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 $//TCI Cablevision of Northwestern Connecticut, Inc., et al., MO&O, DA95-1036//$ $/76.922 Rates for Cable Programming Service Tiers/$ $/benchmark cable rates$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1036 In the Matter of ) ) TCI Cablevision of Northwestern ) CUID Nos. CT0078 (Canaan), CT0079 Connecticut, Inc. ) (Salisbury), CT0080 (Cornwall), CT0081 ) (Sharon), CT0082 (North Canaan) and ) CT0083 (Norfolk) ) TCI Cablevision of Central ) CUID Nos. CT0126 (Avon), Connecticut, Inc. ) CT0127 (Burlington), CT0146 ) (Ellington), CT0147 (Tolland), CT0148 ) (Vernon), CT0149 (Bolton), CT0150 ) (Hebron), CT0151 (Andover) and CT0152 ) (Marlborough) ) TCI Cablevision of St. Louis, Inc. ) CUID No. MO0545 (St. Louis) ) TCI Cablevision of Utah, Inc. ) CUID Nos. UT0009 (Salt Lake ) County) and UT0088 (West Valley ) City) ) Benchmark Filings to Support ) Cable Programming Service Prices ) MEMORANDUM OPINION AND ORDER Adopted: May 4, 1995 Released: May 11, 1995 By the Chief, Cable Services Bureau: 1. Here we consider complaints about the prices that the above-captioned operators (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 addresses the reasonableness of Operators' prices only through May 14, 1994. At a later date we will issue a separate order addressing the reasonableness of the prices 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 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 the Utah franchise areas, May 31, 1994 for the Missouri franchise area and on June 21 and 24, 1994 for the Connecticut franchise areas. 5. In the case of the Utah franchise areas, the actual CPS tier price of TCI Cablevision of Utah, Inc. ("Utah Operator") was above the maximum permitted price that it calculated for the CPS tier and, thus, Utah Operator has failed to demonstrate that its price for the CPS tier was not unreasonable. Upon review of Utah Operator's submission we have found that Utah Operator has not correctly calculated its maximum permitted price, and it is therefore appropriate to make the following adjustments to Utah Operator's calculations in its Form 393: a. Utah Operator incorrectly calculated its benchmark rate as of the initial date of regulation on Form 393, Part II, Worksheet 1, Line 121. The instructions to Form 393 permit an operator to calculate its benchmark channel rate using either the benchmark formula or the benchmark tables. However, the benchmark figure that Utah Operator entered on Line 121 does not agree with the numbers of regulated channels, satellite channels, and subscribers reported by Utah Operator using either method. Accordingly, we changed Line 121 to 0.676, the figure yielded by the benchmark formula using the information that Utah Operator reported. b. Because Utah Operator has not demonstrated that its price in these franchise areas was reasonable, we must also recalculate the Inflation Adjustment Factor using the most accurate data currently available for the date for which Utah Operator filed. On its amended Form 393, Utah Operator calculated the Inflation Adjustment Factor (Line 127, Worksheet 1, Part II) 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 ("GNP-PI") figures of 122.3 for the third quarter of 1992 and 126.5 for the fourth quarter of 1993. Using these GNP-PI figures, we calculate an Inflation Adjustment Factor through December 1993, the base date Utah Operator used in justifying its rate, of 1.034. 6. For the Connecticut franchise areas designated by CUID Nos. CT0078 through CT0083, TCI Cablevision of Northwestern Connecticut, Inc. ("Northwestern Connecticut Operator") asserts that its monthly CPS tier price is justified by its benchmark filing because the price is less than the maximum permitted rate that it calculated on its Form 393. Upon review of Northwestern Connecticut Operator's submission for these franchise areas, we have found that Northwestern Connecticut Operator has not correctly calculated its maximum permitted price, and it is therefore appropriate to make the following adjustments to Northwestern Connecticut Operator's calculations in its Form 393: a. Northwestern Connecticut Operator incorrectly calculated its benchmark rates as of the initial date of regulation and as of September 30, 1992 on Form 393, Part II, Worksheet 1, Line 121 and Worksheet 2, Line 220. The instructions to Form 