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A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:xxxxxPxxxxxxxxxCkkkkkkkkkkPCPCPCPCxxxxxxxxxxkxxxxxxjxjjjxxjxxjxxxxxxxPCxxxxPxxxxCVxHCxxxxxVVx[[[xVCxxxxxxxxjjjxxxxxxPxxPPPWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNxxxPkbbxxxxxxTxxxxTPP||x>>xxxxxP|x!T"x}xExPPPxxxxPxkxofxkkPPPPk]kxkPCkkxkxxxkkPxkPPxxxxxxxPxkP8D%nZZB 3nMnMn..s[2hZ[TWf {]J<?xxx,ix6X@`7X@8wC;,Xw PE37XPD7zC;,mXz_ pi7XDPG,J PE37PV"G($,=hG PE37hP6uC;,QXu&_ x7XXDBPG,%9_ pi7?xxx,/x `7X          "i~'K2^$(8<><q*"xxxxWWxxxWWkkxxxxxxxxPxxxxxxxxCxxxxxkkkkk]C]C]C]Cxxxxxxxxxxxxxjjxxjxxjxxxxx[Cxxx]xxC`x]Cxxjjx[][x`RxxjkjxxxxPxxPPPWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNxxxPxffxxxxxxTxxxxTPPx>>xxxxxPxT"xxExPPPxxxxPxkxsfxxxPPPPk]kkk]Ckkxkxxxkk]xkPPxxxxxxxPxkP8D%nZZB 3nMnMn..s[",tB^ f ^ENluuNNNuNNNNuuuuuuuuuuNNhN[}NNNuuNhuhuhNuuAAuAuuuuV[Auuuuhhuhu=uuuuuNuuuuuuuuuAhhhhhhhhhhNANANANAuuuuuuuuuuhuuuuuuguggguuguuguuuuuuuNAuuuuNuuuuATuFAuuuuuTTu~Y~Y~Y}uTAuuuuuuuuggguuu}uuuNuuNNNWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNuuuNh__uuuuuuRuuuuRNNyyu<<uuuuuNyuR"uyuCuNNNuuuuNuhulcuhhNNNNh[huhNAhhuhuuuhhNuhNNuuuuuuuNuhN /;k  PP9~~+k~~KkKk&&pY<?xxx,ix6X@`7X@ 8wC;,Xw PE37XPD7zC;,mXz_ pi7XDPG,J PE37PV"G($,=hG PE37hP6uC;,QXu&_ x7XXDBPG,%9_ pi7ANE,mR PE37PD@NE,-_ pi7?xxx,/x `7X",tB^ f ^ENluuNNNuNNNNuuuuuuuuuuNNu[pNNNuuNuhhRuANAuh[Nuuuhuuuu=uuuuuNuuuuuuuuAuuuuuhhhhh[A[A[A[AuuuuuuuuuuuuugguuguuguuuuuYAuuu[uuA]u[AuugguY[Yu]OuughguuuuNuuNNNWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNuuuNuccuuuuuuRuuuuRNNu<<uuuuuNuR"uuCuNNNuuuuNuhupcuuuNNNNh[hhh[Ahhuhuuuhh[uhNNuuuuuuuNuhN /;k  PP9~~+k~~KkKk&&pY2ӎ X- C  FOR FCC RECORD ONLY $//Cable Oakland, Oakland, CA, MO&O, DA 951076//$ $/76.922 Rates for Cable Programming Service tiers/$  X-$/benchmark cable rates/$    av<Ԋ E#_ pi7-#Before the FEDERAL COMMUNICATIONS COMMISSION  Washington, D.C. 20554  a<&~ DA 95 1076 Y -(#U#Xw PE37XP#  YY -In the Matter of hh,V)pp ` `  hh,V)  Y+-Cable Oakland hh,V) CUID No. CA0589 (Oakland)  Y-` `  hh,V)  Y-Benchmark Filing to Supporthh,V)  Y-Cable Programming Service Pricehh,V)  Y-}  MEMORANDUM OPINION AND ORDER ă  Y-` ` Adopted: May 11, 1995 VppReleased: May 16, 1995 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau:  Y/- I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)  1. Here we consider complaints about the price Lenfest West, Inc. d/b/a Cable Oakland ("Operator") was charging for its cable programming service ("CPS") tier in the community designated above. 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 date we will issue a separate order  Y-addressing the reasonableness of the price after that date.y g Y5-#Xw PE37XP##Xw PE37XP#э#XR  P7jQXP# The findings in this Order do not in any way prejudge the reasonableness of the price 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 Rulemaking,  Y"-MM Docket No. 92266, FCC 9438, 9 FCC Rcd 4119 (1994) ("Second Order on  Y#-Reconsideration"), the maximum permitted CPS price determined herein might also apply from May 15, 1994 until the date on which Operator #XR  P7jQXP#implemented its CPS price under the  Y%<new regulations. See para. 3, infra.#x6X@`7iX@# #XR  P7jQXP#Further, to the extent that the price as of March 31, 1994 is found to be excessive, a reduction in Operator's price for the period after May 14, 1994 may be required to reflect the fact that Operator's price during the earlier period, which is used as the starting point to calculate its prices for the prospective period, was  Y>)-unreasonable. See 47 C.F.R.  76.922(b)(4)(C).y  " 0*0*0*"Ԍ Y-ԙ2. Under the Cable Television Consumer Protection and Competition Act of 1992,.g Yy-#Xw PE37XP##Xw PE37XP#э#XR  P7jQXP# Pub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act,  623(c), as  Yd-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  Y-obligation on behalf of the cable operator to file a justification of its CPS prices.F Yb-#Xw PE37XP##Xw PE37XP#э#Xw PE37XP# 47 C.F.R.  76.956. Under our rules, an operator may attempt to justify its prices through either a benchmark showing or a  Y-costofservice showing.yF Y-#Xw PE37XP##Xw PE37XP#э#Xw PE37XP# 47 C.F.R.  76.956(b). In either case, the operator has the burden of demonstrating that its  Y-CPS prices are not unreasonable.*F Y -#Xw PE37XP##Xw PE37XP#э#Xw PE37XP# Id.ħ  Yv-3. The Commission's original rate regulations took effect on September 1, 1993.`vF Y -#Xw PE37XP##Xw PE37XP#э#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._` F Yp-#Xw PE37XP#э#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.  F Y-#Xw PE37XP#э#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. F YJ-#Xw PE37XP#э#Xw PE37XP# Id. 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.  wF Y-#Xw PE37XP#э#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 complaint in the franchise area which is the subject of this Order was completed and served on Operator and received by the Commission on the dates set forth on Appendix A. Operator filed an FCC Form 393 in response; Operator has also filed amended and supplemental Form 393 filings, most recently on April 11, 1995, in  Y-response to an inquiry by Commission staff. F Y%-#Xw PE37XP##Xw PE37XP#э#Xw PE37XP# For example, Operator filed amended FCC Forms 393 in response to a Cable Services Bureau Order citing common deficiencies observed in benchmark filings generally. Cable"& 0*((&" Operators' Rate Justification Filings, 9 FCC Rcd 7752 (Cab. Serv. Bur. 1994).  "y 0*((("Ԍ  Y-  5. Operator asserts that its monthly CPS tier price is justified by its benchmark filing because its price is lower than the maximum permitted charge as calculated in the filing. Upon review of Operator's Form 393 filing, we have found that it 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:  Y1- X` ` a. Operator's Form 393, Worksheet 1, Line 104 entry does not represent its current monthly equipment revenue as of the initial date of regulation. Since Operator restructured its rates, including its equipment rates, on September 1, 1993, in an attempt to comply with the Commission's regulations, the monthly equipment cost figure it entered on Line 34 of Step G  Y -of Part III should have been close or identical to its Line 104 entry.  KF Y-#Xw PE37XP##Xw PE37XP#э 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 Line 301.").  However, Operator's entries on Line 104 differed substantially from its entries on Line 34. We therefore adjusted Line 104 (and subsequent steps) to equal  Yy-the amount entered on Line 34.   X` `  X` ` b. In Column G of Schedules A and C of Part III of its FCC Form 393, Operator did not report any income tax expense. Operator is a Subchapter C corporation and is therefore required to pay corporate income  Y-tax. F Yr-#Xw PE37XP#э See letter of confirmation from FCC to Robert Mohollen, VP & Controller, Lenfest Group (April 27, 1995). By omitting 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 calculated Operator's federal income tax allowance on Column G of Schedules A and C on the basis of a 34%  Y-corporate tax rate.YU F Y$-#Xw PE37XP#э Id.Y Furthermore, the Commission has stated that taxpaying business entities must grossup their tax entries in Column G of Schedules A" 0*(("  Y-and C (i.e., calculate the tax as a percentage of return on investment plus tax).cF Yd-#Xw PE37XP##XR  P7jQXP#э First Order on Reconsideration, Second Report and Order, and Third Notice of  YM-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 it has a state or federal income tax obligation.").  Y -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 be calculated based upon a pretax return on investment."). In accordance with this principle, we calculated Column G of Schedules A and C (and subsequent steps) using a grossedup federal income tax rate of 51.51% of Operator's return on investment.   Y- X` ` c. Operator's calculations for its rateregulated package as of the initial date of regulation (Form 393, Part I, and Form 393, Part II, Worksheet 1) are based on a channel count of 22 channels on the basic service tier and 28 channels on the CPS tier. Our examination of the channel lineup card provided by Operator in its amended filings, however, reveals that Operator offered 24 channels on the basic tier and 26 channels on the CPS tier. We therefore adjusted Operator's calculations to reflect the correct number of channels on each tier.   X` ` d. On Line 108 of Form 393, Part II, Worksheet 1, Operator incorrectly entered a franchise fee exceeding the 5% assessed by the local  Y-franchising authority.F Y6-#Xw PE37XP#э #Xw PE37XP#See letter from Robert Mohollen, VP & Controller, Lenfest Group, to FCC (April 11, 1995). We therefore adjusted Line 108 (and subsequent steps) to reflect the fact that the local franchising authority was actually charging the maximum allowance of 5%.   Y6- X` ` e. Because of these errors, we conclude that Operator has failed to demonstrate that its price for the CPS tier was not unreasonable. We will therefore set a price for this tier, incorporating the adjustments discussed above. In doing so, we must also recalculate the Inflation Adjustment Factor in Form 393, Part II, Worksheet 1, on the basis of the most accurate data  Y-currently available for the date as to which Operator filed.! F 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 its amended Form 393, Operator calculated the Inflation Adjustment Factor as of the end of February 1994 using data released on March 31, 1994. 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"g+ 0*((]" quarter of 1992 and 126.5 for the fourth quarter of 1993. Using these GNPPI figures, we calculate an Inflation Adjustment Factor through February 1994, the base date Operator used in justifying its rates, of 1.039.   Y- I. 1. 1. a.(1)(a) i) a) 1. a. i.(1)(a)(i) 1) a)  6. Upon review of the record herein, and having incorporated the adjustments discussed above, we conclude that Operator's showing supports the maximum reasonable CPS tier price shown on Appendix B (plus franchise fee) for the period from the filing of the  Y_-earliest complaint (as set forth in Appendix A) to May 14, 1994._F Y-#Xw PE37XP##Xw PE37XP#э#XR  P7jQXP# This finding is based solely on the representations of Operator and the modifications  Y -described herein. Should information come to our attention that these representations were  Y -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.İ However, we further  YH-determine that the refund at issue is such a de minimis amount that it would not serve the public interest to order a refund.  Y -  #Xw PE37XP#7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint referred to in Appendix A against the cable programming service price charged by Operator in the area referenced above, and all other complaints in this franchise area related to the same price, ARE GRANTED TO THE EXTENT INDICATED HEREIN.   ` `  hh,FEDERAL COMMUNICATIONS COMMISSION  ` `  hh,JoAnn Lucanik ` `  hh,Chief, Financial Analysis and Compliance Division ` `  hh,Cable Services Bureau  ?<#x6X@`7iX@#"0*((_"   X<D #Xw PE37XP#Appendix A ă  Yl-CUID No.` `  Date First ComplaintppDate Complaint xx-  YU-` `  Filed with FCCVppServed  xx-  Y'-CA0589` `  2/22/94hh,Vpp2/14/94 "0*0*0*o "   Y-E Appendix B ă l  Y-CUID No.` `  Actual RatesVMaximum Permitted Rates  Y`-CA0589` `  $10.96V$10.92