FOR FCC RECORD ONLY $//Time Warner Cable of Reston, Virgina, MO&O, DA-95-434//$ $/76.922 Rates for Cable Programming Service tier/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-434 In the matter of ) ) Time Warner Cable of Reston ) Reston, Virginia ) CUID No. VA0046 ) ) Benchmark Filing To Support ) Cable Programming Service Price ) Memorandum Opinion and Order Adopted: March 8, 1995 Released: March 9, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the price Time Warner Cable of Reston ("Warner Cable") was charging for its cable programming service ("CPS") tier in the community of Reston, Virginia, CUID No. VA0046. Warner Cable has attempted to justify its price through a benchmark showing on FCC Form 393. This Order addresses the reasonableness of Warner Cable'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 was completed and served on Warner Cable by the County of Fairfax on October 1, 1993. The Commission received the complaint on October 5, 1993. 5. Warner Cable attempted to justify its CPS price through an FCC Form 393 filed on November 15, 1993. Discussion 6. Warner Cable claims that its monthly CPS tier price of $11.49 per subscriber is justified by its benchmark filing, which shows a maximum permitted charge of $11.49. However, upon review we have determined that Warner Cable has not correctly calculated its maximum permitted price, and it is appropriate to make the following adjustments to Warner Cable's calculations in the Form 393: a. Warner Cable'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) reflect 55 regulated channels and 31 satellite channels. Our examination of the channel line-up that Warner provided with its November 15, 1993 filing, however, reveals only 55 regulated channels and 29 satellite channels. Warner Cable apparently counted 2 additional satellite channels that should have been counted as either pay-per-view or premium channels. Pay-per-view and premium channels, however, may not be counted as regulated channels or as satellite channels when calculating the benchmark rates. Accordingly, we reduce the number of satellite channels by two. b. In its Form 393 filing, Warner Cable calculated the Inflation Adjustment Factor (Line 127, Worksheet 1, Part II) as of the end of October 1993. However, the figures Warner Cable used are not consistent with data on which it should have relied in calculating the Inflation Adjustment Factor. Warner Cable 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. Warner Cable's calculation of the Inflation Adjustment Factor is thus incorrect. c. We must therefore recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date for which Warner Cable 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 1.030 as the Inflation Adjustment Factor through October 1993, the base date Warner Cable used in justifying its rates. 7. These adjustments have the cummulative effect of reducing the maximum permitted monthly price for the CPS tier from $11.49 to $11.23. Conclusions 8. Upon review of the record herein, we conclude that Warner Cable's showing supports a maximum reasonable CPS tier price of $11.23 per month (plus franchise fee) for the period of October 5, 1993 to May 14, 1994 for CUID No. VA0046. 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 Warner Cable must reflect in its Form 1200 rate filing for the period after May 14, 1994 the fact that Warner Cable's price during the earlier period was unreasonable. We reserve the right to make further adjustments to Warner Cable's price for the period after May 14, 1994, upon completion of our review of Warner Cable'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 October 1, 1993 complaint against the cable programming service price charged by Time Warner Cable of Reston in Reston, Virginia, CUID No. VA0046, and all other complaints relating to the same price, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 11. IT IS FURTHER ORDERED that the benchmark filing submitted by Time Warner Cable of Reston with respect to Reston,Virginia, CUID No. VA0046, for the period of October 5, 1993 to May 14, 1994, justifies a maximum price of $11.23 per month (plus franchise fee) for 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 of Reston shall refund to subscribers that portion of the amounts paid for cable programming service from October 5, 1993 to May 14, 1994 in Reston, Virginia, CUID No. VA0046, that exceeded $11.23 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 of Reston shall promptly determine the overcharges to CPS subscribers for the stated 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 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 of Reston shall, within 30 days of the release of this Order, revise its Form 1200 filing with respect to Reston, Virginia, CUID No. VA0046 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). 15. IT IS FURTHER ORDERED that Time Warner Cable of Reston shall place into effect, within 30 days after its submission of the revised Form 1200 filing required above, a CPS tier price for Reston, Virginia, CUID No. VA0046, that reflects the reduction in the CPS rate determined in this Order. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau