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MO&O, DA95921//$ $/76.922 Rates for Cable Programming Service Tiers/$  Y-$/benchmark cable rates$#x6X@`7iX@#  al<   #Xw PE37XP##_ pi7-#-Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95921X(#P  Y -#Xw PE37XP#  Y -In the Matter of hh@)hpp  Yp -x` `  hh@)h  YY -TCI Cablevision of Los Angeleshh@)hCUID No. CA1065 (Hacienda Heights)  YB -County` `  hh@) x` `  hh@)  Y-TCI Cablevision of Centralhh@)hCUID Nos. CT0012 (Bristol), CT0013  Y-Connecticut` `  hh@)h(Farmington), CT0014 (Plainville),  Y-x` `  hh@)hCT0015 (New Britain), CT0016  Y-x` `  hh@)h(Berlin) and CT0125 (Canton) x` `  hh@)  Y-TCI Cablevision of Treasurehh@)hCUID No. ID0097 (Boise)  Y-Valley` `  hh@)h x` `  hh@)  Y\-TCI of Michiana hh@)hCUID Nos. IN0063 (Goshen) and  YE-x` `  hh@)hIN0064 (Elkhart)   xx 0(#(#X x` `  hh@)  Y-TCI Cablevision Associateshh@)hCUID No. IN0079 (Gary)  Y-of Gary` `  hh@) x` `  hh@)  Y-TCI of Southern Minnesota, Inc.hh@)hCUID No. MN0009 (Rochester) x` `  hh@)  Y-Benchmark Filings to Supporthh@)  Y-Cable Programming Service Priceshh@)  Y_ -}  MEMORANDUM OPINION AND ORDER ă  Y2"-x` ` Adopted: April 25, 1995@ hReleased: May 1, 1995 By the Chief, Cable Services Bureau:  Y%- I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)  x1. Here we consider complaints about the prices that the abovecaptioned operators (each "Operator" and, collectively, "Operators") were charging for their cable programming service ("CPS") tiers in the communities designated above. Operators have chosen to attempt to justify their prices through benchmark showings on FCC Form 393. This Order"(0*0*0*!*" addresses the reasonableness of Operators' prices only through May 14, 1994. At a later"0*0*0*A(" date we will issue a separate order addressing the reasonableness of the prices after that  Y-date.= ^ Yy<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 an 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 prices determined herein might also  Y-apply from May 15, 1994 until the date on which such Operator #XR  P7jQXP#implemented its CPS prices  Y<under the new regulations. See para. 3, infra.#x6X@`7iX@# #XR  P7jQXP#Further, to the extent that the prices as of March31, 1994 are found to be excessive, reductions in prices for the period after May 14, 1994 may be required to reflect the fact that the prices during the earlier period, which are used as the starting point to calculate the prices for the prospective period, were  Y -unreasonable. See 47 C.F.R.  76.922(b)(4)(C).=  Y-x2. Under the Cable Television Consumer Protection and Competition Act of 1992,  Y<ԍ#XR  P7jQXP# Pub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act,  623(c), as  Y-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  Yv-obligation on behalf of the cable operator to file a justification of its CPS prices.fv9 Y`<ԍ#Xw PE37XP# 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  YH-costofservice showing.iH Y<ԍ#Xw PE37XP# 47 C.F.R.  76.956(b).i In either case, the operator has the burden of demonstrating that its  Y1-CPS prices are not unreasonable.Y1 Y}<ԍ#Xw PE37XP# Id.Y  Y -x3. The Commission's original rate regulations took effect on September 1, 1993. N Y<ԍ#Xw PE37XP# 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).  Y -The Commission subsequently revised its rate regulations effective May 15, 1994.{  Yn#<ԍ#Xw PE37XP# 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" 0*((y"  Y-compliance with the revised rules from May 15, 1994 forward. Yy<ԍ#Xw PE37XP# 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.Y { Y<ԍ#Xw PE37XP# Id.Y Generally, to justify their prices for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form 1200  Y-series. I. Y -w#Xw PE37XP# #Xw PE37XP#47 C.F.R.  76.922(b)(6); see also Second Order on Reconsideration, 9 FCC Rcd at 4189 n.195.  Yv- x4. The first valid CPS complaints in each of the franchise areas which are the subject of this Order were completed and served on the respective Operators and received by the Commission on the dates set forth on Appendix A. Operators filed FCC Form 393s in response; Operators have also filed amended and supplemental Form 393 filings, most recently on May 18, 1994 for CUID No. ID0097, May 27, 1994 for CUID Nos. IN0063, IN0064 and MN0009, June 6, 1994 for CUID No. CA1065, June 22, 1994 for CUID No.IN0079 and June 24, 1994 for CUID Nos. CT0012, CT0013, CT0014, CT0015,  Y -CT0016 and CT0125.q  ? Y-#Xj\  P6G; 9XP#э# Xw PE37XP# For example, Operators 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). q  Y -  x5. Operators' actual CPS tier prices were above the maximum permitted prices that they calculated for the CPS tier and, thus, Operators have failed to demonstrate that their prices for the CPS tier were not unreasonable. Upon review of Operators' submissions we have found that the Operators for CUID Nos. ID0097 and IN0079 have not correctly calculated their maximum permitted prices, and it is therefore appropriate to make the following adjustments to such Operators' calculations in their Form 393s:  Y- Xx` ` a. On its Form 393 filing for CUID No. ID0097, TCI Cablevision Associates of Treasure Valley ("Treasure Valley Operator") calculated the Inflation Adjustment Factor (line 127, Worksheet 1, Part II) as of the end of December 1993. However, Treasure Valley Operator cannot permissibly calculate inflation through the end of December 1993. Based on the service date of the earliest valid complaint, Treasure Valley Operator was required to file a rate justification no later than November 15, 1993. If Treasure Valley Operator had filed FCC Form 393 by that date, the instructions to Form 393 would have required it to calculate the inflation adjustment"e 0*((l"  Y-only through October 1993.  Yy-#Xw PE37XP#э FCC Form 393, page 11, instructions for Line 124 (Inflation Adjustment Factor is calculated using "the number of whole months from September 30, 1992 to the date you will submit this form"). Treasure Valley Operator cannot claim an additional inflation adjustment simply because it filed Form 393 late. We therefore must recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date that Treasure Valley Operator should have filed Form  Y-393. K Y -#Xw PE37XP#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 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 October 1993, the base date Treasure Valley Operator should have used in justifying its rate for CUID No. ID0097, of 1.030.(#  Y -  Xx` ` b. On its Form 393 filing for CUID No. IN0079, TCI Cablevision Associates of Gary ("Gary Operator") calculated the Inflation Adjustment Factor (line 127, Worksheet 1, Part II) as of the end of December 1993. However, Gary Operator cannot permissibly calculate inflation through the end of December 1993. Based on the service date of the earliest valid complaint, Gary Operator was required to file a  Y-rate justification no later than December 30, 1993.v Y(-#Xw PE37XP#э See 47 C.F.R.  76.956(a). v If Gary Operator had filed FCC Form 393 by that date, the instructions to Form 393 would have required it to  Yb-calculate the inflation adjustment only through November 1993.b Y-#Xw PE37XP#э FCC Form 393, page 11, instructions for Line 124 (Inflation Adjustment Factor is calculated using "the number of whole months from September 30, 1992 to the date you will submit this form"). Gary Operator cannot claim an additional inflation adjustment simply because it filed Form 393 late. We therefore must recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the date that Gary Operator should have filed  Y-Form 393.  Y!-#Xw PE37XP#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 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 November 1993, the base date Gary Operator should have used in justifying its rate for CUID"0*(("  Y-No. IN0079, of 1.032. Yy-#Xw PE37XP#э This adjustment to Worksheet 1 has the effect of causing Gary Operator to calculate its permitted rate from Form 393, Part II, Worksheet 2 rather than Worksheet 1. Gary Operator, however, did not complete Worksheet 2 of Form 393. For this franchise area, therefore, we have computed Worksheet 2 by using data supplied by Gary Operator on its Form 1200 filing. (# x6. In the other franchise areas addressed in this Order, we have found no apparent errors in the maximum permitted rates calculations of the Operators for such other areas (the "Other Operators"). However, Other Operators' actual CPS tier prices were above the maximum permitted prices that they calculated for the CPS tier. Accordingly, Other Operators have failed to demonstrate that their prices for the CPS tier were not unreasonable and we therefore must recalculate the Inflation Adjustment Factor in Form 393, Part II, Worksheets 1 and 4, on the basis of the most accurate data currently available for the date  Y1-for which each Other Operator filed:1 Y-#Xw PE37XP#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).  Xx` ` a. Except for CUID Nos. IN0063 and IN0064, Other Operators on their amended Form 393s calculated the Inflation Adjustment Factor as of the end of October 1993 using data released on August 31, 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 October 1993, the base date Other Operators used in justifying their rates, of 1.030.(# Xx` ` b. For CUID Nos. IN0063 and IN0064, TCI of Michiana ("Michiana Operator") on its amended Form 393 calculated the Inflation Adjustment Factor as of the end of December 1993 using data released on December 1, 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 126.5 for the fourth quarter of 1993. Using these GNPPI figures, we calculate an Inflation Adjustment Factor through December 1993, the base date Michiana Operator used in justifying its rate, of 1.034.(# x7. Upon review of the record herein, and having incorporated the adjustments discussed above, we conclude that Operators have failed to justify the rates they were charging during the periods in question. Operators' showings justify the maximum reasonable CPS tier prices shown on Appendix B (plus franchise fee) for the period from the filing of" 0*(("  Y-the earliest complaint in each franchise area (as set forth in Appendix A) to May 14, 1994.d Yy-#Xw PE37XP#э This finding is based solely on the representations of Operators and the modifications  Yb-described herein. Should information come to our attention that these representations were  YK-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  Y-argument made by any party to this proceeding not specifically addressed herein.d x8. 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 Appendix A against the cable programming service prices charged by Operators 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. x9. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operators shall refund to subscribers in the communities shown in Appendix B 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 on  Y -Appendix A)  Y<ԍ#Xw PE37XP# 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. x10. IT IS FURTHER ORDERED that Operators shall promptly determine the overcharges to their CPS subscribers for the stated periods, and shall within 30 days of the release of this Order file reports with the Chief, Cable Services Bureau, stating the cumulative refund amounts so determined (including franchise fees and interest), describing the calculation thereof, and describing their plans to implement the refunds within 60 days of Commission approval of the plans.T x11. 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 Operators shall, within 30 days of the release of this Order, revise their 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  Y|-area set forth in Appendix B (plus franchise fee).| Y#<#Xw PE37XP##x6Nhez7 XH#э# Xw PE37XP# We reserve the right to make further adjustments to Operators' prices for the  Y$-period after May 14, 1994, upon completion of our review of Operators' Form 1200 filings.#x6Nhez7 XH#у "eQ 0*((]" x12. IT IS FURTHER ORDERED that Operators shall place into effect, within 30 days after their submission of the revised Form 1200 filings required above, prices that reflect the reductions in the CPS rates determined in this Order. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhMeredith J. Jones x` `  hhChief, Cable Services Bureau " 0*((@ "   Y-, Appendix A ă  Y-CUID No.` `  Date First ComplainthppDate Complaint xx  Y-x` `  Filed with FCC@hppServed  xx  Y`-CA1065` `  10/15/93hh@hpp9/13/93  Y2-CT0012` `  9/3/93hh@hpp9/1/93  Y -CT0013` `  9/3/93hh@hpp9/1/93  Y -CT0014` `  9/3/93hh@hpp9/1/93  Y -CT0015` `  9/3/93hh@hpp9/1/93  Yz-CT0016` `  9/3/93hh@hpp9/1/93  YL-CT0125` `  9/3/93hh@hpp9/1/93  Y-ID0097` `  10/8/93hh@hpp10/6/93  Y-IN0063` `  2/28/94hh@hpp2/28/94  Y-IN0064` `  2/28/94hh@hpp2/28/94  xx  Y-IN0079` `  12/7/93hh@hpp11/30/93  Yf-MN0009` `  11/22/93hh@hpp11/18/93 "80*0*0*"   Y-- Appendix B ă  Y-CUID No.` `  Actual Rates@hMaximum Permitted Rates  Yw-CA1065` `  $11.10@hpp$10.26  YI-CT0012` `  $14.39@hpp$13.91  Y -CT0013` `  $14.39@hpp$13.91  Y -CT0014` `  $14.39@hpp$13.91  Y -CT0015` `  $14.39@hpp$13.91  Y-CT0016` `  $14.39@hpp$13.91  Yc-CT0125` `  $14.39@hpp$13.91  Y5-ID0097` `  $11.17@hpp$10.72  Y-IN0063` `  $11.34@hpp$10.90  Y-IN0064` `  $11.34@hpp$10.90  Y-IN0079` `  $8.78hh@hpp$7.00  Y}-MN0009` `  $12.08@hpp$11.91 T