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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 ) ) TCI of Illinois ) CUID No. IL0841 (Village of d/b/a Telenois, Inc. ) Northbrook) ) Complaint Regarding ) Cable Programming Services Tier Rates) ORDER Adopted: October 30, 1997 Released: October 31, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider a complaint concerning the rates the above-captioned operator ("Operator") was charging 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 Form 1240. We have already issued two orders resolving earlier complaints against Operator's rates. In the first order ("First Order"), we resolved complaints against Operator's rates for the period September 1, 1993 through September 15, 1995. In the second order ("Second Order"), we found that Operator's June 1, 1996 CPST rate increase was not unreasonable. Accordingly, this Order addresses the reasonableness of Operator's June 1, 1997 CPST rate increase. 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 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. Cable 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 costs changes. 4. On August 4, 1997, the LFA filed a complaint regarding the June 1, 1997 increase in Operator's CPST rate in the community referenced above. 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 the cable operator to file a justification of its CPST rate 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 to the complaint, Operator asserts that its CPST rate increase is justified by the FCC Form 1240 filed along with the LFA's complaint. 5. On February 23, 1996, the Commission granted Operator a waiver of certain rate adjustment requirements in its initial filing of the Commission's annual rate adjustment form (FCC Form 1240) ("Waiver Order"). Specifically, the Waiver Order allowed Operator, in its initial FCC Form 1240 filings, to include estimated changes in costs, inflation, channels and subscriber information attributable to the period between the last date for which actual cost data was available and the effective date of the new rates. In the Waiver Order, Operator was instructed to include in its initial FCC Form 1240 filing certain calculations, such calculations to be performed on FCC Form 1240 (primarily in Module G), or off FCC Form 1240, in an alternative showing done pursuant to the Waiver Order's "General Guidelines." Operator chose to use an alternative showing rather than perform its calculations directly on FCC Form 1240. 6. To justify its CPST rate, effective June 1, 1997, Operator submitted an FCC Form 1240 for the projected period June 1, 1997 to May 31, 1998, which is Operator's second FCC Form 1240 filing. Upon review of this FCC Form 1240, we are unable to determine if Operator correctly adjusted its second FCC Form 1240 to take into account the calculations performed in its initial FCC Form 1240's alternative showing. We will therefore order Operator to refile its FCC Forms 1240 along with an explanation detailing why its forms justify Operator's current CPST rate of $16.68 in the community referenced above. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator shall file with the Chief, Cable Services Bureau, within 30 days of the release of this Order, the relevant FCC Forms 1240, and all supporting documentation, to support the monthly CPST rate of $16.68 implemented by Operator on June 1, 1997, in the community referenced above. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau