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- 2 - <br />Section 623,b) of the Cable Act which directed it to <br />issue regulations defining the circumstances in which <br />a cable system's rates can be regulated by a franchising <br />authority (i.e., where a cable system is not subject <br />to effective competition) and to establish standards <br />for such rate regulation. <br />The FCC defined "basic cable service" as "the <br />tier of service regularly provided to all subscribers <br />that includes the retransmission of all must -carry <br />broadcast television signals as defined in <br />Sections 76.55 - 76.61 of the rules, for, in the absence <br />of at least three must -carry signals, any unaltered <br />broadcast television signals( and the public, educational <br />and governmental channels, if required by a franchising <br />authority under Section 611 of the (Cable) Act." 58 <br />R.R.2d at 32-33. <br />It determined that "effective competition" exists <br />where three or more off -the -air broadcast signals are <br />available; that is, where they place a predicted Grade B <br />contour over any portion of the cable community or are <br />significantly viewed within the cable community. 58 <br />R.R. 2d at 24-29. <br />The FCC also provided a one-year exemption frog. <br />rate regulation to cable operators previously found <br />to be subject to effective competition, but later <br />determined not to be, due to changed circumstances in <br />the cable system community. 58 k.R.2d at 29. <br />Finally, the FCC allowed cable systems to pass <br />through to subscribers any - •dily identifiable increase <br />(or decrease) .n =oot which it entirely attributable <br />to the provision of basic service. These rate increases <br />may be applied automatically without franchising authority <br />approval, and may be taken in addition to the 5% automatic <br />annual increase to which most systems are entitled. <br />58 R.R.2d at 35. No reason other than "avoidance of <br />pZo forma administrative proceedings" was articulated <br />for this action. <br />In light of the decision in Quincy Cable TV <br />Inc. v. FCC, 768 F.2d 1434 (D.C. Cir. 1985), discussed <br />bilow, the FCC reopened the period for filing comments i on the definition of basic =r`le service. Order Reopening the Period for Filing Comments, MM Docket No. 84-1296 <br />(released September 10, 1985). In the comments filed, <br />the parties have also challenged the FCC's definition <br />of effective competition. As of April 4, 1986, a draft <br />