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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) TCI of Eastern Iowa ) CUID No. IA0109 (City of Burlington) ) Complaints Regarding ) Cable Programming Services Tier ) Rate Increases ) ORDER Adopted: January 24, 1997 Released: January 29, 1997 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints regarding the rate increases of TCI of Eastern Iowa ("TCI") for its cable programming services tier ("CPST") in the City of Burlington, Iowa, CUID No. IA0109. TCI increased its CPST rate on April 1, 1995 in the amount of $2.64, and again on June 1, 1996 in the amount of $1.74. TCI has attempted to justify its CPST rates through benchmark showings on FCC Forms 1200, 1210, and 1240. The first valid complaint received by the Commission for this community is the complaint regarding TCI's April 1, 1995 CPST rate increase. This Order addresses the reasonableness of both increases. We conclude that the April 1, 1995 rate increase is unreasonable, but that any refund liability is de minimis, and that the June 1, 1996 rate increase is not unreasonable. 2. Under the Communications Act, the Federal Communications Commission ("Commission") is authorized to review the CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. If the Commission finds the rate to be unreasonable, it shall determine the correct rate and any refund liability. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the new legislation, require that complaints against the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received subscriber complaints. An LFA may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. 3. To justify rates for the period beginning May 15, 1994 through a benchmark or cost of service showing, operators must use the FCC Form 1200 series. Operators may justify rate increases based on the addition and deletion of channels, changes in certain external costs, and inflation, by filing FCC Form 1210. FCC Form 1210 must be filed at least 30 days before new rates are scheduled to go into effect where the Commission has found the CPST rate to be unreasonable less than one year prior to the filing, or where there is a pending complaint against the CPST rate. Operators may also justify adjustments to their rates on an annual basis using FCC Form 1240 to reflect reasonably certain and quantifiable changes in external costs, inflation, and the number of regulated channels that are projected for the twelve months following the rate change. Any incurred cost that is not projected may be accrued with interest and added to rates at a later time. If actual and projected costs are different during the rate year a "true-up" mechanism is available to correct estimated costs with actual cost changes. The "true-up" requires operators to decrease their rates or alternatively permits them to increase their rates to make an adjustment for over or under estimations of these cost changes. 4. On May 17, 1995 a complaint was filed against TCI's CPST rate increase of $14.36. TCI filed FCC Forms 1200 and 1210 in response to this complaint. The most recent 1210 was filed for the period January 1, 1995 to June 30, 1995. TCI implemented its rate increase April 1, 1995, when it could not have properly done so until July 1, 1995. TCI's FCC Form 1210 filing for the period from January 1, 1995 to June 30, 1995 reflects a maximum permitted CPST rate of $14.41. However, as evidenced by a previous FCC Form 1210 submitted for the period October 1, 1994 to December 31, 1994, TCI was only entitled to a maximum permitted rate of $14.20 as of the effective date of the April 1, 1995 rate increase. At the time of the filing of the May 17, 1995 complaint, TCI's actual CPST rate was $14.36. This has resulted in an overcharge of $0.16 per month per subscriber. Thus, TCI has failed to demonstrate that the rate for its CPST was not unreasonable. However, we determine that the total overcharge per subscriber is de minimis. Therefore, it would not serve the public interest to order a refund. 5. On November 29, 1996, the City of Burlington, Iowa, the LFA in this instance, filed a complaint against TCI's June 1, 1996 CPST rate increase. As required by our rules, the City included with its complaint a copy of the rate justification that TCI provided to the City. Upon review of the record before us we find that TCI has provided sufficient evidence to support its June 1, 1996 rate increase of $1.74. 6. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that TCI's April 1, 1995 CPST rate increase of $2.64 in the City of Burlington, Iowa, CUID No. IA0190, IS UNREASONABLE. 7. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that TCI's June 1, 1996 CPST rate increase of $1.74 in the City of Burlington, Iowa, CUID No. IA0190, IS NOT UNREASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint against the April 1, 1995 CPST rate increase charged by TCI in the City of Burlington, Iowa, CUID No. IA0190 IS GRANTED TO THE EXTENT INDICATED HEREIN. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint against the June 1, 1996 CPST rate increase charged by TCI in the City of Burlington, Iowa, CUID No. IA0190 IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau