NOTICE ************************************************************************* NOTICE ************************************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file pnmc5021. File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* FOR FCC RECORD ONLY $//Cox Cable Humboldt, Inc., Eureka, California, MO&O, DA 95-809//$ $/76.922 Rates for Cable Programming Service tier/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-809 In the Matter of ) ) Cox Cable Humboldt, Inc. ) CUID No. CA0587 Eureka, California ) ) Benchmark Filing To Support ) Cable Programming Service Price ) Memorandum Opinion and Order Adopted: April 12, 1995 Released: April 17, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the price Cox Cable Humboldt, Inc. ("Operator") was charging for its cable programming service ("CPS") tier in its Eureka, California franchise area, CUID No. CA0587. Operator has chosen to attempt to justify its price through a benchmark showing on FCC Form 393. This Order addresses the reasonableness of Operator's price only through May 14, 1994. At a later time 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 complete and timely complaint. The filing of a complete and timely 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 complete and timely 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 was completed and served on Operator on September 5, 1993. It was received by the Commission on October 12, 1993. 5. Operator filed a Form 393 on June 17, 1994. On February 2, 1995, Operator provided the Commission with additional information in response to a request by Commission Staff. In addition, Operator submitted information 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's monthly CPS price of $13.41 is higher than the maximum permitted per channel price of $13.07 as calculated in its February 7, 1995 filing. Thus, Operator has failed to demonstrate that the actual charge for its CPS tier was at or below the maximum permitted rate. Furthermore, upon review we have determined that Operator has not correctly calculated its maximum permitted price, and it is therefore appropriate to make the following adjustments to its calculations in Form 393 in addition to those already made by the Operator in its February 7, 1995 filing: a. In Line 101, Columns A and B of Part II, Worksheet 1 of its FCC Form 393, Operator used different rates than what appear on the rate card that Operator supplied with its February 2, 1995 filing. Pursuant to the instructions on Form 393, Operator should have used rates that were in effect on September 1, 1993. We therefore recalculate Line 101, Columns A and B (and subsequent steps) using the prices for the basic and CPS tiers found in the rate card. b. Since Operator restructured its rates, including its equipment rates, on September 1, 1993, the current monthly equipment revenue figure it entered in Part II, Worksheet 1, Line 104 should have been close or identical to its equipment cost figure on Part III, Step G, Line 34. However, Operator's entries on these two lines varied substantially. Accordingly, we changed Line 104 to equal the figure that appears on Line 34. c. In its February 7, 1995 filing, Operator states that it had 26 rate-regulated satellite channels in service on September 1, 1993. However, we counted 27 rate- regulated satellite channels on a channel line-up provided by Operator. Accordingly, we recalculated the Benchmark Channel Rate on Form 393, Part II, Worksheet 1, Line 121 using the correct number of satellite channels and entered .639 on Line 121. d. Because Operator has failed to demonstrate that its price for the CPS tier was not unreasonable, we must also recalculate the Inflation Adjustment Factor in Form 393, Part II, Worksheet 1. On its Form 393, Operator calculated the Inflation Adjustment Factor using data it relied upon when it set its $13.41 CPS price. If based on this data Form 393 indicated that Operator's price was reasonable, then Operator would have successfully justified its price under paragraph 94 of the Third Order on Reconsideration. However, Operator has not shown that its price was reasonable, so we must recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date Operator was required to file Form 393. On July 29, 1994, the U. S. Department of Commerce released corrected inflation data including 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 of 1.030. Conclusions 7. 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 period in question. Operator's showing justifies a maximum reasonable CPS tier price of $12.90 per month (plus franchise fee) for the period starting on October 12, 1993 and ending on May 14, 1994. 8. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the September 5, 1993 complaint against the cable programming service price charged by Cox Cable Humboldt, Inc. in Eureka, California, CUID No. CA0587, and all other complaints in this franchise area relating to the same price, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 9. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Cox Cable Humboldt, Inc. shall refund to subscribers in the franchise area designated by CUID No. CA0587 that portion of the amount paid for cable programming service from October 12, 1993 to May 14, 1994, that exceeded $12.90 per month (plus franchise fee) and was thus unreasonable, plus interest to the date of the refund. 10. IT IS FURTHER ORDERED that Cox Cable Humboldt, Inc. shall promptly determine the overcharges to CPS subscribers in CUID No. CA0587 for the same 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. 11. 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 Cox Cable Humboldt, Inc. shall, within 30 days of the release of this Order, revise its Form 1200 filing for CUID No. CA0587 for the period beginning May 15, 1994, to reduce the monthly charge per tier as of March 31, 1994 (Line A6b) to equal the maximum price for that franchise area (plus franchise fee). 12. IT IS FURTHER ORDERED that Cox Cable Humboldt, Inc. shall place into effect, within 30 days after submission of the revised Form 1200 filing required above, a CPS tier price for CUID No. CA0587 that reflects the reduction in the CPS rate determined in this Order. 13. IT IS FURTHER ORDERED, pursuant to Section 76.960 of the Commission's Rules, 47 C.F.R.  76.950, that Operator shall not be required to obtain advance approval of adjustments to its CPS price in the franchise area addressed herein 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 Service Bureau