FOR FCC RECORD ONLY $//Century Southwest Cable Television, Beverly Hills, CA, MO&O, DA-95-314//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-314 In the matter of ) ) Century Southwest Cable Television ) Beverly Hills, California ) CUID No. CA0457 ) Benchmark Filing To Support ) Cable Programming Service Prices ) Memorandum Opinion and Order Adopted: March 6, 1995 Released: March 7, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the prices Century Southwest Cable Television ("Century") was charging for its cable programming service ("CPS") tiers in Beverly Hills, California, CUID No. CA0457. Century has chosen to attempt to justify its prices through a benchmark showing on FCC Form 393. This Order addresses the reasonableness of Century's prices only through May 14, 1994. At a later time we will issue a separate order addressing the reasonableness of the prices 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 complete and timely complaint was served on Century on September 1, 1993. The Commission received the complaint on September 2, 1993. In response to the complaint, Century filed an FCC Form 393 on November 16, 1993. 5. Century states that it restructured its service offerings on September 1, 1993. In addition to its basic service tier and a seven-channel CPS tier called the Satellite Tier, Century began offering twelve channels on an individual, or a la carte, basis. These a la carte channels could also be purchased collectively as one twelve-channel package (Century Select 12) or in two packages of six channels each (Century Select 6A and 6B). This restructuring was addressed in our letter of inquiry ("LOI") order released on December 22, 1994, in which we resolved the regulatory status of a la carte packages offered by Century in Beverly Hills and Los Angeles, California. In the LOI order, we found that the retiering in Beverly Hills and Los Angeles constituted an evasion of rate regulation. We concluded that Century's a la carte packages must be treated as rate-regulated cable programming service tiers and that the channels composing them must be counted as rate-regulated channels as of September 1, 1993, for purposes of completing the rate justification forms. Based upon this decision, and in response to our December 29, 1994 Public Notice, Century filed an updated FCC Form 393 for Beverly Hills on February 7, 1995, in which it treated the twelve-channel package of a la carte channels as a CPS tier. 6. On January 23, 1995, Century filed an Application for Review which argued that the Commission should reverse the Bureau's LOI decision regarding the treatment of its a la carte packages. Century then filed a motion on January 26, 1995 requesting the Bureau to defer action on the complaints pending against its CPS rates in Beverly Hills and Los Angeles until the Commission rules on the Application for Review. Discussion 7. In its amended benchmark filing of February 7, 1995, Century calculated a maximum permitted rate for the seven-channel Satellite Tier of $3.55 per month (plus franchise fee) and a maximum permitted rate for the Century Select 12 tier of $6.08 per month (plus franchise fee). Century did not, however, attempt to justify its monthly price of $4.00 for the Century Select 6A and 6B tiers. Upon review, we have determined that Century has not correctly calculated its maximum permitted per-channel rate, and it is therefore appropriate to make the following adjustments to Century's calculations in Form 393: a. According to a supplemental schedule attached to its Form 393, Century's benchmark calculation for its regulated offerings as of September 1, 1993 (Form 393, Part II, Worksheet 1, Line 121) was based upon 61 regulated channels and 35 satellite channels. The channel line-up card effective September 1, 1993 assigns station KDOC to both channels 29 and 56. Because subscribers receive only one programming service over channels 29 and 56, Century cannot charge subscribers for these channels as separate units of cable service. Accordingly, we reduced the total number of rate-regulated channels from 61 to 60. Century did not identify on the channel line-up card which of the regulated channels were delivered by satellite. Based upon our count, we found that there were 34 satellite channels instead of 35. This adjustment increases the benchmark channel rate entered on Line 121 of Worksheet 1. b. Similarly, Century's benchmark calculation for its regulated offerings as of September 30, 1992 (Form 393, Part II, Worksheet 2, Line 220) is based upon 53 regulated channels and 35 satellite channels. We were able to verify the 53 regulated channels used for the benchmark calculation, but we were unable to verify Century's count of 35 satellite channels. Based upon our count, we reduced the number of satellite channels from 35 to 34. This adjustment reduces the benchmark channel rate entered on Line 220 of Worksheet 2. 8. These adjustments have the cumulative effect of increasing the maximum permitted monthly price for the Century Select 12 tier to $6.18 per month (plus franchise fee). Century's actual monthly charge for the Century Select 12 tier was $6.00 (plus franchise fee). Therefore, Century has demonstrated that the actual charge for this twelve- channel tier was at or below the maximum permitted rate. 9. The same adjustments result in a maximum permitted rate for the seven-channel Satellite Tier of $3.61 per month (plus franchise fee) and a maximum permitted rate for the Century Select 6A and 6B tiers of $3.09 per month (plus franchise fee). Century's actual monthly charge for the seven-channel Satellite Tier was $3.82 (plus franchise fee). The actual monthly charge for the Century Select 6A and 6B tiers was $4.00 (plus franchise fee). Thus, Century has failed to demonstrate that its actual charges for the seven-channel Satellite Tier and for the Century Select 6A and 6B tiers were at or below the maximum permitted rates. 10. Depending upon the amount of allowable offsets, refunds may be owed to compensate subscribers for the overcharges described above. However, since the Commission's resolution of the issues pending in Century's Application for Review could require revisions to our analysis, we will stay the effective date of this Order in response to Century's motion until the Commission has issued its decision in that proceeding. Since interest charges on any required refunds will continue to accrue during the period of this stay, Century's subscribers in Beverly Hills will not be adversely affected. Conclusions 11. Upon review of the record herein, we conclude that, for the period from September 2, 1993, to May 14, 1994, Century's showing supports maximum reasonable CPS tier prices of $3.61 per month (plus franchise fee) for the seven-channel Satellite Tier, $6.18 per month (plus franchise fee) for the Century Select 12 tier, and $3.09 per month (plus franchise fee) for the Century Select 6A and 6B tiers. 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 amounts they paid in excess of a reasonable price for the CPS tiers. 12. We further conclude that Century must file an FCC Form 1200 rate filing for the period after May 14, 1994 which reflects the fact that Century's prices during the earlier period were unreasonable. We reserve the right to make further adjustments to Century's prices for the period after May 14, 1994, upon completion of our review of Century's rate justification for that period. 13. We futher conclude that Century has submitted in good faith a timely optional supplemental filing in response to our December 29, 1994 Public Notice. As provided in the Public Notice, we will relieve Century of its obligation to obtain advance Commission approval of adjustments to its CPS prices for one year following the release of this Order. 14. We further conclude that the effective date of this Order will be stayed until the Commission releases a decision on Century's Application for Review of the Bureau's LOI decision regarding the treatment of Century's a la carte packages in Beverly Hills and Los Angeles. 15. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the September 1, 1993 complaint against the cable programming service prices charged by Century Southwest Cable Television in Beverly Hills, California, CUID No. CA0457, and all other complaints relating to the same prices, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 16. IT IS FURTHER ORDERED that the benchmark filing submitted by Century Southwest Cable Television with respect to Beverly Hills, California, CUID No. CA0457, for the period of September 2, 1993 to May 14, 1994, justifies maximum prices of $3.61 per month (plus franchise fee) for the seven-channel Satellite Tier, $6.18 per month (plus franchise fee) for the Century Select 12 tier, and $3.09 per month (plus franchise fee) for the Century Select 6A and 6B tiers. 17. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Century Southwest Cable Television shall refund to subscribers for the period September 2, 1993 to May 14, 1994, that portion of the amounts paid for cable programming service that exceeded $3.61 per month (plus franchise fee) for the seven-channel Satellite Tier and $3.09 per month (plus franchise fee) for the Century Select 6A and 6B tiers and were thus unreasonable, offset by the amounts paid by subscribers during the same period for the Century Select 12 tier which were less than the maximum permitted price, plus interest to the date of the refund. 18. IT IS FURTHER ORDERED that Century Southwest Cable Television shall determine the overcharges to CPS subscribers for the stated period, and shall within 30 days of the effective date 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 60 days of Commission approval thereof. 19. IT IS FURTHER ORDERED, pursuant to Section 76.960 of the Commission's Rules, 47 C.F.R.  76.960, that Century Southwest Cable Television shall not be required to obtain advance Commission approval of adjustments to its CPS prices for one year following the release of this Order. 20. IT IS FURTHER ORDERED that Century Southwest Cable Television's motion to defer action on the complaints against its cable programming service prices in Beverly Hills, California, CUID No. CA0457, is resolved as indicated herein. 21. IT IS FURTHER ORDERED that the effective date of this Order will be stayed until the Commission releases a decision on Century Southwest Cable Television's Application for Review of the Bureau's LOI decision regarding the treatment of its a la carte packages in Beverly Hills and Los Angeles. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau