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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 ) ) Triax Midwest Associates L.P. ) CUID No. IL0159 (Clinton) ) Complaint Regarding ) Cable Programming Services Tier Rates) ORDER Adopted: September 23, 1997 Released: September 26, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider a complaint about the rates charged by the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. Operator has attempted to justify its rates through benchmark showings on FCC Form 393, FCC Form 1200, multiple FCC Forms 1210, and FCC Form 1240. 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. The Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act"), in effect at the time the complaint was filed, requires the Commission to review CPST rates upon the filing of a valid complaint by a subscriber or local franchise authority ("LFA"). If the Commission finds the rate to be unreasonable, it shall determine the correct rate and any refund liability. 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 with valid CPST complaints filed prior to May 15, 1994 must demonstrate that their CPST rates complied with the Commission's initial rules from the time the complaint was filed through May 14, 1994. Their rates must also comply with the revised rules from May 15, 1994 forward. Cable operators attempting to justify their rates for the period beginning May 15, 1994 by a benchmark showing must use the FCC Form 1200 series. Cable operators may also justify rate increases based on the addition and deletion of channels, changes in certain external costs, and inflation, by filing FCC Form 1210. FCC Form 1210 must be filed at least 30 days before new rates are scheduled to go into effect where the Commission has found the cable programming service rate to be unreasonable less than one year prior to the filing, or where there is a pending complaint against the CPST rate. 4. 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. The "true-up" requires operators to decrease their rates or alternatively permits them to increase their rates to make an adjustment for over or under estimations of these cost changes. 5. On October 18, 1993, we received a valid complaint against Operator's September 1, 1993 CPST rates. On November 15, 1993, Operator filed its FCC Form 393 to justify those rates. Operator filed an amended FCC Form 393 on June 6, 1994. Upon review of Operator's amended FCC Form 393, we find that Operator has correctly calculated a maximum permitted rate ("MPR") for its CPST of $10.73. However, Operator was actually charging $11.71 for its CPST. Thus, Operator has failed to demonstrate that its September 1, 1993 CPST rate of $11.71 was not unreasonable. 6. Upon review of Operator's FCC Form 1200 filed on August 15, 1994, we adjusted Module A, Line A6(b) (Monthly Charge Per Tier as of March 31, 1994) from $11.35 to $10.73 to match the CPST rate calculated on Operator's FCC Form 393. Notwithstanding our adjustment, Operator correctly calculated a MPR for the CPST of $10.28. However, Operator was actually charging $10.81 for its CPST. Because Operator's actual CPST rate of $10.81 exceeds its revised MPR of $10.28, we find Operator's actual CPST rate of $10.81 to be unreasonable. Operator elected to take advantage of the refund liability deferral period in accordance with the Commission's Rules. Consequently, Operator does not incur refund liability for charging in excess of the MPR calculated on its FCC Form 1200 until July 15, 1994. 7. Operator filed its first FCC Form 1210 covering the period from April 1, 1994 to December 31, 1994 to justify a CPST rate of $11.47 effective February 1, 1995. Upon review of the FCC Form 1210, we adjusted Module B, Line B13 to correct Operator's previous external costs from $3.1182 to $3.2758, as reported on Line B13 of Operator's FCC Form 1200. This adjustment reduced Operator's calculated MPR from $11.53 to $11.37. Thus, Operator has failed to demonstrate that its February 1, 1995 rate of $11.47 for its CPST was not unreasonable. 8. Operator filed its second FCC Form 1210 covering the period from January 1, 1995 to December 31, 1995 to justify a CPST rate of $11.57 effective February 1, 1996. In this FCC Form 1210, we adjusted Module A, Line A2 to reflect the correct previous MPR of $11.37 brought forward from the prior FCC Form 1210. This resulted in a reduction of Operator's calculated MPR from $12.64 to $12.11. However, Operator was actually charging $11.57. Thus, Operator has demonstrated that its February 1, 1996 rate of $11.57 for its CPST was not unreasonable. 9. On November 31, 1996, Operator filed FCC Form 1240 for the projected period January 1, 1997 to December 31, 1997 to justify a Selected Rate on Line I10 of $12.64, effective January 1, 1997, and a CPST rate of $12.68, effective June 1, 1997. We adjusted Module A, Line A1 of this FCC Form 1240 to reflect the corrected MPR of $12.11 brought forward from the prior FCC Form 1210. Our adjustment to Operator's FCC Form 1240 resulted in a reduction of the MPR for CPST to $11.85. Thus, Operator has failed to demonstrate that its January 1, 1997 Selected Rate of $12.64 and its June 1, 1997 rate of $12.68 for its CPST were not unreasonable. 10. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rates charged by Operator in the community referenced above, from September 1, 1993 to January 31, 1996, ARE UNREASONABLE. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rates charged by Operator in the community referenced above, from February 1, 1996 to December 31, 1996, ARE REASONABLE. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rates charged by Operator in the community referenced above, from January 1, 1997 to the present, ARE UNREASONABLE. 13. 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 $10.73 per month (plus franchise fees), plus interest to the date of the refund, for the period from October 18, 1993 to July 14, 1994. 14. 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 $10.28 per month (plus franchise fees), plus interest to the date of the refund, for the period from July 15, 1994 to January 31, 1995. 15. 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 $11.37 per month (plus franchise fees), plus interest to the date of the refund, for the period from February 1, 1995 to December 31, 1995. 16. 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 $11.85 per month (plus franchise fees), plus interest to the date of the refund, for the period from January 1, 1997 to the day before Operator implements the maximum permitted CPST rate of $11.85. 17. 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 amount so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of Commission approval of the plan. 18. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint filed with the Commission against the CPST rates charged by Operator, in the community referenced above, IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau