FOR FCC RECORD ONLY $//Meredith Cable, Roseville, MN, MO&O, DA95-319 $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-319 In the Matter of ) ) Meredith Cable Television ) CUID Nos. MN0297, MN0298, MN0299 of North Suburban ) MN0300, MN0301, MN0302 Roseville, Minnesota ) MN0303, MN0304, MN0305 ) and MN0306 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 Meredith Cable Television of North Suburban ("Meredith") was charging for its cable programming service ("CPS") tier in its Roseville, Minnesota system, CUID Nos. MN0297 et al. Meredith has chosen to attempt to justify its price through a benchmark showing on FCC Form 393. This Order addresses the reasonableness of Meredith'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 complete and timely complaint. The filing of a complete and timely 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 complete and timely 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 CPS complaints in the franchise areas addressed in this Order were completed and served on Meredith and received by the Commission on the dates set forth in Appendix A. 5. Meredith filed its first Form 393 for its North Suburban cable system, headquartered in Roseville, Minnesota, CUID Nos. MN0297 through MN0306, on November 15, 1993. A second Form 393 was filed on March 24, 1994. In the cover letter that accompanied the second Form 393 filing, Meredith explained that the second Form 393 ". . . reflects certain information which came to Meredith's attention during the basic rate review process [and] should be associated with all of the Form 329 Complaints filed to date for the communities regulated by the North Suburban Cable Commission." Discussion 6. Meredith asserts that its monthly CPS price of $13.24 per subscriber is justified by its benchmark filing because its price is less than the maximum permitted charge of $13.28, as calculated in it most recent filing, dated March 24, 1994. However, upon review, we have determined that Meredith has not correctly calculated its maximum permitted price, and it is therefore appropriate to make the following adjustments to Meredith's calculations in Form 393: a. In order to properly unbundle equipment and installation costs on Form 393, Part II, Worksheet 3, those costs must be expressed at the level of organization at which Form 393 is filed. Where a cable operator records its equipment and installation costs at a higher level of organization, the Commission's regulations permit the operator to assign these costs pro rata, using a reasonable allocation method such as the number of subscribers in the franchise area as a percentage of the total. In allocating its costs on Form 393, Part III, Step G, Line 33, Meredith used an incorrect subscriber count which yielded an incorrect figure for Monthly Equipment and Installation Cost. Based upon the numbers provided by Meredith, the correct allocation percentage is 22,308 subscribers for the system divided by the total subscriber count of 103,637, which is 21.53% of the total equipment and installation costs. Accordingly, we will correct Meredith's monthly equipment and installation cost on Form 393, Part III, Step G, Line 34 from $53,885 to $54,658. b. Meredith's Form 393, Worksheet 1, Line 104 entry does not represent its current monthly equipment revenue as of the initial date of regulation. Instead of entering its current monthly equipment revenue figure, Meredith entered a figure based on its prior equipment rates. This observation is confirmed by the fact that Meredith's Worksheet 2, Line 204 entry is the same as its Worksheet 1, Line 104 entry. As a result, Meredith's Line 104 entry must be revised to reflect its current monthly equipment revenue. Since Meredith restructured its rates, including its equipment rates, on September 1, 1993 in an attempt to comply with the Commission's regulations, the monthly equipment cost figure it entered on Line 34 of Step G of Part III should have been close or identical to its Line 104 revenue entry. Accordingly, on Line 104 we enter $54,658 instead of $84,872. 7. Because of these errors, we conclude that Meredith 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 adjustments discussed above. In doing so, we must also recalculate the Inflation Adjustment Factor in Form 393, Part II, Worksheet 1. On its amended Form 393 Meredith apparently calculated the Inflation Adjustment Factor using data it relied on when it set its $13.24 CPS price. If based on this data Form 393 indicated that Meredith's prices were reasonable, then Meredith would have successfully justified its prices under paragraph 94 of the Third Order on Reconsideration. However, Meredith has not shown that its prices were reasonable, so we must recalculate the Inflation Adjustment Factor on the basis of the most accurate data available for the date that Meredith timely filed FCC Form 393. On July 29, 1994, the U.S. Department of Commerce released corrected 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 month preceding Meredith's November 15, 1993 filing, of 1.030. 8. These adjustments have the cumulative effect of reducing the maximum permitted monthly CPS tier price from $13.28, as calculated by Meredith, to $13.05. Conclusions 9. Upon review of the record herein, we conclude that Meredith's showing supports a maximum reasonable CPS tier price of $13.05 per month (plus franchise fee) for the period that begins with the date the Commission received the first complete and timely CPS complaint for each franchise area, as listed in Appendix A, to May 14, 1994. 10. We further conclude that Meredith must reflect in its Form 1200 rate filing for the period after May 14, 1994 the fact that Meredith's price during the earlier period was unreasonable. We reserve the right to make further adjustments to Meredith's price for the period after May 14, 1994, upon completion of our review of Meredith's FCC Form 1200 rate filing. 11. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaints referenced in Appendix A against the cable programming service price charged by Meredith Cable Television of North Suburban, headquartered in Roseville, Minnesota, CUID Nos. MN0297 through MN0306, and all other complaints in these franchise areas relating to the same price, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 12. IT IS FURTHER ORDERED that the benchmark filing submitted by Meredith Cable Television of North Suburban, headquartered in Roseville, Minnesota, CUID Nos. MN0297 through MN0306, for the period beginning with the receipt by the Commission of a complete and timely complaint for each franchise area covered by this order (see Appendix A) and ending on May 14, 1994, justifies a maximum price of $13.05 per month (plus franchise fee) for Meredith's cable programming service tier. 13. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Meredith Cable Television of North Suburban shall refund to subscribers that portion of the amounts paid for cable programming service for each franchise area, from the dates the first complaints were received by the Commission as listed in Appendix A to May 14, 1994, that exceeded $13.05 (plus franchise fee) per month and was thus unreasonable, plus interest to the date of the refund. 14. IT IS FURTHER ORDERED that Meredith Cable Television of North Suburban shall promptly determine the overcharges to CPS subscribers for the same period, 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 60 days of Commission approval thereof. 15. 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 Meredith Cable Television of North Suburban shall, within 30 days of the release of this Order, revise its Form 1200 filing for CUID Nos. MN0297 through MN0306 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 that franchise area (plus franchise fee). 16. IT IS FURTHER ORDERED that Meredith Cable Television of North Suburban shall place into effect, within 30 days after submission of the revised Form 1200 filing required above, a CPS tier price for CUID Nos. MN0297 through MN0306 that reflects the reduction in the CPS rate determined in this Order. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Service Bureau APPENDIX A CUID No. Date First Complaint Date Complaint Filed with FCC Served on Meredith MN0297 10/25/93 10/25/93 MN0298 10/25/93 10/25/93 MN0299 10/25/93 10/25/93 MN0300 10/18/93 10/12/93 MN0301 10/25/93 10/25/93 MN0302 10/25/93 10/25/93 MN0303 10/25/93 10/25/93 MN0304 10/07/93 10/12/93 MN0305 10/25/93 10/25/93 MN0306 10/20/93 10/16/93