393 permit an operator to calculate its benchmark channel rates using either the benchmark formula or the benchmark tables. However, the benchmark figures that Northwestern Connecticut Operator entered on Lines 121 and 220 do not agree with the numbers of regulated channels, satellite channels, and subscribers reported by Northwestern Connecticut Operator using either method. Accordingly, we changed Line 121 to 0.758 and Line 220 to 0.803, the figures yielded by the benchmark formula using the information that Northwestern Connecticut Operator reported. b. Because of these errors, Northwestern Connecticut Operator has failed to demonstrate that its price in these franchise areas was not unreasonable. Therefore, we must also recalculate the Inflation Adjustment Factor using the most accurate data currently available for the date for which Northwestern Connecticut Operator filed. On its amended Form 393, Northwestern Connecticut Operator 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 ("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, the base date Northwestern Connecticut Operator used in justifying its rate, of 1.030. 7. For the Connecticut franchise areas designated by CUID Nos. CT0126 and CT0127 and CT0146 through CT0152, we have found no apparent errors that affect the calculation by TCI Cablevision of Central Connecticut, Inc. ("Central Connecticut Operator") of its maximum permitted rates. However, Central Connecticut Operator's actual CPS tier prices in these franchise areas were above the maximum permitted prices that Central Connecticut Operator calculated for the CPS tier. Accordingly, Central Connecticut Operator has failed to demonstrate that its 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 for which Central Connecticut Operator filed: For these Connecticut franchise areas Central Connecticut Operator on its amended Form 393 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 ("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, the base date Central Connecticut Operator used in justifying its rates, of 1.030. 8. For the Missouri franchise area designated by CUID No. MO0545, we have found no apparent errors in the calculation by TCI Cablevision of St. Louis, Inc. ("St. Louis Operator") of its maximum permitted rate. However, St. Louis Operator's actual CPS tier price was above the maximum permitted price that St. Louis Operator calculated for the CPS tier. Accordingly, St. Louis Operator has failed to demonstrate that its price for the CPS tier was 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 for which St. Louis Operator filed: For the Missouri franchise area St. Louis Operator on its amended Form 393 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 ("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, the base date St. Louis Operator used in justifying its rate, of 1.030. 9. 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 the earliest complaint in each franchise area (as set forth in Appendix A) to May 14, 1994. 10. 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. 11. 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 Appendix A) 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. 12. 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. 13. 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 area set forth in Appendix B (plus franchise fee). 14. 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. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau Appendix A CUID No. Date First Complaint Date Complaint Filed with FCC Served CT0078 9/2/93 8/31/93 CT0079 9/2/93 8/31/93 CT0080 9/2/93 8/31/93 CT0081 9/2/93 8/31/93 CT0082 9/2/93 8/31/93 CT0083 9/2/93 8/31/93 CT0126 9/3/93 9/1/93 CT0127 9/3/93 9/1/93 CT0146 9/3/93 9/1/93 CT0147 9/3/93 9/1/93 CT0148 9/3/93 9/1/93 CT0149 9/3/93 9/1/93 CT0150 9/3/93 9/1/93 CT0151 9/3/93 9/1/93 CT0152 9/3/93 9/1/93 MO0545 10/4/93 9/30/93 UT0009 1/24/94 1/19/94 UT0088 2/28/94 2/28/94 Appendix B CUID No. Actual Rates Maximum Permitted Rates CT0078 $13.52 $13.37 CT0079 $13.52 $13.37 CT0080 $13.52 $13.37 CT0081 $13.52 $13.37 CT0082 $13.52 $13.37 CT0083 $13.52 $13.37 CT0126 $11.52 $11.34 CT0127 $11.52 $11.34 CT0146 $12.07 $11.74 CT0147 $12.07 $11.74 CT0148 $12.07 $11.74 CT0149 $12.07 $11.74 CT0150 $12.07 $11.74 CT0151 $12.07 $11.74 CT0152 $12.07 $11.74 MO0545 $11.16 $10.67 UT0009 $10.83 $10.48 UT0088 $10.83 $10.48