WPC? 2MB<RK Z3|jTimes New RomanTimes New Roman BoldTimes New Roman Italic"i~'^:DPddDDDdp4D48dddddddddd88pppX|pDL|pp||D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxdHP4Si; LPT1; Rm. 907_1HPLAS4SI.PRSXj\  P6G;\LSXP2[ %K-#Xj\  P6G;yoXP#3|jTimes New RomanTimes New Roman BoldTimes New Roman Italic"i~'^:DpddȨDDDdp4D48ddddddddddDDpppd|Ld|pȐD8DtdDdpXpXDdp8Dp8pdppXLDpdddXP,PhD4htDDD4DDDDDDdDp8dddddȐXXXXXJ8J8J8J8pddddppppddpddddzpdddXXhXXXXXdddhdptL8LpLDLpphhp8ZDP8pppddƐXXXpLpLpLphfDtppppppȐhXXXpDppLDd4ddC6CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxHjdDdddddd'))4H-ART.STYARTICLE IV&@`qw %ARTICLE IVЃ  ` 3H-ART.STYARTICLE III'Aqw %ARTICLE IIIă  ` WILL.STYWILLS FORMATS(H, 3'3'Standard<'$<'StandardZ*pRHP L"nY4   (  '  (  ` hp x (# hp x (#ЁT I. A. 1. a.(1)(a) i) a) I I I I I (a) i) a)TLH-TXTFull ltr, date, etc. etc.)' %June 9, 1989 2:4**+73+,j--0 1LH-FULLFull Ltr head*Lr   'h *  'LH-LOC.STYALL LOCATIONS LTR HEAD+Np%` hp x (#` hp x (# 857 %June 16, 1989 ` hp x (#` hp x (#COL.STY3 columns w/line in med,oLj XX ` hp x (#` hp x (#CH$҇` hp x (#` hp x (#ЈCH$CH$SIGNLNS.STYWITNESS & ADDRESS LNS.-ٹH0   'h%%++0  @ ` WITNESS `   h%%+ HxFF KK(#Q `   h%%++00p6@64ADDRESS  'h%%++0  @ ` WITNESS `   h%%+  `   h%%++0@0p/ADDRESS  'h%%++0  @ ` WITNESS 26.l4/40|51XR6 Memo Header.(? i3$W Page  $= LetterheadPersonal letterhead with address, etc./G 37 J.G. Harrington ă 57221 Beechwood Road 1Alexandria, Virginia 22307 7(703) 7686987 >Normal0$ Xx  @ Header123=2i6XE7K8K:Footnote2Í/B7jC:,9Xj\  P6G;XPC7nC:,|Xn4  pG;XDW!@(#,h@\  P6G;hP\5hC:,%2Xh*f9 xr G;XX"i~'^#)0< X=#-ԍ Cox recently acquired the cable assets of Times Mirror Cable Television, Inc. ("Times Mirror"). References herein to Cox systems include such cable assets. #@T\L PyoXP# that will resolve over 400 rate complaints filed against Cox regarding the rates that Cox charged for cable programming  X"-services from September 1, 1993 through June 30, 1995,#@T\L PyoXP#"b> X'-ԍ A#@T\L PyoXP#t issue are 317 complaints filed against Cox covering the period September 1, 1993 through May 14, 1994, and 99 complaints filed against Cox covering the period of May 15,"(0*0*0*("  X-1994 through June 30, 1995. #@T\L PyoXP# Cox filed benchmark and cost of service justifications in response to these rate complaints. including complaints as to which""b0*0*0*!"  X-the Cable Services Bureau ("Bureau") has issued orders. #@T\L PyoXP# For the reasons stated below, and  X-based upon our review of the record, we find that the Resolution,by& X-Ѝ Attached to this Order as Attachment A. We note that Cox sold its cable system in the community of Bullhead City, Arizona prior to the release of the Proposed Resolution, thus the community of Bullhead City, Arizona is not subject to the Resolution, and has been removed  X-from Exhibit 5 of Attachment A.  See Letter from Peter H. Feinberg to the Federal Communications Commission (September 8, 1995). including the modifications, serves the interests of Cox's subscribers by, among other things, bringing finality and stability to its cable programming service tier ("CPST") rates and improving the availability of customer programming choices. We also believe that adoption of the Resolution is consistent with the Commission's responsibility under the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") to ensure that consumers' interests are protected in the receipt of cable services.  X1- II. BACKGROUND x2. The 1992 Cable Act gave the Commission and local franchising authorities jurisdiction over the cable programming and equipment rates of cable systems that did not face effective competition, as defined by that Act. Specifically, the 1992 Cable Act provides that with respect to cable systems that are not subject to effective competition, local franchising authorities may regulate the rates for the basic service tiers ("BSTs") pursuant to  X-guidelines established by the Commission, and that the Commission may regulate the rates for  Xy-the CPSTs.zyy& X-ԍ Communications Act of 1934, as amended,  623(a)(2), 47 U.S.C.  543(a)(2).z In enacting the legislation, Congress stated its intent that the 1992 Cable Act be implemented to ensure that ". . . consumer interests are protected in the receipt of cable  XK-service."#@T\L PyoXP#Kj y& Xf-ԍ Pub. L. No. 102385  2(b)(4), 106 Stat. 1460 (1992); see also H.R. Rep. No. 628, 102d Cong. 2d Sess. at 34 (1992). x3. The Proposed Resolution provides that Cox will refund, in the form of credits on subscribers' bills, $7.1 million, plus interest, to approximately one million of Cox's CPST subscribers in the communities listed in Exhibits 1 and 3 to the Proposed Resolution. Cox will provide the refunds no later than during its January 1996 billing cycle or its first monthly billing cycle beginning 60 days after the effective date of this Order, whichever is later. x4. In addition, Cox will eliminate charges for regulated additional outlets as of the later of its January 1996 billing cycle or its first monthly billing cycle beginning 60 days after the effective date of this Order, whichever is later. Where additional outlet charges are"e 0*((" eliminated, Cox may increase its CPST rates to cover certain programming costs that were previously reflected in the additional outlet charges that will be eliminated. These increases will not cause Cox's rates to increase beyond the rates set forth in Exhibit 3 to the Proposed Resolution. x5. Under the Proposed Resolution, Cox, at its discretion, may move a maximum of any four regulated services to a single migrated product tier ("MPT") in each of its franchise areas in which it did not offer an a la carte package. Cox must set the initial rate for an MPT at a level, per channel, that does not exceed the price of the channel on the rate regulated tier from which the channel was moved. Cox may add any number of new services to an MPT and may increase the price for an MPT by up to $0.20 for each channel added plus the amount of the channel's license fee. Cox may increase the price of an MPT to cover inflation  X -and increases in external costs. On or after March 1, 1997, Cox may reclassify each MPT as  X -a new product tier ("NPT"), as defined in the Commission's Going Forward rules.c y& XN-ԍ 47 C.F.R.  76. 987 and subsequent amendments thereto. c The  X -Proposed Resolution further provides that if, in any Consolidated Systema_ yy& X-ԍ "Consolidated System" means a cable system which is managed and operated by Cox as a unified system and which consists of one or more systems formerly owned by Times Mirror and one or more systems owned by Cox but never owned by Times Mirror (including systems acquired by Cox at any time after February 1, 1995, which are integrated into the unified system) in which the system or systems formerly owned by Times Mirror provided collective offerings of a la carte channels that were created between April 1, 1993 and September 30, 1994 and are now classified as NPTs.a on which Cox elects to offer an MPT, an NPT is offered in part of such system, and the MPT and NPT would be priced differently, then Cox may adjust the MPT and NPT rates on a revenue neutral basis so that a uniform rate for the MPT and NPT may be established. The uniform rate will be established on the basis of the NPT rate in effect on August 1, 1995 (subject to adjustments that could have been taken on the NPT if it had been an MPT) and the permitted MPT rate. All such uniformly priced MPTs and NPTs shall be subject to the conditions on MPT price increases set forth in the Proposed Resolution. x6. Under the Proposed Resolution, Cox may avail itself of any applicable modifications of any law or regulation governing the CPST rates, except that Cox shall provide refunds pursuant to the terms of the Proposed Resolution and shall not seek additional compensation for services provided on or before June 30, 1995. The Proposed Resolution further provides that Cox's current rates are found to be justified and therefore not unreasonable. Cox admits no violation of, or failure to conform to, any applicable laws, rules  Xg-or regulations by agreeing to the terms of the Proposed Resolution.  X9-x7. On September 14, 1995, the Commission adopted an Order}9 y& X'-ԍ Order, FCC 95396 (September 15, 1995#-H@~ h@#).}#@T\L PyoXP# instructing the Bureau"9S 0*(({" staff to serve all complainants and relevant local franchise authorities with the Proposed Resolution. Accordingly, copies of the Order were mailed to 91 local franchise authorities and 323 complainants other than local franchising authorities. The Order provided a 30day period in which the served persons were entitled to submit comments on the proposal. Thirtyseven written comments were received by the Commission reflecting the views of 20 local  X-franchising authoritiesP yy& X-ԍ The local franchising authorities filing comments were the cities of Peoria, Arizona and Ironton, Ohio; the Town of Fountain Hills, Arizona; the California cities of Imperial Beach, National City, Escondido, Chula Vista, San Diego, La Mesa, Poway, Laguna Beach, San Clemente, San Juan Capistrano, Lake Forest, Mission Viejo, Laguna Hills and Laguna Nigel, Irvine, the Rhode Island Division of Public Utilities ("Rhode Island") and the Cable Television Review Commission of the County of San Diego, California ("San Diego County"). xThe California cities of Irvine, Laguna Beach, San Clemente, San Juan Capistrano, Lake Forest, Mission Viejo, Laguna Hills and Laguna Nigel ("Cities") filed consolidated comments. The Cities' consolidated comments were received at the Commission on October 18, 1995, one day after the end of the comment period. The City of Imperial Beach filed comments on November 2, 1995. No motions for extension of time pursuant to 47 C.F.R.  1.46 were submitted. There has been no opposition filed against acceptance of these latefiled comments. Therefore, in order to provide a full and complete record and because no party will be prejudiced by acceptance of these comments, we hereby waive the requirement for filing a motion for extension of time and accept these comments.P and 24 complaints other than local franchising authorities.  y& XG-ԍ The comments from complainants other than local franchising authorities included comments from the Utility Consumers' Action Network, a nonprofit consumer advocacy organization in San Diego, California.  X_- III. DISCUSSION x8. Comments were received from four local franchising authorities supporting the  X -Proposed Resolution.  y& XW-#@T\L PyoXP#э This group consists of the cities of Peoria, Arizona; Escondido, California; Ironton,  X@ -Ohio and the Town of Fountain Hills, Arizona.#-H@~ h@#  In addition, three subscribers filed comments supporting the Proposed Resolution. Oppositions were filed reflecting the views of 16 local franchising authorities. These local franchising authorities included communities where the Bureau has issued  X -decisions on appeal from BST rate orders involving Cox,  &y& X$-ԍ On April 7, 1995 the Bureau released Consolidated Order DA 95743 which resolved Cox's appeals of the BST reviews of the California cities of Chula Vista, San Diego, La Mesa and Poway. and #@T\L PyoXP#communities in which the"  0*(( "  X-Bureau issued CPST rate orders involving Cox.J y& Xy-ԍ See comments of the Cities.J Comments from 15 subscribers opposing  X-the Proposed Resolution also were filed.{y& X-ԍ Six subscribers filed comments neither supporting nor opposing the Proposed Resolution. The comments raised various concerns, as further discussed below, including among others, the authority and procedures that were followed to effectuate the Proposed Resolution; the effect of the Proposed Resolution on rates and additional outlet charges; the decision to permit Cox to create MPTs; and whether specific communities could be exempted from the terms of the Proposed Resolution. We address these concerns below and set forth modifications to the Proposed Resolution.  XH- xA. Authority and Procedures in Negotiating the Proposed Resolution x9. As an initial matter, we set forth the Commission's regulatory authority to approve the Proposed Resolution. The Communications Act provides the Commission with wide discretion to resolve rate cases, including through the settlement process. Section 4(i) of the Communications Act authorizes the Commission to "perform any and all acts . . . not  X -inconsistent with [the] Act, as may be necessary in the execution of its functions."? y& X-ԍ 47 U.S.C.  154(i).? Section 4(j) provides that the "Commission may conduct its proceedings in such manner as will best  X-conduce to the proper dispatch of business and to the ends of justice. . . ."?y& X-ԍ 47 U.S.C.  154(j).? We believe that sections 4(i) and 4(j) allow the Commission to consider proposed resolutions to resolve rate complaints. Proposed resolutions are not in any way inconsistent with the 1992 Cable Act, which requires the Commission to adopt regulations creating "fair and expeditious procedures  X4-for the receipt, consideration, and resolution of complaints"E4wy& X\-ԍ 47 U.S.C.  543(c)(1)(B).E since they protect consumers' statutory interests in being charged CPST rates that are not unreasonable. They are also "necessary" to the execution of the Commission's business and the ends of justice because they conserve regulatory and private resources and resolve large numbers of proceedings, while ensuring that consumers' interests in CPST rates that are not unreasonable are protected.  X-The Commission's authority to resolve cases has been affirmed in an analogous context.|( y& X"-ԍ See New York State Dep't of Law v. FCC, 984 F.2d 1209 (D.C. Cir. 1993).| x 10. We further believe that Congress' desire to simplify cable rate regulation supports the adoption of an expeditious means of resolving complaints that will afford adequate protection for the subscribers, complainants and operators. Thus, the Commission has authority to consider the Proposed Resolution and to determine, after review and consideration"N 0*((" of comments, that the rates set forth in the Proposed Resolution are not unreasonable. Nonetheless, to the extent the submission of the Proposed Resolution and our action on it requires a waiver of our rules, we find such a waiver to be in the public interest for the reasons specified in Sections C through E, and also because the Proposed Resolution will ensure the expeditious resolution of a large number of rate complaints while protecting consumers' statutory interest in CPST rates that are not unreasonable. x 11. We find that the rates and refunds provided for in the Proposed Resolution are not unreasonable. The Proposed Resolution took into consideration certain offsets claimed by Cox and also the public interest benefit to consumers of prompt, certain relief. Moreover, although we do not rule on the merits of each of Cox's claims, we believe that it is fully consistent with the 1992 Cable Act to consider the benefits of avoiding the delays and uncertainty of litigation in setting rates within the range of reasonableness. Indeed, the courts have long recognized that regulatory agencies have broad discretion to choose among ratemaking methods and procedures in ratemaking determinations, provided that the rates are  X -within a range of reasonableness. y& X -ԍ See FERC v. Pennzoil Producing Co., 439 U.S. 508, 517 (1979); Permian Basin Area  X -Rate Cases, 390 U.S. 747, 797 (1968). x 12. The Cities challenge the Proposed Resolution on the basis that the Commission  Xb-does not have the authority to vacate the Bureau's Ordersbfy& Xy-ԍ The Proposed Resolution vacates Bureau Orders DA 941288, DA 95661, DA 95678, DA 95696, DA 95809, DA 95810, DA 95811, DA 95813, DA 941334, DA 941335, DA 941336, DA 941337, DA 941338, DA 941339, DA 941340 and DA 941341. Cox filed a Petition for Reconsideration of DA 941334 through DA 941341 and filed Applications for Review for the remaining Orders.  concerning Cox's CPST rates and supersede them with the Proposed Resolution because the terms of the Proposed Resolution are contrary to those Orders. We disagree. All of the Bureau's Orders regarding Cox's rates are before the Bureau for reconsideration or before the Commission for review and we have  X-the ability to review and modify these Orders.Vy& Xr-ԍ See 47 C.F.R.  1.106 and 1.115.V There is nothing in our rules or regulations that precludes us from vacating these Orders in the context of a Proposed Resolution which establishes rates that are not unreasonable. Moreover, the Commission's authority to resolve disputes under Sections 4(i) and 4(j) of the Communications Act is undiminished by the existence of Bureau level orders. We find that modifying the Bureau's rate decisions involved with this case to be in the public interest because we find the rates provided for in the Proposed Resolution are not unreasonable and, as discussed in this Order, the settlement is in the public interest.  X7-x 13. The Cities further challenge the Proposed Resolution on the basis that it was"7n 0*(("  X-arrived at based on unlawful ex parte negotiations.Jy& Xy-ԍ See Cities comments at 15. J We again disagree with the Cities'  X-position. In rate complaint cases, the proceedings are restricted.B{y& X-ԍ 47 C.F.R.  1.1208(B).B Consequently, the parties  X-generally may not make ex parte contact with the Commission at all. Generally, the only permitted communications are in writing with service to all interested parties.  X-x 14. An important exception to this general rule against ex parte contacts in restricted proceedings is in circumstances where the Commission staff requests further information of one of the parties for the resolution of issues or to obtain further information as provided in 47 C.F.R.  1.1204(b)(7):  X -Xx(b) Exempt Ex Parte Presentations. The following types of ex parte presentations are exempt from the prohibitions and requirements in  1.1206 (nonrestricted proceedings) and  1.1208 (restricted proceedings) as follows:  Xx. . . (7) The presentation is requested by the Commission or staff for the clarification or adduction of evidence or for resolution of issues, and the proceeding is a restricted proceeding which has not been designated for hearing, a non-restricted proceeding or  X-an exempt proceeding. See 47 C.F.R.  1.1204(b)(7). (#  XU-x15. The purpose of this exception is to permit the staff to seek the narrowing of issues in a proceeding, to attempt to settle a case or to supplement the record, so that the proceeding can be resolved on the basis of a more complete record, or through more expeditious  X-procedures.M,y& X-ԍ See 47 C.F.R.  1.1202(a).M The Note to the ex parte exception in 47 C.F.R.  1.1204(b)(7) further clarifies that if any such contact elicits new information, that information must be served on all parties  X-to the proceeding.y& Xt-ԍ If service would be unduly burdensome because of the number of parties involved or because the materials relating to the presentation are voluminous, the Commission may waive such service by issuing a public notice notifying parties that such materials are available for  X/ -public inspection. See 47 C.F.R.  1.1204(b)(7), Note. The purpose of this provision is to ensure that interested parties have fair notice of the substance of the new information that has been provided and thus have a fair opportunity to provide their own views on the information. Under this standard, any presentations on the merits of the case that have not been included in previous pleadings must  X-be placed in the record. The legality of these procedures was upheld in New York State  Xs-Department of Law v. FCC.NsM y& Xq&-ԍ 984 F.2d 1209 (D.C. Cir. 1993).N "^ 0*(("Ԍx16. In the instant proceeding Cox contacted the Bureau staff expressing an interest in discussing a global resolution of the rate complaints. Because this conversation did not address the "merits or outcome" of the proceedings, it was not a communication covered by  X-the Commission's ex parte rules.Qy& X4-ԍ See 47 C.F.R  1.1202(a).Q Subsequent to this contact, at the request of the Bureau staff, Cox provided new information. Pursuant to a Bureau public notice, information that was not already reflected in the pleadings, was placed in the record of the proceeding so as to  Xx-allow comment on it.x{y& X -ԍ See Public Notice, "Additional Information Available for Public Inspection on Cox  X -Communications, Inc.," DA 951983 (September 20, 1995). Consistent with the Note to the ex parte exception in 47 C.F.R. 1.1204(b)(7), the service provision was waived by the Bureau because it determined that service of this material on all parties to the proceeding would be unduly burdensome due to the large number of parties and volume of material involved. Instead a public notice was issued notifying the public that new information in the record was available for public  X -inspection.< y& X-ԍ See Id.< All complainants including local franchising authorities were served with the Proposed Resolution for the purpose of soliciting comment. In addition, local franchising authorities that were not complainants, and therefore not parties to the proceedings, were served for the purpose of providing an opportunity to comment where a proceeding existed with respect to their franchise areas. The Commission provided 30 days for comment on the  X-Proposed Resolution. We conclude that the Bureau correctly followed the ex parte rules and all interested parties were given fair participation rights.  XQ-x B. Preemption and Waiver of Notice Requirements x17. The Proposed Resolution allows Cox to implement refunds and restructure its rates and services during the January 1996 billing cycle. Because of the short time between our approval and the January 1996 billing cycle, it will not be possible for Cox to provide 30 days' notice of a rate or service change to all of its affected customers, as required by sections 76.309(c)(3)(i)(B) and 76.964 of the Commission's rules. This is due to billing procedures and the timing of monthly billings. For example, if Cox were to give subscribers notice of a service change as a billing insert in December, subscribers who are billed at the beginning of the month would receive 30 days' advance notice of the change in service, but subscribers who are billed later in the month would not receive 30 days' advance notice of this change which will become effective at the beginning of January 1996. x18. We believe that on a onetime basis, preemption and waiver of advance notification requirements is appropriate in this case because prompt implementation will serve the public interest. Accordingly, we will grant a onetime waiver of the advance notice provisions of sections 76.309(c)(3)(i)(B) and 76.964 in order to allow Cox to implement the Resolution by January 1996. In addition, we believe that preemption of state and local notice" 0*((" requirements is appropriate in cases such as this where the local law conflicts with the  X-agency's regulations or frustrates the purpose of the regulation.ky& Xb-ԍ See City of New York et al v. FCC, 486 U.S. 57 (1988).k x19. This preemption and waiver is provided on a onetime basis and only to the extent that it requires Cox to give advance notice of rate and service changes to subscribers for the  X-period prior to January 1, 1996.J{y& X-ԍ See Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992, 8 FCC Rcd 3652 (1993); Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992; Rate Regulation, MM Docket Proposed Rulemaking, 9 FCC Rcd 4119, 4184 n. 182 (1994). The Commission preempted any local and state requirements that required cable systems give more than 30 days' notice of rate and service changes to subscribers where application of the local and state provisions would serve to prevent a system from bringing its rates into compliance with the new benchmark rules by the end of the refund deferral period. However, if a subscriber complains about a rate increase and cancels subscription to the relevant CPST within 30 days after the date of the first bill reflecting the CPST adjustment authorized by the Resolution, Cox must issue a refund for the incremental amount attributable to such increase. Accordingly, the preemption of state and local notice requirements and the waiver of Commission notice requirements will not injure subscribers. We also note, notwithstanding the foregoing, that nothing in this Order should be construed to preempt the authority of a local franchising authority to regulate the basic service tier and related equipment rates consistent with our regulations and orders.  X - xC. The Impact of the Resolution on Rates x` ` i. Impact on BST Rates x20. The cities of Chula Vista, San Diego, La Mesa and Poway, California raised a concern that the wording of the Proposed Resolution could be interpreted to extend to BSTs and to enable Cox to raise its rates for BSTs. We clarify that the Proposed Resolution is not intended to interfere with the authority of local franchising authorities to regulate BST rates in their respective jurisdictions. Moreover, in order to address this concern, Cox has agreed to modify Paragraph 13 of the Proposed Resolution, which will now read in its entirety as follows (the italicized language being the addition): XxThe Resolution Order shall affirmatively state that any and all waivers of the Commission's rules, and any modifications to Commission forms, necessary to effectuate these terms are deemed to be granted. The Commission will not assert in any proceeding that Cox's compliance with the terms of this Resolution violates any Commission rule or order, and, in any proceeding before the Commission brought by a third party, a showing by Cox that it has complied with these terms shall constitute a"7 0*(({" defense to any claim that Cox's actions in meeting the terms constitute a violation of  X-any applicable Commission rule or order.  Notwithstanding the foregoing, nothing in this Resolution should be construed to preempt the authority of a local franchising authority to regulate the basic service tier and related equipment rates, consistent with  V-the Commission's regulations and orders. (#  X- We believe that this additional revision should alleviate the concerns raised. x` ` ii. Impact on CPST Rates x` `  a. Agreement with BST Rates x21. The cities of Chula Vista, San Diego, La Mesa and Poway, California commented that based on their understanding of the Bureau's decisions on appellate review of the BSTs in their communities, the CPST rates must be found unreasonable and CPST customers in their jurisdictions should be entitled to receive larger rate refunds for CPST services. We reject the argument that the outcome of CPST rate reviews must duplicate the outcome of BST rate reviews in the same jurisdiction. x22. The Congressional scheme of granting regulatory authority (1) to local franchising authorities for review of BST rates subject to the Commission's appellate review, and (2) to the Commission for review of CPST rates, leads to the Commission applying different standards of review when acting in its original and appellate functions, since each of these processes are separate and distinct. The purpose of the Commission's appellate review of  X-BST rate orders is not to decide the issues de novo, but simply to ensure that there is a rational basis for the LFA's decision and that the local franchising authorities have correctly  X-applied the Commission's rules, regulations and orders., y& X'-ԍ See Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992; Rate Regulation, MM Docket No. 92266, Report and Order and Further Notice of Proposed Rulemaking, 8 FCC Rcd 5361, 57315732 (1993) ("Rate Order"). , In contrast, the Commission reviews  X-the CPST rate complaints de novo. The BST rate review is thus independent of, and need not impact, the CPST rate review. x x` `  b. Additional Outlet Charges x x23. San Diego County supports the Proposed Resolution's elimination of the additional outlet charges. However, San Diego County, Rhode Island and the Cities assert that they are entitled to larger refunds associated with Cox's additional outlet charges. In particular, the Cities note that when compared, the Proposed Resolution's refund amount for additional outlet charges is much less than the refund amount ordered for additional outlet" 6 0*(("  X-charges in the Bureau's November 29, 1994 Orders.!y& Xy-ԍ The Proposed Resolution vacates Bureau Orders DA 941337, DA 941338, DA 941339, DA 941340 and DA 941341. The Cities argue that the record does not support any basis for the reduction in the additional outlet refund amount. San Diego County further contends that the Proposed Resolution fails to provide an adequate definition of those subscribers who are eligible to receive refunds for additional outlet charges. We believe that the record supports the Proposed Resolution's additional outlet refund amount. x24. Cox argued that the Commission had jurisdiction over the additional outlet charge issue only in those franchise areas where a complaint specifically mentioned the additional outlet charge. Thus, Cox contended that if a complaint did not specifically mention the additional outlet charge, the Commission had no authority to consider this charge in its rate review of Cox's systems. Cox also argued that its programming contracts required Cox to charge subscribers for additional outlets. Separately, Cox argued that if any refund liability existed for its additional outlet charges, the liability should be offset by programming costs Cox could have, but did not, charge in tier rates during the period under consideration. Cox also asserted that any additional outlet charge refund liability should be offset by the difference between its actual CPST rates and its maximum permitted rates in its cost of service filings. Cox based this argument on its belief that its actual CPST rates were less than its maximum permitted rates in the franchise areas for which it filed cost of service rate justifications. x25. Finally, Cox asserted that if any additional outlet liability existed it should be  X-offset by "gap period adjustments" that Cox believed arose from the ruling in Time Warner  X-Entertainment Co. v. FCC.G"by& X-ԍ 56 F 3d 151 (D.C. Cir. 1995). G For the franchise areas for which it justified its rates with benchmark filings, Cox claimed that it was entitled to gap period adjustments to recover all external cost changes incurred, but not included in rates by an external cost adjustment, from September 30, 1992, to the first filing of an FCC Form 1210. Cox also requested credit for gap period adjustments against any refund liability for franchise areas for which it justified its rates with cost of service filings from January 1, 1994, to July 14, 1995.  Xi-x26. While we do not rule upon the legitimacy of the specific issues and arguments raised by Cox with respect to additional outlet charges, we believe that the Proposed Resolution reaches a careful balance, ensuring that ratepayers pay reasonable rates while also recognizing that if this case were litigated, Cox might be entitled to certain offsets against a refund of the additional outlet charge. We reviewed the agreement and the terms and conditions proposed in the negotiations in their totality. With respect to the additional outlet charge, the refund amounts are in the public interest because they are fair to consumers and current charges for regulated additional outlets will be eliminated immediately. We believe that the expeditious resolution of these rate complaints is in the best interest of subscribers. "! "0*(( " The resolution of Cox's rate complaints benefit the subscribers not only by eliminating the additional outlet charge promptly in regulated and unregulated franchise areas and giving them an immediate refund, but also by bringing certainty to rates and avoiding future litigation expenses.  X- x x27. We note that it was unclear from the Proposed Resolution that Cox has agreed to eliminate its additional outlet charges in both its regulated and unregulated franchise areas. In order to clarify that Cox will eliminate its additional outlet charges in all of its franchise areas, Cox has agreed to modify Paragraph 12 (h), which will now read in its entirety as follows (the italicized language being the addition):  X -XxCox shall eliminate the current charges for regulated additional outlets and will also  X -eliminate the same charges for additional outlets in unregulated areas as of the later of the January, 1996 billing cycle or the first monthly billing cycle beginning 60 days after the Effective Date. If additional outlet charges are not removed until after the January, 1996 billing cycle, any amounts charged for additional outlets after that billing cycle shall be refunded to subscribers residing in the CUIDs listed in Exhibit 5.(# x28. San Diego County raises the concern that the Proposed Resolution allows Cox to raise its CPST rates to compensate for the elimination of the additional outlet charges. We note that the Proposed Resolution provides that where additional outlet charges are eliminated, Cox is allowed to increase the CPST rates to include programming costs allowed by our  X -regulations that were previously included in the additional outlet charges.B# y& X-ԍ 47 C.F.R.  76.923(h).B San Diego County's concern is misplaced. The addition of this cost to the rates is already reflected in the rates set forth in Exhibit 3 to the Proposed Resolution. x29. San Diego County and the Utility Consumers' Action Network contest the failure of the Proposed Resolution to include subscribers who may have paid for additional outlets during only a portion of the regulation period, or subscribers who have paid these charges but subsequently cancelled their cable television service. We note that the Commission's regulations permit a cable operator, at its discretion, to implement a refund in one of two ways. The operator can identify actual subscribers or can use a prospective percentage  X$-reduction to the rates of the class of subscribers that currently subscribe to the service.B$$yy& XN!-ԍ 47 C.F.R.  76.942(d).B The rationale for this choice is that cable operators face constant changes to their subscriber base  X-making it difficult, if not impossible, to identify all such former subscribers.F%*y& X$-ԍ See Rate Order at 5866.F We are convinced that the expense associated with giving refunds to all former subscribers in the areas affected and identifying the exact parties eligible for a refund would be large and unduly burdensome to Cox. We conclude that the proposed refund to current subscribers only"! %0*(( " is consistent with our rules and is appropriate.  X-x30. One commenterX&y& XK-ԍ See comments of Philip Thorneycroft at 1.X suggests that we require Cox to eliminate charges for additional outlets immediately in lieu of the time frame set forth in the Proposed Resolution. We note that this Order effectively allows for the immediate elimination of the additional outlet charge. As discussed above, we are preempting state and local laws and waiving our rules which require advance notice of changes in rates or service in order to permit Cox to eliminate additional outlet charges in its January 1996 billing cycle. Moreover, under the Proposed Resolution, if additional outlet charges are not removed until after Cox's January 1996 billing cycle, any amount charged for additional outlets after that billing cycle shall be refunded to subscribers residing in the communities listed in Exhibit 5 to the Proposed Resolution. x31. Two individuals questioned why the Commission did not remove Cox's additional outlet charges upon the Commission's initial adoption of its regulation prohibiting such  X -charges.b' {y& X-ԍ See comments of Dwight Turner and Judy Blankenship.b We note that the 1992 Cable Act provides the Commission with authority to review a cable operator's CPST rates and associated equipment charges upon the filing of a valid complaint. Our authority to review the CPST rates of a cable operator exists only in a community for which a complaint is filed. Until such time as a valid complaint is filed we have no authority to review a cable operator's CPST charges, even if they are in violation of our regulations. Cox's CPST rates became subject to our review upon the filing of the complaints under consideration in this proceeding. Our decision resolves these CPST rates as well as the additional outlet charges related to CPST services for the period subject to our review.  X-x` ` iii. Migrated Product Tier and New Product Tier x32. Under the Proposed Resolution, Cox, at its discretion, may move a maximum of any four regulated services to a single migrated product tier ("MPT") in each of its franchise areas in which it did not offer an a la carte package. Cox must set the initial rate for an MPT at a level, per channel, that does not exceed the price of the channel on the rate regulated tier from which the channel was migrated. Cox may add any number of new services to an MPT and may increase the price for an MPT by up to $0.20 for each channel added plus the amount of the channel's license fee. Cox may increase the price of an MPT to cover inflation and increases in external costs. On or after March 1, 1997, Cox may reclassify each  X-MPT as a new product tier ("NPT"), as defined in the Commission's Going Forward rules. The Proposed Resolution further provides that if, in any Consolidated System on which Cox elects to offer an MPT pursuant to the Proposed Resolution, an NPT is then offered in part of such system, and if the MPT and NPT would be priced differently, then Cox may adjust the MPT and NPT rates on a revenue neutral basis such that a uniform rate for the MPT and NPT"" .'0*((!" may be established on the basis of the NPT rate in effect on August 1, 1995 (subject to adjustments that could have been taken on the NPT if it had been an MPT) and the permitted MPT rate. All such uniformly priced MPTs and NPTs shall then be subject to the conditions on MPT price increases. x 33. Commenters opposing this provision of the Proposed Resolution contend that the migration of channels to this tier will result in increased costs and decreased quality of  X_-programming on the remaining regulated tiers.(_y& X-ԍ See, e.g., the comments of the City of Chula Vista, page 2 and the comments of Philip Zachary Lesch, page 2. They also raise concerns that creating an MPT will result in rate increases for services already regulated and will force them to receive unwanted channels. We believe, however, that sufficient safeguards are in place which protect subscribers' interests. x!34. Under the Proposed Resolution, Cox is allowed to create MPTs that do not exceed rate regulated prices on a per channel basis. Channels may be added to MPTs at a per  X -channel price that we found acceptable in our Going Forward rules.) dy& X-ԍ Rate Regulation, MM Docket Nos. 92266, 93215, Sixth Order on Reconsideration, 10 FCC Rcd 1226 (1994). When these channels are later converted to NPTs, we believe market forces (including competition from CPSTs) will control the prices of the NPTs, thereby ensuring that the rates for these tiers will be reasonable. Further, the price for the regulated tiers from which services are migrated will decrease to the extent channels are migrated from regulated tiers, thereby ensuring that subscribers will not pay more for fewer channels on the regulated tiers. x"35. The creation of MPTs and NPTs is intended to expand the programming choices available for subscribers. Subscribers need only buy the BST in order to select service on the MPT, there is no requirement to purchase the CPST in order to obtain MPT service. Cox has an incentive to maintain the quality of the CPSTs, because if subscribers perceive a decrease in quality in the CPSTs they may discontinue CPST service, resulting in a loss of revenue to Cox. Subscribers will have the choice to continue or discontinue services on any tier (except the BST) without affecting receipt of any other tier of service. Thus, the Proposed Resolution does not have the effect of forcing the receipt of unwanted services. Indeed, the creation of the MPT has the potential for increasing subscriber choices the CPST will continue to be offered as well as an MPT and consumers can choose to take either or both. In addition, new channels may be added to both tiers. For these reasons, we believe that it is in the public interest for us to grant a waiver of the Commission's rules to permit the formation of the MPT in the overall context of the Proposed Resolution.  X- à")0*(("  X-xD. Exempting Communities From the Proposed Resolution  X-x#36. Some local franchising authorities have requested an exemption of their communities from the terms of the Proposed Resolution because BST or CPST rates already have been adopted in their jurisdictions and the findings are inconsistent with the terms of the  X-Proposed Resolution.*y& X-ԍ Included in this group are the City of San Diego and the Cities. In addition, the City of Poway, California asks to be excluded from the group of cities in which Cox can provide a MPT unless the Proposed Resolution clarifies that the MPT would be revenue neutral for existing services. As explained above, the MPT is essentially revenue neutral for existing services. We must deny the request of these local franchising authorities to be exempted from the Proposed Resolution.  XH-x$37. The Proposed Resolution has been reached as a companywide resolution of all rate complaints against Cox pending before the Commission from September 1, 1993 to June 30, 1995. It serves as a measure that will bring a final resolution of all pending CPST complaints against Cox and will improve the availability of customer programming choices for over one million of Cox's CPST subscribers. Allowing communities or individuals to opt out or be exempt from the agreement, would substantially undermine the very purpose of the Proposed Resolution to provide a final resolution of the rate complaints and rate stability.  X-x%38. Further, we do not believe the local franchising authorities have provided a basis for establishing their entitlement to be exempted from the Proposed Resolution. Moreover, in reaching companywide resolutions of rate complaints in the past, we have only allowed local franchising authorities the ability to "opt out" of the agreement where terms of the agreement have included issues that, while beneficial to all of the company's subscribers, included matters that were properly within the jurisdiction of those local franchising authorities. For  X-example, in the Social Contract with Continental Cablevision, Inc.,+y& X-ԍ See In re Social Contract for Continental Cablevision, DA 952160, released August 3,  X-1995. #-H@~ h@# affected local franchising authorities had the opportunity to opt out of the provisions of the Social Contract where the Commission determined rates and refund liability for BSTs. In contrast, the Proposed Resolution only addresses matters relating to CPSTs and MPTs, which are outside the jurisdiction of the local franchising authorities.  X|-x&39. We find that resolution of the CPST complaints in the affected communities is in the public interest. Also, as discussed above, the refund amount and rates agreed to in the Proposed Resolution are not unreasonable. Thus, we do not believe subscribers are harmed in precluding local franchising authorities from opting out of the Proposed Resolution.  X - " +0*((="ԌxE. Additional Concerns  X- x'40. The Office of the Mayor of National City, California and the Administrative Services Division of the City of Imperial Beach, California requested that their subscribers receive the same benefits of any reasonable rate reductions or refunds or other subscriber benefits as received by the City of Chula Vista, California. Cox's CPST rates in National City (CUID No. CA0419) and the City of Imperial Beach (CA 0421) were reviewed as part of the Proposed Resolution. Based upon that review it was determined that the rates for National City and the City of Imperial Beach did not exceed the maximum permitted CPST rate and that no refunds were due. No information was submitted that would warrant a different outcome.  X -x(41. One commenterX, y& Xe -ԍ See comments of Philip Thorneycroft at 2.X objected to the fact that the Proposed Resolution allows Cox to avoid admitting that it violated the Commission's rules. The very purpose of a resolution is to resolve the rate complaints, pay refunds to subscribers and set reasonable rates. The Proposed Resolution is an effort to reach a fair and equitable solution of all of the issues in a manner which is both reasonable and fair to all parties. This goal is achieved regardless of whether Cox admits wrongdoing.  XK-x)42. Several commentersr-K{y& Xw-ԍ See comments of Daniel Laviolette, Milton Lewis and Melvin Anthony.r expressed concern that Cox has no competition in the commenter's service areas. Even assuming the validity of this claim, we believe that the Proposed Resolution ensures that subscribers will not pay unreasonable rates for services because of the creation of price regulated MPTs and the limitations that have been placed upon the maximum permitted rates Cox may charge for all other regulated services. Thus, in the absence of effective competition we have acted as the statute requires to protect cable  X-subscribers against unreasonable CPST rates.H..y& X-ԍ See 47 U.S.C.  543(C)H  X-x*43. One commenterQ/y& X% -ԍ See comments of Daniel Laviolette.Q stated that Cox should pay all the expenses of the investigation. This Commission is funded in part by taxpayer dollars and in part by regulatory fees paid by all cable operators. Our investigation of this matter is funded by our mix of funding sources. Our actions taken in resolving this matter, by providing for refunds, eliminating Cox's additional outlet charges and setting reasonable rates are intended to provide a benefit to the public by ensuring that rates for regulated CPST services are not unreasonable until such time  X -that a competitive environment exists in which the marketplace can better influence the rates.  X-x+44. Two commenters have suggested that the Proposed Resolution does not"/0*((;" appropriately address a contract that Cox allegedly had with them to provide Tier I and  X-antenna service at a fixed cost with no additional channels or monthly charges.a0y& Xb-ԍ See comments of Henry Dethlefs, III and Minnie Caniglia.a Tier I and "antenna service" refer to BST services that are within the regulatory jurisdiction of the local franchising authorities and beyond the scope of this Proposed Resolution. The Proposed Resolution does not pass on BST services.  Xv- IV. CONCLUSION AND ORDERING CLAUSES  XH-x,45. For the reasons discussed above, we conclude that it is in the public interest to adopt the Proposed Resolution with the modifications set forth in Paragraphs 20 and 27 above.  X -x-46. We further conclude that the maximum permitted rates as reflected by Cox's Form 1200 Series filings, as indicated for the CUIDs listed in Exhibits 2 and 3 to the Resolution, are justified and are therefore not unreasonable.  X-x.47. Accordingly, for the reasons set forth above, IT IS ORDERED that the Resolution attached to this Order as Attachment A, including the modifications noted in this Order, IS ADOPTED.  X4-x/48. IT IS FURTHER ORDERED that all rate complaints under the jurisdiction of the Commission against Cox ARE GRANTED to the extent indicated herein, and DENIED in all other respects.  X-x049. IT IS FURTHER ORDERED that all proceedings pending review before the Cable Services Bureau and the Commission with respect to rate complaints against the CPST rates of Cox which were filed between September 1993 through June 30, 1995 are resolved.  X|-x150. IT IS FURTHER ORDERED that all orders issued by the Cable Services Bureau and the Commission with respect to CPST rate complaints against Cox filed between September 1993 through the present are vacated and are superseded by this Resolution.  X -x251. IT IS FURTHER ORDERED that any local franchising agreement or any state or local law or regulation that requires Cox to give more than 30 days notice of rates and service changes to subscribers for the period prior to January 1, 1996 is preempted.  X -x352. IT IS FURTHER ORDERED that waivers of 47 C.F.R.  76.309(c)(3)(i)(B) and 76.964 ARE GRANTED.  X#-x453. IT IS FURTHER ORDERED that a waiver of 47 C.F.R.  1.46 IS GRANTED. "h$y00*((F#"Ԍx554. IT IS FURTHER ORDERED that the Cable Services Bureau is given delegated authority to oversee implementation of this Resolution Order. x655. IT IS FURTHER ORDERED that this Order is effective upon adoption. x x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhWilliam F. Caton x` `  hhSecretary