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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $//United Artists Enterprises, Inc., MO&O, DA 95-1370//$ $/ 76.922 Rates for Cable Programming Service tier/$ $/benchmark cable rates/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1370 In the Matter of ) ) United Artists Enterprises, Inc. ) CUID No. CA1091 (Moreno ) Valley) ) Chino Valley Cablevision, Inc. ) CUID Nos. CA1151 (Chino Hill) and ) CA1226 (City of Chino) ) TCI Cablevision of Wisconsin, Inc. ) CUID No. IL0627 (Village of Richmond) ) TCI of Central Indiana, Inc. ) CUID No. IN0074 (Anderson) ) Benchmark Filings to Support ) Cable Programming Service Prices ) MEMORANDUM OPINION AND ORDER Adopted: June 16 , 1995 Released: June 23, 1995 By the Chief, 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. For the franchise area designated by CUID No. CA1091, the Operator's actual CPS tier price was above the maximum permitted price that the Operator calculated for the CPS tier and, thus, the Operator failed to demonstrate that its price for the CPS tier was not unreasonable. Furthermore, upon review of the Operator's submission for this franchise area, we have found that the Operator miscalculated its maximum permitted price, and it is therefore appropriate to make the following adjustments to the Operator's calculations in its Form 393: a. On Line 101, Worksheet 1 of Form 393, the Operator states that it has 22 channels on its basic service tier and 28 channels on its CPS tier. The attached September 1993 channel line-up indicates that the Operator actually had 23 channels on its basic service tier and 27 channels on its CPS tier. Accordingly, we have revised these entries on Line 101. b. Because the Operator has not demonstrated that its price in this franchise area was reasonable, we must also recalculate the Inflation Adjustment Factor using the most accurate data currently available for the date for which the Operator filed. The 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 the Operator used in justifying its rate, of 1.030. 6. For the franchise area designated by CUID No. IN0074, the Operator's actual CPS tier price was less than the maximum permitted price that the Operator calculated for its CPS tier. However, upon review of the Operator's submission for this franchise area, we have found that the Operator miscalculated its maximum permitted price, and it is therefore appropriate to make the following adjustments to the Operator's calculations in its Form 393: a. On Line 108, Worksheet 1 of Form 393, the Operator entered $23,918.20 as its monthly franchise fee expense. However, the Operator's September 1993 rate card indicates that the rates entered on Line 101 do not include franchise fees. Accordingly, we changed Line 108 to $0.00. b. Because the Operator has not demonstrated that its price in this franchise area was reasonable, we must also recalculate the Inflation Adjustment Factor using the most accurate data currently available for the date for which the Operator filed. The 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 the Operator used in justifying its rate, of 1.030. 7. For the franchise area designated by CUID No. IL0627, the Operator's actual CPS tier price was above the maximum permitted price that the Operator calculated for the CPS tier and, thus, the Operator failed to demonstrate that its price for the CPS tier was not unreasonable. Furthermore, upon review of the Operator's submission for this franchise area, we have found that the Operator miscalculated its maximum permitted price, and it is therefore appropriate to make the following adjustment to the Operator's calculations in its Form 393: On its Form 393 filing for CUID No. IL0627, the Operator calculated the Inflation Adjustment Factor as of the end of March 1994. However, the Operator cannot permissibly calculate inflation through the end of March 1994. Based on the service date of the earliest valid complaint, the Operator was required to file a rate justification no later than March 28, 1994. If the 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. The 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 the 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 the Operator should have used in justifying its rate for CUID No. IL0627, of 1.039. 8. For the franchise areas designated by CUID Nos. CA1151 and CA1226, we have found no apparent errors in the Operator's calculation of its maximum permitted rate. However, the Operator's actual CPS tier price was above the maximum permitted price that the Operator calculated for the CPS tier. Accordingly, the 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 the Operator filed: On its amended Form 393, the 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 the 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 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. 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 CA1091 10/12/93 10/8/93 CA1151 2/23/94 2/18/94 CA1226 10/15/93 10/12/93 IL0627 2/24/94 2/24/94 IN0074 10/25/93 10/21/93 Appendix B CUID No. Actual Rates Maximum Permitted Rates CA1091 $11.96 $10.60 CA1151 $10.55 $10.09 CA1226 $10.55 $10.09 IL0627 $10.75 $9.98 IN0074 $11.22 $11.03