FOR FCC RECORD ONLY $//Sammons Communications, Inc., California, MO&O, DA-95-739//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. 20554 DA 95-739 In the Matter of ) ) Sammons Communications, Inc. ) CUID Nos. CA0178, Burbank; ) CA0180, Glendale Benchmark Filings to Support ) Cable Programming Service Price ) Memorandum Opinion and Order Adopted: April 5, 1995 Released: April 7, 1995 By the Chief, Cable Services Bureau: 1. Here we consider complaints about the price that the above-captioned operator ("Operator") was charging for its cable programming service ("CPS") tier in Burbank, California and Glendale, California. Operator has chosen to attempt to justify its price through benchmark showings on FCC Form 393. This Order addresses the reasonableness of Operator'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. 4. The first valid CPS complaints in Burbank and Glendale were completed and served on Operator and received by the Commission on the dates set forth in the Appendix. For both communities, Operator filed an FCC Form 393 in response. For the Glendale community, Operator also filed amended Form 393 filings on November 18, 1993 and June 24, 1994 and a supplemental filing on February 6, 1995. 5. In its benchmark filings for both Burbank and Glendale, Operator calculated a maximum permitted CPS rate of $8.70 per month (plus franchise fee). Operator's actual monthly charge for its CPS tier was $9.80 (plus franchise fee). Thus, Operator has failed to show that its rate for the CPS tier was not unreasonable. Furthermore, upon review of Operator's Form 393 filings, we have found that it has not correctly calculated its maximum permitted price, and it is therefore appropriate to make the following adjustments to Operator's calculations in Form 393: a. On its Form 393 for Burbank, Operator calculated the Inflation Adjustment Factor (Line 127, Worksheet 1, Part II) as of the end of October 1993 using data released by the U.S. Department of Commerce on August 31, 1993. However, Operator's use of October 1993 as the date through which it calculated the inflation adjustment is impermissible. Operator was served with a rate complaint on September 1, 1993. The instructions to FCC Form 393, page 11, require that the Inflation Adjustment Factor be calculated using "the number of whole months from September 30, 1992 to the date you will submit this form." In general, a cable operator must submit a justification of its rates no more than 30 days after service of the earliest valid complaint. Operator cannot be permitted to claim an additional inflation adjustment simply because it did not file its Form 393 within this 30 day period. We must therefore recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the latest date contemplated by the Form 393 instructions. 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 1.028 as the Inflation Adjustment Factor through September 1993, the base date Operator should have used in justifying its rate in Burbank. b. In its optional supplemental filing in response to the Public Notice for Glendale, Operator claimed an Inflation Adjustment Factor of 1.047, which indicates that inflation was taken through May 1994 using data released by the U.S. Department of Commerce on July 29, 1994. However, for reasons discussed in the preceding paragraph, at the time Operator was required to respond to the first valid rate complaint, the instructions to Form 393 permitted it to claim an inflation adjustment only through October 1993. Operator cannot claim an additional inflation adjustment simply because it subsequently amended its rate justification. We therefore must recalculate the the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date for which Operator should have filed. 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 Operator should have used in justifying its rate in Glendale. 6. Upon review of the record herein, and having incorporated the adjustments discussed above, we conclude that Operator has failed to justify the rate it was charging during the periods in question. Operator's showings justify a maximum reasonable CPS tier price of $8.57 per month (plus franchise fee) for the period from the filing of the earliest complaint in each franchise area (as set forth in the Appendix) to May 14, 1994. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaints referred to in the Appendix against the cable programming service price charged by Operator in Burbank, California and Glendale, California ARE GRANTED TO THE EXTENT INDICATED HEREIN. 8. 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 Burbank, California and Glendale, California that portion of the amounts paid for cable programming service for the period from the filing of the first valid complaint in each franchise area (as set forth in the Appendix) to May 14, 1994 which exceeded $8.57 per month (plus franchise fee), plus interest to the date of the refund. 9. 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. 10. 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 Burbank, California and Glendale, California, 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 $8.57 per month (plus franchise fee). 11. IT IS FURTHER ORDERED that Operator shall place into effect, within 30 days after its submission of the revised Form 1200 filings required above, a price that reflects the reduction in the CPS rate determined in this Order. 12. IT IS FURTHER ORDERED, pursuant to Section 76.960 of the Commission's rules, 47 C.F.R.  76.960, that in Glendale, California, Operator shall not be required to obtain advance approval of adjustments to its CPS price for one year following the release of this Order, due to Operator's having submitted in good faith an optional supplemental filing in response to our Public Notice. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau Appendix Date First Complaint Date Complaint CUID No. Filed with FCC Served CA0178 9/8/93 9/1/93 CA0180 10/18/93 10/13/93