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A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:Fx6X@`7X@37jC:,+Xj\  P6G;XP48wC;,=9Xw PE37XPD57zC;,!BXz_ pi7X66uC;,/~Xu&_ x7XX7@ND,?,ʼ4  pG;87nC:,?Xn4  pG;X9W!@(#,9h@\  P6G;hP\5hC:,TXh*f9 xr G;XXlemented for this type of view!Day >Hidden_C____IKP___DRB AcceptBttn AttachBttn"i~'^:DTddDDDd4D48ddddddddddDDd||||DXp||dp||ppL8LTdDddXdX8dd88X8ddddLL8dXXXLP8PlD4lTDDD4DDDDDDdDd8|d|d|d|d|dX|X|X|X|XD8D8D8D8dddddddddpX|ddddpXd|d|d|d|dXXlXx|X|X|X|XdddldldD8DdDDDddllXp8pHpDp@p8dtdddd|L|L|LdLdLdLllpHp8pTddddddplpLpLpLdpDddLpDpdx4ddC,CWddddddddddddddddddddddddddddddddddddddddNHxxHhdLdddddd8@d<@d<DDppdDDxddzHxxHkddDpd<"dxtldxxd2WW Y-Ԋ  Rj $//Jones Intercable, Alexandria, VA, MO&O, DA 952169//$ $/76.922 for Cable Programming Service tiers/$  Y-$benchmark cable rates/$T#4  pG;,ʼ#у 0Before the FEDERAL COMMUNICATIONS COMMISSION  a<eWashington, D.C.#Xj\  P6G;+XP#X01Í ÍX01Í Í҃ X- ) DA 95 2169 ĐX(#P  X -In the Matter of hh@)hpp  X -x` `  hh@)h  Xp -Jones Intercable, Inc.hh@)hCUID No. VA0220 (Alexandria) x` `  hh@)  XB -Benchmark Filing to Supporthh@)  X+-Cable Programming Service Pricehh@)  X-  MEMORANDUM OPINION AND ORDER ă  X-x` ` Adopted: October 16, 1995@hReleased: October 25, 1995 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau:  X\- I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)  x1. Here we consider a complaint about the price that the abovecaptioned 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  X-reasonableness of the price after that date. b" Xb-ԍ The findings in this Order do not in any way prejudge the reasonableness of the price for CPS service after May 14, 1994 under our new rate regulations. However, to the extent Operator has sought to take advantage of the refund deferral period under the Second Order on Reconsideration, Fourth Report and Order, and Fifth Notice of Proposed Rulemaking, MM  X!-Docket No. 92266, FCC 9438, 9 FCC Rcd 4119 (1994) ("Second Order on  X!-Reconsideration"), the maximum permitted CPS price determined herein might also apply from May 15, 1994 until the date on which Operator implemented its CPS price under the  X#-new regulations. See para. 3, infra. Further, to the extent that the price as of March 31, 1994 is found to be excessive, a reduction in Operator's price for the period after May 14, 1994 may be required to reflect the fact that Operator's price during the earlier period, which is used as the starting point to calculate its price for the prospective period, was unreasonable.  Xk'-See 47 C.F.R.  76.922(b)(4)(C). " 0*0*0*"Ԍ X-  x2. Under the Cable Television Consumer Protection and Competition Act of 1992,x Xy-ԍ Pub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act,  623(c), as  Xd-amended, 47 U.S.C.  543(c) (1993). 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  X-obligation on behalf of the cable operator to file a justification of its CPS prices.@x Xb-ԍ 47 C.F.R.  76.956.@ Under our rules, an operator may attempt to justify its prices through either a benchmark showing or a  X-costofservice showing.Cyx X-ԍ 47 C.F.R.  76.956(b).C In either case, the operator has the burden of demonstrating that its  X-CPS prices are not unreasonable.3*x X -ԍ Id.3  Xv-x3. The Commission's original rate regulations took effect on September 1, 1993.vx X -ԍ Order in MM Docket No. 92266, Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, FCC 93372, 58 Fed. Reg. 41042 (Aug. 2, 1993).  X_-The Commission subsequently revised its rate regulations effective May 15, 1994.C_` x Xp-ԍ 47 C.F.R.  76.922(b).C 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  X -compliance with the revised rules from May 15, 1994 forward.w  x X-ԍ See Second Order on Reconsideration, 9 FCC Rcd at 4190, paras. 150152.w Operators attempting to justify their prices for the period prior to May 15, 1994 through a benchmark showing must  X -complete and file FCC Form 393.3 x XJ-ԍ Id.3 Generally, to justify their prices for the period beginning  X -May 15, 1994 through a benchmark showing, operators must use the FCC Form 1200 series.  wx X-ԍ 47 C.F.R.  76.922(b)(6); see also Second Order on Reconsideration, 9 FCC Rcd at 4189 n.195.  Xb- x4. The complaint in the franchise area which is the subject of this Order was completed and served on Operator on February 28, 1994 and received by the Commission on February 28, 1994. Operator filed FCC Form 393 in response on May 19, 1994. " 0*(("Ԍ X-  x5. Operator asserts that its monthly CPS tier price of $11.11 (plus franchise fee) is justified by its benchmark filing because its price is equal to the maximum permitted charge of $11.11 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:  X_-Xxa.` ` In its filing, Operator entered $11.00 for the basic service tier and $13.65 for the CPS tier on Form 393, Part II, Worksheet 1, Line 101 as its current monthly rates as of the initial date of regulation. However, Operator's rate card indicates that its actual monthly rates, inclusive of franchise fees, were $9.79 for the basic tier and $11.74 for the CPS tier. The instructions to Form 393 require the operator to enter on Line 101 its actual current monthly charges. We have therefore corrected Line 101 to match the figures on Operator's rate card.(#  X -Xxb.` ` In Column G of Schedules A and C of Part III of its FCC Form 393, Operator did not correctly account for its income tax expense. By placing entries in these  Xy-columns, Operator confirms that it is a taxpaying entity (i.e., a "C" corporation). However, Operator incorrectly calculated its income tax by simply applying the corporate tax rate to its return on investment. The Commission has stated that taxpaying business entities must grossup their tax entries in Column G of Schedules A  X-and C (i.e., calculate the tax as a percentage of return on investment plus tax). ax X-ԍ First Order on Reconsideration, Second Report and Order, and Third Notice of Proposed Rulemaking, MM Docket No. 92266, FCC 93428, 9 FCC Rcd 1164, 1196 n.92 (1993) ("Our provision to grossup the return amount for income taxes applies to all taxpaying business entities to the extent that they have a state or federal income tax obligation.")  X<-See also Cable Television Rate Regulation Questions and Answers Relating to FCC Form 393, Question and Answer No. 14 (released July 30, 1993) ("The federal tax expense should be calculated based upon a pretax return on investment."). By understating its tax entries in Column G, an operator reduces its effective rate of return on equipment and installations and thereby could increase its CPS price. We therefore recalculate Column G of Schedules A and C (and subsequent steps) using correctly grossedup tax entries.(#  X-Xxc.` ` In Column D of Schedules A and C of Part III of its FCC Form 393, Operator incorrectly entered negative deferred taxes. We therefore recalculate Column D of Schedules A and C (and subsequent steps) using amounts which were adjusted to zero. (#  X;-Xxd.` ` 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. Since Operator restructured its rates, including its equipment rates, on September 1, 1993, the current monthly equipment revenue figure it entered on Line 104 should have been" 0*(("  X-close or identical to its equipment cost figure on Part III, Step G, Line 34. x Xy-ԍ See Questions and Answers on Completion of FCC Form 393 and Associated Filing Requirements, Question and Answer No. 7 (released Nov. 10, 1993) ("Where operators have restructured equipment rates as of September 1, 1993 in accordance with our regulations . . . operators will enter on Line 104 the same, or nearly the same, number as on Line 301."). However, Operator's entries on these two lines differed substantially. We therefore adjusted Line 104 to equal the amount entered on Line 34.(# Xx(#  X-Xxe.` ` Because of these errors, we conclude that Operator has failed to demonstrate its price for the CPS tier was not unreasonable. We will therefore set a price for this tier, incorporating the adjustments discussed above. In doing so, we must also recalculate the Inflation Adjustment Factor in Form 393, Part II, Worksheet 1. On its Form 393, Operator apparently calculated the Inflation Adjustment Factor using data it relied on when it set its $11.11 CPS price. If based on this data Form 393 indicated that Operator's price was reasonable, then Operator would have successfully justified its  X -price under paragraph 94 of the Third Order on Reconsideration.  6x X-ԍ Third Order on Reconsideration, MM Docket Nos. 92266 and 92262, FCC 9440, 9 FCC Rcd 4316, 4348 (1994). However, Operator has not shown that its price was reasonable, so we must recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the  X -date that Operator filed FCC Form 393. x XA-ԍ  See 47 C.F.R.  76.922(b)(9)(iii) (if a cable operator fails to justify its rates, rates must be adjusted in accordance with the most accurate data available at the time of analysis). On July 29, 1994, the U.S. Department of Commerce released corrected inflation data including Gross National Product Price Index ("GNPPI") figures of 122.3 for the third quarter of 1992 and 126.5 for the fourth quarter of 1993. Using these figures, we calculate an Inflation Adjustment Factor through February 1994, the month preceding the date Operator should have  XM-filed Form 393, of 1.039. @(#  X-  x6. 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 $11.03 per month (plus franchise fee) for the period from February 28, 1994 to May  X-14, 1994.l x X"-ԍ This finding is based solely on the representations of Operator and the modifications described herein. Should information come to our attention that these representations were materially inaccurate, we reserve the right to take appropriate action. This Order is not to be construed as a finding that we have accepted as correct any specific entry, explanation or argument made by any party to this proceeding not specifically addressed herein. However, we further determine that the total overcharge per subscriber is de  X-minimis. Therefore, it would not serve the public interest to order a refund. "0*((R"Ԍ X-ԙx7. 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. x8. 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 $11.03  X -(plus franchise fee). x X -ԍ We reserve the right to make further adjustments to Operator's price for the period after May 14, 1994, upon completion of our review of Operator's Form 1200 filing. x9. 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. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhJoAnn Lucanik x` `  hhChief, Financial Analysis and Compliance Division  X-x` `  hhCable Services Bureau