FOR FCC RECORD ONLY $//Kingwood Cablevision, Inc., Kingwood, TX, MO&O, DA 95-545//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-545 In the Matter of ) ) Kingwood Cablevision, Inc. ) CUID No. TX0229 Kingwood, Texas ) ) Benchmark Filing To Support ) Cable Programming Service Price ) Memorandum Opinion and Order Adopted: March 20, 1995 Released: March 22, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider a complaint about the price Kingwood Cablevision, Inc. ("Kingwood") was charging for its cable programming service ("CPS") tier in Kingwood, Texas, CUID No. TX0229. Kingwood has chosen to attempt to justify its price through a benchmark showing on FCC Form 393. This Order addresses the reasonableness of Kingwood's price only through May 14, 1994. At a later date 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 complete and timely CPS complaint in Kingwood, Texas, CUID No. TX0229, was completed and served on Kingwood on October 23, 1993 and received by the Commission on October 29, 1993. 5. Kingwood filed an FCC Form 393 for Kingwood, Texas, CUID No. TX0229 on May 16, 1994. Kingwood submitted additional information on February 7, 1995 in response to a Cable Services Bureau Public Notice offering operators the opportunity to make optional supplemental filings. 6. Kingwood filed a motion to dismiss the complaint on November 22, 1993. In its motion, Kingwood requests that the Commission dismiss the complaint for a number of reasons. First, Kingwood asserts that the complainant incorrectly answered questions number 8 and 9 on FCC Form 329 as it then existed, because the answer to question 8 included rates for services that were sold on the basic tier, as well as rates for services that were sold on the CPS tier, and because the answer to question 9 included services on the basic tier, as well as services on the CPS tier. In addition, Kingwood urges the Commission to find the complaint deficient on the grounds that the complainant failed to indicate that the complaint was a corrected complaint, rather than an initial complaint, and also failed to identify accurately the date the complaint was mailed to the operator in his answer to question number 12. Kingwood's assertions do not persuade us that the complaint is invalid or should be dismissed. In general, we will find valid any complaint that states a claim on which relief can be granted and provides adequate information to allow us to process the complaint, despite minor flaws or inaccuracies. We believe this approach best implements the mandate of the 1992 Cable Act. Because the complainant's response to question number 9 includes channels contained on the CPS tier and because the rates listed in answer number 8 and on the attached bill indicate that the complainant received the CPS tier, we find it reasonable to conclude that the complainant objected to the CPS tier rate and that she believed that rate was unreasonable. We therefore find the complaint filed on October 29, 1993 valid and deny Kingwood's Motion to Dismiss. Discussion 7. Kingwood asserts that its monthly CPS tier price of $15.99 is justified by its benchmark filing because its price is lower than the maximum permitted charge of $16.01, as calculated in the filing. Upon review of Kingwood's Form 393 filing, we have found that Kingwood has not correctly calculated its maximum permitted price, and it is therefore appropriate to make the following adjustment to Kingwood's calculations in Form 393: a. In its amended filing of February 7, 1995, Kingwood states that it calculated the Inflation Adjustment Factor (Form 393, Part II, Worksheet 1, Line 127, and Form 393, Part II, Worksheet 4, Line 401) using data it relied on when it set its $15.99 CPS price. If Kingwood had done so correctly (i.e., if it had completed Form 393 with accurate data, including the most recent inflation data available as of the time it set its price), and if based on this data Form 393 indicated that its price was reasonable, then Kingwood would have successfully justified its price under paragraph 94 of the Third Order on Reconsideration. However, the figures Kingwood used are not consistent with data on which it should have relied in setting its CPS price. Specifically, Kingwood used data released by the U.S. Department of Commerce on May 28, 1993, to complete Lines 122, 123 and 125, but claimed an Adjustment Time Period extending through October 1993 (Line 124), which is inconsistent with an attempt to justify rates based on May 1993 data. Kingwood's calculation of the Inflation Adjustment Factor is thus incorrect. b. We must therefore recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date as of which Kingwood filed. On its amended Form 393, Kingwood entered 13 months on Line 124, indicating that its filing was as of the end of October 1993. 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 an Inflation Adjustment Factor through October 1993, the base date Kingwood used in justifying its rates, of 1.030. 8. Because of this error, we conclude that Kingwood has failed to demonstrate that its price for the CPS tier was not unreasonable. We will therefore set a price for this tier, incorporating the adjustment discussed above. This adjustment has the effect of reducing the maximum permitted monthly CPS tier price from $16.01 to $15.83. Conclusions 9. Upon review of the record herein, we conclude that Kingwood's showing supports the maximum reasonable CPS tier price of $15.83 (plus franchise fee) for the period from October 29, 1993 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. 10. We further conclude that Kingwood must reflect in its FCC Form 1200 rate filing for the period after May 14, 1994 the fact that Kingwood's price during the earlier period was unreasonable. We reserve the right to make further adjustments to Kingwood's price for the period after May 14, 1994, upon completion of our review of Kingwood's FCC Form 1200 rate filings. 11. We further conclude that Kingwood has submitted in good faith a timely optional supplemental filing in response to our Public Notice. As provided in the Public Notice, we will relieve Kingwood of its obligation to obtain advance Commission approval of adjustments to its CPS price for one year following the release of this Order. 12. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the Motion of Kingwood Cablevision, Inc. to dismiss the October 23, 1993 complaint against its cable programming service price charged in Kingwood, Texas, CUID No. TX0229, IS DENIED. 13. IT IS FURTHER ORDERED that the complaint filed October 29, 1993 against the cable programming service price charged by Kingwood Cablevision, Inc. in Kingwood, Texas, CUID No. TX0229, IS GRANTED TO THE EXTENT INDICATED HEREIN. 14. IT IS FURTHER ORDERED that the benchmark filing submitted by Kingwood Cablevision, Inc. with respect to Kingwood, Texas, CUID No. TX0229, for the period beginning on October 29, 1993 and ending on May 14, 1994 justifies the maximum price of $15.83 (plus franchise fee) per month for Kingwood Cablevision, Inc.'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 Kingwood Cablevision, Inc. shall refund to subscribers that portion of the amounts paid for cable programming service for the period from October 29, 1993 to May 14, 1994 which exceeded $15.83 (plus franchise fee) per month and was thus unreasonable, plus interest to the date of the refund. 16. IT IS FURTHER ORDERED that Kingwood Cablevision, Inc. 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 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 Kingwood Cablevision, Inc. shall, within 30 days of the release of this Order, revise its Form 1200 filing with respect to Kingwood, Texas, CUID No. TX0229, 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 $15.83 (plus franchise fee). 18. IT IS FURTHER ORDERED that Kingwood Cablevision, Inc. shall place into effect, within 30 days after its submission of the revised Form 1200 filing required above, a price that reflects the reduction in the CPS rate determined in this Order. 19. IT IS FURTHER ORDERED, pursuant to Section 76.960 of the Commission's rules, 47 C.F.R.  76.960, that Kingwood Cablevision, Inc. shall not be required to obtain advance approval of adjustments to its CPS price in Kingwood, Texas, CUID No. TX0229, for one year following the release of this Order. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau