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File how2ftp (.txt & .wp) is in directory /pub/Bureaus/Miscellaneous/Public_Notices/ ***************************************************************** ******** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of) ) Continental Cablevision, Inc. ) CUID No. CA0775 d/b/a American Cablesystems ) Los Angeles, CA - Area J ) ) and ) ) CUID No. CA0808 ) Los Angeles, CA - Area I Benchmark Filings to Support ) Cable Programming Service Rates ) MEMORANDUM OPINION AND ORDER Adopted: May 14, 1996 Released: May 14, 1996 By the Chief, Cable Services Bureau: 1. In this Order we address complaints filed against rate increases which Continental Cablevision, Inc. ("Continental") imposed on its cable programming service ("CPS") tier subscribers in the Los Angeles, California, CUID No. CA0775, Area J Franchise and the Los Angeles, California, CUID No. CA0808, Area I Franchise. As explained below, we find that Continental's CPS tier I and II rates are reasonable in both of the above referenced franchise areas because the rates do not exceed the maximum permitted rate. 2. On February 14, 1996, the City of Los Angeles filed two complaints with the Federal Communications Commission ("Commission") regarding increases in the CPS tier rates that Continental was charging its customers in each of the above-referenced franchise areas. The rate increases complained of went into effect on January 1, 1996. Continental, pursuant to a Social Contract which was entered into with the Commission ("Social Contract"), submitted its rate justifications for each franchise area on a Rate Form to justify the rate increases in each of the above referenced franchise areas. 3. Under the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act"), the Commission is authorized to review the CPS tier rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. If the Commission finds the rate unreasonable, it shall determine the correct rate and any refund liability. The 1996 Act, and our rules implementing the new legislation, changed the process by which the Commission reviews complaints concerning rates charged for a CPS tier. 4. Under the 1992 Cable Act and our rules implementing it, subscribers, franchising authorities, or other relevant state or local government entities were permitted to file complaints concerning CPS tier rates directly with the Commission. The receipt of one valid complaint was sufficient to trigger the Commission's review jurisdiction, and imposed an obligation on the operator to file a justification of its CPS tier rates. Under the 1996 Act and our Interim Rules implementing the new legislation, complaints against the CPS tier rates are to be filed with the Commission by a franchising authority that has received subscriber complaints. A franchising authority may not file a CPS tier rate complaint unless, within 90 days after such increase becomes effective, it receives subscriber complaints. This standard requires more than one subscriber rate complaint. The provisions under the 1996 Act became effective upon the enactment of the 1996 Act on February 8, 1996. 5. The LFA for the City of Los Angeles filed two complaints on February 14, 1996. These complaints are thus, subject to the requirements of the 1996 Act. On March 22, 1996, in response to our request, the LFA submitted additional information indicating that it had received multiple complaints from subscribers regarding Continental's January 1, 1996 CPS tier rate increases in each of the above referenced franchise areas. On March 28, 1996, Continental requested that we dismiss the complaints because the complaints did not contain any indication that the LFA received multiple complaints about Continental's rate increases. Continental also asserts that its rates are reasonable in each of its franchise areas. Because the LFA has filed valid complaints against Continental, we hereby deny Continental's request to dismiss the LFA's complaints. 6. On August 1, 1995, the Commission adopted an order approving the Social Contract entered into between the Continental and the Commission. Under the terms of the Social Contract, Continental is required to, among other things, invest at least $1.35 billion to rebuild and upgrade all of its domestic systems from 1995 through 2000. By January 1, 1996 Continental must create a lifeline basic service tier by reducing rates on the basic service tier by 15% to 20% and offset this reduction in a revenue neutral manner by adjusting the rates on the CPS tier. Continental may migrate up to four existing services from its CPS tier to a Migrated Product Tier ("MPT") and Continental may add an unlimited number of channels to a MPT at $.20 per added channel plus license fees. 7. There are no official forms available for use to implement the one-time changes in rates by January 1, 1996, as required by the Social Contract. The Commission, seeking to simplify the implementation of the Social Contract, found in the Implementation Order that the Rate Form proposed by Continental to implement the rate restructuring under the Social Contract, was consistent with the methodologies of the Commission's Forms 1200 and 1210 and greatly simplified the review of the restructured rates under the Social Contract. Therefore, pursuant to the terms of the Social Contract and the Implementation Order, the Commission permitted Continental to file a Rate Form to establish its CPS tier rates. 8. On March 28, 1996, Continental responded to the instant complaints and filed the Social Contract Rate Forms to justify its January 1, 1996 rate increases in each of the above referenced franchise areas. Continental asserts that its monthly CPS tier I and II rates for CUID No. CA0775, Area J of $1.91 and $16.64, respectively, and its monthly CPS tier I and II rates for CUID No. CA0808, Area I of $1.93 and $15.06, respectively, are justified because the rates are equal to or lower than the maximum permitted rate under the terms of the Social Contract. Upon review of Continental's Rate Forms, we agree. We have found no apparent errors in Continental's calculation of its initial rates under the Social Contract. Therefore, Continental's CPS I and II tier rates upon review of the record herein are justified. 9. 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 with respect to CUID No. CA0775, Area J, against the cable programming service tier I and II rates charged by Continental in the franchise area referenced in the caption IS DENIED. 10. 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 with respect to CUID No. CA0808, Area I, against the cable programming service tier I and II rates charged by Continental in the franchise area referenced in the caption IS DENIED. 11. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that Continental be permitted to charge a monthly CPS I and II tier rates in its franchise area CUID CA0775, Area J not exceeding $1.91 and $16.64, respectivley, per month (plus franchise fee). 12. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that Continental be permitted to charge a monthly CPS tier I and II rates in its franchise area CUID CA0808, Area I not exceeding $1.93 and $15.06, respectivley, per month (plus franchise fee). FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau