FOR FCC RECORD ONLY $//Colony Cablevision of FLorida, Collier County, FL, MO&O, DA 95-624//$ $/76.922 Rates for Cable Programming Service tiers/$ $/a la carte orders/$ Before the Federal Communications Commission Washington, D.C. DA 95-624 In the matter of ) ) Colony Cablevision of Florida ) Collier County, Florida ) CUID Nos. FL0348, FL0098, FL0050 ) Benchmark Filing To Support ) Cable Programming Service Prices ) Memorandum Opinion and Order Adopted: March 27, 1995 Released: March 29, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider a complaint about the prices Colony Cablevision of Florida ("Operator") was charging for its cable programming service ("CPS") tiers in Collier County, Florida, CUID Nos. FL0348, FL0098, and FL0050. Operator has chosen to attempt to justify its prices through a single benchmark showing 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, 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 for all three CUID areas covered by this Order was served on Operator by the local franchising authority on January 20, 1994. The Commission received the complaint on February 14, 1994. In response to the complaint, Operator filed an FCC Form 393 on March 18, 1994. Operator amended its justification on June 30, 1994 in response to a Cable Services Bureau Order citing common deficiencies observed in benchmark filings generally, and on January 25, 1995, in response to a Cable Services Bureau Public Notice offering operators the opportunity to make optional supplemental filings. 5. Operator states that it restructured its service offerings on September 1, 1993. In addition to its basic service tier and a CPS tier called Basic Service, Operator began offering eight channels on an individual, or a la carte, basis. These a la carte channels could be purchased collectively as one eight-channel package (Cable Plus) or individually. A similar 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 Operator's affiliate, Dynamic Cablevision of Florida ("Dynamic"), in Hialeah, Florida. In the LOI order, we found that the retiering constituted an evasion of rate regulation. We concluded that Dynamic'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. 6. On January 23, 1995, Dynamic filed a Petition for Reconsideration which argued that the Commission should reverse the Bureau's LOI decision regarding the treatment of its a la carte packages. Operator then filed a motion on March 9, 1995 requesting the Bureau to defer action on the complaints pending against its CPS rates in Florida until the Bureau rules on the Petition for Reconsideration. Discussion 7. In its amended benchmark filing, Operator calculated a maximum permitted rate for the Basic Service CPS tier of $8.64 per month (plus franchise fee). Operator did not attempt to justify its monthly price of $2.40 for the Cable Plus tier. Upon review, we have determined that Operator has not correctly calculated its maximum permitted prices, and it is therefore appropriate to make the following adjustment to Operator's calculations in Form 393: a. In its calculations on Form 393, Part I, and Form 393, Part II, Worksheet 1, Operator did not count as rate-regulated or as satellite channels the eight channels in its Cable Plus package. Prior to September 1, 1993, two of these channels were offered as part of Operator's basic service tier, five channels were offered as part of a CPS tier, and one channel was not offered on this system. In several recent decisions, we have held that a la carte packages involving similar numbers and percentages of migrated channels must be treated as rate-regulated service tiers for purposes of Form 393. There are no facts in the record of this proceeding that materially distinguish Operator's offering from these precedents. We therefore determine Operator's maximum permitted prices by including the eight channels of Operator's Cable Plus package as an additional CPS tier, increasing the total rate- regulated channels from 41 to 49 and the total satellite channels from 32 to 37. 8. This adjustment has the effect of decreasing the maximum permitted monthly price for the Basic Service tier to $7.06 per month (plus franchise fee). Operator's actual monthly charge for the tier was $8.64 (plus franchise fee). Therefore, the actual charge for this tier was above the maximum permitted rate and was thus unreasonable. 9. The same adjustment results in a maximum permitted rate for the Cable Plus tier of $3.32 per month (plus franchise fee). Operator's actual monthly charge for the Cable Plus tier was $2.40 (plus franchise fee). Thus, the actual charge for this tier was below the maximum permitted rate. 10. Under the Commission's rules, Operator may be liable for refunds to compensate subscribers for the overcharges described above. However, since our resolution of the issues pending in Dynamic's Petition for Reconsideration could require revisions to our analysis, we will stay the effective date of this Order in response to Operator's motion until we have issued our decision in that proceeding. Since interest charges on any required refunds will continue to accrue during the period of this stay, Operator's subscribers will not be adversely affected. Conclusions 11. Upon review of the record herein, we conclude that, for the period from February 14, 1994, to May 14, 1994, Operator's showing supports maximum reasonable CPS tier prices of $7.06 per month (plus franchise fee) for the Basic Service tier, and $3.32 per month (plus franchise fee) for the Cable Plus tier. 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. 12. We further conclude that Operator must reflect in its Form 1200 rate filing for the period after May 14, 1994 the fact that Operator's price for the Basic Service tier during the earlier period was 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 rate justification for that period. 13. We futher conclude that Operator 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 Operator of its obligation to obtain advance Commission approval of adjustments to its CPS prices for one year following the release of this Order. 14. We further conclude that the effective date of this Order will be stayed until the Bureau releases a decision on Dynamic's Petition for Reconsideration of the Bureau's LOI decision regarding the treatment of Dynamic's a la carte packages in Hialeah, Florida. 15. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaint against the cable programming service prices charged by Operator in Collier County, Florida, CUID Nos. FL0348, FL0098, and FL0050, IS GRANTED TO THE EXTENT INDICATED HEREIN. 16. IT IS FURTHER ORDERED that the benchmark filing submitted by Operator with respect to Collier County, Florida, CUID Nos. FL0348, FL0098, and FL0050, for the period of February 14, 1994 to May 14, 1994, justifies maximum prices of $7.06 per month (plus franchise fee) for the Basic Services tier and $3.32 per month (plus franchise fee) for the Cable Plus tier. 17. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers for the period February 14, 1994 to May 14, 1994, that portion of the amounts paid for cable programming service that exceeded $7.06 per month (plus franchise fee) for the Basic Services tier and was thus unreasonable, plus interest to the date of the refund. 18. IT IS FURTHER ORDERED that Operator shall 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. 19. 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 effective date of this Order, revise its Form 1200 filing for the period beginning May 15, 1994, to include the Cable Plus package as a cable programming service tier and to reduce the monthly charge per tier as of March 31, 1994 for Tier 2 (Line A6b) to equal the maximum price determined in this Order (plus franchise fee). 20. IT IS FURTHER ORDERED that Operator shall place into effect, within 30 days after submission of the revised Form 1200 filing required above, CPS tier prices for Collier County, Florida, CUID Nos. FL0348, FL0098, and FL0050, that reflect the reductions in the CPS rate determined in this Order. 21. 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 one year following the release of this Order. 22. IT IS FURTHER ORDERED that Operator's motion to defer action on the complaints against its cable programming service prices in Collier County, Florida, CUID Nos. FL0348, FL0098, and FL0050, is resolved as indicated herein. 23. IT IS FURTHER ORDERED that the effective date of this Order will be stayed until the Commission releases a decision on Operator's Petition for Reconsideration of the Bureau's LOI decision regarding the treatment of its a la carte packages in Hialeah, Florida. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau