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CT0055 (Bridgeport)  S-of Southern Connecticut, L.P.j)pp CT0056 (Stratford)  Sy-j)pp CT0114 (Fairfield)  SQ-j)pp  S) -j)pp  S -j)pp Complaints Regardingj) Cable Programming Services Tier Ratesj)  S9-T ORDER ă  S- Adopted: December 18, 1997 VppReleased: December 19, 1997  S- By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau:  SI-   I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)1.` ` In this Order we consider complaints against the April 1, 1997 rate increase that the   Labovecaptioned operator ("Operator") implemented for its cable programming services tier ("CPST") in   the communities set forth above. Operator has attempted to justify its CPST rate through a benchmark   showing on FCC Forms 1210 and 1235. We have already issued an order which found that Operator's  S-  CPST rates in effect before May 15, 1994 ("1994 Order") were not unreasonable. {O-#X\  P6G;P#э See In the Matter of Cablevision Systems of Southern Connecticut, L.P., 10 FCC Rcd 8651 (1995). On February 5, 1997,   we released another order which found that Operator's CPST rates in effect from May 15, 1994 to   February 28, 1996 were not unreasonable, but that Operator's CPST rate for the period March 1, 1996  S1-  Lto September 30, 1996, was unreasonable ("1997 Order").1Z {O+-#X\  P6G;P#э See In the Matter of Cablevision Systems of Southern Connecticut, L.P., 12 FCC Rcd 1454 (1997). However, in our 1997 Order, we determined   =that the total overcharge per subscriber was de minimis and that it would not serve the public interest to  S-  order a refund.e {Om -#X\  P6G;P#э Id. at para. 4.e Accordingly, this Order addresses only the reasonableness of Operator's CPST rate of $15.66 that became effective on April 1, 1997.  Si-  2.` ` The Communications Acti~ {O$-#X\  P6G;P#э#X\  P6G;P# Section 623(c) of the Communications Act of 1934, as amended, 47 U.S.C. Section 543(c) (1996). authorizes the Federal Communications Commission   ("Commission") to review the CPST rates of cable systems not subject to effective competition to ensure   jthat rates charged are not unreasonable. If the Commission finds the rate unreasonable, it shall determine  S-  the correct rate and any refund liability. {O(-#X\  P6G;P#э#X\  P6G;P# See 47 C.F.R. Section 76.957. The Telecommunications Act of 1996 ("1996 Act") yO-#X\  P6G;P#Ѝ#X\  P6G;P# Pub. L. No. 104104, 110 Stat. 56 (1996). and our"X,))ZZH!"  S-  jrules implementing the new legislation ("Interim Rules"),HX {O- xi#X\  P6G;P#Ѝ#X\  P6G;P# See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd  yO-5937 (1996).#Xj\  P6G;9XP#H 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.  S8-  n3.` ` Cable operators attempting to justify rates for the period beginning May 15, 1994 through  S-  a benchmark showing must use the FCC Form 1200 series. {Ob -#X\  P6G;P#э#X\  P6G;P# 47 C.F.R. Section 76.922(b)(6); see also Second Order on Reconsideration, 9 FCC Rcd at 4189 n. 195. Cable operators may also justify rate   increases based on the addition and deletion of channels, changes in certain external costs, and inflation,  S-  by filing FCC Form 1210. D yO-#X\  P6G;P#э#X\  P6G;P# 47 C.F.R. Section 76.922(d). FCC Form 1210 must be filed at least 30 days before new rates are scheduled   to go into effect where the Commission has found the CPST rate to be unreasonable less than one year  Sp-prior to the filing, or where there is a pending complaint against the CPST rate. p yO-#X\  P6G;P#э#X\  P6G;P# 47 C.F.R. Sections 76.958 and 76.960.Ģ  SH -    S -  A4.` ` FCC Form 1235 is an abbreviated cost of service filing used in cases of network upgrades.   It allows cable operators to justify rate increases related to significant capital expenditures used to improve   rateregulated services. This option is extended only in cases of significant upgrades requiring added   capital investment, such as bandwidth capacity and conversion to fiber optics, and for system rebuilds.   Normal improvements and expansions of service will remain subject to the usual rate adjustments allowed   by filings of FCC Forms 1210, 1220 and 1240. Cable operators that incur increases in operating costs   associated with a significant network upgrade will be permitted to charge additional rates as justified by  S-their FCC Form 1235 filing.   S-  o5.` ` On September 23, 1997, the LFA filed a complaint regarding the April 1, 1997 increase   in Operator's CPST rate in the communities referenced above. In its complaint, the LFA asserts that it   Mhas received more than one subscriber complaint against Operator's CPST rate increase in each of the  S@-  communities set forth above, thereby triggering the Commission's jurisdiction to review these complaints.^ @d  yOD- x<#X\  P6G;P#э#X\  P6G;P# The first subscriber complaint was received by the LFA on the following dates: April 16, 1997, Bridgeport (CT0055); June 4, 1997, Stratford (CUID No. CT0056); and April 23, 1997, Fairfield (CUID No. CT0114).^   kThe valid complaint from the LFA triggers an obligation by the cable operator to file a justification of  S-  its CPST rates with the LFA.   yOL#-#X\  P6G;P#э#X\  P6G;P# 47 C.F.R. Section 76.1402. 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 FCC Forms 1210 and 1235 for the communities set forth above to justify the rate increases that went into effect on April 1, 1997. "xL ,-(-(ZZ"Ԍ S-  6.` ` Operator's April 1, 1997 rate increase reflects not only the quarterly increase as reported   on FCC Form 1210, but also recovery of costs for its network upgrade as reflected on FCC Form 1235.   Operator initially filed its FCC Form 1210 on April 1, 1997 and its FCC Form 1235 on April 7, 1997 and  S-  selected the preapproval option for the FCC Form 1235.  yO- x#X\  P6G;P##X\  P6G;P#э The preapproval option is provided to assist operators in projecting cash flows and obtaining capital for the  xconstruction of upgraded cable systems. The FCC Form 1235 can be filed for preapproval any time prior to the  xupgrade services becoming available to subscribers using projected upgrade costs. The Network Upgrade Addon  x(Part III, Line 4), however, cannot be charged to subscribers until upgraded cable services become available and are  {O-providing benefits to customers of rateregulated services. See FCC Form 1235 Instructions at 2. Operator subsequently filed an amended FCC  S`-  Form 1210 on December 11, 1997`z {Oz - x[#X\  P6G;P#э See Fax to Helena Wong, Cable Services Bureau, Federal Communications Commission, from Dimitrios Misantonis, Finance Department, Cablevision, dated December 11, 1997. and an amended FCC Form 1235 on December 12, 1997.=` {O - x#X\  P6G;P#э See Letter to Meredith J. Jones, Chief, Cable Services Bureau, Federal Communications Commission, from Gary Kraus, Vice President of Corporate Finance, Cablevision Systems Corporation, dated December 12, 1997.= On its   amended FCC Form 1235, Operator chose to allocate its Monthly Network Upgrade Addon (Part III,  S-  Lines 4 and 5) to both its basic service tier ("BST") and its CPST rates..  {O-#X\  P6G;P#э See Operator's FCC Form 1235, Part III, Lines 4 and 5, as amended December 12, 1997. Such an election is consistent  S-  with the FCC Form 1235 instructions.  {OH-#X\  P6G;P##X\  P6G;P#э See FCC Form 1235 Instructions at 8. Upon review of Operator's amended FCC Form 1210 for the   period October 1, 1996 to March 31, 1997, we find that Operator has correctly calculated its maximum   permitted rate ("MPR") of $14.29 and that no adjustments are necessary. Upon review of Operator's   \amended FCC Form 1235, we have made adjustments. We corrected the Federal tax rate reported by   Operator from 35% to 34%. In addition, we increased Operator's advertising revenue offsets to correct  S -  zmiscalculations that were carried forward from the original filings.  R  yO-  #X\  P6G;P#э Information regarding the specific adjustments made to Operator's filing can be found in the public file for   ,the community referenced above which is available in the Cable Services Bureau's public reference room, or through   the Commission's copy contractor, International Transcription Services (ITS), 1231 20th Street, N.W., Washington, D.C., 20036, or by calling ITS at (202) 8573800. After our adjustments, the CPST upgrade increase justified by Operator is $3.20, or $0.03 less than Operator's calculated MPR of $3.23.  S -  `7.` ` Therefore, when the FCC Form 1210 MPR of $14.29 is combined with the FCC Form   >1235 MPR of $3.20, the combined MPR is $17.49. Operator is actually charging a combined rate of   $15.66, effective April 1, 1997. We conclude that the CPST rate of $15.66 is reasonable for the upgraded  S0-system.S 0: yO "-  J#X\  P6G;P#э#X\  P6G;P# These findings are based solely on the representations of Operator. Should information come to our attention   that these representations were materially inaccurate, we reserve the right to take any appropriate action. This Order   is not to be construed as a finding that we have accepted as correct any specific entry, explanation or argument made by any party to this proceeding not specifically addressed herein.S "",-(-(ZZ "Ԍ S-  8.` ` 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 $15.66 effective April 1, 1997 in the communities set forth above, IS NOT UNREASONABLE.   X` hp x (#%'0*,.8135@8: