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 $//Telecable of Bloomington/Normal, Inc. et al., MO&O, DA 95-1114//$ $/76.922 Rates for cable programming service tier/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-1114 In the Matter of ) ) Telecable of Bloomington/Normal, Inc. ) CUID No. IL0147 Normal, Illinois ) ) Telecable of Lexington, Inc. ) CUID No. KY0469 Lexington, Kentucky ) ) Benchmark Filings To Support ) Cable Programming Service Prices ) Memorandum Opinion and Order Adopted: May 17, 1995 Released: May 24, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the prices Telecable of Bloomington/Normal, Inc. and Telecable of Lexington, Inc. (each "Operator" and, collectively, "Operators") were charging for the cable programming services ("CPS") tier in the Bloomington/Normal, Illinois franchise area, CUID No. IL0147; and the Lexington, Kentucky franchise area, CUID No. KY0469. Operators have chosen to attempt to justify their prices through benchmark showings on FCC Forms 393. This Order addresses the reasonableness of Operators' prices only through May 14, 1994. At a later time 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 complete and timely complaint. The filing of a complete and timely 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 complete and timely 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. Procedural Matters 4. The first complete and timely CPS complaints in each of the franchise areas addressed in this Order were completed and served on the respective Operators and received by the Commission on the dates set forth in Appendix A. 5. Operators filed Forms 393 on the dates set forth in Appendix B. 6. Operators filed Motions to Dismiss the complaints identified on Appendix A. In their Motions, Operators request that the Commission dismiss the complaints on the ground that the complaints are about specific requirements of the Cable Act that are not subject to regulation by the Commission, such as equipment charges and basic service tier rate charges. We note that attached to several of the FCC Forms 329 filed by the complainants are comments that raise issues in addition to the CPS tier rate. However, we are not persuaded that the complaints are invalid or should be dismissed. In general, we will find valid any complaint that states a claim on which relief can be granted and provides adequate information to allow us to process the complaint, despite minor flaws or inaccuracies. We believe this approach best implements the mandate of the 1992 Cable Act. Because the rates listed on the Forms 329 and on the attached bills indicate that the complainants received the CPS tier, we find it reasonable to conclude that the complainants objected to the CPS tier rate. We therefore find the complaints valid and deny Operators' Motions to Dismiss. Discussion 7. Operators assert that their monthly CPS prices are justified by their benchmark filings because their prices are less than the maximum permitted charges as calculated in their most recent filings. However, upon review, we have determined that Operators have not correctly calculated their maximum permitted prices, and it is therefore appropriate to make the following adjustments to Operators' calculations in Forms 393: a. On September 1, 1993, Operators restructured their rates. As part of this restructuring, Telecable of Bloomington/Normal changed its basic tier price to $13.34 and its CPS tier price to $10.56; and Telecable of Lexington changed its basic tier price to $8.36 and its CPS price to $10.21. These changes, however, are not reflected on Line 101 of Worksheet 1 of Part II of Operators' FCC Form 393 filings. Instead of entering their currently effective tier prices, as required by the directions for Line 101, Operators entered their previously effective tier prices. We therefore substitute Operators' restructured tier prices on Part II, Worksheet 1, Line 101. b. Since Operators restructured their rates, including their equipment rates, on September 1, 1993, the current monthly equipment revenue figures they entered on Part II, Worksheet 1, Line 104 should have been close or identical to their equipment cost figures on Part III, Step G, Line 34. However, Operators' entries on these two lines varied substantially. Accordingly, on Line 104 we enter $292,642 for Telecable of Lexington and $104,272 for Telecable of Bloomington/Normal, which are the identical figures that appear on Part III, Step G, Line 34 of the respective Form 393 filings. c. Because of these errors, we will set prices for these tiers, incorporating the adjustments discussed above. In doing so, we must also recalculate the Inflation Adjustment Factor in Form 393, Part II, Worksheet 1. On its amended Forms 393 Operators apparently calculated the Inflation Adjustment Factors using data they relied on when they set their restructured CPS prices. If based on this data the Forms 393 indicated that Operators' prices were reasonable, then Operators would have successfully justified their prices under paragraph 94 of the Third Order on Reconsideration. However, Operators have not shown that their prices were reasonable, so we must recalculate the Inflation Adjustment Factor on the basis of the most accurate data available for the date that Operators timely filed FCC Form 393. On July 29, 1994, the U.S. Department of Commerce released corrected 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 of 1.030 for both franchise areas covered by this Order. Conclusions 8. Upon review of the record herein, and having incorporated the adjustments discussed above, we conclude that Operators' showings support the maximum reasonable prices shown in Appendix C (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. 9. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that Operators' motions to dismiss the complaints listed in Appendix A ARE DENIED. 10. IT IS FURTHER ORDERED that the complaints referenced in Appendix A against the cable programming service prices charged by Telecable of Bloomington/Normal, Inc., in Normal, Illinois, CUID No. IL0147; and Telecable of Lexington, Inc., in Lexington, Kentucky, CUID No. KY0469, and all other complaints in these franchise areas relating 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 those communities shown at Appendix C hereto 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 in Appendix A) to May 14, 1994, which exceeded the maximum price for each franchise area set forth in Appendix C (plus franchise fee) per month and was thus unreasonable, 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 same 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 charges per tier as of March 31, 1994 for Tier 2 (Line A6b), to equal the maximum prices for those franchise areas covered by this Order (plus franchise fee). 14. IT IS FURTHER ORDERED that Operators shall place into effect, within 30 days after 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 on Telecable IL0147 10/26/93 10/21/93 KY0469 10/15/93 10/13/93 APPENDIX B CUID No. Date First Form Date Amended Form 393 Filed 393 Filed IL0147 11/15/93 06/24/94 KY0469 11/15/93 06/24/94 APPENDIX C CUID No. Actual Rates Maximum Reasonable Rates IL0147 $10.56 $10.42 KY0469 $10.21 $10.11