******************************************************** 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 ) CUID Nos. IL0613 (Deerfield) ) IL0614 (Highland Park) ) IL1243 (Winnetka) Post-Newsweek Cable ) IL1262 (Lincolnshire) ) ) Complaints 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 communities referenced above. Operator has attempted to justify its CPST rates through benchmark justifications on FCC Form 1200, multiple FCC Form 1210s and FCC Form 1240. We have already issued a separate order in which we found that Operator's rates in effect prior to May 15, 1994 were reasonable. 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 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 a 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 1210s, 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 rate ("MPR") and has charged in excess of its MPR beginning October 1, 1995, as discussed in the paragraphs below. 5. We reviewed Operator's FCC Form 1200, and we agree that Operator's MPR of $14.23 is reasonable. Operator's actual CPST rate in effect from May 15, 1994 to July 14, 1994 was $14.78. Therefore, we find Operator's actual CPST rate for the period May 15, 1994 to July 14, 1994 to be unreasonable. However, Operator elected to take advantage of the refund liability deferral period in accordance with the Commission's Rules. Consequently, Operator does not incur refund liability for charging in excess of the MPR calculated on its FCC Form 1200 for the period May 15, 1994 to July 14, 1994. 6. We next reviewed Operator's first three FCC Form 1210s covering the periods March 31, 1994 through June 30, 1994; July 1, 1994 through September 30, 1994; and January 1, 1995 through March 31, 1995. We find that Operator correctly calculated its MPRs for these periods and that Operator's actual CPST rates did not exceed its MPRs through September 30, 1995. Therefore, we find Operator's actual CPST rates of $14.78, effective July 14, 1994 through Decemer 31, 1994; $14.53 effective January 1, 1995 through May 31, 1995; and $15.13 effective June 1, 1995 through September 30, 1995 to be reasonable. 7. Upon review of Operator's FCC Form 1210 for the period April 1, 1995 through September 15, 1995, we disallowed Operator's claim for $1.00 for channel adjustment because Operator did not add any channels to the CPST. As a result of this adjustment, we calculated a revised MPR of $15.60 rather than Operator's MPR of $16.62. Operator's actual CPST rate of $16.62, effective October 1, 1995 through December 31, 1995, exceeded its revised MPR of $15.60. Therefore, we find Operator's actual CPST rate of $16.62, effective October 1, 1995 through December 31, 1995, to be unreasonable. 8. Finally, we reviewed Operator's FCC Form 1240 for the projected period June 1, 1996 through May 31, 1997. We adjusted Line A1 to coincide with the revised FCC Form 1210 and we disallowed Operator's continuing claim for $1.00 for channel adjustment as no channels were added. These adjustments resulted in a revised MPR for the projected period of $16.35 rather than Operator's MPR for the projected period of $18.12. Operator's actual CPST rate of $18.12, effective June 1, 1996, exceeded its revised MPR of $16.35. Therefore, we find Operator's actual CPST rate of $18.12, effective June 1, 1996, to be unreasonable. 9. 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 $16.62, charged by Operator in the franchise areas referenced above during the period October 1, 1995 through December 31, 1995, IS UNREASONABLE. 10. 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 $18.12, charged by Operator in the franchise areas referenced above beginning June 1, 1996, IS UNREASONABLE. 11. 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 franchise areas referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $15.60 per month (plus franchise fees), plus interest to the date of the refund, for the period October 1, 1995 through December 31, 1995. 12. 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 franchise areas referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $16.35 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 $16.35. 13. 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. 14. 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. 15. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaints ARE GRANTED TO THE EXTENT DISCUSSED HEREIN. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau