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 $//American Cable TV Investors 4, Ltd. et al., MO&O, DA95-1098//$ $/76.922 Rates for Cable Programming Service Tiers/$ $/benchmark cable rates$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1098 In the Matter of ) ) American Cable TV Investors 4, Ltd. ) CUID Nos. HI0023 (Captain Cook), ) HI0024 (Waikoloa), HI0025 ) (Kawakhae-Puako), HI0026 ) (Honaunau), HI0027 (Kealaklekua), ) HI0028 (Holualoa), HI0029 (Kailua-Kona), ) HI0030 (Kamuela), HI0031 (Keauhou), ) HI0032 (Kalaoa), HI0056 (Mauna Lani), ) HI0075 (Mauna Kea), HI0078 (Hawaii) ) and HI0093 (Waikoloa Resort) ) TCI Cablevision of Ohio, Inc. ) CUID No. OH0187 (Columbiana) ) Benchmark Filings to Support ) Cable Programming Service Prices ) MEMORANDUM OPINION AND ORDER Adopted: May 16, 1995 Released: May 19, 1995 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. Here we consider complaints about the prices that the above-captioned operators (individually "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 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. 5. Operators' actual CPS tier prices were above the maximum permitted prices that Operators calculated for the CPS tier and, thus, Operators failed to demonstrate that their prices for the CPS tier were not unreasonable. Furthermore, upon review of Operator's submission for the franchise areas located in the Hawaii islands, we have found that in every case Operator miscalculated its maximum permitted price, and it is therefore appropriate to make the following adjustment to Operator's calculations in its Form 393: On its Form 393 filing, Operator calculated the Inflation Adjustment Factor as of the end of March 1994. However, Operator cannot permissibly calculate inflation through the end of March 1994. Based on the service date of the earliest valid complaint, Operator was required to file a rate justification no later than March 30, 1994. If Operator had filed FCC Form 393 by that date, the instructions to Form 393 would have required it to calculate the inflation adjustment only through February 1994. 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 Operator should have filed Form 393. 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 February 1994, the base date Operator should have used in justifying its rate, of 1.039. 6. For CUID No. OH0187, we have found no apparent errors in Operator's calculation of its maximum permitted rate. However, Operator's actual CPS tier price was above the maximum permitted price that Operator calculated for the CPS tier. Accordingly, 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 Operator filed: Operator on its amended Form 393 calculated the Inflation Adjustment Factor as of the end of March 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 ("GNP-PI") figures of 122.3 for the third quarter of 1992 and 127.5 for the first quarter of 1994. Using these GNP-PI figures, we calculate an Inflation Adjustment Factor through March 1994, the base date Operator used in justifying its rate, of 1.043. 7. 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. However, we further determine that for each franchise area the total overcharge per subscriber is de minimis. Therefore, it would not serve the public interest to order a refund. 8. 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 franchise 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. 9. 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 franchise areas 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). 10. 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 HI0023 2/28/94 2/25/94 HI0024 2/28/94 2/25/94 HI0025 2/28/94 2/25/94 HI0026 2/28/94 2/25/94 HI0027 2/28/94 2/25/94 HI0028 2/28/94 2/25/94 HI0029 2/28/94 2/25/94 HI0030 2/28/94 2/25/94 HI0031 2/28/94 2/25/94 HI0032 2/28/94 2/25/94 HI0056 2/28/94 2/25/94 HI0075 2/28/94 2/25/94 HI0078 2/28/94 2/25/94 HI0093 2/28/94 2/25/94 OH0187 4/18/94 4/18/94 Appendix B CUID No. Actual Rates Maximum Permitted Rates HI0023 $10.76 $10.66 HI0024 $10.76 $10.66 HI0025 $10.76 $10.66 HI0026 $10.76 $10.66 HI0027 $10.76 $10.66 HI0028 $10.76 $10.66 HI0029 $10.76 $10.66 HI0030 $10.76 $10.66 HI0031 $10.76 $10.66 HI0032 $10.76 $10.66 HI0056 $10.76 $10.66 HI0075 $10.76 $10.66 HI0078 $10.76 $10.66 HI0093 $10.76 $10.66 OH0187 $11.88 $11.41