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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 ) ) James Cable Partners, L.P. ) CUID No. GA0359 (City of Union Point) d/b/a Southern Cableview ) ) Small System Filing to Support ) Cable Programming Services Tier Rates) and Basic Service Tier Rates ) ORDER Adopted: September 16, 1997 Released: September 22, 1997 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider the rate that James Cable Partners d/b/a Southern Cableview ("Operator") was charging for its cable programming service tier ("CPST") and its basic service tier ("BST") rate, in the community referenced above. On September 13, 1994, the local franchising authority, the City of Union Point ("City") petitioned the Federal Communications Commission ("Commission") requesting assistance in reviewing the BST cost-of-service showing on FCC Form 1220. On February 15, 1995, the Commission granted Operator's request. On February 14, 1994, Operator filed a cost-of-service submission on FCC Form 1220 with the Commission in response to a pre-May 15, 1994 complaint that alleged that Operator's CPST rates in the above-referenced franchise were unreasonable. Operator subsequently submitted a second FCC Form 1220 filing on August 15, 1994. On September 29, 1995, Operator substituted this cost-of-service showing with a cost-of-service showing on FCC Form 1230. In response to a request by Commission staff, Operator filed an amended FCC Form 1230 on November 8, 1995. In this Order we grant Operator's request for small system relief under the Small Systems Order and, based on our review of Operator's FCC Form 1230 filing, deny the pending CPST complaint and find both the BST and the CPST rates to be not unreasonable. 2. Under the Communications Act and the Commission's rules, the Commission must review a cable operator's rates for its CPST upon the filing of a valid complaint. The filing of a valid complaint triggers an obligation on behalf of the cable operator to file a justification of its CPST rate. Under the Commission's rules, an operator may attempt to justify its CPST benchmark showing, or a small system cost of service showing. In any case, the operator has the burden of demonstrating that its rate is not unreasonable. 3. Under the Commission's rules, an operator may attempt to justify its BST rate through a benchmark showing, a cost-of-service showing, or a small system cost-of-service showing. In any case, the operator has the burden of demonstrating that its rate is not unreasonable. Under cost-of-service regulation a cable system's rates are reviewed under traditional rate of return analysis. Cost-of-service regulation imposes heavy burdens upon regulators and the regulated entity because of the significant administrative and compliance costs associated with this regulatory model. The Commission has recognized that some local franchising authorities may have resources and personnel sufficient to conduct a review of the rate-setting justification based on the benchmark approach but not to examine and review a cost-of-service showing. The Commission has also understood that this concern may have discouraged certification by many local franchising authorities. Therefore, it has established procedures under which the Commission, if requested by the local franchising authority in a petition for special relief under Section 76.7 of the Commission's rules, will issue a ruling that makes cost-of-service determinations for the BST. 4. The Commission's original rate regulations took effect on September 1, 1993. The Commission subsequently revised its rate regulations effective May 15, 1994. In a further effort to offer small cable companies administrative relief from rate regulation, the Commission amended the definition of small cable companies and small systems and introduced a simplified form of small system rate relief in Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulations; Sixth Report and Order and Eleventh Order on Reconsideration ("Small Systems Order"). In the Small Systems Order, the Commission introduced FCC Form 1230 to simplify the cost-of-service showings for small cable companies and small systems. FCC Form 1230 requires that the Operator Selected Per Subscriber Monthly Programming Rate Per Channel (FCC Form 1230, Line A-11) not exceed the Per Subscriber, Per Channel Monthly Programming Costs (FCC Form 1230, Line A-6). If the maximum rate established on FCC Form 1230 does not exceed $1.24 per channel, the rate shall be presumed reasonable. Cable systems serving 15,000 or fewer subscribers, and owned by a company having 400,000 or fewer subscribers, may elect to use the small system rate mechanism found in FCC Form 1230 in lieu of other Commission rate processes, provided the Commission has not reached a final resolution on the rate complaints filed against the system. In the present case, although Operator had filed FCC Form 1220 with the City, who then filed it with the Commission, prior to filing FCC Form 1230, no final resolution of the FCC Form 1220 had been reached. Consequently, we will consider only Operator's FCC Form 1230. 5. We have previously found that Operator is a company with fewer than 400,000 total subscribers. We also find that the system in the community referenced above serves fewer than 15,000 subscribers, making it eligible for small system status. Upon review of Operator's FCC Form 1230, we find that Operator's actual BST rate of $6.57, its actual CPST-1 rate of $2.04, and its actual CPST-2 rate of $21.39 as reported on Line A11, are not unreasonable. 6. Accordingly, IT IS ORDERED, pursuant to Section 76.934 of the Commission's rules, 47 C.F.R. Section 76.934, that Operator's request for small system relief IS GRANTED. 7. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the monthly BST rate of $6.57 charged by Operator in the community referenced above IS NOT UNREASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the monthly CPST rates of $2.04 (CPST-1) and $21.39 (CPST-2) charged by Operator, with respect to the community referenced above ARE NOT UNREASONABLE. 9. IT IS FURTHER ORDERED, that the complaint against the CPST rate charged by Operator with respect to the community referenced above IS DENIED. 10. IT IS FURTHER ORDERED, pursuant to Section 76.933(d) of the Commission's rules, 47 C.F.R. Section 76.933(d), that this decision is binding on the local franchising authority, the City of Union Point, and the cable operator, James Cable Partners d/b/a Southern Cableview Cable. FEDERAL COMMUNICATIONS COMMISSION Margaret M. Egler Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau