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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 ) ) ) Comcast Cablevision of Paducah, Inc. ) KY0189 (City of Paducah) ) ) 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. Initially, we issued an order in which we found that Operator's rates in effect from May 15, 1994 through December 31, 1995 were reasonable ("First Order"). Subsequently, we issued an order in which we found that Operator's November 1, 1996 CPST rate increase was unreasonable ("Second Order"). On August 25, 1997, Operator filed a Refund Plan in response to the Second Order as well as a timely Petition for Reconsideration of the Second Order ("Petition"). Operator filed a revised Petition on August 26, 1997, which we accept in lieu of its initial filing. 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 22, 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 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 October 1, 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. Operators with complete and timely CPST complaints filed against them prior to May 15, 1994 must demonstrate that their CPST rates were in compliance with the Commission's initial rules from the time the complaint was filed through May 14, 1994, and that the CPST rates were in compliance with the revised rules from May 15, 1994 forward. Operators attempting to justify CPST rates for the period prior to May 15, 1994 through a benchmark showing must complete and file FCC Form 393. 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 First Order, we reviewed Operator's FCC Form 1200 and two FCC Form 1210s. The first FCC Form 1210 ("First 1210") reviewed did not indicate the time period covered by the form. The second FCC Form 1210 ("Second 1210") reviewed covered the period April 1, 1995 through September 30, 1995. The Second 1210 justified a maximum permitted rate ("MPR") of $13.97, which we found to be reasonable. Because Operator's actual CPST rate of $13.97, effective November 1, 1995, did not exceed its MPR, we found Operator's CPST rate of $13.97 to be reasonable. In our Second Order, we reviewed Operator's FCC Form 1210 ("Third 1210") for the period October 1, 1995 through December 31, 1995. We found that Operator had miscalculated its MPR on its Third 1210 and we made the appropriate adjustments. Our adjustments resulted in a revised MPR of $14.77 rather than Operator's MPR of $15.80. We also reviewed Operator's FCC Form 1240 for the projected period November 1, 1996 through October 31, 1997, changing only the starting rate on Line A1 to coincide with the revised FCC Form 1210 MPR of $14.77. This resulted in a revised FCC Form 1240 MPR of $16.61 rather than Operator's MPR of $17.53. Because Operator's actual CPST rate of $17.53, effective November 1, 1996 exceeded its revised MPR, Operator incurred refund liability beginning November 1, 1996. 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 February 28, 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. Operator did not challenge any of the specific adjustments we made to its Third 1210, rather it relies solely on the argument that the Thirteenth Reconsideration Order "grandfathered" actual CPST rates as of February 28, 1994 if no complaints were pending as of that date. In its Opposition, the LFA argues that Operator's argument is flawed because in the Thirteenth Reconsideration Order, the Commission 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 will 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 when a complaint is filed against rate changes that occur after November 5, 1995. In its Opposition, the LFA demonstrates that a valid complaint was filed November 2, 1995 against Operator's November 1, 1995 CPST rate increase, and, therefore, Operator must justify its CPST rates beginning with the FCC Form 1200. 6. We agree with the LFA. 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." However, if a complaint is filed against an operator prior to November 6, 1995, we must review the Operator's entire rate structure. Because the complaint in question was filed prior to November 6, 1995, Operator's reliance on the Thirteenth Reconsideration Order is misplaced. The basis for our rescission of the "all rates in play" policy was partly due to the fact that at the time of the Thirteenth Reconsideration Order, it had been "nearly two years since subscribers and franchising authorities first had the opportunity to complain about their CPST rates." This passage of time is crucial to the adoption of the new policy. The Thirteenth Reconsideration Order was not intended to apply retroactively to CPST rates specifically covered by our previous orders. For these reasons, we deny Operator's Petition for Reconsideration and accept Operator's refund plan. 7. 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 DENIED. 8. IT IS FURTHER ORDERED, that the Petition for Stay filed by Operator is DENIED. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator's Refund Plan filed on August 25, 1997 IS ACCEPTED. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau