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File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $//Cablevision of the Midwest, Inc., Lakewood, OH, MO&O, DA 95-2093//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates /$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-2093 In the Matter of) ) Cablevision of the Midwest, Inc. ) CUID No. OH1449 (Lakewood) ) Benchmark Filing to Support ) Cable Programming Service Price ) MEMORANDUM OPINION AND ORDER Adopted: October 2, 1995 Released: October 11, 1995 By the Chief, Cable Services Bureau: 1. Here we consider a complaint 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 complaint in the franchise area which is the subject of this Order 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 amended its justification several times in response to Commission letters which requested further clarification of Operator's showing. 5. Operator admits that its monthly CPS tier price of $13.72 (plus franchise fee) was not justified by its benchmark filing because its price was greater than the maximum permitted charge of $13.21 per month (plus franchise fee) as calculated in the amended filing. Thus, Operator has failed to demonstrate that its price for the CPS tier was not unreasonable. Furthermore, 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 on Form 393: a. Operator's calculations for its rate-regulated channels as of the initial date of regulation (Form 393, Part II, Worksheet 1, Line 102) reflect 14 basic tier channels and 26 CPS tier channels. However, based on the channel line-up which was effective on the initial date of regulation, there were 14 basic tier channels and 25 CPS tier channels. We therefore changed Part II, Worksheet 1, Line 102B from 26 to 25 channels, and reduced the number of total regulated channels used in calculating the benchmark channel rate on Worksheet 1, Line 121, from 40 to 39. b. In its most recent Form 393 filing, Operator incorrectly calculated the Inflation Adjustment Factor (Form 393, Part II, Worksheet 1, Line 127). Lines 122 and 125 of Form 393 require the operator to enter Gross National Product Price Index ("GNP-PI") data for the latest quarter for which data is available that ended before the date through which the Inflation Adjustment Factor is calculated. On its Form 393, Operator calculated the Inflation Adjustment Factor through February 1994. However, Operator completed Lines 122 and 125 using updated GNP-PI data for the second quarter of 1993 (released August 31, 1993), when updated data was available at least through the third quarter of 1993 (released December 1, 1993). Operator's calculation of the Inflation Adjustment Factor is therefore incorrect. c. We must therefore recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available in accordance with the Form 393 Instructions. On July 29, 1994, the Department of Commerce released corrected inflation data including 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 of 1.039 through February 1994, the base date Operator 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 $13.03 per month (plus franchise fee) for the period from February 28, 1994 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 IS 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 February 28, 1994 to May 14, 1994 which exceeded the maximum price of $13.03 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 $13.03 (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