FOR FCC RECORD ONLY $//Bresnan Communications Company, MI, MO&O, DA 95-488//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-488 In the matter of ) ) Bresnan Communications Company ) CUID Nos. MI0129, MI0133, MI1093 Laurium, Michigan ) Torch Lake, Michigan ) Hancock, Michigan ) ) Benchmark Filings To Support ) Cable Programming Service Prices ) Memorandum Opinion and Order Adopted: March 14, 1995 Released: March 15, 1995 By the Deputy Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the prices Bresnan Communications Company ("Operator") was charging for its cable programming service ("CPS") tier in Laurium, Michigan, CUID No. MI0129; Torch Lake, Michigan, CUID No. MI0133; and Hancock, Michigan, CUID No. MI1093. Operator has attempted to justify its prices through separate benchmark showings on FCC Form 393. This Order addresses the reasonableness of Operator'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, 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 were completed and served on Operator on November 2, 1993 for CUID Nos. MI0129 and MI1093, and on November 9, 1993 for CUID No. MI0133. The Commission received the complaints on November 8, 1993 for MI0129 and MI1093, and on November 9, 1993 for CUID No. MI0133. 5. Operator attempted to justify its CPS prices through separate FCC Forms 393 filed on November 29, 1993 for CUID Nos. MI0129 and MI0133, and on November 15, 1993 for CUID No. MI1093. Operator amended its justifications for CUID Nos. MI0129 and MI1093 on February 7, 1995, in response to a Cable Services Bureau Public Notice offering operators the opportunity to make optional supplemental filings. Discussion 6. Operator asserts that its monthly CPS tier prices of $11.03 in CUID No. MI0129, $10.83 in CUID No. MI0133, and $10.82 in CUID No. MI1093 are justified by its benchmark filings because its prices are less than the maximum permitted charges calculated in the filings. Upon review of Operator's filings, we have found the following errors that require a recalculation of Operator's maximum permitted CPS prices: a. In Line 2 of Step A of Part III of its FCC Form 393, Operator entered a customer equipment and installation percentage of 14%, yet did not correctly calculate this percentage amount on Line 3. We therefore adjusted Line 3 to equal 14% of the amount of Line 1, and adjusted subsequent steps accordingly. b. In Columns A, B, C and D of Worksheet 1 of Part II of its FCC Form 393, Operator completed information for four separate tiers although its rate cards showed only two tier offerings consisting of basic and CPS programming with related charges. Accordingly, Worksheet 1 was adjusted to reflect only the two tiers and to include tier channels and tier charge information consistent with the rate cards. c. Operator's Form 393, Worksheet 1, Line 104 entry does not represent its current monthly equipment revenue as of the initial date of regulation. Since Operator 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 entry. However, Operator's entry on Line 104 differed substantially from its entry on Line 34. We therefore adjusted Line 104 to equal the amount entered on Line 34, as adjusted pursuant to paragraph 6a, supra. 7. Because of these errors, we conclude that Operator 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 the basis of the most accurate data currently available for the date for which Operator filed. On its Forms 393, Operator entered 13 months on Line 124, indicating that it calculated the Inflation Adjustment Factor through October 1993. On July 29, 1994, the U.S. 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 an Inflation Adjustment Factor through October 1993, the base date Operator used in justifying its rates, of 1.030. 8. These adjustments have the cumulative effect of reducing the maximum permitted monthly CPS tier price from $11.18, $11.02, and $11.09 per month (as Operator calculated) to $11.02, $10.82, and $10.78 per month for Laurium, Michigan, CUID No. MI0129; Torch Lake, Michigan, CUID No. MI0133; and Hancock, Michigan, CUID No. MI1093, respectively. Conclusions 9. Upon review of the record herein, we conclude that Operator's showing supports maximum reasonable CPS tier prices of $11.02, $10.82, and $10.78 (plus franchise fee) per month for Laurium, Michigan, CUID No. MI0129; Torch Lake, Michigan, CUID No. MI0133; and Hancock, Michigan, CUID No. MI1093, respectively, for the period November 29, 1993 to May 14, 1994 for CUID Nos. MI0129 and MI0133 and for the period November 15, 1993 to May 14, 1994 for CUID No. MI1093. However, we further determine that the refund at issue is such a de minimis amount that it would not serve the public interest to order a refund. 10. We further conclude that Operator must reflect in its FCC Form 1200 rate filings for the period after May 14, 1994 the fact that Operator's prices during the earlier period were unreasonable. We reserve the right to make further adjustments to Operator's prices for the period after May 14, 1994 upon completion of our review of Operator's FCC Form 1200 rate filings. 11. We further conclude that Operator has submitted in good faith timely optional supplemental filings for CUID Nos. MI0129 and MI1093 in response to our December 29, 1994 Public Notice. As provided in the Public Notice, we will relieve Operator of its obligation to obtain advance Commission approval of adjustments to its CPS prices for one year following the release of this Order for CUID Nos. MI0129 and MI1093. 12. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaints against the cable programming service price charged by Operator in Laurium, Michigan, CUID No. MI0129; Torch Lake, Michigan, CUID No. MI0133; and Hancock, Michigan, CUID No. MI1093, ARE GRANTED TO THE EXTENT INDICATED HEREIN AND DENIED TO THE EXTENT INDICATED HEREIN. 13. IT IS FURTHER ORDERED that the benchmark filings submitted by Operator with respect to Laurium, Michigan, CUID No. MI0129 and Hancock, Michigan, CUID No. MI1093, for the period of November 8, 1993 to May 14, 1994, justify maximum prices of $11.02 and $10.78, respectively, per month (plus franchise fee) for the cable programming service tier. 14. IT IS FURTHER ORDERED that the benchmark filing submitted by Operator with respect to Torch Lake, Michigan, CUID No. MI0133, for the period of November 9, 1993 to May 14, 1994, justifies a maximum price of $10.82 per month (plus franchise fee) for the cable programming service tier. 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 Operator shall, within 30 days of the release of this Order, revise its Form 1200 filings with respect to Laurium, Michigan, CUID No. MI0129; Torch Lake, Michigan, CUID No. MI0133; and Hancock, Michigan, CUID No. MI1093, 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 permitted rate (plus franchise fee) for each franchise area. 16. IT IS FURTHER ORDERED that Operator shall place into effect, within 30 days after its submission of the revised Form 1200 filings required above, CPS tier prices that reflect the reductions in the CPS rate determined in this Order. 17. IT IS FURTHER ORDERED, pursuant to Section 76.960 of the Commission's rules, 47 C.F.R.  76.960, that Operator shall not be required to obtain advance Commission approval of adjustments to its CPS prices for CUID Nos. MI0129 and MI1093 for one year following the release of this Order. FEDERAL COMMUNICATIONS COMMISSION Gregory J. Vogt Deputy Chief, Cable Services Bureau