  . prohibits regulation of non-predatory bulk discount rates offered by
    operators to subscribers in commercial and residential developments; and
 
  . permits regulated equipment rates to be computed by aggregating costs of
    broad categories of equipment at the franchise, system, regional or
    company level.
 
   The 1996 Telecom Act also provides for the deregulation of the CPST of
certain cable systems owned by "small cable operators." Among other
requirements, an eligible small operator is one which does not serve,
 
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