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. ***************************************************************** ******** $//Inland Valley Cablevision, Hemet, CA, MO&O, DA 95-1508//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1508 In the Matter of ) ) Inland Valley Cablevision ) CUID No. CA0376 (Hemet, CA) ) Benchmark Filing to Support ) Cable Programming Service Price ) MEMORANDUM OPINION AND ORDER Adopted: July 5, 1995 Released: July 14, 1995 By the Chief, Cable Services Bureau: 1. Here we consider complaints about the price that the above-captioned operator ("Operator") was charging for its cable programming service ("CPS") tier in the community referenced 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 addressing the reasonableness of the price 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 complaint in the franchise area which is the subject of this Order was completed and served on Operator on October 21, 1993 and received by the Commission on October 22, 1993. Operator filed FCC Form 393 in response; Operator has also filed amended and supplemental Form 393 filings, most recently on June 26, 1995. On November 22, 1993, Operator filed a Motion to Dismiss the complaint for a number of reasons. First, Operator asserts that the complainant failed to complete question number 12 on FCC Form 329. We note that although the complainant failed to certify that he was sending a copy of the complaint to Operator, he did indicate the date on which he mailed the complaint to Operator. Operator admits that it timely received the complaint. Hence, Operator's assertions do not perusade us that the complaint is invalid or should be dismissed. Operator also asserts that the complainant did not include a copy of his most recent bill with the complaint which he sent to Operator and that the complainant incorrectly answered question number 9 on FCC Form 329 as it then existed because he listed in his complaint channels that were sold on the basic service tier as well as channels that were offered on the CPS tier. In addition, Operator urges the Commission to find the complaint deficient on the ground that the complainant incorrectly answered question number 8. Operator argues that the challenged rate as listed by the complainant includes basic rates and therefore does not indicate what rate the complainant finds unreasonable. Operator's assertions do not persuade us that the complaint is 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 complainant's response to question number 9 includes channels contained on the CPS tier and because the rates listed in answer number 8 indicate that the complainant received the CPS tier, we find it reasonable to conclude that the complainant objected to the CPS tier rate and that he believed that rate was unreasonable. Furthermore, there is no evidence that Operator was hindered in responding to the complaint by complainant's failure to include a copy of his most recent bill. We therefore find the complaint valid and deny Operator's Motion to Dismiss. Operator also disputes the validity of a subsequent complaint filed by another cable subscriber. Because we have accepted the complaint at issue as properly filed, we find it unnecessary to rule on Operator's objections to this later filed complaint. 5. Operator asserts that its monthly CPS tier price of $10.80 (plus franchise fee) is justified by its benchmark filing because its price is lower than the maximum permitted charge of $10.86 per month (plus franchise fee), 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: a. On Line 302 of Worksheet 3, Part II, Operator incorrectly entered the amount it reported on Line 106 of Worksheet 1 instead of the amount it reported on Line 206 of Worksheet 2. The instructions for Line 302 of Form 393 state: "If you completed Worksheet 1 only, enter the number from Line 106, Column E. If you completed Worksheet 2, enter the number from Line 206, Column E." In this case, Operator completed Worksheet 2 and therefore should have entered the number from Line 206. We therefore adjusted Line 302 to equal the amount reported on Line 206 in accordance with the Form's instructions. b. Operator calculated the Inflation Adjustment Factor (Line 127, Worksheet 1, Part II) as of the end of November 1993. However, Operator's use of November 1993 as the date through which it calculated the inflation adjustment is impermissible. The instructions to FCC Form 393, page 11, require that the Inflation Adjustment Factor be calculated using "the number of whole months from September 30, 1992 to the date you will submit this form." (Emphasis added.) In general, a cable operator must submit a justification of its rates no more than 30 days after service of the earliest valid complaint. Operator was served with the rate complaint on October 21, 1993. Since Operator was required to file a rate justification no later than November 20, 1993, Operator should have used October 1993 as the base date for calculating the Inflation Adjustment Factor. We therefore must recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the correct base date. 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 1.030 as the Inflation Adjustment Factor through October 1993, the base date Operator should have used in justifying its rate. 6. Upon review of the record herein, and having incorporated the adjustments discussed above, we conclude that Operator has failed to justify the rate it was charging during the period in question. Operator's showing justifies a maximum reasonable CPS tier price of $10.50 per month (plus franchise fee) for the period from October 22, 1993 to May 14, 1994. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaint referenced herein against the cable programming service price charged by Operator in the franchise area referenced in the caption, and all other complaints in this franchise area related to the same price, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 8. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in the franchise area referenced in the caption that portion of the amount paid for cable programming service for the period from October 22, 1993 to May 14, 1994 which exceeded the maximum price of $10.50 per month (plus franchise fee), plus interest to the date of the refund. 9. IT IS FURTHER ORDERED that Operator shall promptly determine the overcharges to CPS subscribers for the stated period, 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. 10. 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 Operator shall, within 30 days of the release of this Order, revise its Form 1200 filing with respect to the franchise area referenced in the caption, 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 permitted price of $10.50 (plus franchise fee). 11. IT IS FURTHER ORDERED that Operator shall place into effect, within 30 days after its submission of the revised Form 1200 filing required above, a price that reflects the reduction in the CPS rate determined in this Order. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau