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                                Before the
                     Federal Communications Commission
                          Washington, D.C. 20554


In the Matter of                     )
                                     )
                                     )
Comcast Cablevision of Paducah, Inc. )     KY0203 (McCracken County)
                                     )
                                     )
Complaints Regarding                 )
Cable Programming Services Tier Rates)
                                     )
Petition for Reconsideration         )


                        ORDER ON RECONSIDERATION

   Adopted:  October 2, 1997                       Released:  October 3, 1997

By the Chief, Cable Services Bureau:

  1.    In this Order we consider a Petition for Reconsideration of a Cable Services Bureau
("Bureau") order regarding the rates the above-referenced operator ("Operator") was charging for its cable
programming services tier ("CPST") in the community referenced above.  We issued an order in which
we found that Operator's November 1, 1996 rate increase was unreasonable ("Prior Order").  On August
22, 1997, Operator filed alternate Refund Plans in response to the Prior Order as well as a timely Petition
for Reconsideration of the Prior Order ("Petition").  On August 28, 1997, Operator filed a Petition for Stay
Pending Reconsideration and supplemented it with a Declaration on September 2, 1997.  Operator's
Petition for Stay was not opposed by the local franchising authority ("LFA") that filed the complaint. 
However, because we are addressing Operator's Petition for Reconsideration, we will deny Operator's
Petition for Stay.  On September 4, 1997, the LFA for the community referenced above filed a Motion
for Extension of Time to File Oppositions to Operator's Petition and on September 19, 1997, the LFA filed
its Opposition to Operator's Petition ("Opposition").  Because Operator did not oppose the LFA's Motion
for Extension of Time and counsel for the LFA indicated that there was some delay in receiving the
Petition, we will grant the LFA's Motion for Extension of Time and accept the LFA's Opposition as timely
filed.  Operator filed a Reply to the LFA's Opposition on September 30, 1997.

  2.    Under the Communications Act, the Commission is authorized to review the CPST rates
of cable systems not subject to effective competition to ensure that rates charged are not unreasonable.
The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the legislation ("Interim
Rules"), require that a complaint against the CPST rate be filed with the Commission by an LFA that has
received more than one subscriber complaint.   The filing of a complete and timely 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.  If the Commission finds
a rate to be unreasonable, it shall determine the correct rate and any refund liability.  

  3.     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.
  
  4.    In our Prior Order, Operator filed FCC Forms 1210 and 1240 in response to a complaint
filed against a CPST rate increase effective November 1, 1996.  Because Operator used its actual rate,
effective July 1, 1994, as the starting rate on its FCC Form 1210, which covered the period July 1, 1994
to December 31, 1995, without filing an FCC Form 1200 or 1220 as a basis for the rate being updated
by the FCC Form 1210, we did not review Operator's FCC Form 1210.  Instead, we only reviewed
Operator's FCC Form 1240 for the projected period November 1, 1996 through October 31, 1997. 
Because Operator was not previously subject to CPST regulation and its FCC Form 1240 was filed in
response to a CPST rate complaint, we adjusted the beginning rate on Line A1 to coincide with the actual
CPST rate in effect prior to the November 1, 1996 rate increase.  We also removed Operator's True-Up
Period and adjusted Operator's Lines D3 and I1 in accordance with the FCC Form 1240 Instructions. 
These adjustments resulted in a revised FCC Form 1240 maximum permitted rate ("MPR") of $15.91 for
the projected period.  Because Operator's actual CPST rate of $17.53, effective November 1, 1996
exceeded its revised MPR, Operator incurred refund liability beginning December 20, 1996, the date the
first subscriber complaint was received by the LFA.

  5.    In its Petition, Operator argues that the policy elucidated in Implementation of Sections
of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Thirteenth
Order on Reconsideration, MM Docket No. 92-266 ("Thirteenth Reconsideration Order") in effect
allows Operator to justify its CPST rates using its July 1, 1994 actual CPST rate as a starting point,
updating that actual CPST rate by filing an initial FCC Form 1210 without FCC Form 1200, and then
filing subsequent FCC Form 1210s or FCC Form 1240s.  In its Opposition, the LFA contends that
Operator's argument, that the Thirteenth Reconsideration Order "grandfathered"Operator's actual CPST
rates as of July 1, 1994, is flawed because the Thirteenth Reconsideration Order does not grandfather any
prior rate charged by an operator but only the current rates of any operator not currently regulated. 
Therefore, the LFA argues, the starting rate for any form filed by Operator should be the rate Operator
was charging prior to the rate increase which triggered the complaint.  We find that the policy contained
in the Thirteenth Reconsideration Order is a prospective policy.  Its purpose is to simplify and expedite
the rate review process by creating an annual rate adjustment methodology and by "eliminating our current
practice of reviewing the entire CPST rate after receiving a CPST complaint."  In the Thirteenth
Reconsideration Order, we stated

     On the effective date of these rules, this system of rate regulation, commonly referred to
     as "all rates in play," will be eliminated for CPSTs that have not been subject to a rate
     complaint.  Following that date, CPST rate complaints will require a Commission
     determination whether the amount of the rate increase complained about is reasonable.
     
The effective date of the rules is November 6, 1995, 30 days after the rules were published in the Federal
Register.  Paragraph 164 of the Thirteenth Reconsideration Order states that we find an operator's initial
CPST rates under regulation to be reasonable "if no rate complaint is filed prior to the effective date of
these rules."  Therefore, if no complaint was filed against an operator's CPST rates prior to November 6,
1995, then an operator is not subject to Commission review of its entire rate structure.  In the instant
matter, the first complaint was filed against Operator's November 1, 1996 CPST rate increase and the new
rules apply.

  6.    However, Operator may not arbitrarily choose any actual CPST rate and build a maximum
permitted rate from that beginning rate using a combination of FCC Form 1210s and FCC Form 1240s
in response to the complaint.  When responding to a complaint filed after November 6, 1995, an operator
may use the actual CPST rate in effect immediately prior to the rate increase complained about and it may
adjust that rate only for changes that occurred after that rate became effective.  This policy reflects the
Commission's mandate in the Thirteenth Reconsideration Order that we will "review only the amount of
the rate increase complained about."  Because Operator chose to begin its rate justification with an FCC
Form 1210 which does not use the rate prior to the rate against which the complaint in question was filed,
we cannot accept Operator's FCC Form 1210. 

  7.    Arguing in the alternative, Operator contends that if its use of the FCC Form 1210 is
found to be incorrect, it should still be permitted to include unclaimed inflation, external costs and CAPS
method adjustments in its FCC Form 1240 for the projected period November 1, 1996 to October 31,
1997.  Operator attached an amended FCC Form 1240 to its Petition for Reconsideration which includes
the adjustments listed above.  Operator argues that our revised FCC Form 1240 did not allow Operator
to recover its unclaimed inflation and CAPS method adjustments.  We accept Operator's FCC Form 1240
in lieu of its previous filings and make the following adjustments.  On Line 201 of Worksheet 2 (CAPS
Method Projected Period) Operator reported unclaimed increases for channel additions of $0.91.  However,
in its Opposition, the LFA included a letter from Operator in which Operator states that it had added six
channels to its CPST and that "[c]onsistent with Federal Communications Commission rules, [it] will be
increasing the monthly rate for Expanded Basic Services by $0.67, effective January 1, 1996, in the areas
where the new channels are available to subscribers, as of December 31, 1995 . . . ."  This rate increase
took effect prior to the November 1, 1996 increase.  Therefore, we reduced Operator's Line 201 from
$0.91 to $0.83, which is the difference between $1.50 (the maximum CAPS adjustment permitted between
January 1, 1995 and December 31, 1996) and $0.67 (the CAPS adjustment previously taken by Operator). 
We allowed Operator to use an excess inflation factor for its unclaimed inflation (Line C2) and its
projected period (Line C5) in accordance with our previous waiver.  These inflation factors will be
corrected on Operator's next FCC Form 1240.  Our adjustment to Operator's Line 201 resulted in a revised
MPR for the projected period of $17.22 rather than Operator's MPR for the projected period of $17.30. 
Because Operator's actual CPST rate of $17.53, effective November 1, 1996, exceeds its revised MPR,
we find Operator's actual rate of $17.53, effective November 1, 1996 through the present, to be
unreasonable.

  8.    Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47
C.F.R.  1.106, that the Petition for Reconsideration filed by Operator is GRANTED IN PART AND
DENIED IN PART TO THE EXTENT INDICATED HEREIN.

  9.    IT IS FURTHER ORDERED, that In The Matter of Comcast Cablevision of Paducah, Inc.,
DA 97-1531 (Released July 23, 1997) IS VACATED IN PART AND AFFIRMED IN PART TO THE
EXTENT INDICATED HEREIN.

  10.   IT IS FURTHER ORDERED, that the Petition for Stay filed by Operator is DENIED.

  11.   IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47
C.F.R.  0.321, that Operator's Refund Plans filed on August 22, 1997 ARE NOT ACCEPTED.

  12.   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 $17.53, charged by Operator in the franchise area referenced above,
effective November 1, 1996 through the present, IS 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 franchise area referenced above that
portion of the amount paid in excess of the maximum permitted CPST rate of $17.22 per month (plus
franchise fees), plus interest to the date of the refund, for the period December 20, 1996 through the day
before Operator implements the maximum permitted rate of $17.22.

  14.   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. 
  15.   IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47
C.F.R.  0.321, that Operator take into account our FCC Form 1240 adjustments when calculating its
maximum permitted rate and performing the true-up calculation on its next FCC Form 1240.

        FEDERAL COMMUNICATIONS COMMISSION 



        Meredith J. Jones
        Chief, Cable Services Bureau