WPCh 2BEJ Z Courier c-#XR  P7jQXP#HP LaserJet 4_230_1HPLAS4.PRS 4x  @\oeX@2K 6{f 3|w CG Times Bold#XR  P7jQ}XP#CourierCG Times907_1HPLAS4SI.PRSx  @\iX@3|w ",tB^ f ^;C]ddCCCdCCCCddddddddddCCY~~vCN~sk~CCCddCYdYdYCdd88d8ddddJN8ddddYYdYd4dddddCddddddddd8YYYYYY~Y~Y~Y~YC8C8C8C8ddddddddddYdddddsdXdXXXddx|X~d~d|XdddddddC8ddddCdoddd|8|H~d<|8dtddddHHdlLlLlLkd|H|8~ddddddddXXXd~ddkd~ddxCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCYQQddddddFddddFCChhd44ddzzdddvooChdF"dhd9dCCzCddoddCdYds]zUvdYYCCCCz~ozoY~NYdYC8YooYdYzsdzdd~YYzozzz~CdzYzzzzCCdddddddzCsdYC\   pxtll\tll@\@\`L29v} p kcka8DocumentgDocument Style StyleXX` `  ` a4DocumentgDocument Style Style . a6DocumentgDocument Style Style GX  a5DocumentgDocument Style Style }X(# 2kvta2DocumentgDocument Style Style<o   ?  A.  a7DocumentgDocument Style StyleyXX` ` (#` BibliogrphyBibliography:X (# a1Right ParRight-Aligned Paragraph Numbers:`S@ I.  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Continue?",tB^ f ^GPoxxPPPxPPPPxxxxxxxxxxPPx]sPPPxxPxkkTxCPCxk]Pxxxkxxxx>xxxxxPxxxxxxxxCxxxxxkkkkk]C]C]C]Cxxxxxxxxxxxxxjjxxjxxjxxxxx[Cxxx]xxC`x]Cxxjjx[][x`RxxjkjxxxxPxxPPPWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNxxxPxffxxxxxxTxxxxTPPx>>xxxxxPxT"xxExPPPxxxxPxkxsfxxxPPPPk]kkk]Ckkxkxxxkk]xkPPxxxxxxxPxkP8D%nZZB 3nMnMn..s[2f s]Fh",tB^ f ^;C`ddCCCdCCCCddddddddddCCdxxxsCYoxxdoxxooCCCddCddYdY8dd88Y8ddddLL8dYYYLYdYd4dddddCddddddddd8xdxdxdxdxdYxYxYxYxYC8C8C8C8dddddddddoYxddddoYdxdxdxdxdXXddxxXxdxdxXdddddddD8ddddCdddddp8pHodp8p8dxddddxLxLxddLdLdLddpHp8odddddddodpLpLpLdoddddododxCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCd]]ddddddFddddFCCddd88ddzzdddkddCddF"ddd9dCCzCdzdoddCdYds]zUvdYYCCCCzzzozoYzNoYdYC8YooYdYzzdzddoYoYzzozzzzzCdoozYzzzzCCddddzdddooozCsdYC\   pxtll\tll@\@\`L X- FOR FCC RECORD ONLY $//Crown Cable Wisconsin, Inc., MO&O, DA 95680//$  X-$/76.922 Rates for Cable Programming Service tiers/$  X- $/benchmark cable rates/$    Y-  c< E Before the FEDERAL COMMUNICATIONS COMMISSION  c< Washington, D.C. 20554 ă X-: DA 95680 Đ(#U  Y{ -In the Matter of hh,V)CUID No. WI0043, Janesville, WI X(#(#  Yd -Crown Cable Wisconsin, Inc.hh,V)CUID No. WI0066, Hartford, WI  YM -` `  hh,V)CUID No. WI0265, West Allis, WI  Y6 -Benchmark Filings to Supporthh,V)CUID No. WI0604, LaCrosse, WI  Y-Cable Programming Service Priceshh,V)CUID No. WI0659, Mishicot, WI  Y-}  MEMORANDUM OPINION AND ORDER ă  Y-` ` Adopted: March 30, 1995 Released: April 5, 1995 By the Chief, Cable Services Bureau:  Yh- I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)  1. Here we consider complaints about the prices Crown Cable Wisconsin, Inc.Hh Y<ԍ#Xw PE37XP# On January 18, 1995, Marcus Cable Partners, L.P. purchased all of the Wisconsin cable systems owned by Crown Cable Wisconsin, Inc. As required by the context, the term "Operator" as used in this Order includes Operator's successors in interest. H ("Operator") was charging for its cable programming service ("CPS") tier in the communities designated above. Operator has chosen to attempt to justify its prices through benchmark showings on FCC Form 393. This Order addresses the reasonableness of Operator's prices only through May 14, 1994. At a later date we will issue a separate order addressing the  Y-reasonableness of the prices after that date.n K Y<ԍ#XR  P7jQXP# The findings in this Order do not in any way prejudge the reasonableness of the prices for CPS service after May 14, 1994 under our new rate regulations. However, to the extent Operator has sought to take advantage of the refund deferral period under the Second Order on Reconsideration, Fourth Report and Order, and Fifth Notice of Proposed  Y#-Rulemaking, MM Docket No. 92266, FCC 9438, 9 FCC Rcd 4119 (1994) ("Second Order  Y$-on Reconsideration"), the maximum permitted CPS price determined herein might also apply  Yk%-from May 15, 1994 until the date on which Opeartor #XR  P7jQXP#implemented its CPS prices under the  YT&<new regulations. See para. 3, infra.#x6X@`72X@# #XR  P7jQXP#Further, to the extent that the prices as of March 31, 1994 are found to be excessive, reductions in Operator's prices for the period after May 14, 1994 may be required to reflect the fact that Operator's prices during the earlier period, which are used as the starting point to calculate its prices for the prospective period, were")0*0*0*o)"  Y-unreasonable. See 47 C.F.R.  76.922(b)(4)(C).n"{0*0*0*"Ԍ"Q0*0*0*%"Ԍ Y-  2. Under the Cable Television Consumer Protection and Competition Act of 1992,x4 Yy<ԍ#XR  P7jQ}XP# Pub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act,  623(c), as  Yd-amended, 47 U.S.C.  543(c) (1993). 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  Y-obligation on behalf of the cable operator to file a justification of its CPS prices.ffx4 Y<ԍ#Xw PE37}XP# 47 C.F.R.  76.956.f Under our rules, an operator may attempt to justify its prices through either a benchmark showing or a  Y-costofservice showing.ix4 YU <ԍ#Xw PE37}XP# 47 C.F.R.  76.956(b).i In either case, the operator has the burden of demonstrating that its  Yv-CPS prices are not unreasonable.Yvx4 Y <ԍ#Xw PE37}XP# Id.Y  YH-3. The Commission's original rate regulations took effect on September 1, 1993.H{x4 Yt<ԍ#Xw PE37}XP# Order in MM Docket No. 92266, Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, FCC 93372, 58 Fed. Reg. 41042 (Aug. 2, 1993).  Y1-The Commission subsequently revised its rate regulations effective May 15, 1994.{1 x4 Y<ԍ#Xw PE37}XP# 47 C.F.R.  76.922(b).{ 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  Y -compliance with the revised rules from May 15, 1994 forward. x4 Y5<ԍ#Xw PE37}XP# See Second Order on Reconsideration, 9 FCC Rcd at 4190, paras. 150152. Operators attempting to justify their prices for the period prior to May 15, 1994 through a benchmark showing must  Y -complete and file FCC Form 393.Z bx4 Y<ԍ#Xw PE37}XP# Id.Z Generally, to justify their prices for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form  Yy-1200 series. yx4 Y?"<ԍ#Xw PE37}XP# 47 C.F.R.  76.922(b)(6); see also Second Order on Reconsideration, 9 FCC Rcd at 4189 n.195.  YK- 4. The first valid CPS complaints in the franchise areas which are the subject of this Order were completed and served on Operator and received by the Commission on the dates set forth on Appendix A. Operator filed FCC Form 393 in response; Operator has also filed" 0*((7" amended and supplemental Form 393 filings, most recently on February 17, 1995, in" 0*0*0*'"  Y-response to an inquiry by Commission staff.p 3x4 Yy<ԍ#Xw PE37}XP# For example, Operator filed amended FCC Forms 393 in response to a Cable Services Bureau Order citing common deficiencies observed in benchmark filings generally. Cable Operators' Rate Justification Filings, 9 FCC Rcd 7752 (Cab. Serv. Bur. 1994). Operator submitted additional information in response to a Cable Services Bureau Public Notice offering operators the opportunity to make optional supplemental filings. Public Notice: Cable Services Bureau Announces Optional Procedures with Respect to Pending PreMay 15 Benchmark Cases, DA 941556 (Dec. 29, 1994) and Public Notice: Cable Services Bureau Announces Extension of Time to File Under Optional Procedures with Respect to  Y -Pending PreMay 15 Benchmark Cases, DA 9587 (Jan. 20, 1995) (together, Public Notice).p 5. On March 31, 1994, Operator filed a Motion to Dismiss the complaint in CUID No. WI0604 because the complainant, a municipal entity, failed to submit a copy of its cable bill. We do not require municipal entities to submit cable bills since they are not expected to subscribe to the cable service at issue. Accordingly, we deny Operator's motion. On December 23, 1993, Operator filed a Motion to Dismiss the complaint in CUID No. WI0659 because the complainant failed to complete question number 12 on FCC Form 329. We note that although the complainant failed to certify that he was sending a copy of the complaint to Operator, he did indicate the date on which he mailed the complaint to Operator. Operator admits that it timely received the complaint. Hence, Operator's assertions do not perusade us that the complaint is invalid or should be dismissed. In general, we will find valid any complaint that states a claim 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. We therefore find the complaint valid and deny Operator's motion.  Yy-  6. Operator asserts that its monthly CPS tier prices are justified by its benchmark filings because its prices are lower than or equal to the maximum permitted charges as calculated in the filings. Upon review of Operator's Form 393 filings, we have found that it has not correctly calculated its maximum permitted prices, and it is therefore appropriate to make the following adjustments to Operator's calculations in Form 393:  Y- X` ` a. Operator's Form 393, Worksheet 1, Line 104 entries do 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 figures it entered on Line 34 of Step G of Part III should have been close or  Y|-identical to its Line 104 entries. | x4 Y$-#Xw PE37}XP#э See Questions and Answers on Completion of FCC Form 393 and Associated Filing Requirements, Question and Answer No. 7 (released Nov. 10, 1993) ("Where operators have restructured equipment rates as of September 1, 1993 in accordance with our regulations..."& 0*((&" operators will enter on Line 104 the same, or nearly the same, number as on Line 301.").  However, Operator's entries on Line 104 differed"|y 0*((O" substantially from its entries on Line 34. We therefore adjusted Line 104 to equal the  Y-amounts entered on Line 34.(#  Y- ` ` b. In Column G of Schedules A and C of Part III of its FCC Forms 393,  Y-Operator did not report any income tax expense due to a net operating loss.yx4 Y<ԍ#Xw PE37}XP# Facsimile from Amy M. Walker, Regulatory Manager, Marcus Cable, to FCC (Feb. 17, 1995) Operator is a Subchapter C corporation and is therefore required to pay corporate  Yv-income tax.Yvx4 W: <ԍ #Xw PE37}XP#Id.Y Therefore, Operator must complete Column G on the basis of its  Y_-statutory tax rate, regardless of the rate it actually paid in any given year._x4 Y<ԍ#Xw PE37}XP# See Cable Television Rate Regulation Questions and Answers Relating to FCC Form 393, Question and Answer No. 15 (released July 30, 1993). By omitting its tax entries in Column G, an operator reduces its effective rate of return on equipment and installations and thereby could increase its CPS price. We Xtherefore calculate Operator's federal income tax allowance on Column G of  Y -Schedules A and C on the basis of a 34% corporate tax rate. ` x4 Y< #Xw PE37}XP#э Facsimile from Amy M. Walker, Regulatory Manager, Marcus Cable, to FCC (Feb. 17, 1995) Furthermore, the Commission has stated that taxpaying business entities must grossup their tax entries in Column G of Schedules A and C (i.e., calculate the tax as a percentage of return  Y -on investment plus tax).c x4 Yi< #XR  P7jQ}XP#э First Order on Reconsideration, Second Report and Order, and Third Notice of  YR-Proposed Rulemaking, MM Docket No. 92266, FCC 93428, 9 FCC Rcd 1164, 1196 n. 92 (1993) ("Our provision to grossup the return amount for income taxes applies to all tax paying business entities to the extent that they have a state or federal income tax obligation.")  Y-See also Cable Television Rate Regulation Questions and Answers Relating to FCC Form 393, Question and Answer No. 14 (released July 30, 1993) ("The federal tax expense should be calculated based upon a pretax return on investment.") In accordance with this principle, we recalculate Column G of Schedules A and C (and subsequent steps) using a grossedup federal income tax rate of 51.51% of Operator's return on investment. (# X` ` c. For CUID No. WI0659, in Line 101 of Worksheet 1 of Part II of its FCC Form 393, Operator did not correctly enter its monthly tier charges as of the initial date of regulation. Accordingly, Worksheet 1 was adjusted to reflect tier charge information consistent with the rate card as submitted by Operator and with the rates Operator reported on Form 393, Part I. (#"%0*(("Ԍ7. 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  Y-accurate data currently available for the date for which Operator filed.x4 Y< #Xw PE37}XP#э See 47 C.F.R.  76.922(b)(9)(iii)(if a cable operator fails to justify its rates, rates must be adjusted in accordance with the most accurate data available at the time of analysis).  On its Forms 393, Operator entered 12 months on Line 124, indicating that it calculated the Inflation Adjustment Factor through September 1993. On July 29, 1994, the U.S. Department of Commerce released corrected inflation data including Gross National Product Price Index (GNPPI) figures of 122.3 for the third quarter of 1992 and 125.7 for the third quarter of 1993. Using these GNPPI figures, we calculate an Inflation Adjustment Factor through September 1993, the base date Operator used in justifying its rates, of 1.028.  Y -  8. Upon review of the record herein, and having incorporated the adjustments discussed above, we conclude that Operator has failed to justify the rates it was charging during the periods in question. Operator's showing justifies the maximum reasonable CPS tier prices shown on Appendix B (plus franchise fee) for the period from the filing of the  Y-earliest complaint in each franchise area (as set forth in Appendix A) to May 14, 1994.OvMx4 Y<ԍ#XR  P7jQ}XP# This finding is based solely on the representations of Operator and the modifications described herein. Should information come to our attention that these  Y`-representations were materially inaccurate, we reserve the right to take appropriate action. This Order is not to be construed as a finding that we have accepted as correct any specific entry, explanation or argument made by any party to this proceeding not specifically  Y-addressed herein.O 9. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the Operator's motions to dismiss the complaints referenced in Appendix A against the cable programming service prices charged by Operator in the areas referenced above and at Appendix A herein ARE DENIED. 10. IT IS FURTHER ORDERED that the complaints referred to in Appendix A against the cable programming service prices charged by Crown Cable Wisconsin, Inc. in the areas referenced in the caption and at Appendix A herein, and all other complaints in these franchise areas related to the same prices, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 11. 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 in the communities shown in Appendix B that portion of the amounts paid for cable programming service for the"7 0*((." period from the filing of the first valid complaint in each franchise area (as set forth on  Y-Appendix A)x4 Yb<ԍ#Xw PE37}XP# Our jurisdiction to order a refund dates from the earliest date a valid complaint is filed with the Commission. 47 C.F.R.  76.961(b). to May 14, 1994 which exceeded the maximum price for each franchise area set forth in Appendix B (plus franchise fee) per month, plus interest to the date of the refund. 12. IT IS FURTHER ORDERED that Operator 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 of the plan.l 13. 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 the communities listed herein, 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  Yy-forth in Appendix B (plus franchise fee).ybx4 Y<ԍ#Xw PE37}XP# 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 Form 1200 filings. 14. IT IS FURTHER ORDERED that Operator shall place into effect, within 30 days after its submission of the revised Form 1200 filings required above, prices that reflect the reductions in the CPS rates determined in this Order. 15. 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 approval of adjustments to its CPS prices in the franchise areas addressed herein for one year following the release of this Order, due to Operator's having submitted in good faith optional supplemental filings in response to our Public Notice. ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,Meredith J. Jones ` `  hh,Chief, Cable Services Bureau "0*(("  IAppendix A  Y-CUID No.` `  Date First ComplaintppDate Complaint xx-  Yv-` `  Filed with FCCVppServed  xx-  Y_-  YH-WI0043` `  2/24/94hh,Vpp2/24/94  Y1-WI0066` `  1/31/94hh,Vpp1/24/94  Y -WI0265` `  2/28/94hh,Vpp2/28/94  Y -WI0604` `  2/28/94hh,Vpp2/28/94  Y -WI0659` `  11/22/93hh,Vpp11/16/93" 0*0*0*@ " JAppendix B l  Y-CUID No.` `  Actual RatesVMaximum Permitted Rates   Y_-WI0043` `  $11.88V$11.67  YH-WI0066` `  $12.38V$12.08  Y1-WI0265` `  $10.27V$10.01  Y -WI0604` `  $15.25V$14.96  Y -WI0659` `  $12.78V$12.12