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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 ) ) Suburban Cable ) CUID No. PA2500 (Township of New Britain) ) ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: September 2, 1997 Released: September 5, 1997 By the Acting Division Chief, Financial Analysis & Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the April 1, 1997 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 showing on FCC Forms 1220, 1210 and 1240. Accordingly, this Order addresses the reasonableness of the Operator's CPST rate of $16.65, effective April 1, 1997. 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 June 20, 1997, the local franchising authority ("LFA") filed its complaint against Operator's April 1, 1997 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 1220, 1210 and 1240 for the community set forth above to justify its CPST rate increase. 5. The Commission permits an operator that is filing an FCC Form 1240 in response to a CPST complaint, and is not currently regulated on its CPST to use, as its beginning rate on Line A1, the maximum permitted rate ("MPR") calculated on FCC Forms 1200, 1210 and 1240, even if the MPR has never been put into effect by the operator. In addition, 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. 6. Operator's cost of service filing seeks to establish that its CPST rate is justified based on its cost of providing regulated cable service. According to information provided by Operator in its cost of service showing, the franchise area comprises approximately 2,456 CPST subscribers. In this review process, we analyzed Operator's CPST cost of service showing to ensure that its CPST rate is not unreasonable and to determine any associated refund liability. 7. In reviewing Operator's cost of service showing, rate base and expense items have been evaluated to determine whether Operator should be permitted to recover those items. Where a certain rate base or expense element was not supported, was excessive, or was unrelated to providing regulated cable service, such cost was disallowed in whole or in part. Based on our review of Operator's cost of service filing and applying the Commission's most current rules, we find that Operator has justified an MPR of $14.86. 8. Our review of Operator's 1210 for the period April 1, 1994 to December 31, 1994, indicates that Operator has correctly calculated its MPR of $15.80. Our review of Operator's 1210 for the period January 1, 1995 to March 31, 1995 indicates that Operator has correctly calculated its MPR of $16.28. Our review of Operator's 1210 for the period April 1, 1995 to June 30, 1995, indicates that Operator has correctly calculated its MPR of $16.62. Our review of Operator's FCC Form 1240 for the projected period April 1, 1996 through March 31, 1997 indicated that Operator has correctly calculated its MPR. Our review of Operator's FCC Form 1240 for the projected period April 1, 1997 to March 31, 1998 indicates that Operator has correctly calculated its MPR. Consequently, we find that Operator's CPST rate of $16.65, effective April 1, 1997, is justified and not unreasonable. 9. 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 $16.65, effective April 1, 1997, in the community set forth above, IS NOT UNREASONABLE. 10. 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 DENIED. FEDERAL COMMUNICATIONS COMMISSION Margaret E. Egler Acting Chief, Financial Analysis & Compliance Division Cable Services Bureau