FOR FCC RECORD ONLY $//Viacom Cable, Marin County, CA, MO&O, DA 94-1516//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 94-1516 In the Matter of ) ) CUID Nos. CA0050, CA0051, CA0052, Viacom Cable ) CA0054, CA0166, CA0168 ) CA0352, CA0355, CA0361 Marin County, California ) CA0362, CA0363, CA0527 ) Benchmark Filing to Support ) Cable Programming Service Price ) Memorandum Opinion and Order Adopted: December 20, 1994 Released: December 21, 1994 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the price Viacom Cable ("Viacom") was charging for its cable programming service ("CPS") tier in the Marin County, California, communities designated by the CUID numbers referenced above. Viacom has chosen to attempt to justify its price through a benchmark showing on FCC Form 393. This order addresses the reasonableness of Viacom's price only through May 14, 1994. At a later date we will issue a separate order addressing the reasonableness of the price after that date. 2. Under the Cable Television Consumer Protection and Competition Act of 1992, and our rules implementing it, 47 C.F.R. Part 76, Subpart N, the Commission must review CPS prices upon the filing of a valid complaint. The filing of a valid complaint triggers an obligation on behalf of the cable operator to file a justification of its CPS prices. Under our rules, an operator may attempt to justify its prices through either a benchmark showing or a cost-of-service showing. In either case, the operator has the burden of demonstrating that its CPS prices are not unreasonable. 3. The Commission's original rate regulations took effect on September 1, 1993. The Commission subsequently revised its rate regulations effective May 15, 1994. Operators with valid CPS complaints filed against them prior to May 15, 1994 must demonstrate that their CPS prices were in compliance with the Commission's initial rules from the time the complaint was filed through May 14, 1994, and that their prices were in compliance with the revised rules from May 15, 1994 forward. Operators attempting to justify their prices for the period prior to May 15, 1994 through a benchmark showing must complete and file FCC Form 393. Generally, to justify their prices for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form 1200 series. Procedural Matters 4. The first valid CPS complaints in the franchise areas addressed in this Order were completed and served on Viacom and received by the Commission on the dates set forth in Appendix A. 5. Viacom filed an amended FCC Form 393 covering all of the franchise areas addressed in this Order with the Commission on June 27, 1994 in response to a Cable Services Bureau Order citing common deficiencies observed in benchmark filings generally. Discussion 6. Viacom asserts that its monthly CPS tier price of $10.39 per subscriber is justified by its benchmark filing because its price is equal to the maximum permitted charge of $10.39 as calculated in the filing. However, upon review we have determined that Viacom has not correctly calculated its maximum permitted price, and it is therefore appropriate to make the following adjustment to Viacom's calculations in Form 393: a. In its amended filing of June 27, 1994, Viacom states that it calculated the Inflation Adjustment Factor (Form 393, Part II, Worksheet 1, Line 127, and Form 393, Part II, Worksheet 4, Line 401) using data it relied on when it set its $10.39 CPS price. If Viacom had done so correctly (i.e., if it had completed Form 393 with accurate data, including the most recent inflation data available as of the time it set its price), and if based on this data Form 393 indicated that its prices were reasonable, then Viacom would have successfully justified its prices under paragraph 94 of the Third Order on Reconsideration. However, the figures Viacom used are not consistent with data on which it should have relied in setting its CPS price. Specifically, Viacom used data released by the U.S. Department. Department of Commerce on August 31, 1993, to complete Lines 122 and 125, but used earlier data to calculate the Inflation Factor on Line 123. Furthermore, Viacom claimed an Adjustment Time Period extending through October 1993 (Line 124), which is inconsistent with an attempt to justify rates based on August 1993 data. Viacom's calculation of the Inflation Adjustment Factor is thus incorrect. We must therefore recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date as of which Viacom filed. On its amended Form 393, Viacom entered 13 months on Line 124, indicating that its filing was as of the end of October 1993. On July 29, 1994, the Department of Commerce released corrected inflation data including Gross National Product Price Index (GNP-PI ) figures of 122.3 for the third quarter of 1992 and 125.7 for the third quarter of 1993. Using these GNP-PI figures, we calculate an Inflation Adjustment Factor through October 1993, the base date Viacom used in justifying its rates, of 1.030. 7. Because of this error, we conclude that Viacom has failed to demonstrate that its price for the CPS tier was not unreasonable. We will therefore set a price for this tier, incorporating the adjustment discussed above. This adjustment has the effect of reducing the maximum permitted monthly CPS tier price from $10.39 (as Viacom calculated) to $10.22. Conclusions 8. Upon review of the record herein, we conclude that Viacom's showing supports a maximum reasonable CPS tier price of $10.22 per month (plus franchise fee) for the period from the filing of the earliest complaint in each franchise area (as set forth on Appendix A) to May 14, 1994. We further determine that we will order appropriate refunds pursuant to Section 76.957 of the Commission's Rules, 47 C.F.R.  76.957, in order to reimburse subscribers for the amount they paid in excess of a reasonable price. 9. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaints referred to in Appendix A against the cable programming service price charged by Viacom Cable in Fairfax, California, CUID No. CA0050; Mill Valley, California, CUID No. CA0051; San Anselmo, California, CUID No. CA0052; Tiburon, California, CUID No. CA0054; Sausalito, California, CUID No. CA0166; South Sausalito, California, CUID 0168; Corte Madera, California, CUID No. CA0352; Larkspur, California, CUID No. CA0355; Ross, California, CUID No. CA0361; San Rafael, California, CUID No. CA0362; Marin County, California, CUID No. CA0363; and Belvedere, California, CUID No. CA0527 and all other complaints in these franchise areas related to the same price ARE GRANTED TO THE EXTENT INDICATED HEREIN. 10. IT IS FURTHER ORDERED, that the benchmark filing submitted by Viacom Cable with respect to Fairfax, California, CUID No. CA0050; Mill Valley, California, CUID No. CA0051; San Anselmo, California, CUID No. CA0052; Tiburon, California, CUID No. CA0054; Sausalito, California, CUID No. CA0166; South Sausalito, California, CUID CA0168; Corte Madera, California, CUID No. CA0352; Larkspur, California, CUID No. CA0355; Ross, California, CUID No. CA0361; San Rafael, California, CUID No. CA0362; Marin County, California, CUID No. CA0363; and Belvedere, California, CUID No. CA0527, for the period beginning with the filing of the first valid complaint in each franchise area and ending on May 14, 1994, as set forth on Appendix A, justifies a maximum price of $10.22 (plus franchise fee) for Viacom Cable's cable programming service tier. 11. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Viacom Cable shall refund to subscribers that portion of the amounts paid for cable programming service for the period from the filing of the first valid complaint in each franchise area (as set forth on Appendix A) to May 14, 1994 which exceeded $10.22 (plus franchise fee) per month and was thus unreasonable, plus interest to the date of the refund. 12. IT IS FURTHER ORDERED, that Viacom Cable shall promptly determine the overcharges to CPS subscribers for the stated periods, and shall within 30 days of the release of this Order file a report with the Chief, Cable Services Bureau, stating the cumulative refund amount so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 30 days of Commission approval thereof. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau Appendix A CUID No. Date First Complaint Date Complaint Filed with FCC Served 0050 11/19/93 10/28/93 0051 11/26/93 11/19/93 0052 11/29/93 11/19/93 0054 11/15/93 10/29/93 0166 11/15/93 10/27/93 0168 4/14/94 2/25/94 0352 11/19/93 11/13/93 0355 11/22/93 11/15/93 0361 12/13/93 12/6/93 0362 11/29/93 11/17/93 0363 12/10/93 11/5/93 0527 11/17/93 11/5/93