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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 ) CUID No. VA0151 (Roanoke County) ) Cox Communications, Inc. ) ) Complaints Regarding ) Cable Programming Services Tier Rates) ) ORDER Adopted: November 21, 1997 Released: November 24, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider complaints against the rates charged by the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already issued an order in which we found that Operator's rates in effect prior to May 15, 1994 were unreasonable ("Prior Order"). Subsequently, we issued an order vacating and superseding our Prior Order and resolving all the complaints filed through June 30, 1995 against Operator's CPST rates ("Resolution"). Accordingly, this Order addresses only the reasonableness of Operator's CPST rate increases subsequent to the Resolution. 2. Under the Communications Act, the Federal Communications Commission ("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 Cable Protection and Competition Act of 1992 ("1992 Act"), and our rules in effect at the time the subscriber complaint was filed, required the Commission to review CPST rates upon the filing of a valid complaint by a subscriber. If the Commission finds a rate to be 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 more than one subscriber complaint. 3. A valid subscriber complaint was filed with the Commission on August 29, 1995 against Operator's CPST rate increase from $14.63 to $15.20. In addition, the LFA for the franchise area referenced above filed a complaint with the Commission on August 28, 1997 against Operator's March 1, 1997 CPST rate increase from $16.90 to $18.35. The LFA verified that it received more than one subscriber complaint for the franchise area and that the first valid complaint was received by the LFA on March 3, 1997. 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. 4. 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. 5. The Resolution approved a maximum permitted rate ("MPR") of $14.66 for the CPST in the community referenced above. Upon review of Operator's FCC Form 1210 covering the period January 1, 1995 through March 31, 1995, which updates Operator's approved MPR of $14.66, we find Operator's calculated MPR of $15.20 to be reasonable. Because Operator's actual CPST rate of $15.20, effective August 1, 1995, does not exceed its MPR, we find Operator's actual CPST rate of $15.20, effective August 1, 1995 through February 28, 1996, to be reasonable. 6. Upon review of Operator's FCC Form 1210 for the period April 1, 1995 through September 30, 1995, we find Operator's calculated MPR of $15.87 to be reasonable. Upon review of Operator's FCC Form 1210 for the period October 1, 1995 through December 31, 1995, we find Operator's calculated MPR of $16.16 to be reasonable. Operator did not increase its actual CPST rate of $15.20 during this period. 7. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1996 through February 28, 1997, we made several adjustments. Operator claimed a True-up Period from October 1, 1995 through December 31, 1995. However, our FCC Form 1240 Instructions state that for first time filers of FCC Form 1240, the beginning date of the True-up Period is the end of the last quarter covered by an FCC Form 1210, if the FCC Form 1210 was used to adjust rates after the release date of our Order establishing the annual rate adjustment method. Because Operator used the FCC Form 1210 for the period October 1, 1995 through December 31, 1995 to adjust the MPR for its CPST to $16.16, we disallowed Operator's True-up Period and adjusted Line E2 (Number of Months in the True-up Period 1) to zero. This adjustment resulted in a blank Module H (True-up Adjustment Calculation). However, we did allow Operator to recover its unclaimed inflation for the period from July 1, 1995 through December 31, 1995. These adjustments resulted in a revised FCC Form 1240 MPR of $16.88 for the projected period, rather than Operator's MPR of $16.90 for the projected period. Because Operator's actual CPST rate of $16.05, effective March 1, 1996 through March 31, 1996, does not exceed its revised MPR, we find Operator's actual CPST rate of $16.05, effective March 1, 1996 through March 31, 1996, to be reasonable. Because Operator's actual CPST rate of $16.90, effective April 1, 1996, exceeds its revised MPR, we find Operator's actual CPST rate of $16.90, effective April 1, 1996 through February 28, 1997, to be unreasonable. 8. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1997 through February 28, 1998, we adjusted Operator's Line A1 to coincide with Operator's revised MPR of $16.88 from its previous FCC Form 1240. We corrected Operator's inflation factor at Worksheet 1 and Line C1 from 1.0199 to 1.0189 and at Line C3 from 1.0239 to 1.0222 to reflect the inflation factor for the second quarter of 1996 released by the Commission in November 1996. We also adjusted Lines D6, D7 and F8 to coincide with the previous revised FCC Form 1240, in accordance with our FCC Form 1240 Instructions. These adjustments resulted in a revised FCC Form 1240 MPR of $18.08 for the projected period, rather than Operator's MPR of $18.45 for the projected period. Because Operator's actual CPST rate of $18.35, effective March 1, 1997, exceeds its revised MPR, we find Operator's actual CPST rate of $18.35, effective March 1, 1997 through the present, to be unreasonable. 9. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $15.20, charged by Operator in the franchise area referenced above, effective August 1, 1995 through February 28, 1996, IS REASONABLE. 10. 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 $16.05, charged by Operator in the franchise area referenced above, effective March 1, 1996 through March 31, 1996, IS REASONABLE. 11. 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 $16.90, charged by Operator in the franchise area referenced above, effective April 1, 1996 through February 28, 1997, IS UNREASONABLE. 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 $18.35, charged by Operator in the franchise area referenced above, effective March 1, 1997 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 $16.88 per month (plus franchise fees), plus interest to the date of the refund, for the period April 1, 1996 through February 28, 1997. 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 franchise area referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $18.08 per month (plus franchise fees), plus interest to the date of the refund, for the period March 1, 1997 through the day before Operator implements the maximum permitted CPST rate of $18.08. 15. 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. 16. 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. 17. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaints ARE GRANTED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau