FOR RCC RECORD ONLY $//V Cable, Inc., Bedford Heights and Granger Township, OH, MO&O, DA 95-485//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-485 In the Matter of ) ) V Cable, Inc. ) CUID Nos. OH0967 and OH1272 Bedford Heights and Granger Township, Ohio ) ) Benchmark Filing To Support ) Cable Programming Service Prices ) Memorandum Opinion and Order Adopted: March 14, 1995 Released: March 15, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the prices V Cable, Inc. d/b/a Cablevision ("Cablevision") was charging for its cable programming service ("CPS") tier in Bedford Heights, Ohio, CUID No. OH0969, and Granger Township, Ohio, CUID No. OH1272. Cablevision has chosen to attempt to justify its prices through benchmark showings on FCC Form 393. This Order addresses the reasonableness of Cablevision'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 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 CPS complaint in Bedford Heights, Ohio, CUID No. OH0967, was completed and served on Cablevision October 27, 1993 and received by the Commission on November 1, 1993. The first complete and timely CPS complaint in Granger Township, Ohio, CUID No. OH1272, was completed and served on Cablevision on October 8, 1993 and received by the Commission on October 12, 1993. 5. Cablevision filed its first FCC Form 393 for Bedford Heights, Ohio, CUID No. OH0967, on December 3, 1993, and filed an amended Form 393 on December 27, 1993. Cablevision filed its FCC Form 393 for Granger Township, Ohio, CUID No. OH1272, on January 27, 1994. Cablevision amended its justification on July 1, 1994, for CUID No. OH0967, in response to a Cable Services Bureau Order citing common deficiencies observed in benchmark filings generally. Cablevision amended its justifications for both areas on February 17, 1995, in response to a Commission letter which requested clarification of Cablevision's showing. Background 6. Cablevision restructured its rates in an effort to comply with the Commission's Rules on September 1, 1993. In October 1993, Cablevision changed its channel line-up on Channel 37 by deleting HSN II, a satellite channel on the CPS tier, and adding WQHS, a non-satellite channel on the basic tier. On January 1, 1994, Cablevision again changed its channel line-up by moving Channel 17, a satellite channel on the CPS tier, to the basic tier. These changes in Cablevision's channel line-up were unaccompanied by any change in Cablevision's prices for its basic and CPS tiers. Cablevision completed Part II of Form 393 using its channel line-up as of October 1993. In Part I of Form 393, Cablevision performed alternative calculations using its number of channels as of September 1, 1993, and as of October 1993. Discussion 7. Cablevision acknowledges that its CPS prices are higher than the maximum permitted price if Form 393 is calculated using the number of channels Cablevision offered as of October 1993. Thus, Cablevision has failed to demonstrate that its prices for the CPS tier were not unreasonable. 8. Because Cablevision has failed to demonstrate that its prices for the CPS tier were not unreasonable, we will set prices for this tier. In doing so, we must recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date that Cablevision should have filed Form 393 in each franchise area. Our rules require a cable operator to respond to a complaint that is not returned by the Commission within 30 days after the complaint is served. 47 C.F.R  76.956(c). Cablevision did not comply with this rule. Cablevision cannot be permitted an additional inflation adjustment simply because it filed Form 393 late. 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 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 Cablevision should have used in justifying its rates. 9. This adjustment has the effect of yielding the maximum permitted monthly CPS tier price for each franchise area as of the initial date of regulation set forth in Appendix A. 10. As described in paragraph 6, supra, on January 1, 1994, Cablevision moved Channel 17 from the CPS tier to the basic tier. Cablevision thus increased the rate charged for its service by reducing the number of channels available on the CPS tier without a consequent reduction in price. Cablevision failed to notify the Commission of the rate change and submit a revised rate justification as required by the instructions to Form 393. To determine Cablevision's subsequent permitted per channel charges as of January 1, 1994, and thus Cablevision's maximum permitted prices, we rely on the Commission's Rules then in effect and reduce the number of channels on the CPS tier on Form 393, Part I effective January 1, 1994 from 25 to 24. This adjustment has been reflected in Appendix A for the period after December 31, 1993. Conclusions 11. Upon review of the record herein, we conclude that Cablevision's showing supports the maximum CPS tier prices set forth in Appendix A (plus franchise fee) for the periods set forth in Appendix A. 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. 12. We further conclude that Cablevision must reflect in its FCC Form 1200 rate filings for the period after May 14, 1994 the fact that Cablevision's prices as of March 31, 1994 were unreasonable. We reserve the right to make further adjustments to Cablevision's prices for the period after May 14, 1994, upon completion of our review of Cablevision's FCC Form 1200 rate filings. 13. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaint filed on November 1, 1993 against the cable programming service price charged by V Cable d/b/a Cablevision in Bedford Heights, Ohio, CUID No. OH0967, and the complaint filed on October 12, 1993 against the cable programming service price charged by V Cable, Inc. d/b/a Cablevision in Granger Township, Ohio, CUID No. OH1272, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 14. IT IS FURTHER ORDERED that the benchmark filings submitted by V Cable, Inc. d/b/a Cablevision with respect to Bedford Heights, Ohio, CUID No. OH0967, and Granger Township, Ohio, CUID No. OH1272, for the periods set forth in Appendix A justify the maximum prices set forth in Appendix A (plus franchise fee) for V Cable, Inc. d/b/a Cablevision's cable programming service tier. 15. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that V Cable, Inc. d/b/a Cablevision shall refund to subscribers that portion of the amounts paid for cable programming service for the periods set forth in Appendix A to May 14, 1994 which exceeded the maximum prices set forth in Appendix A (plus franchise fee) per month and was thus unreasonable, plus interest to the date of the refund. 16. IT IS FURTHER ORDERED that V Cable, Inc. d/b/a Cablevision 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. 17. 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 V Cable Inc. d/b/a Cablevision shall, within 30 days of the release of this Order, revise its Form 1200 filings with respect to Bedford Heights, Ohio, CUID No. OH0967, and Granger Township, Ohio, CUID No. OH1272, 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 in each franchise area set forth in Appendix A (plus franchise fee). 18. IT IS FURTHER ORDERED that V Cable, Inc. d/b/a Cablevision shall place into effect, within 30 days after its submission of the revised Form 1200 filing 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. 0967 Actual Rate Maximum Reasonable Rate Maximum Reasonable Rate 11/1/93-12/31/93 1/1/94-5/14/94 $13.83 $13.25 $12.67 CUID No. 1272 Actual Rate Maximum Reasonable Rate Maximum Reasonable Rate 10/12/93-12/31/93 1/1/94-5/14/94 $14.80 $13.15 $12.62