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TX0190 (Brenham)  Yc -Northland Cable Properties Sevenhh,V)pp TX1412 (Washington County)  YL-Limited Partnership hh,V) pp    Y5-` `  hh,V)  Y-Benchmark Filings to Supporthh,V)  Y-Cable Programming Service Priceshh,V)  Y-}  MEMORANDUM OPINION AND ORDER ă  Y-` ` Adopted: April 26, 1995 VppReleased: May 3, 1995 By the Chief, Cable Services Bureau:  YP- I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)  1. Here we consider complaints about the prices that the abovecaptioned operator ("Operator") was charging for its cable programming service ("CPS") tiers 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  Y-addressing the reasonableness of the prices after that date.[ ^ YV<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 prices determined herein might also apply from May 15, 1994 until the date on which Operator #XR  P7jQXP#implemented its CPS prices under  Y%<the new regulations. See para. 3, infra.#x6X@`7iX@# #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"v(0*0*0*("  Y-unreasonable. See 47 C.F.R.  76.922(b)(4)(C).["{0*0*0*"Ԍ  Y"-  2. Under the Cable Television Consumer Protection and Competition Act of 1992," ^ YW(<ԍ#XR  P7jQXP# Pub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act,  623(c), as  YB)-amended, 47 U.S.C.  543(c) (1993)."""0*0*0*0" and our rules implementing it, 47 C.F.R. Part 76, Subpart N, the Commission must review"""0*0*0*?" 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.f Yb<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  Y-costofservice showing.iy Y<ԍ#Xw PE37XP# 47 C.F.R.  76.956(b).i In either case, the operator has the burden of demonstrating that its  Y-CPS prices are not unreasonable.Y* Y <ԍ#Xw PE37XP# Id.Y  Yv-3. The Commission's original rate regulations took effect on September 1, 1993.v 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.{_`  Yp<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  Y -compliance with the revised rules from May 15, 1994 forward.   Y<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.Z  YJ<ԍ#Xw PE37XP# Id.Z 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 w 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.  Yy- 4. The first valid CPS complaints in each of 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 Forms 393 in response; Operator also filed amended and supplemental Form 393 filings on April 13, 1995.  Y-  5. Operator asserts that its monthly prices for the first CPS tier (Tier 2) are justified by its benchmark filings because its prices for that tier are lower than the maximum permitted charges as calculated in the filings. Operator concedes that its prices for the" 0*((" second CPS tier (Tier 3) are unreasonable because they are significantly higher than 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 adjustment to Operator's calculations in Form 393:  ` ` In its amended FCC Form 393 filings, Operator calculated its Inflation Adjustment Factor (line 127, Worksheet 1, Part II) as of the end of April 1995 using data released by the U.S. Department of Commerce on August 31, 1993. However, Operator's use of April 1995 as the date through which it calculated the inflation adjustment is impermissible. Operator was required to file a justification of its CPS prices for the Brenham franchise area by no later than November 15, 1993 and for  Y -the Washington County franchise area by no later than November 21, 1993.   Ye <ԍ #Xw PE37XP#47 C.F.R.  76.956(a) (operator must file a response within 30 days of the date of service of a complaint). (#(# Y -Since Operator filed its initial justifications in a timely fashion, the instructions to (#(# Y -Form 393 required it to calculate the inflation adjustment only through October (#(# Y -1993.  b Y<ԍ #Xw PE37XP#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"). Operator cannot be permitted to claim an additional inflation adjustment (#(# Y-simply because it subsequently filed revised Forms 393. We must therefore  X(#(# Yy-recalculate the Inflation Adjustment Factor on the basis of the most accurate data (#(#currently available for the date on which Operator timely filed its initial FCC Form  YK-393 in each franchise area. K Y<ԍ #Xw PE37XP#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 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 1.030 as the Inflation Adjustment Factor through October 1993 for both franchise areas addressed in this Order.  Y-  Y-  6. Upon review of the record herein, and having incorporated the adjustment discussed above, we conclude that Operator has failed to justify the rates it was charging during the period 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 earliest"ej 0*((]"  Y-complaint in each franchise area (as set forth in Appendix A) to May 14, 1994.Ov Yy<ԍ#XR  P7jQXP# This finding is based solely on the representations of Operator and the modifications described herein. Should information come to our attention that these  YK-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  Y-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 Appendix A against the cable programming service prices charged by Operator in the areas referenced in the caption and at Appendix A herein ARE GRANTED TO THE EXTENT INDICATED HEREIN.  Y_-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 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 prices for each franchise area set forth in Appendix B (plus franchise fee) per month, plus interest to the date of the refund.  Y -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.l  Y- 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 the communities listed herein, for the period beginning May 15, 1994, to reduce the monthly charge per tier as of March 31, 1994 for Tiers 2 and 3 (Lines A6b and A6c) to equal the maximum prices in  Y-each franchise area set forth in Appendix B (plus franchise fee).  Y#<#Xw PE37XP##x6Nhez7XH#э#Xw PE37XP# We reserve the right to make further adjustments to Operator's prices for the  Y$-period after May 14, 1994, upon completion of our review of Operator's Form 1200 filings.#x6Nhez7XH#с "e: 0*((]" 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, prices that reflect the reductions in the CPS rates determined in this Order. ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,Meredith J. Jones ` `  hh,Chief, Cable Services Bureau "10*((p"   Y-D Appendix A ă  Y-CUID No.` `  Date First ComplaintppDate Complaint xx-  Yw-` `  Filed with FCCVppServed  xx-  YI-TX0190` `  10/26/93hh,Vpp10/21/93  Y2-TX1412` `  10/15/93hh,Vpp10/13/93 " 0*0*0*P "  Y-E Appendix B ă l  Y-CUID No.` ` Tier Actual RatesVMaximum Permitted Rates  Yw-TX0190` ` 2 $10.68V$10.31  Y`-` ` 3 $6.80hh,V$2.21  YI-TX1412` ` 2 $11.00V$10.75  Y2-` ` 3 $7.00hh,V$2.30