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. ***************************************************************** ******** $//Chronicle Cablevision, Hawaii, MO&O, DA-95-1525//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1525 In the Matter of ) CUID Nos. HI0033 (Hana) ) HI0034 (Hihei/Wailea) Chronicle Cablevision ) HI0035 (Wailuki/Hahului) ) HI0037 (Makawao/Pukalani) Benchmark Filing to Support ) HI0087 (Paia) Cable Programming Service Price ) HI0089 (Maalaea) ) HI0100 (Kula) MEMORANDUM OPINION AND ORDER Adopted: July 6, 1995 Released: July 14, 1995 By the Chief, Financial Analysis and Compliance Division, 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 communities 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. For each of the franchise areas which are the subject of this Order, the first valid CPS complaint was completed and served on Operator on February 25, 1994 and received by the Commission on February 28, 1994. Operator filed FCC Form 393 in response; Operator also filed an amended Form 393 filing on May 31, 1994 and supplemental filings on June 24, 1994 and February 7, 1995. 5. Operator asserts that its monthly CPS tier price is justified by its benchmark filing because its price is equal to or lower than the maximum permitted charge 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 Form 393, Part II, Worksheet 1, Line 101, Operator entered $15.25 for the basic service tier and $6.17 for the CPS tier as its current monthly rates as of the initial date of regulation. However, Operator's rate card indicates that its actual monthly rates, exclusive of franchise fees, were $8.58 for the basic service tier and $12.87 for the CPS tier. These figures are consistent with Operator's entries on Form 393, Part I and the supplemental filing of February 7, 1995. The instructions to Form 393 require the operator to enter on Line 101 its actual current monthly charges. We therefore corrected Line 101 to match the figures on Operator's rate card. b. Operator's Form 393, Part II, Worksheet 1, Line 104 entry does not represent its current monthly equipment revenue as of the initial date of regulation. Instead of entering its current monthly equipment revenue, as required by the Form 393 instructions, Operator entered a figure based on its prior equipment rates. This observation is confirmed by the fact that Operator's Worksheet 2, Line 204 entry is the same as its Worksheet 1, Line 104 entry. As a result, Operator's Line 104 entry must be revised to reflect its current monthly equipment revenue. Since Operator restructured its rates, including its equipment rates, on September 1, 1993 in an attempt to comply with the Commission's regulations, the monthly equipment cost figure it entered on Line 34 of Step G of Part III should have been close or identical to its Line 104 revenue entry. Accordingly, we corrected Operator's Line 104 entry to equal Line 34. c. Operator entered on Line 121 of Worksheet 1, Part II, a benchmark channel rate of 0.689. Operator entered on Line 220 of Worksheet 2, Part II, a benchmark channel rate of 0.777. Based upon the total number of regulated and satellite channels provided in Operator's supplemental filing of February 7, 1995, and using the benchmark tables (interpolation method), we calculated benchmark channel rates of 0.693 and 0.768 for Lines 121 and 220, respectively. d. 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. e. In its supplemental filing of February 7, 1995, Operator provided two revised Inflation Adjustment Factors: 1.043 based upon its calculations (which were not provided) and 1.039 based upon the information provided in the Public Notice. We affirm 1.039 as the Inflation Adjustment Factor through February 1994, the base date Operator should have used in justifying its rates. 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 $12.81 per month (plus franchise fee) for the period from February 28, 1994 to May 14, 1994. However, we further determine that the total overcharge per subscriber is de minimis. Therefore, it would not serve the public interest to order a refund. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaints referenced herein against the cable programming service price charged by Operator in the franchise areas referenced in the caption ARE GRANTED TO THE EXTENT INDICATED HEREIN. 8. 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 filings with respect to the franchise areas 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 $12.81 (plus franchise fee). 9. 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. 10. IT IS FURTHER ORDERED, pursuant to Section 76.960 of the Commission's Rules, 47 C.F.R.  76.960, that Operator shall not be required to obtain advance approval of adjustments to its CPS price in the franchise areas addressed herein for one year following the release of this Order, due to Operator's having submitted in good faith an optional supplemental filing in response to our Public Notice. FEDERAL COMMUNICATIONS COMMISSION JoAnn Lucanik Chief, Financial Analysis and Compliance Division Cable Services Bureau