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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 ) CUID No. FL0143 (Okaloosa) ) Cox Communications, Inc. ) d/b/a Emerald Coast Cable Television) ) Complaint Regarding ) Cable Programming Services Tier Rates) ) ORDER Adopted: August 25, 1997 Released: August 26, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the March 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already issued an order in which we found that Operator's rates in effect prior to May 15, 1994 were unreasonable ("Prior Order"). Subsequently, we issued an order vacating and superseding our Prior Order and resolving all the complaints filed from September 1993 through June 30, 1995 against Operator's CPST rates ("Resolution"). Accordingly, this Order addresses only the reasonableness of Operator's March 1, 1997 CPST rate increase. 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. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the new legislation ("Interim Rules"), require that complaints against the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 3. The LFA for the franchise area referenced above filed a complaint with the Commission on May 30, 1997 against Operator's March 1, 1997 CPST rate increase from $15.73 to $17.02. The LFA verified that it received more than one subscriber complaint for the franchise area and that the first valid complaint was received by the LFA on March 20, 1997. The filing of a complete and timely LFA complaint triggers an obligation upon the cable operator to file a justification of its CPST rates. The Operator has the burden of demonstrating that the CPST rates complained about are reasonable. 4. To justify rates for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form 1200 series. Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210. Operators may alternatively 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. 5. The Resolution approved a maximum permitted rate ("MPR") of $12.79 for the CPST in the community referenced above. Upon review of Operator's FCC Form 1210 covering the period January 1, 1995 through September 30, 1995, which updates Operator's approved MPR of $12.79, we adjusted Operator's inflation adjustment factor at Line I5 to 1.0296. This adjustment resulted in a revised MPR of $13.36 rather than Operator's MPR of $13.56. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1996 through February 28, 1997, we adjusted Operator's Line A1 to coincide with Operator's MPR of $13.36 from its previous revised FCC Form 1210. This adjustment resulted in a revised FCC Form 1240 MPR of $15.45 rather than Operator's MPR of $15.73. 6. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1997 through February 28, 1998, we adjusted Operator's Line A1 to coincide with Operator's MPR from its previous revised FCC Form 1240. Also, Operator made true-up adjustments through to the effective date of the rate increase. This is incorrect. The annual adjustment afforded by FCC Form 1240 allows operators to project changes in external costs, inflation, and the number of regulated channels. This structure avoids the delay some operators experienced in recouping costs through multiple rate adjustments throughout the year. Because projections will not reflect the costs that actually occur, the Commission provided, as part of the annual adjustment, a "true-up" to correct projected cost changes with the actual cost changes. The true-up data is intended to indicate real, not projected data. Operator signed the second FCC Form 1240 on January 30, 1997. Consequently, Operator could not have had actual data for all twelve months of the true- up period. We will order Operator to submit an FCC Form 1240 for the projected period March 1, 1997 through February 28, 1998 with a true-up period not to exceed ten months, provided Operator has actual data for all of the months used in the true-up. We will also order Operator to use the rate of $15.45 on Line A1 of this FCC Form 1240. 7. 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 $17.02, charged by Operator in the franchise area referenced above, effective March 1, 1997, 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 Operator shall, within 30 days of the release of this Order, file with the Chief, Cable Services Bureau, an FCC Form 1240 for the projected period March 1, 1997 through February 28, 1998 that incorporates our findings in this Order. 9. 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. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau