WPCb 2BJ Z Courier3|xBoldCG TimesX@`7X@HP LaserJet 4_230_1HPLAS4.PRS 4x  @\oeX@2 6F v3|xCourierCourier Bold1HPLAS4SI.PRSx  @\iX@a8DocumentgDocument Style StyleXX` `  ` 2=pRkk-a4DocumentgDocument Style Style . a6DocumentgDocument Style Style GX  a5DocumentgDocument Style Style }X(# a2DocumentgDocument Style Style<o   ?  A.  2votY a7DocumentgDocument Style StyleyXX` ` (#` BibliogrphyBibliography:X (# a1Right ParRight-Aligned Paragraph Numbers:`S@ I.  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I.   a7TechnicalTechnical Document Style(@D i) . 2 3oea8TechnicalTechnical Document Style(D a) . Doc InitInitialize Document Stylez   0*0*0*  I. A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:><q*"xxxxWWxxxWWkkxxx <ԍ#Xw PE37}XP# 47 C.F.R.  76.956.#x6X@`7X@#э Under our rules, an operator may attempt to justify its prices through  Yv-either a benchmark showing or a costofservice showing.vN Y<ԍ#Xw PE37}XP# 47 C.F.R.  76.956(b)#x6X@`7X@#. In either case, the operator has  Y_-the burden of demonstrating that its CPS prices are not unreasonable._b N Wr<ԍ#Xw PE37}XP# Id.#x6X@`7X@#р  Y1-x3. The Commission's original rate regulations took effect on September 1, 1993.N1 N Y<ԍ#Xw PE37}XP# Order in MM Docket No. 92266, Implementation of Sections of the Cable Consumer Protection and Competition Act of 1992: Rate Regulation, FCC 93372, 58 Fed.  Y-Reg. 41042 (Aug. 2, 1993).#x6X@`7X@#N  Y -The Commission subsequently revised its rate regulations effective May 15, 1994. N Yc<ԍ#Xw PE37}XP# 47 C.F.R.  76.922(b)#x6X@`7X@#. 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  Y -prices were in compliance with the revised rules from May 15, 1994 forward. IN Y<ԍ#Xw PE37}XP# See Second Order on Reconsideration, 9 FCC Rcd at 4190, paras. 150152.#x6X@`7X@# Operators attempting to justify their prices for the period prior to May 15, 1994 through a benchmark  Y-showing must complete and file FCC Form 393. N W="<ԍ#Xw PE37}XP# Id.#x6X@`7X@#р Generally, to justify their prices for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC  Yb-Form 1200 series. bN Y%<ԍ#Xw PE37}XP# 47 C.F.R.  76.922(b)(6); see also Second Order on Reconsideration, 9 FCC Rcd  Y&-at 4189 n.195.#x6X@`7X@#  XK-  "4I 0*0*0*G"Ԍ  X-Procedural Matters x4. A complete and timely CPS complaint for CUID Nos. CT0034 and CT0035 was completed and served on Operator by the Connecticut State Attorney General on September 1, 1993. It was received by the Commission on September 3, 1993. x5. Operator filed a single Form 393 with the Commission for both franchise areas covered by this Order on November 15, 1993.  X - Discussion x6. Operator asserts that its monthly CPS price of $10.28 is equal to its maximum permitted per channel price of $10.28 as calculated in its filing. However, 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 Operator's calculations in Form 393: x` ` a. In Column G of Schedules A and C of Part III of its FCC Form 393, XxOperator did not correctly account for its income tax expense. By placing entries in these columns, Operator confirms that it is a taxpaying entity (i.e., a subchapter "C" corporation). However, Operator incorrectly calculated its income tax by simply applying the corporate tax rate to its return on investment. 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 on investment  Y|-plus tax). a|dx4 Y<ԍ#Xw PE37}XP#First Order on Reconsideration, Second Report and Order, and Third Notice of 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.")  Y5"-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  Y $-be calculated based upon a pretax return on investment.") #x6X@`7X@# By understating 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 therefore recalculate Column G of Schedules A and C (and subsequent steps) using correctly grossedup tax entries.(#"7 0*((."ԌXx` ` b. In Line 101, Columns A and B of Part II, Worksheet 1 of its FCC Form 393, Operator used different rates than those on the rate card for September 1, 1993 which Operator filed along with the Form 393. Pursuant to the instructions on Form 393, Operator should have used rates that were in effect on September 1, 1993. Similarly, Operator's entries in Part II, Worksheet 2, Line 201, Columns A and B did not match the rates on its September 30, 1992 rate card. We therefore recalculate (# XxLines 101 and 201, Columns A and B (and subsequent steps) using the prices for the basic and CPS tiers found in Operator's rate cards. (# Xx` ` c. 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  Y -figure on Part II, Step G, Line 34.  x4 Y7<ԍ#Xw PE37}XP#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...operators will enter on Line 104 the same, or nearly the same, number as on  Y<Line 301.")#x6X@`7X@#. However, Operator's entries on these two lines varied substantially. Accordingly, on Line 104 we enter the same figure that appears  Y-on Line 34, as adjusted pursuant to paragraph 6a, supra.(# Xx` ` d. Because of these errors, we must also recalculate the Inflation Adjustment Factor in Form 393, Part II, Worksheet 1. On its amended Form 393, Operator apparently calculated the Inflation Adjustment Factor using data it relied upon when it set its $10.28 CPS price. If based on this data Form 393 indicated that Operator's prices were reasonable, then Operator would have successfully justified its prices  Y-under paragraph 94 of the Third Order on Reconsideration.x4 Y<ԍ#Xw PE37}XP#Third Order on Reconsideration, MM Docket Nos. 92266 and 92262, FCC 9440,  Y-9 FCC Rcd 4316, 4348 (1994).#x6X@`7X@# However, Operator has not shown that its prices were reasonable, so we must recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the  Y-date that Operator timely filed FCC Form 393.x4 Y"<ԍ#Xw PE37}XP#See 47 C.F.R.  76.922(b)(9)(iii) (if a cable operator fails to justify its rates, rates must be justified in accordance with the most accurate data available at the time of analysis). 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."  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"0*((m" 125.7 for the third quarter of 1993. Using these GNPPI figures, we calculate an Inflation Adjustment Factor through October 1993 of 1.030.(#  XH- Conclusions x7. 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. We further conclude that Operator's showing justifies a maximum reasonable CPS tier price of $10.20 per month (plus franchise fee) for the period  Y -September 3, 1993 to May 14, 1994.x x4 Y7<ԍ#Xw PE37}XP#This finding is based solely on the representations of the cable operator listed in  Y -paragraph 5, supra, and the modifications described in paragraph 6, supra. Should information come to our attention that these 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  Y-party to this proceeding not specifically addressed herein.#x6X@`7X@#џ x8. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the September 1, 1993 complaint against the cable programming service price charged by Cox Cable Greater Hartford, Inc., in Rocky Hill and Wethersfield, Connecticut, CUID Nos. CT0034 and CT0035, IS GRANTED TO THE EXTENT INDICATED HEREIN. x9. IT IS FURTHER ORDERED that the benchmark filing submitted by Cox Cable Greater Hartford, Inc., with respect to Rocky Hill and Wethersfield, Connecticut, CUID Nos. CT0034 and CT0035, for the period beginning on September 3, 1993 and ending on May 14, 1994, justifies a maximum price of $10.20 per month (plus franchise fee) for Operator's cable programming service tier. x10. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Cox Cable Greater Hartford, Inc. shall refund to subscribers in the franchise areas designated by CUID Nos. CT0034 and CT0035 that portion of the  Y7-amount paid for cable programming service from September 3, 1993,7x4 Y$<ԍ#Xw PE37}XP#Our jurisdiction to order a refund dates from the earliest date a complete and timely  Y%-complaint is filed with the Commission. See 47 C.F.R.  76.961(b).#x6X@`7X@#, to May 14, 1994, that exceeded $10.20 per month (plus franchise fee) and was thus unreasonable, plus interest to"  0*((" the date of the refund. x11. IT IS FURTHER ORDERED that Cox Cable Greater Hartford, Inc. shall promptly determine the overcharges to CPS subscribers in CUID Nos. CT0034 and CT0035 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. x12. 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 Greater Hartford, Inc. shall, within 30 days of the release of this Order, revise its Form 1200 filing for CUID Nos. CT0034 and CT0035 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 for those  Y -franchise areas (plus franchise fee).. x4 Y7<ԍ#Xw PE37}XP#We reserve the right to make further adjustment to Operator's price for the period  Y -after May 14, 1994, upon completion of our review of Operator's Form 1200 filing.#x6X@`7X@#. x13. IT IS FURTHER ORDERED that Cox Cable Greater Hartford, Inc. shall place into effect, within 30 days after submission of the revised Form 1200 filing required above, a CPS tier price for CUID Nos. CT0034 and CT0035 that reflects the reduction in the CPS rate determined in this Order. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Service Bureau