FOR FCC RECORD ONLY $//Century Southwest Cable Television, West Hollywood, CA, MO&O, DA-95-478//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-478 In the matter of ) ) Century Southwest Cable Television ) West Hollywood, California ) CUID No. CA0254 ) Benchmark Filing To Support ) Cable Programming Service Prices ) Memorandum Opinion and Order Adopted: March 13, 1995 Released: March 14, 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 West Hollywood, California, CUID No. CA0254. 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 18, 1993. The Commission received the complaint on September 24, 1993. In response to the complaint, Century filed an FCC Form 393 on November 16, 1993. 5. On September 1, 1993, Century restructured its service offerings. In addition to its basic service tier and a 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 same type of 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 those two communities, Century also created three Century Select packages consisting of twelve or six a la carte channels. 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 West Hollywood 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 in Beverly Hills and Los Angeles. 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. On March 2, 1995, Century submitted a letter to the Bureau asking that its motion to defer action be extended to the complaints pending in West Hollywood since the same a la carte issues on appeal for Beverly Hills and Los Angeles apply to West Hollywood as well. Discussion 7. In its amended benchmark filing of February 7, 1995, Century calculated a maximum permitted rate for the Satellite Tier of $2.96 per month (plus franchise fee) and a maximum permitted rate for the Century Select 12 tier of $5.08 per month (plus franchise fee). Upon review of this filing, we have found no apparent errors that would require a recalculation of these maximum permitted rates. However, Century's actual monthly charge for the Satellite Tier was $3.82 (plus franchise fee), and its actual monthly charge for the Century Select 12 tier was $6.00 (plus franchise fee). Thus, Century failed to demonstrate that the actual charges for these two CPS tiers were at or below the maximum permitted rates. 8. Century did not attempt to justify its monthly price of $4.00 (plus franchise fee) for the Century Select 6A and 6B tiers. Applying the same maximum permitted per-channel rate used in calculating the maximum permitted rates for the aforementioned CPS tiers results in a maximum permitted rate for the Century Select 6A and 6B tiers of $2.54 (plus franchise fee). Therefore, Century's actual monthly charges for these tiers also exceeded the maximum permitted rates. 9. 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 request until the Commission has issued its decision in that proceeding. Because interest charges on any required refunds will continue to accrue during the period of this stay, Century's subscribers in West Hollywood will not be adversely affected. Conclusions 10. Upon review of the record herein, we conclude that, for the period of September 24, 1993 to May 14, 1994, Century's showing supports maximum reasonable CPS tier prices of $2.96 per month (plus franchise fee) for the Satellite Tier, $5.08 per month (plus franchise fee) for the Century Select 12 tier, and $2.54 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. 11. 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. 12. We further 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 effective date of this Order. 13. 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. 14. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the September 18, 1993 complaint against the cable programming service prices charged by Century Southwest Cable Television in West Hollywood, California, CUID No. CA0254, and all other complaints relating to the same prices, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 15. IT IS FURTHER ORDERED that the benchmark filing submitted by Century Southwest Cable Television with respect to West Hollywood, California, CUID No. CA0254, for the period of September 24, 1993 to May 14, 1994, justifies maximum prices of $2.96 per month (plus franchise fee) for the Satellite Tier, $5.08 per month (plus franchise fee) for the Century Select 12 tier, and $2.54 per month (plus franchise fee) for the Century Select 6A and 6B tiers. 16. 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 of September 24, 1993 to May 14, 1994, that portion of the amounts paid for cable programming service that exceeded $2.96 (plus franchise fee) per month for the Satellite Tier, $5.08 (plus franchise fee) per month for the Century Select 12 tier, and $2.54 (plus franchise fee) per month for the Century Select 6A and 6B tiers and were thus unreasonable, plus interest to the date of the refund. 17. IT IS FURTHER ORDERED that Century Southwest Cable Television shall promptly 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. 18. 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 effective date of this Order. 19. IT IS FURTHER ORDERED that Century Southwest Cable Television's request to defer action on the complaints against its cable programming service prices in West Hollywood, California, CUID No. CA0254, is resolved as indicated herein. 20. 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