******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) Marcus Cable Partners, L.P. ) CUID No. WI0659 (Mishicot) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ) ) ORDER Adopted: May 30, 1997 Released: June 3, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider complaints about the rates charged by the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. Operator has attempted to justify its CPST rates through benchmark justifications on FCC Form 1200, multiple FCC Form 1210's and FCC Form 1240. We have already issued a separate order in which we found Operator's rates in effect before May 15, 1994 to be unreasonable ("Prior Order"). Accordingly, this Order addresses only the reasonableness of Operator's CPST rates in effect after May 14, 1994. 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 a CPST rate to be unreasonable, it shall determine the correct rate and any refund liability. 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. Cable operators may file an FCC Form 1210 to justify rate increases based on the addition and deletion of channels, changes in certain external costs and inflation. In addition, Operators must file an FCC Form 1210 at least 30 days before new rates are scheduled to go into effect, where there is a pending complaint against the CPST rate. Operators may 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. Upon review of Operator's FCC Form 1200, multiple FCC Form 1210's and FCC Form 1240 for the period May 15, 1994 through May 31, 1997, we find that Operator has not correctly calculated its maximum permitted rates ("MPRs") beginning May 15, 1994, as discussed in the paragraphs below. 5. Upon review of Operator's FCC Form 1200, we found that Operator's subscriber count was not supported by the comparable figures from Operator's other FCC filings. We adjusted Operator's FCC Form 1200 so that Line A2 reflects the number of subscribers claimed by Operator in the refund plan which Operator submitted in response to our Prior Order. This was the only adjustment we made and it affected all of Operator's subsequent filings. This adjustment resulted in a revised MPR of $12.02 versus Operator's MPR of $12.11. Operator's actual CPST rate at the time was $12.78. We find that Operator's CPST rate of $12.78 for the period May 15, 1994 through June 30, 1994, has exceeded its revised MPR of $12.02. Thus, Operator failed to demonstrate that its May 15, 1994 CPST rate of $12.78 was reasonable. Operator has elected to take advantage of the refund liability deferral period in accordance with the Commission's Rules. Consequently, Operator is not liable for refunds between May 15, 1994 and July 14, 1994 because its actual CPST rate is greater than the MPR justified on its FCC Form 1200 series filings. However, because we have found that Operator's CPST rate was in excess of $12.12, which we determined to be Operator's MPR for its CPST in our Prior Order, Operator is still liable for refunds for charging a CPST rate greater than $12.12 during the period of May 15, 1994 through July 14, 1994. 6. We adjusted Operator's FCC Form 1210 for the period April 1, 1994 through June 30, 1994 to reflect the revised MPR from the previous filing and the amendment to the subscriber count noted above. This resulted in a revised MPR of $12.68 versus Operator's MPR of $12.76. We find Operator's actual CPST rate of $12.78 effective July 15, 1994 through September 30, 1994 to be unreasonable. 7. Next, we adjusted Operator's FCC Form 1210 for the period July 1, 1994 through September 30, 1994 to reflect the revised MPR from the previous filing and the amendment to the subscriber count. This resulted in a revised MPR of $12.96 rather than Operator's MPR of $13.04. However, Operator's actual CPST rate was $12.78. Therefore, we find that Operator's actual CPST rate of $12.78 effective October 1, 1994 through December 31, 1994 was reasonable. 8. We also adjusted Operator's FCC Form 1210 for the period October 1, 1994 through December 31, 1994 to reflect the revised MPR from the previous filing and the amendment to the subscriber count, reducing the MPR to $12.74 rather than Operator's MPR of $12.88. Because Operator's actual rate of $12.78 exceeded its revised MPR of $12.74, we find Operator's actual CPST rate of $12.78 effective January 1, 1995 through March 31, 1995 to be unreasonable. However, pursuant to the Commission's Rules, where Operator's FCC Form 1210 reflects a reduction in external costs without any channel deletions, Operator is only required to reduce its rates annually. Therefore, Operator does not incur any refund liability for this reduction in external costs until January 1, 1996. 9. Operator filed three more FCC Form 1210's which did not require modification of the subscriber counts. However, each of these filings was adjusted to account for the revised MPRs from the previous filings. For the period January 1, 1995 through March 31, 1995, we found a revised MPR of $12.70, effective April 1, 1995, rather than Operator's MPR of $12.78. For the periods April 1, 1995 through June 30, 1995 and July 1, 1995 through September 30, 1995, we found a revised MPR of $12.67, effective July 1, 1995, versus Operator's MPR of $12.75. Because Operator's actual CPST rate remained at $12.78 during this period, which is higher than any of its revised MPRs, we find Operator's actual CPST rate of $12.78 for the period April 1, 1995 through May 31, 1996 to be unreasonable. However, as noted in the previous paragraph, because Operator's MPR was lowered due to a reduction in external costs unrelated to channel deletion, Operator's refund liability begins as of January 1, 1996. Therefore, Operator incurs refund liability for the period January 1, 1996 through May 31, 1996 for any amount charged over the MPR of $12.67. 10. Finally, we reviewed Operator's FCC Form 1240 for the projected period June 1, 1996 through May 31, 1997. We amended Line A1 to match the MPR from the previous FCC Form 1210 and this resulted in a revised MPR of $13.54 versus Operator's MPR of $13.70. Operator's actual CPST rate for this period is $13.70, which is higher than its revised MPR of $13.54. Therefore, we find that Operator's actual CPST rate of $13.70, beginning June 1, 1996, is unreasonable. 11. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $12.78, charged by Operator in the franchise area referenced above effective May 15, 1994 through September 30, 1994 IS UNREASONABLE. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $12.78, charged by Operator in the franchise area referenced above effective October 1, 1994 through December 31, 1994, IS REASONABLE. 13. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $12.78, charged by Operator in the franchise area referenced above effective January 1, 1995 through December 31, 1995, IS REASONABLE TO THE EXTENT INDICATED HEREIN. 14. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $12.78, charged by Operator in the franchise area referenced above effective January 1, 1996 through May 31, 1996, IS UNREASONABLE. 15. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $13.70, charged by Operator in the franchise area referenced above beginning June 1, 1996, IS UNREASONABLE. 16. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $12.12 per month (plus franchise fees), plus interest to the date of the refund, for the period May 15, 1994 through July 14, 1994. 17. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $12.68 per month (plus franchise fees), plus interest to the date of the refund, for the period July 15, 1994 through September 30, 1994. 18. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $12.67 per month (plus franchise fees), plus interest to the date of the refund, for the period January 1, 1996 through May 31, 1996. 19. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $13.54 per month (plus franchise fees), plus interest to the date of the refund, for the period June 1, 1996 through the day before Operator implements the maximum permitted CPST rate of $13.54. 20. IT IS FURTHER ORDERED that Operator shall promptly determine the overcharges to CPST subscribers for the stated periods, and shall within 30 days of the release of this Order, file a report with the Chief, Cable Services Bureau, stating the cumulative refund amount so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of Commission approval of the plan. 21. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator take into account our FCC Form 1240 adjustments when calculating its maximum permitted rate and performing the true-up calculation on its next FCC Form 1240. 22. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaint IS GRANTED TO THE EXTENT DISCUSSED HEREIN. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau