******************************************************** 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 ) ) Suburban Cable TV Co., Inc. ) CUID No. PA2150 (Warrington) ) ) Complaints Regarding ) Cable Programming Services Tier Rates) ORDER Adopted: September 19, 1997 Released: September 24, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider complaints about the June 1, 1995 and the April 1, 1997 rate increases of the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. Operator has attempted to justify its CPST rate through a benchmark showing on FCC Forms 1240, and a cost of service showing on FCC Form 1220. We have already issued an order which resolved complaints filed against Operator from September 1, 1993 through May 14, 1994 ("Prior Order"). On July 12, 1995, Operator filed a timely refund plan pursuant to our Prior Order. Accordingly, this Order addresses Operator's refund plan and the reasonableness of Operator's CPST rates beginning May 15, 1994. 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, require that complaints against the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received subscriber complaints. An LFA may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber rate complaint. Prior to the 1996 Act, a complaint could be filed by a subscriber independent of the LFA. 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. 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 March 2, 1995, a valid complaint was filed with the Commission against Operator's June 1, 1995 CPST rate of $13.84 (excluding franchise fees). Operator chose to justify its CPST rate through a cost of service showing on FCC Form 1220. 5. 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. Where reported costs were disallowed, we have made appropriate adjustments. Even with our adjustments and disallowances, however, we find that Operator's monthly CPST rate of $13.84 (excluding franchise fees) effective June 1, 1995 has been justified. Therefore, we find that Operator's CPST rate of $ $13.84 (excluding franchise fees), effective June 1, 1995, is not unreasonable. 6. On June 17, 1997, the LFA for the community referenced above filed a complaint regarding the April 1, 1997 increase in Operator's CPST rate in the community referenced above. 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. In its response, Operator asserts that its April 1, 1997 rate increase is justified by the FCC Form 1240 filed along with the LFA's complaint on June 17, 1997. 7. Upon review of Operator's FCC Form 1240, for the period April 1, 1996 to March 31, 1997, we find Operator has not correctly calculated its maximum permitted rate ("MPR"). We corrected the inflation at Worksheet 1, Line C1 and Line C5. These adjustments reduced the MPR from $18.30 to $16.57. Because Operator's actual CPST rate of $15.26 is lower than its MPR, we find that Operator's CPST rate of $15.26 (excluding franchise fees), effective April 1, 1996, is not unreasonable. 8. Upon review of Operator's FCC Form 1240, for the period April 1, 1997 to March 31, 1998, we find Operator has not correctly calculated its maximum permitted rate ("MPR"). We brought forward the corrected MPR from the previous FCC Form 1240 Line A1. Additionally, we corrected the inflation at Worksheet 1, Line C3 and Line C5. We also corrected Lines D6 and D7 to conform to the previous FCC Form 1240. These adjustments reduced the MPR from $18.53 to $17.70. Because Operator's actual CPST rate of $16.65 is lower than its MPR, we find that Operator's CPST rate of $16.65 (excluding franchise fees), effective April 1, 1997, is not unreasonable. 9. In addition, in this Order we consider the refund plan filed by Operator in the community referenced above pursuant to our Prior Order. Our review of Operator's refund plan reveals that the refund plan does not comply with the requirements of the Prior Order. 10. In its refund plan, Operator attempts to calculate its refund in a method which differs from the calculation prescribed in the Prior Order. Operator did not file a petition for reconsideration or an application for review of the Prior Order. Consequently, Operator is now attempting to raise in its refund plan an issue that it failed to properly place before the Commission in accordance with the Commission's Rules. See Sections 1.101 - 1.120 of the Commission's Rules. A refund plan is not a substitute for the reconsideration and review process and issues raised in refund plans will not be considered. We, therefore, determine that Operator's refund plan is unacceptable and that Operator has failed to comply with the Prior Order. Operator shall have thirty days from the release of this Order to resubmit a refund plan which complies with this Order and with the Prior Order. 11. Accordingly, IT IS ORDERED, pursuant to Section 76.962 of the Commission's Rules, 47 C.F.R. Section 76.962 and Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator's refund plan IS NOT ACCEPTED. 12. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R. Section 76.961, that Operator revise its refund plan as detailed herein and resubmit its plan to the Chief, Cable Services Bureau, within thirty days of the release of this Order. 13. 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 $13.84 (excluding franchise fees) charged by Operator in the community referenced above, effective June 1, 1995, IS NOT UNREASONABLE. 14. 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 $16.65 (excluding franchise fees) charged by Operator in the community referenced above, effective April 1, 1997, IS NOT UNREASONABLE. 15. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaints referenced herein with respect to cable programming services charged by Operator in the community referenced above ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau