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 how2ftp. File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $//TCI of Arkansas, Inc., et al., MO&O, DA-95-1505//$ $/ 76.922 Rates for Cable Programming Services tiers /$ $/benchmark cable rates/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1505 In the Matter of ) ) TCI of Arkansas, Inc. ) CUID No. AR0056 (Jonesboro) ) TCI Cablevision of Florida, Inc. ) CUID Nos. FL0060 (Port Orange) and ) FL0365 (Key Colony Beach) ) TCI of South Florida, Inc. ) CUID Nos. FL0436 (Dade), FL0485 ) (North Miami), FL0486 (El Portal), ) FL0487 (Miami Shores) and FL0534 ) (North Miami Beach) ) TCI of Pennsylvania, Inc. ) CUID No. PA0731 (Gilpin) ) Benchmark Filings to Support ) Cable Programming Service Prices ) MEMORANDUM OPINION AND ORDER Adopted: July 5, 1995 Released: July 12, 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 areas designated by CUID Nos. FL0436, FL0485, FL0486, FL0487 and FL0534, 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 these franchise areas, 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. The 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. Under either method, however, the benchmark figure that the Operator entered on Line 121 does not agree with the number of regulated channels, satellite channels, and subscribers reported by the Operator. Accordingly, using the information that the Operator reported, we changed Line 121 to 0.619, the figure yielded by the benchmark formula. b. On its Form 393 filing, the Operator calculated the Inflation Adjustment Factor (Line 127, Worksheet 1, Part II) as of the end of December 1993. However, the Operator cannot permissibly calculate inflation through the end of December 1993. Based on the service date of the earliest valid complaint for each franchise area, the Operator was required to file a rate justification no later than November 15, 1993. 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 October 1993. 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 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 should have used in justifying its rate for these franchise areas, of 1.030. 6. For the franchise area designated by CUID No. PA0731, 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, the Operator calculated the Inflation Adjustment Factor (Line 127, Worksheet 1, Part II) 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 February 17, 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 January 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 January 1994, the base date the Operator should have used in justifying its rate for this franchise area, of 1.037. 7. For the franchise areas designated by CUID Nos. AR0056, FL0060 and FL0365, we have found no apparent errors in the Operators' calculation of their maximum permitted rates. However, the Operators' actual CPS tier prices were above the maximum permitted prices that the Operators calculated for the CPS tier. Accordingly, the Operators have failed to demonstrate that their 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 the Operators filed: On their amended Form 393s, the Operators calculated the Inflation Adjustment Factor 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 the Operators used in justifying their rates, of 1.034. 8. 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 CUID Nos. FL0365 and PA0731, the total overcharge per subscriber is de minimis. Therefore, it would not serve the public interest to order refunds in these franchise areas. 9. 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. 10. 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, except for CUID Nos. FL0365 and PA0731, 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. 11. 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. 12. 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). 13. 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 AR0056 2/25/94 2/25/94 FL0060 1/18/94 1/12/94 FL0365 4/1/94 3/28/94 FL0436 9/27/93 9/17/93 FL0485 9/27/93 9/17/93 FL0486 9/27/93 9/17/93 FL0487 9/27/93 9/17/93 FL0534 9/27/93 9/17/93 PA0731 2/3/94 1/18/94 Appendix B CUID No. Actual Rates Maximum Permitted Rates AR0056 $12.63 $12.23 FL0060 $11.25 $10.73 FL0365 $11.73 $11.50 FL0436 $12.22 $11.36 FL0485 $12.22 $11.36 FL0486 $12.22 $11.36 FL0487 $12.22 $11.36 FL0534 $12.22 $11.36 PA0731 $11.91 $11.77