STATE OF NEW JERSEY
Division of The Ratepayer Advocate
31 Clinton Street, 11^th Fl.
P. O. Box 46005
Newark, New Jersey 07101

Press Release

Ratepayer Advocate Seema M. Singh and BPU President Jeanne Fox
Fight Federal Ruling that Would Raise Basic Cable TV Rates for
200,000 Cablevision Customers in 49 NJ Municipalities

Newark, NJ -- Ratepayer Advocate Seema M. Singh and Board of Public Utilities President Jeanne M. Fox challenged a recent federal ruling that would allow basic cable rates to go unregulated in 49 municipalities serviced by Cablevision in New Jersey.

Ratepayer Advocate Singh and President Fox announced today that their agencies called on the Federal Communications Commission to overturn a ruling by the FCC’s Mass Media Bureau that deemed Cablevision was operating in a competitive market, thereby eliminating basic rate regulation by the New Jersey Board of Public Utilities. The ruling, which is now in effect, allows Cablevision to raise basic monthly rates for more than 200,000 customers in the 49 communities.

In the unprecedented action in which the two New Jersey agencies joined together for the first time to appeal to the FCC on behalf of New Jersey consumers, the Ratepayer Advocate and the Board of Public Utilities contend that Cablevision did not satisfy the effective competition test in the 49 municipalities. In papers submitted to the FCC in Washington, DC, on Monday, the two agencies asked the FCC to reverse, vacate and remand the Mass Media Bureau’s ruling because it was based on mismatched data and on data that state regulators are not permitted to review.

Governor James E. McGreevey, praised the two agencies for taking the pro-consumer steps of joining together to appeal a federal decision that could negatively impact more than 200,000 customers in more than four dozen New Jersey communities.

The Governor, highlighting the importance of the matter to New Jersey consumers, said, “In this climate of ever-rising cable rates, it is critical that basic service rates remain regulated in areas where there is no real competition. It is crucial that my Administration make every effort to protect the interests of consumers.”

Ratepayer Advocate Seema M. Singh said, “We are pro-consumer and pro-competition because we believe consumers benefit with better service and better prices where a healthy competitive environment exists. Until competition occurs, then basic cable television rates must remain regulated by the BPU in order to protect the consumer.”

Ms. Singh continued, “My office will work diligently to ensure that basic cable rates remain regulated in non-competitive areas. Many residents throughout the state, particularly senior citizens and low-income customers, need basic cable as a lifeline service. We will do all we can to protect them from unregulated basic service tier cable rates.”

“The most important point here is what is right for cable customers, which is why the BPU and the RPA have filed this appeal together,” said BPU President Fox. “We cannot relinquish our regulatory authority to protect Cablevision customers in the 49 affected communities or any cable customers in New Jersey.” President Fox added that while the basic cables rates, previously approved by the BPU, are at a 10-year low, rates the FCC once regulated have risen 84 percent since the FCC lost its authority.

“For the FCC to come into our state and tell us what we know is not the truth -- that Cablevision has reached the threshold for competition -- is completely absurd, irresponsible, and inexcusable,” said Senate President Richard J. Codey. “To say that the FCC is consumer-friendly is like saying Colonel Sanders is a friend of chickens."

“I applaud the Ratepayer Advocate and Board of Public Utilities for taking this critical action and challenging the FCC's decision to eliminate basic cable rate regulation in 49 municipalities in New Jersey,” said Jo-Anne Schubert, Mayor of South Bound Brook and President of the New Jersey League of Municipalities. “This ruling affects hundreds of thousands of cable customers, including nearly all of the households in South Bound Brook. It is important that we do all we can to ensure that residents have access to basic cable at a reasonable rate in all of New Jersey's municipalities.”

Angelo Corradino, the mayor of Manville, one of the 49 towns affected by the decision, joined the public officials the news conference to discuss the impact on his community. Marilyn Askin, state president of AARP New Jersey, also issued a statement in support of the action challenging the decision.

In its ruling on April 15, 2004, the Bureau granted three petitions filed by Cablevision for revocation of the regulation of basic rates in the 49 municipalities, determining that Cablevision met the criteria needed for the areas to be determined as having effective competition. The Ratepayer Advocate opposed Cablevision’s petitions before the Bureau last year. The BPU, which argued its case to keep basic rate oversight in Allamuchy in 2001, voted to join the Ratepayer Advocate in the application to the FCC commissioners to review the Bureau’s ruling because of the significance of the decision.

Under FCC regulations, a cable company must prove effective competition by demonstrating:
1) it is served by at least two unaffiliated multi-channel video programming distributors, each of which must offer comparable video programming to at least 50 percent of the households in the franchise area and 2) the number of households subscribing to program services offered by the multi-channel video programming distributors exceeds 15 percent of the households in the franchise area.

In filed oppositions last year, the Ratepayer Advocate argued that Cablevision’s reliance on mismatched data -- household data using figures from the 2000 Census along with a 2002/2003 Direct Broadcast Satellite customer data -- is inadequate to show effective competition.

“The two-to-three year differential on the data significantly impacts the case because some of the communities are close to the 15 percent threshold,” Ms. Singh said. “If new household data were used, certain communities would fall below 15 percent, thereby preventing the deregulation of basic service tier rates.”

Ms. Singh explained that her staff, using Certificates of Occupancy and tax records, compiled updated household census data in eight of the impacted communities. “Our research showed that, based on the increased number of households, the Direct Broadcast Satellite penetration fell below 15 percent in all eight of the communities.” They are: Aberdeen, Bound Brook, Sayreville, Old Tappan, Kinnelon, Interlaken, Manasquan, and Washington.

“Our research emphatically supports our contention that only by comparing properly matched data can the FCC get accurate statistics on competition,” said Ms. Singh. “If decisions on effective competition are made using mismatched data, then the ability of the BPU to regulate BST rates and the Ratepayer Advocate’s ability to represent the interests of consumers will be improperly eliminated. If this decision is permitted to stand, then the impact will be felt in other New Jersey communities.”

In seeking review by the full Commission of the Bureau’s ruling, the Ratepayer Advocate and the Board of Public Utilities are requesting that the Bureau’s ruling be reversed, vacated and remanded due to legal errors.

Among the two agencies’ arguments are that the Bureau relied on mismatched data; improperly shifted the burden of proof of effective competition to the Ratepayer Advocate; failed to hold further proceedings to resolve the disputed facts on the number of households; ignored prior precedent; and failed to address all issues raised.

Attached are lists of the 49 municipalities showing the number of Cablevision subscribers in the impacted communities and the claim of DBS penetration in each community by Cablevision.

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The Division of the Ratepayer Advocate is an independent state agency that represents the interests of utility consumers and serves as an active participant in every case where New Jersey utilities seek changes in their rates or services. The Ratepayer Advocate also gives consumers a voice in setting long-range energy, water, and telecommunications policy that will affect the delivery of utility services well into the future.

Additional information on this and other matters can be found at the Division of Ratepayer Advocate’s website at http://www.rpa.state.nj.us

The New Jersey Board of Public Utilities (NJBPU) is a state agency and regulatory authority mandated to ensure safe, adequate, and proper utility services at reasonable rates for New Jersey customers. Critical services regulated by the NJBPU include natural gas, electricity, water, wastewater, telecommunications and cable television. The Board has general oversight responsibility for monitoring utility service, responding to consumer complaints, and investigating utility accidents.

Additional information on this and other matters can be found at the Board of Public Utilities website at http://www.bpu.state.nj.us

Joint Application for Review by the FCC Filed by New Jersey Division of the Ratepayer Advocate and New Jersey Board of Public Utilities. Tuesday, May 18, 2004

I/M/O Cablevision of Raritan Valley, Inc. CSR 6108-E
Cablevision of New Jersey CSR 6169-E
Cablevision of Monmouth CSR 6176-E
Petitions for Determination of Effective Competition May14, 2004

Number of Cablevision subscribers in the 49 municipalities.This is Board of Public Utilities data

Cablevision claims is market penetration by satellite TV.

Cablevision Subscribers and Basic Service Tier charges