FOR FCC RECORD ONLY $//CVI, Liberty, New York, MO&O, DA-95-358//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. DA 95-358 In the Matter of ) ) CUID Nos. NY0322, NY0437, ) NY0492, NY0514, Cablevision Industries ) NY0717, NY0821, New York ) NY0878, NY1384 ) Benchmark Filings to Support ) Cable Programming Service Prices ) Memorandum Opinion and Order Adopted: February 24, 1995 Released: February 24, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the prices Cablevision Industries ("CVI") was charging for its cable programming service ("CPS") tier in Orange County, New York, CUID Nos. NY0492, NY0514, NY0717, and NY0821; Warren County, New York, CUID No. NY0322; Ulster County, New York, CUID No. NY0437; Genesee County, New York, CUID No. NY0878; and Chautauqua County, New York, CUID No. NY1384. CVI has chosen to attempt to justify its prices through benchmark showings on FCC Form 393. This Order addresses the reasonableness of CVI's prices only through May 14, 1994. At a later date 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 a cable operator's prices for its cable programming service ("CPS") tier 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 CVI and received by the Commission on the dates set forth in Appendix A. 5. CVI filed its first FCC Form 393 filing on the dates set forth in Appendix B. CVI subsequently amended its Form 393 filings in response to two Commission letters which requested clarification on CVI's initial filings. Discussion 6. CVI erroneously asserts that its monthly CPS tier prices per subscriber are justified, in each of the communities addressed by this Order with the exception of CUID No. NY0437, by its benchmark filings because its prices are "within the maximum permitted rates" as calculated in its Form 393 filings. Upon review of CVI's FCC Form 393's, we have found the following errors that require a recalculation of CVI's maximum permitted CPS prices: a. On September 1, 1993, CVI restructured its rates. As part of this restructuring, CVI reduced its CPS price and basic programming tier price in each franchise area. These changes, however, are not reflected on Line 101 of Worksheet 1 of Part II of CVI's FCC Form 393. Instead of entering its currently effective tier prices, as required by the directions for Line 101, CVI entered its previously effective tier prices. Accordingly, on Line 101 we enter for each franchise area the currently effective CPS and basic programming tier prices. b. Since CVI restructured its rates, including its equipment rates, on September 1, 1993, the current monthly equipment revenue figure it entered on Part II, Worksheet 1, Line 104 should have been close or identical to its equipment cost figure on Part III, Step G, Line 34. Accordingly, on Line 104 we enter for each franchise area the identical figure that is on Line 34 of Step G of Part III. c. For CUID No. NY1384, CVI's calculations for its rate-regulated package as of the initial date of regulation (Form 393, Part I and Form 393, Part II, Worksheet 1) record 14 rate-regulated channels on its CPS tier and 17 rate- regulated channels on the basic programming tier; however, our review of the channel line-up provided by CVI for the initial date of regulation indicates 13 channels on the CPS tier and 18 channels on the basic programming tier. Therefore, we decrease the number of rate-regulated channels on the CPS tier from 14 to 13 and we increase the number of rate-regulated channels on the basic programming tier from 17 to 18. d. For CUID No. NY0322, CVI's calculations for its rate-regulated package as of September 30, 1992 (Form 393, Part II, Worksheet 2) record 18 rate- regulated channels on its CPS tier; however, our review of the channel line-up for September 30, 1992 indicates 17 channels on the CPS tier. Therefore, we decrease the number of rate-regulated channels on the CPS tier from 18 to 17. We also decrease the number of rate-regulated channels used in calculating CVI's benchmark (Form 393, Part II, Worksheet 2, Line 220) from 35 to 34, and we decrease the number of satellite channels used from 27 to 26. e. For CUID Nos. NY0492, NY0514, NY0717, and NY0821, CVI's calculations for its rate-regulated package as of September 30, 1992 (Form 393, Part II, Worksheet 2) count channel 15 as a rate-regulated satellite channel on the basic tier and channel 30 as a rate-regulated satellite channel on the CPS tier. Both channel 15 and 30, however, carry identical programming at the same time. Because subscribers receive only one programming service over channels 15 and 30, CVI cannot charge subscribers for these channels as separate units of cable service. We therefore further reduce by one the number of rate-regulated channels on the CPS tier as of September 30, 1992 on Form 393, Part II, Worksheet 2, Line 202, and the number of rate- regulated channels and satellite channels used in calculating the benchmark on Form 393, Part II, Worksheet 2, Line 220. 7. Because of these errors, we conclude that CVI has failed to demonstrate that its prices for the CPS tier were not unreasonable. We will therefore set prices 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 Forms 393, CVI apparently calculated the Inflation Adjustment Factor using the data it relied on when it set its CPS prices. If, based on this data, Form 393 indicated that CVI's prices were reasonable, then CVI would have successfully justified its prices under paragraph 94 of the Third Order on Reconsideration. However, CVI has not shown that its prices were reasonable, so we must recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date that CVI should have filed FCC Form 393 for each franchise area. 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, 126.5 for the fourth quarter of 1993, and 127.5 for the first quarter of 1994. Using these GNP-PI figures, we calculate Inflation Adjustment Factors of 1.039 through February 1994 for CUID Nos. NY0322, NY0437, NY0492, NY0514, NY0821, NY0878, and NY1384 and 1.032 through November 1993 for CUID No. NY0717. Conclusions 8. Upon review of the record herein, we conclude that CVI's showing supports the maximum reasonable CPS tier price for each franchise area set forth in Appendix C (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. We further conclude that CVI must reflect in its FCC Form 1200 rate filings for the period after May 14, 1994 the fact that CVI's prices during the earlier period were unreasonable. We reserve the right to make further adjustments to CVI's prices for the period after May 14, 1994, upon completion of our review of CVI's FCC Form 1200 rate filings. 10. 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 prices charged by Cablevision Industries in Orange County, New York, CUID Nos. NY0492, NY0514, NY0717, and NY0821; Warren County, New York, CUID No. NY0322; Ulster County, New York, CUID No. NY0437; Genesee County, New York, CUID No. NY0878; and Chautauqua County, New York, CUID No. NY1384, and all other complaints in these franchise areas related to the same prices, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 11. IT IS FURTHER ORDERED that the benchmark filings submitted by Cablevision Industries with respect to Orange County, New York, CUID Nos. NY0492, NY0514, NY0717, and NY0821; Warren County, New York, CUID No. NY0322; Ulster County, New York, CUID No. NY0437; Genesee County, New York, CUID No. NY0878; and Chautauqua County, New York, CUID No. NY1384, 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, justify the maximum price in each franchise area set forth in Appendix C (plus franchise fee) for Cablevision Industries' 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 Cablevision Industries 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 the maximum price for each franchise area set forth in Appendix C (plus franchise fee) per month and was thus unreasonable, plus interest to the date of the refund. 13. IT IS FURTHER ORDERED that Cablevision Industries 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 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 Cablevision Industries shall, within 30 days of the release of this Order, revise its Form 1200 filings with respect to Orange County, New York, CUID Nos. NY0492, NY0514, NY0717, and NY0821; Warren County, New York, CUID No. NY0322; Ulster County, New York, CUID No. NY0437; Genesee County, New York, CUID No. NY0878; and Chautauqua County, New York, CUID No. NY1384, for the period beginning May 15, 1994, to reduce the monthly charge for Tier 2 (Line A6b) to equal the maximum price in each franchise area set forth in Appendix C (plus franchise fee). 15. IT IS FURTHER ORDERED that Cablevision Industries shall place into effect, within 30 days after its submission of the revised Form 1200 filings required above, prices that reflect the reductions in the CPS rates determined in this Order. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau Appendix A CUID No. Date First Valid Date First Complaint Filed with FCC Complaint Served NY0322 02/25/94 02/22/94 NY0437 02/25/94 02/25/94 NY0492 02/24/94 02/21/94 NY0514 02/24/94 02/22/94 NY0717 11/29/93 11/18/93 NY0821 02/03/94 02/01/94 NY0878 02/28/94 02/25/94 NY1384 02/24/94 02/28/94 Appendix B CUID No. Date First 393 Filed with FCC NY0322 06/27/94 NY0437 06/27/94 NY0492 03/21/94 NY0514 03/28/94 NY0717 05/16/94 NY0821 03/04/94 NY0878 03/28/94 NY1384 03/28/94 Appendix C CUID No. Actual CPS Price Maximum Reasonable Price NY0322 $11.20 $10.51 NY0437 $10.45 $ 8.78 NY0492 $12.75 $11.77 NY0514 $12.75 $11.78 NY0717 $12.75 $11.71 NY0821 $12.75 $11.56 NY0878 $10.40 $ 9.54 NY1384 $ 9.75 $ 8.78