FOR FCC RECORD ONLY $//Greater Media Cablevision of Champaign - Urbana, Illinois, MO&O, DA-95-290//$ $/76.922 Rates for Cable Programming Service tier/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-290 In the matter of ) ) Time Warner Cable ) CUID Nos. IL0189 and IL0190 Champaign-Urbana, Illinois ) ) Benchmark Filing To Support ) Cable Programming Service Price ) Memorandum Opinion and Order Adopted: February 21, 1995 Released: February 23, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the price Time Warner Cable of Champaign- Urbana, Illinois ("Time Warner") was charging for its cable programming service ("CPS") tier in Champaign, Illinois, CUID No. IL0189 and Urbana, Illinois, CUID No. IL0190. Time Warner has chosen to attempt to justify its price through a benchmark showing on FCC Form 393. This order addresses the reasonableness of Time Warner's price only through May 14, 1994. At a later time 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 complaint for the City of Champaign, CUID No. IL0189, was served on Time Warner on December 10, 1993. The first valid CPS complaint for the City of Urbana, CUID No. IL0190, was served on Time Warner on November 19, 1993. The Commission received the complaints on December 15, 1993 for CUID No. IL0189 and on November 22, 1993 for CUID No. IL0190. 5. Time Warner filed substantially identical Form 393s on December 21, 1993 for CUID No. IL0189 and on December 6, 1993 for CUID No. IL0190. Time Warner amended its justification for CUID No. IL0189 on June 22, 1994, in response to a Cable Services Bureau Order citing common deficiencies observed in benchmark filings generally. Discussion 6. Time Warner claims that its monthly CPS tier price of $12.25 per subscriber is justified by its benchmark filings, which show a maximum permitted charge of $12.27. However, upon review we have determined that Time Warner has not correctly calculated its maximum permitted price, and it is appropriate to make the following adjustments to Time Warner's calculations in the Form 393s: a. In its most recent Form 393 filings, Time Warner calculated the Inflation Adjustment Factor (Line 127, Worksheet 1, Part II) as of the end of September 1993. However, the figures Time Warner used are not consistent with data on which it should have relied in calculating the Inflation Adjustment Factor. Time Warner used the Gross National Product Price Index ("GNP-PI") data released by the U.S. Department of Commerce on August 31, 1993 to complete Lines 122 and 125, but used an outdated GNP-PI of 121.8 for the third quarter of 1992 in calculating Line 123. The GNP-PI figure for the third quarter of 1992 released on August 31, 1993 was 122.5. Time Warner's calculation of the Inflation Adjustment Factor is thus incorrect. b. We must therefore recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date for which Time Warner filed. On July 29, 1994, the U.S. Department of Commerce released corrected inflation data including 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 1.028 as the Inflation Adjustment Factor through September 1993, the base date Time Warner used in justifying its rates. 7. This adjustment has the effect of reducing the maximum permitted monthly price for the CPS tier from $12.25 to $12.11. Conclusions 8. Upon review of the record herein, we conclude that Time Warner's showing supports a maximum reasonable CPS tier price of $12.11 per month (plus franchise fee) for the period of December 15, 1993 to May 14, 1994 for CUID No. IL0189 and for the period of November 22, 1993 to May 14, 1994 for CUID No. IL0190. 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. We further conclude that Time Warner must reflect in its Form 1200 rate filing for the period after May 14, 1994 the fact that Time Warner's prices during the earlier period were unreasonable. We reserve the right to make further adjustments to Time Warner's prices for the period after May 14, 1994, upon completion of our review of Time Warner's FCC Form 1200 rate filing. 10. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the December 15, 1993 complaint against the cable programming service price charged by Time Warner Cable in Champaign, Illinois, CUID No. IL0189, and the November 22, 1993 complaint against the cable programming service price charged by Time Warner in Urbana, Illinois, CUID No. IL0190, and all other complaints in those franchise areas relating to the same price, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 11. IT IS FURTHER ORDERED that the benchmark filings submitted by Time Warner Cable with respect to the City of Champaign, Illinois, CUID No. IL0189, for the period of December 15, 1993 to May 14, 1994, and with respect to the City of Urbana, Illinois, CUID No. IL0190, for the period of November 22, 1993 to May 14, 1994 justify a maximum price of $12.11 per month (plus franchise fee) for Time Warner Cable's cable programming service tier. 12. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Time Warner Cable shall refund to subscribers that portion of the amounts paid for cable programming service from December 15, 1993 to May 14, 1994 for the City of Champaign, Illinois, CUID No. IL0189, and from November 22, 1993 to May 14, 1994, for the City of Urbana, Illinois, CUID No. IL0190, that exceeded $12.11 per month (plus franchise fee), and was thus unreasonable, plus interest to the date of the refund. 13. IT IS FURTHER ORDERED that Time Warner 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 refunds within 60 days of Commission approval thereof. 14. IT IS FURTHER ORDERED, pursuant to Section 76.922(b)(4)(C) of the Commission's rules, 47 C.F.R.  76.922(b)(4)(C), that Time Warner Cable shall, within 30 days of the release of this Order, revise its Form 1200 filings with respect to Champaign, Illinois, CUID No. IL0189, and with respect to Urbana, Illinois, CUID No. IL0190, for the period beginning May 15, 1994, to reduce the monthly charge per tier as of March 31, 1994 for Tier 2 (Line A6b) to equal the maximum price for those franchise areas (plus franchise fee). 15. IT IS FURTHER ORDERED that Time Warner Cable shall place into effect, within 30 days after its submission of the revised Form 1200 filings required above, a CPS tier price for Champaign, Illinois, CUID No. IL0189, and for the City of Urbana, Illinois, CUID No. IL0190, that reflects the reduction in the CPS rate determined in this Order. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau