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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 ) ) Comcast Cablevision of Paducah, Inc. ) CUID No. KY0203 (County of McCracken) ) ) Complaint Regarding ) Cable Programming Services Tier Rates) ORDER Adopted: July 18, 1997 Released: July 23, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the November 1, 1996 rate increase that the above-captioned operator ("Operator") implemented for its cable programming services tier ("CPST") in the community set forth above. Operator has attempted to justify its CPST rate increase through a benchmark showing on FCC Forms 1210 and 1240. Accordingly, this Order addresses the reasonableness of the Operator's CPST rate of $17.53, effective November 1, 1996. 2. The Communications Act authorizes the Federal Communications Commission ("Commission") 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 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 ("Interim Rules"), require that complaints against CPST rates be filed with the Commission by a franchising authority that has received subscriber complaints. A franchising authority may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. 3. The Commission's original rate regulations took effect on September 1, 1993. The Commission revised its rate regulations effective May 15, 1994. Cable 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. 4. On April 29, 1997, the local franchising authority ("LFA") filed its complaint against Operator's November 1, 1996 CPST rate increase. In its complaint, the LFA asserts that it has received more than one subscriber complaint against Operator's CPST rate increase, thereby triggering the Commission's jurisdiction to review this complaint. The valid complaint from the LFA triggers an obligation on behalf of the cable operator to file a justification of its CPST rates with the LFA. Thus, in this case, Operator is required to justify the increase in its CPST rate which is the subject of the LFA's complaint. Operator submitted FCC Forms 1210 and 1240 for the community set forth above to justify its CPST rate increase. 5. In a letter to the Commission dated June 23, 1997, Operator argues that it should be permitted to use a "grandfathered" rate, i.e., an actual rate, as the starting rate in its FCC Form 1210 for the period July 1, 1994 to December 31, 1995 and then use the maximum permitted rate ("MPR") calculated on this form as the starting rate on Operator's FCC Form 1240, Line A1. We reject this argument because "the Commission will not accept an FCC Form 1210 to justify an MPR unless that FCC Form 1210 is being used to adjust a rate previously calculated by an FCC Form 1200 or a cost-of service showing." The FCC Form 1240 allows the operator to use, as its beginning rate on Line A1, the MPR calculated on a series of FCC Forms 1200, 1210 and 1240, even if the MPR has never been put into effect by the operator. If the FCC Form 1240 is being filed in response to a CPST rate complaint and the operator is not currently regulated on its CPST, the operator may use the rate it was charging prior to the rate increase which triggered the complaint. Because Operator has failed to provide an FCC Form 1200 that supports the starting rate on Line A1 and Line A2 on its FCC Form 1210, which in turns supports the starting rate on Operator's FCC Form 1240, Line A1, we will use as the starting rate on Operator's FCC Form 1240, Line A1, the rate that Operator was charging prior to the November 1, 1996 CPST rate increase. 6. Our review of Operator's FCC Form 1240 for the projected period November 1, 1996 to October 31, 1997 to justify its CPST rate of $17.53, effective November 1, 1996, indicates that Operator has miscalculated its MPR. We have corrected Operator's starting rate on Line A1 to reflect the actual CPST rate of $14.84 that Operator was charging prior to the rate increase which triggered the instant complaint. Because Operator was not previously subject to CPST regulation and this FCC Form 1240 was filed in response to a CPST rate complaint, Operator was not entitled to claim a true-up period in this FCC Form 1240. Consequently, we removed the ten-month true-up period claimed in this FCC Form 1240. For the same reason, we also removed Operator's current CAPS method segment on Line D3 and Line I1. In total, our adjustments to Operator's FCC Form 1240 result in a corrected MPR for the Projected Period of $15.91 (Line I9). Consequently, we find that Operator has failed to demonstrate that its November 1, 1996 rate of $17.53 was not unreasonable. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. Section 0.321 that Operator's CPST rate of $17.53, effective November 1, 1996, in the community set forth above, IS UNREASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint referenced herein against the rate increase charged by Operator in the community set forth above, IS GRANTED. 9. 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 $15.91 per month (plus franchise fee) plus interest during the period from November 1, 1996 to the day before Operator reduces its CPST rate to $15.91. 10. 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 amounts so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of the Commission approval of the plan. 11. 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. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau