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A. a.(1)(a) i) a)Documentg2$& e$%%PleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:1 X-  X01Í ÍX 1Í Í#XP\  P6Q+XP# FOR RECORD ONLY  qpp  )xxX $//MO&O, 34 Cable Operators, DA 95252//$ $/76.1090 Temporary Freeze of Cable Rates/$  X-$/Letters of Inquiry/$ hhCqpp  )xxX   X- +fBefore the [ FEDERAL COMMUNICATIONS COMMISSION  Xv-6Washington, D.C. 20554  XH-` `  hhCqpp DA 95252  X1-In the Matter of: hhC)q  X -` `  hhC)q  X -CTEC Cable Systems, et al.hhC) qLOI931; LOI932; LOI934;  X -` `  hhC)qLOI935; LOI936; LOI937; LOI938;  X -` `  hhC)qLOI9311; LOI9312; LOI9313; LOI9314;  X -Letters of Inquiry hhC)qLOI9315; LOI9316; LOI9317; LOI9318;  X -` `  hhC)qLOI9319; LOI9321; LOI9322; LOI9323;  X-` `  hhC)qLOI9324; LOI9325; LOI9326; LOI9327;  Xy-` `  hhC)qLOI9328; LOI9329; LOI942; LOI943;  Xb-` `  hhC)qLOI944; LOI946; LOI947; LOI948;  XK-` `  hhC)qLOI949; LOI9410; LOI9411 ` `  X-  MEMORANDUM OPINION AND ORDER ă  X- Adopted : February 16, 1995hhCq Released : February 17, 1995 By the Chief, Cable Services Bureau:  X7-  X -I.Introduction  X-1.` ` The Commission received letters and complaints from several cities and subscribers alleging that cable operators violated the Commission's temporary freeze of  X -regulated cable service rates.c K X=#-ԍSee Implementation of Sections of the Cable Television Consumer Protection and  X($-Competition Act of 1992: Rate Regulation, MM Docket 92266, Order, 8 FCC Rcd 2921  X%-(1993) ("Rate Freeze Order"), clarified, 8 FCC Rcd 2917, 58 FR 21929 (April 26, 1993);  X%-extended, FCC 93304 (released June 15, 1993), 58 FR 33560 (June 18, 1993) ("Deferral  X&-Order"), Erratum, 8 FCC Rcd 4511 (1993); extended, FCC 93494 (released November 10,"&0*((&"  X-1993), 58 FR 60141 (November 15, 1993) ("November 10 Extension Order"); extended, 9  X{-FCC Rcd 1299, 59 FR 6901 (February 14, 1994) ("February 8 Extension Order"). Generally, these orders required operators to freeze the average amount of revenues received per subscriber for regulated cable services at the level in effect on April 5, 1993. The freeze was effectuated by requiring that the average monthly subscriber bill for services subject to rate regulation may not increase above the average monthly subscriber bill in effect on April 5, 1993. 8 FCC Rcd 29212922.  In response to these letters and complaints, the Commission" 0*(("  X-issued letters of inquiry to a number of cable operators.>K X -ԍ See Appendix. LOI931 addressed complaints received by the Commission regarding 16 Michigan communities. In an order released December 30, 1994, the inquiry initiated by LOI931 was terminated with regard to 14 of those communities (Wayland Township, City of Grayling, City of Grand Haven, City of Greenville, Caledonia Charter Township, Village of Spring Lake, Village of Pentwater, City of Stanton, City of Hudsonville, Robinson Township, City of  X-Rockford, Cannon Township, City of Cadillac, and Grand Haven Charter Township). CTEC  X-Cable Systems, McBain, Michigan and Zeeland Charter Township, Michigan, LOI931 (released December 30, 1994). This order therefore addresses CTEC's actions only in the remaining two communities covered by LOI931, McBain and Zeeland Charter Township, Michigan. LOI939, Coldwater Cablevision, Inc., City of Coldwater Michigan and LOI9310, Mercom, Inc., City of Plainwell, Michigan also requested information concerning compliance  XQ-with the Rate Freeze Order. By letters dated December 20, 1994, the Commission terminated  X<-the inquiries initiated by LOI939 and LOI9310. See Letter from Meredith J. Jones, Chief, Cable Services Bureau, FCC, to Gardner F. Gillespie, DA 941543 (December 20, 1994) (LOI939); Letter from Meredith J. Jones, Chief, Cable Services Bureau, FCC, to Gardner F. Gillespie, DA 941544 (December 20, 1994) (LOI9310). The LOI's asked the cable operators to provide information concerning, among other issues, their compliance with the  X-Commission's Rate Freeze Order.?K X|-ԍMany of the LOI's also requested information concerning other issues, including, inter  Xg-alia, negative option billing, and the regulatory status of a la carte packages. This order addresses only the rate freeze issue. The Bureau previously has released orders resolving  X;!-issues concerning the regulatory status of a la carte packages, see, e.g., Warner Cable  X&"-Communications, Milwaukee, Wisconsin, LOI9314, DA 941276 (released November 18,  X#-1994), and has issued orders on negative option billing issues in two cases, Warner Cable  X#-Communications, Milwaukee, Wisconsin, LOI9314, DA 9560 (released January 20, 1995)  X$-and Comcast Cablevision, Tallahassee, Florida, LOI932, DA 9561 (released January 20, 1995).  X- "$0*(("  X-II.Background   X- 2.` ` In the Rate Freeze Order, the Commission ordered that rates of cable services subject to regulation under the Cable Television Consumer Protection and Competition Act of  X-1992\K X-ԍPub. L. No. 102385, 106 Stat. 1460 (1992).\ ("1992 Cable Act") be frozen as of April 5, 1993. The Rate Freeze Order sought to ensure that, pending implementation of cable service rate regulation, cable operators not  Xz-continue to raise rates, "effectively undermining the statutory purpose of reasonable rates."\zyK X -ԍRate Freeze Order, 8 FCC Rcd at 2921.\ The rate freeze afforded local franchising authorities an opportunity to become certified to regulate the basic service tier and allowed consumers to become familiar with and to exercise  X5-their rights to invoke Commission oversight of cable programming service tiers.5,K X-ԍRate Freeze Order, 8 FCC Rcd at 291122. See also Clarification Order, 8 FCC Rcd at 2918. The freeze was extended until May 15, 1994 in order to provide franchising authorities and other affected parties sufficient time to become familiar with pending modifications to the Commission's  X -rate regulations before the freeze was lifted.e K Xi-ԍFebruary 8 Extension Order, 9 FCC Rcd at 1300.e  X -3.` ` The Rate Freeze Order required that the average monthly subscriber bill for cable services subject to rate regulation under the 1992 Cable Act could not increase above the level determined under rates in effect on April 5, 1993. The freeze did not preclude cable operators from adding subscribers, programming offerings, equipment or other services as  Xh-long as the average monthly subscriber bill was maintained during the freeze period._h{K X-ԍRate Freeze Order, 8 FCC Rcd at 292122._ In addition, the freeze did not preclude cable operators from "increas[ing] the charge for a tier or provision of equipment as long as the average monthly subscriber bill [did] not increase"  X#-during the freeze period.N #. K X-ԍId., 8 FCC Rcd at 2922.N The freeze thus permitted operators to make reasonable changes in the structures of their tiers of service in response to the Commission's rate regulations while  X-still protecting consumers from overall rate increases.:  K X"-ԍId.: In particular, the freeze was "intended to permit changes in individual rate components while constraining increases in overall rate  X-levels."^  K X &-ԍClarification Order, 8 FCC Rcd at 2918.^ "G 0*(("Ԍ X- III.xDiscussion  X-x4.` ` The letters of inquiry requested operators to complete a rate freeze computation form to determine whether the operator's average monthly subscriber bill for regulated cable services increased above the average monthly subscriber bill for regulated cable services determined under rates in effect on April 5, 1993. The rate freeze computation form requested information concerning operators' services and rates as of April 5, 1993 and for the first full monthly billing cycle after they made changes in rates or restructured their rates.  X1-x5.` ` With the exception of CTEC Cable Systems ("CTEC") and Century Southwest Cable TV ("Century Southwest"), based upon our review of the responses to our letters of inquiry and the rate freeze computation forms of the operators listed in the attached  X -Appendix, we cannot conclude that violations of the Rate Freeze Order occurred. In particular, the evidence presented in the cable operators' responses to our letters of inquiry and in the rate freeze computation forms does not permit us to conclude that the average monthly subscriber bill for regulated cable services for any of these operators increased above the average monthly subscriber bill for regulated cable services determined under rates in effect on April 5, 1993. In this regard it should be noted that while operators may have increased prices for some regulated cable services and equipment, such increases do not violate the rate freeze as long as the average monthly subscriber bill for regulated cable services did not increase above the average monthly subscriber bill for regulated cable  X-services in effect on April 5, 1993.P K X-ԍxSee para. 3, supra.P  X-x6.` ` Based upon our review of the responses to our letters of inquiry and rate freeze computation forms submitted by CTEC and Century Southwest, it appears that CTEC and Century Southwest may have been in violation of the rate freeze from the date they restructured their service offerings, September 1, 1993, until either May 15, 1994 or the  X-date on which their basic service tiers became subject to regulation, whichever is earlier.u |{K X-ԍxThe freeze ended May 15, 1994 or the date on which an operator's basic service tiers  X-became subject to regulation. See February 8 Extension Order, 9 FCC Rcd at 1300;  X-November 10 Extension Order, 58 FR at 6014243. In the November 10 Extension Order the Commission stated that the freeze would no longer apply to regulated cable services provided by cable operators whose basic cable service had become subject to rate regulation by a local  XR!-franchising authority or the Commission. Id. at n.12.u In particular, the rate freeze computation forms show that for CTEC's Zeeland Charter  Xg-Township systemsgK X$-ԍxCTEC serves Zeeland Charter Township from two systems, Blendon/Hudsonville and Holland. CTEC's rate freeze computation form for Zeeland Charter Township appears to include data from both systems. and Century Southwest's Beverly Hills system, the average monthly subscriber bill for regulated cable services as of the first full monthly billing cycle after"PB 0*((" changes in rates or restructuring occurred increased above the average monthly subscriber bill for regulated cable services determined under rates in effect on April 5, 1993. In calculating the average monthly subscriber bill as of the first full monthly billing cycle after restructuring occurred, we included revenues from CTEC's and Century Southwest's collective or package offerings of certain individually offered ("a la carte") channels. These a la carte packges were  X-the subject of our orders in CTEC Cable Systems, McBain and Zeeland Charter Township,  Xx-Michigan, LOI931, DA 941622 (Cab. Serv. Bur., released Dec. 30, 1994) and Century  Xc-Southwest Cable TV, Beverly Hills and Los Angeles, California, LOI9317, DA 941553 (Cab. Serv. Bur., released Dec. 22, 1993). In those orders, we found that a la carte package offerings of both CTEC and Century Southwest must be treated as rate regulated as of  X -September 1, 1993.D K X -ԍxCTEC's a la carte offering on its Zeeland Charter Township systems at issue in our  X -CTEC Cable Systems order and included in our computation of revenues from rateregulated  Xm -service offerings for purposes of determining compliance with the Rate Freeze Order is comprised of the following channels: Nickelodeon, The Discovery Channel, Turner Network Television, The Nashville Network, Cable News Network, Arts & Entertainment, Headline News, Music TV, USA Network, Lifetime, Comedy Central, The Weather Channel, PASS/Country Music TV, American Movie Classics, VH1, ESPN, and CNBC (Arts & Entertainment was not offered on CTEC's Holland system in Zeeland Charter Township).  X-Century Southwest's a la carte offering on its Beverly Hills system at issue in our Century  X-Southwest Cable TV order and included in our computation of revenues from rateregulated  X-services offerings purposes of determining compliance with the Rate Freeze Order is comprised of the following channels: Turner Network Television, Cable News Network, Turner Broadcast Systems, American Movie Classics, Bravo, The Discovery Channel, Galavision, CNBC, WOR, VH1, Arts & Entertainment, and Headline News.D  X -x7.` ` When the revenues from CTEC's and Century Southwest's a la carte offerings are included in the calculation of revenues from regulated service offerings, CTEC's rate freeze computation form shows that on its Zeeland Charter Township systems, the average monthly subscriber bill for regulated services as of April 5, 1993 was $21.98 and the average monthly subscriber bill for regulated services as of October 31, 1993 was $22.84, and Century Southwest's rate freeze computation form shows that on its Beverly Hills system, the average monthly subscriber bill for regulated services as of April 5, 1993 was $33.85 and the average monthly subscriber bill for regulated services as of October 31, 1993 was $35.02.  X#-x8.` ` As indicated above, the evidence with respect to CTEC and Century Southwest shows a violation of the rate freeze when revenues from their a la carte packages are included in the computation of revenues from rateregulated service offerings. In our previous letter of inquiry orders we required CTEC and Century Southwest to count as rateregulated channels  X-the channels comprising their a la carte packages going back to September 1, 1993.~XK X&-ԍxCTEC Cable Systems, 34, Century Southwest Cable T V, 27.~ " 0*((" Therefore, these operators are subject to such refund liability as may be required to comply with the rate recalculations reflecting the rateregulated status of these packages required by of our previous letter of inquiry orders. Thus, CTEC and Century Southwest's incorrect exclusion of the a la carte channels from the package of services subject to regulation referenced in the previous letter of inquiry orders and our present conclusion regarding the rate freeze violation relate to essentially the same legal controversy and conduct. Accordingly, we conclude that no further action, beyond that specified in our previous orders  X_-in CTEC Cable Systems and Century Southwest Cable TV is warranted at this time.  XJ- x  X - IV.xOrdering Clauses  X -x9.` ` Accordingly, IT IS ORDERED , that the Commission's letters of inquiry with respect to allegations of rate freeze violations invoving CTEC Cable Systems, McBain and Zeeland Charter Township, Michigan and Century Southwest Cable TV, Beverely Hills and Los Angeles, California are terminated subject to compliance by the systems' operators with  X-our previous orders in CTEC Cable Systems, McBain and Zeeland Charter Township,  X}-Michigan, LOI931, DA 941622 (Cab. Serv. Bur., released Dec. 30, 1993) and Century  Xh-Southwest Cable TV, Beverely Hills and Los Angeles, California, LOI9317, DA 941553 (Cab. Serv. Bur., released Dec. 22, 1994).  X%-x10.` ` IT IS FURTHER ORDERED that the Commission's letters of inquiry with respect to the other allegations of rate freeze violation listed in the attached Appendix are terminated.  X- x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhMeredith J. Jones  X?-x` `  hhChief, Cable Services Bureau "(0*(( "  X-0 APPENDIX ă CTEC Cable Systems, McBain and Zeeland Charter Township, Michigan, LOI931 x(November 17, 1993) Comcast Cablevision, City of Tallahassee, Florida, LOI932 (November 17, 1993) MetroVision, Prince George's County, Maryland, LOI934 (November 17, 1993) Triax Cablevision, LOI935 (November 17, 1993) Cable Satellite of South Miami, Dade County, Florida, LOI936 (November 17, 1993) Meredith Cable, North Suburbs, Minnesota, LOI937 (November 17, 1993) Crown Cable, Walnut, California, LOI938 (November 17, 1993) Cablevision of Raleigh, Raleigh, North Carolina, LOI9311 (November 17, 1993) Cablevision of Boston, LOI9312 (November 17, 1993) US Cable, City of Lake Forest and Village of Lake Bluff, Illinois, LOI9313 x(November 17, 1993) Warner Cable Communications, Milwaukee, Wisconsin, LOI9314 (November 17, 1993) MultiVision Cable TV, Prince George's County, Maryland, LOI9315 (November 17, 1993) Time Warner Cable, Everett, Winthrop, and Somerville, Massachusetts, LOI9316 x(December 13, 1993) Century Southwest Cable TV, Beverly Hills and Los Angeles, California LOI9317 x(December 13, 1993) Century Cable TV, Muncie, Indiana, LOI9318 (December 13, 1993) Comcast Cablevision, Mt. Clemens, Michigan, LOI9319 (December 13, 1993) United Artists Cable, Baltimore, Maryland, LOI9321 (December 13, 1993) Meredith Cable, North Central, Minnesota, LOI9322 (December 13, 1993) Nashoba Cable Services, Danvers, Massachusetts, LOI9323 (December 13, 1993) Vision Cable of North Carolina, Charlotte, North Carolina, LOI9324 (December 13, 1993) Paragon Cable, Irving, Texas, LOI9325 (December 13, 1993) CableVision of Central Florida, LOI9326 (December 13, 1993) St. Louis TeleCommunications, St. Louis, Missouri, LOI9327 (December 13, 1993) TCI Cablevision of Eastern Shore, Ocean City, Maryland, LOI9328 (December 13, 1993) Cablevision, Bedford Heights, Ohio, LOI9329 (December 13, 1993) Falcon Cable TV, Southern Shores, North Carolina, LOI942 (February 22, 1994) Lexander Cablevision, Whigham, Georgia, LOI943 (February 22, 1994) Century Cable TV, Brunswick, Georgia, LOI944 (February 22, 1994) Cablevision of Raleigh, Hillsborough, North Carolina, LOI946 (February 22, 1994) Cablevision Industries, Wake Forest, North Carolina, LOI947 (February 22, 1994) Cablevision of Raleigh, Knightdale, North Carolina, LOI948 (February 22, 1994) Cablevision Industries, Smithfield, North Carolina, LOI949 (February 22, 1994) Cablevision Industries, Morrisville and Hillsborough, North Carolina, LOI9410 x(February 22, 1994) Comcast Cablevision, Sterling Heights, Michigan, LOI9411 (February 22, 1994)