******************************************************** 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 ) ) Cox Communications Roanoke, Inc. ) CUID No. VA0150 (Roanoke) ) ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: October 14, 1997 Released: October 16, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the March 1, 1997 rate increase that the above-captioned operator ("Operator") implemented for its cable programming services tier ("CPST") in the community set forth above. Operator has attempted to justify its CPST rate through a benchmark showing on FCC Form 1240. We have already issued an order which resolved complaints filed against Operator from September 1, 1993 through June 30, 1995. Accordingly, this Order addresses the reasonableness of the Operator's CPST rate of $17.95 effective March 1, 1997. 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 ("Interim Rules"), 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 complaint. 3. To justify rates for the period beginning May 15, 1994 through a benchmark 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 July 21, 1997, the LFA filed a complaint regarding the March 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 by 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. Operator submitted an FCC Form 1240 for the community set forth above to justify the rate increase that went into effect on March 1, 1997. 5. Upon review of Operator's revised FCC Form 1240 for the projected period March 1, 1997 to February 28, 1998, we find that Operator has incorrectly calculated its maximum permitted rate ("MPR"). In particular, on Worksheet 1, Operator incorrectly reported the inflation factor of 2.39 percent for all months in its true-up period. As a result, Operator reported the incorrect inflation factor of 1.0199 on Line C1. In addition, Operator reported the incorrect inflation factor of 1.0239 on Line C3. On April 8, 1997, the Commission released the fourth quarter 1996 inflation adjustment factor of 1.83 percent for cable operators using FCC Form 1240. Thus, the correct inflation factor was available to the Operator at the time Operator prepared and signed its FCC Form 1240 on May 27, 1997. Therefore, we have adjusted Worksheet 1 to reflect the correct inflation factor of 2.22 percent, 2.21 percent, and 1.83 percent for the second quarter of 1996, the third quarter of 1996, and the first month of the fourth quarter of 1996, respectively. We have also adjusted Operator's FCC Form 1240, Line C1 and Line C3 to reflect the correct inflation factor of 1.0186 and 1.0183, respectively. Our adjustments to Operator's FCC Form 1240 result in a reduction of the MPR for the Projected Period to $17.89 (Line I9). Thus, Operator has failed to demonstrate that its March 1, 1997 rate of $17.95 was not unreasonable. 6. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator's CPST rate of $17.95 effective March 1, 1997 in the community set forth above, IS UNREASONABLE. 7. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint referenced herein, IS GRANTED. 8. 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 $17.89 per month (plus franchise fees), plus interest to the date of the refund, for the period from March 6, 1997 to the day before Operator implements the maximum permitted CPST rate of $17.89. 9. IT IS FURTHER ORDERED, that Operator shall promptly determine the overcharges to CPST subscribers for the stated period, and shall file, within 30 days of the release of this Order, a report with the Chief, Cable Services Bureau, stating the cumulative refund amounts so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of the Commission approval of the plan. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau