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ўџўџџџўџџўџџџџџџўўўџџџџџџџџџџџЂџџ:*,™„№*є\  PŽ6G;№PўўўўўўўџўџџџўџџўџџџџџџўўўџџџџџџџџџџџџџџџD„D„D§Fџџr–fЕQqТТТТТТТТТџџџџТТТТТи‡иТТ иТд ‘XД-да АААX аа Шщ ааае.тNЊд ‘XД-дСрw ьєСб#Xjє\  PŽ6G;9XP#бУ УFederal Communications CommissionƒС`(#=СDA Ф ФУ У97Љ244Ф Фƒ д щдкyxА™dddyк .еŠСрvьKСУ Уб#єXє\  PŽ6G;‰јєP#бBefore theƒ СрьїСFederal Communications Commissionƒ д yOБЅдСр}ь"СWashington, D.C. 20554Ф Фв ШX01УУФФ УУФФААШX01УУФФ УУУУФФФФАА вб#Xjє\  PŽ6G;9XP#бƒ д ‘XbД-дб#Xjє\  PŽ6G;9XP#бIn the Matter ofСрЪьjС)ƒСССppЌССШШзСС  ССxx-С СрЪьjС)ƒ Global Acquisition Partners, Ltd.СрЪьjС)ƒ д ‘XД-дd/b/a Adelphia Cable CommunicationsСрЪьjС)ƒСС CUID No. NY0874 (Orchard Park)С(#(#‚С д ‘XД-дСрЪьjС)ƒСССppЌС NY1225 (Elma)Са а XС д ‘XяД-дComplaint RegardingСрЪьjС)ƒСС Cable Programming Services TierСрЪьjС)ƒ Rate IncreaseСрЪьjС)ƒ д ‘X“ Д-дСрšьEСУ У ORDERФ Фƒ д ‘Xe Д-дУ УС€СAdopted: January 31, 1997СРРVССССppЌСReleased: February 3, 1997 Ф ФУ У д ‘XNД-дааФ Ф By the Chief, Cable Services Bureau: д ‘X Д-  ™идвŒ I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)ŒвййС€С1.С` ` ЋСIn this Order we consider complaints against the August 1, 1996 rate increase of д ћЃ д$3.86 by the above captioned operator ("Operator") for its cable programming services tier д ћЃ д("CPST") in the communities set forth above. This Order addresses the reasonableness of д ћЃ kдOperator's rate increase of August 1, 1996. Operator has attempted to justify its CPST rates д ћЃ [дthrough a cost of service showing on FCC Form 1220, a benchmark showing on Form 1210 and д ћЃ ˜дFCC Form 1240. We conclude, for the reasons discussed below, that the CPST rate increase implemented by Operator is unreasonable. д ‘XQв- €›дС€С2. The Communications ActжtШQLд yOЪЅ-даа Section 623(c), as amended, 47 U.S.C. Section 543(c)(3) (1996). tж authorizes the Federal Communications Commission д ћЃ yд("Commission") to review the CPST rates of cable systems not subject to effective competition д ‘X#Д- ћЃ Ддto ensure that rates charged are not unreasonable. УУФФУУФФThe Cable Television Consumer Protection and д ‘X в- ћЃ zдCompetition Act of 1992ж_Ш XLд yOЅ-даа Pub. L. No. 102Љ385, 106 Stat. 1460 (1992)._ж ("1992 Cable Act") required the Commission to review CPST rates д ћЃ ˆдupon the filing of a valid complaint by a subscriber or local franchising authority ("LFA"). The д ‘Xов- ћЃ дTelecommunications Act of 1996ж^ШошLд yOw"Ѕ-даа Pub. L. No. 104Љ104, 110 Stat. 56 (1996). ^ж ("the 1996 Act") and our rules implementing the new д ‘XЧв- ћЃ дlegislation,жт”ЧxLд {O№$Ѕ- ћЃ Тдаа УУSee ФФImplementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 5937 д {OК%Ѕ-д(1996) ("УУInterim RulesФФ").тж require that complaints against the CPST rates be filed with the Commission only д ћЃ гдby an LFA that has received subscriber complaints. An LFA may not file a CPST rate complaint д ћЃ ‡дunless it receives more than one subscriber complaint within 90 days after such increase becomesд"™дˆ,о)о)ZZџс"д д ‘Xв- ћЃ —дeffective.жšЪhњд {OyЅ-даа УУ See ФФCommunications Act, Section 623(c)(3), УУas amendedФФ, 47 U.S.C. Section 543(c)(3) (1996).šж If the Commission finds the rate unreasonable, it shall determine the correct rate and д ‘Xщв-дany refund liability.ж^ЪщZhњд {OєЅ-даа УУSeeФФ 47 U.S.C. Section 543(c) (1993).^ж д ‘XЛД-  ™`дС€С3.С` ` ЋСTo justify rates for the period beginning May 15, 1994 through a benchmark or д ћЃ дcost of service showing, operators must use the FCC Form 1200 series. Operators may justify д ћЃ —дadjustments to their rates on an annual basis using FCC Form 1240 to reflect reasonably certain д ћЃ ˆдand quantifiable changes in external costs, inflation, and the number of regulated channels that д ‘X_в- ћЃ удare projected for the twelve months following the rate change.УУФФж`\_ьhњд {Oќ Ѕ- ћЃ †даа УУSeeФФ In the Matter of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate д {OЦ Ѕ- ћЃ •дRegulation, MM Docket No. 92Љ266, Thirteenth Order on ReconsiderationУУ ("Thirteenth Reconsideration Order"), ФФ11 FCC Rcd 388, 391 (1996).`жУУФФ Any incurred cost that is not д ‘XHв- ћЃ дprojected may be accrued with interest and added to rates at a later time.жEЪHhњд {O Ѕ-даа УУ Id. ФФat 392.Eж УУФФIf actual and projected д ћЃ [дcosts are different during the rate year, a "trueЉup" mechanism is available to correct estimated д ‘X в- ћЃ ‰дcosts with actual cost changes.ж= Ъ Ђhњд {OmЅ-даа УУIdФФ.=ж The "trueЉup" requires operators to decrease their rates or д ћЃ {дalternatively permits them to increase their rates to make an adjustment for over or under д ‘Xь в-дestimations of these cost changes.жц Дь 4 hњд {OбЅ- ћЃ даа УУIdФФ. The Commission granted Operator a waiver to allow Operator, in its initial filing of FCC Form 1240, д ћЃ сдto include cost adjustments over the period of time between the last date for which actual cost data is available and д ћЃ Zдthe effective date of Operator's new rates. The cost adjustments included for this period are subject to a trueЉup д ћЃ Zдat the same time that the required trueЉup is performed on Operator's initial Form 1240 Projected Period Rates. д {OѓЅ- ћЃ JдУУSee ФФIn the Matter of Annual Rate Adjustment System Љ Request for Waiver Љ FCC Form 1240, 11 FCC Rcd. 13997 (1996). цж д ‘Xе Д-дУУФФУУС€СУ УФ ФФФ д ‘XО Д-  ™КдС€С 4.С` ` ЋСOn November 5, 1996 and December 9, 1996, the LFA filed complaints regarding д ‘XЇ Д- ћЃ Ідthe August 1, 1996 increase in Operator's CPST rate in each of the communities set forth above.У УФ Ф д ‘Xв- ћЃ ]дThe LFA has certified that it has complied with the Interim Rules.жў ’Аhњд {OёЅ- ћЃ ‡даа УУSeeФФ FCC Form 329 Complaint for CUID No. NY0874 filed by the LFA dated September 25, 1996. УУSeeФФ FCC Form 329 Complaint for CUID No. NY1225 filed by the LFA dated December 4, 1996.ўж On October 18, 1996, д ћЃ удOperator submitted FCC Form 1240 to justify the rate increase that went into effect August 1, д ћЃ zд1996. Upon review of Operator's FCC Form 1240, we find that Operator charged in excess of д ‘XKв-дits calculated maximum permitted rate, as discussed in the paragraphs below.ж K hњд yO%Ѕ- ћЃ wдаа This finding is based solely on the representations of Operator. Should information come to our attention that д ћЃ ,дthese representations were materially inaccurate, we reserve the right to take appropriate action. This Order is not д ћЃ Удto 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.жд"Kђ ˆ,-(-(ZZ…џ"дŒд ‘XД-  ™Pд™С€С5.С` ` ЋСOn its FCC Form 1240 filing, Operator attempted to justify its current rate increase д ћЃ дby adjusting a maximum permitted rate ("MPR") that was higher than the rate it previously д ћЃ дcharged to subscribers. To verify the MPR included on Line A1 of Operator's FCC Form 1240 д ћЃ хдrate justification, we reviewed FCC Forms 1210 and 1220 previously filed for Operator's д ‘XЄв-дLancaster system, of which the communities set forth above are a part.жж Єhњд yOЅ- ћЃ даа On August 9, 1994, Operator filed its FCC Form 1220 for the Lancaster system to justify CPST rates in effect д ћЃ Гдafter May 14, 1994. Further, on December 4, 1996, Operator submitted an FCC Form 1210 that was originally filed д ћЃ •дprior to the FCC Form 1240 under review. Operator confirmed that these documents apply to the Orchard Park and Elma communities under review. жж д ‘Xvв-  ™дС€С6.С` ` ЋСУУФФУУФФУУФФУУMPR Review Љ FCC Forms 1220 and 1210ФФ:жя vАhњд yOз Ѕ- ћЃ Kдаа Information regarding the specific adjustments made to Operator's filings can be found in the public file for д ћЃ —дcommunities set forth above, which files are available in the Cable Services Bureau's public reference room, or д ћЃ ˆдthrough the Commission's copy contractor, International Transcription Services (ITS), 1919 M Street N.W., Washington, DC, 20554, or by calling ITS at (202) 857Љ3800. яж We made three adjustments to д ћЃ едOperator's cost of service calculations on its FCC Form 1220 that affected the MPR. First, д ћЃ ёдOperator allocated all rate base and operating costs not directly assigned on a weighted channel д ћЃ ђдbasis, i.e. the number of channels per tier times the number of tier subscribers. In accordance д ћЃ дwith the Final Cost Rules, we revised these allocations on a channel ratio basis. This reduced the percentage of common costs allocated to the CPST from 60% to 55%. д ‘Xе Д-  ™дС€С7.С` ` ЋСSecond, Operator did not allocate depreciation expenses assignable to the д ћЃ Чдequipment basket on Lines 23, 26, 30 and 36 of FCC Form 1220. We revised Operator's д ћЃ Фдcalculations consistent with the general ledger detail data that accompanied the FCC Form 1220. д ‘XyД-  ™ЊдС€С8.С` ` ЋСThird, Operator did not include the Home Shopping channel revenues and late fee д ћЃ ёдrevenues as offsets to its revenue requirement. Moreover, the advertising revenues assigned to д ћЃ <дOther Programming Service Activities should instead have been assigned to the CPST, as should д ћЃ <дthe corresponding advertising expenses. Again, we made adjustments as appropriate, consistent д ћЃ Mдwith general ledger detail data that accompanied the FCC Form 1220. The effect of our FCC д ћЃ ЦдForm 1220 adjustments reduced the CPST MPR on that form from $19.99, as calculated by Operator, to $16.98, excluding franchise fees. С€С д ‘XСД-  ™QдС€С9.С` ` ЋСUpon review of the FCC Form 1210, we adjusted Line A2 of that form to $16.98 д ћЃ ђдto reflect our correction to the CPST MPR on the previous FCC Form 1220. As a result of our д ћЃ дadjustment, the MPR calculated on Operator's FCC Form 1210 for CPST has been corrected to $16.18. д ‘XNД-  ™кдС€С10.С` ` ЋСУУCurrent Charge Review Љ FCC Form 1240:ФФ On its FCC Form 1240, Operator д ћЃ Lдcalculated a CPST Maximum Permitted Rate For Projected Period of $19.99, excluding franchise д ћЃ ]дfees, to justify a $3.86 increase in its actual rates from $l5.70 to $19.56. As a result of our д ћЃ !дadjustments to the FCC Forms 1210 and 1220, discussed above, we adjusted Line A1 ofд" ˜ˆ,-(-(ZZ=с"д д ћЃ ХдOperator's FCC Form 1240 to reflect the corrected MPR of $16.18 calculated on the FCC Form д ћЃ Їд1210. As a result of our adjustment, the CPST Maximum Permitted Rate For Projected Period calculated by Operator on its FCC Form 1240 has been corrected to $18.75. д ‘XЄД-  ™›дС€С11.С` ` ЋСUpon review of the record before us, we find that Operator has provided sufficient д ћЃ дevidence to support a CPST rate increase of only $3.05. Thus, Operator failed to demonstrate that its August 1, 1996 rate increase of $3.86 was not unreasonable. д ‘XHД-  ™йдС€С12.С` ` ЋСAccordingly, IT IS ORDERED, pursuant to Section 0.32l of the Commission's д ћЃ yдrules, 47 C.F.R. Section 0.321 that the monthly CPST rate increase of $3.86 charged by Operator in the communities set forth above beginning August 1, 1996, IS UNREASONABLE. д ‘Xь Д-  ™чдС€С13.С` ` ЋСIT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, д ћЃ [д47 C.F.R. Section 0.321, that the complaints referenced herein against the August 1, 1996 CPST rate increase charged by Operator in the communities set forth above, ARE GRANTED. д ‘XД-  ™ŽдС€С14.С` ` ЋСIT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's д ћЃ \дrules, 47 C.F.R. РР 76.961, that Operator shall refund subscribers in the communities set forth д ћЃ дabove that portion of the amount of the CPST rate increase paid by subscribers that exceeded д ћЃ дthe maximum permitted CPST rate of $18.75 per month (plus franchise fee), plus interest to the д ћЃ Ждdate of the refund, for the period from August 1, 1996 to the day before Operator implements the maximum permitted CPST rate of $18.75. д ‘XяД-  ™4дС€С15.С` ` ЋСIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's д ћЃ .дrules, 47 C.F.R. РР 0.321, that Operator in the communities set forth above, revise its calculation of its maximum permitted CPST rate in its next FCC Form 1240 filing. д ‘X“Д-  ™лдС€С16.С` ` ЋСIT IS FURTHER ORDERED that Operator shall promptly determine the д ћЃ yдovercharges to CPST subscribers for the stated periods, and shall within 30 days of the release д ћЃ дof this Order, file a report with the Chief, Cable Services Bureau, stating the cumulative refund д ћЃ гдamount so determined (including franchise fees and interest), describing the calculation thereof, д ћЃ дand describing its plan to implement the refund within 60 days of Commission approval of the plan. С€СС` ` ЋССИ И жССССhh,ССРРVСFEDERAL COMMUNICATIONS COMMISSION С€СС` ` ЋССИ И жССССhh,ССРРVСMeredith J. Jones С€СС` ` ЋССИ И жССССhh,ССРРVСChief, Cable Service Bureau