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The  x/Commission made a finding in the 1994 Order that Operator's CPST rates up to May 14, 1994 were  xunreasonable. In the 1994 Order, the Commission stated it would issue a separate order at a later date  S- x.addressing the reasonableness of the Operator's CPST rate after May 14, 1994.N(; {O -ԍ See 1994 Order at paragraph 1.N Pursuant to the Cable  S- xTelevision Consumer Protection and Competition Act of 1992 ("1992 Cable Act"),U)~; yO -ԍ Pub. L. No. 102235, 106 Stat. 1460 (1992).U the Commission was  xNrequired to review Operator's CPST rates subsequent to May 14, 1994. In addition to the LFA's  xjcomplaint, the Commission received a valid complaint on August 4, 1994, against Operator's CPST rates  Sp- xin effect on July 14, 1994, which was not withdrawn.*p; {O-ԍ See FCC Form 329 Complaint by Raymond R. Cruz received by the Commission on August 4, 1994. The Commission clearly has jurisdiction to review  SH -Operator's CPST rates after May 14, 1994 despite the LFA's withdrawal of its complaints.+H ; {O- xZԍ As to the LFA's objection to Operator's Petition regarding the calculation of the franchise fee, see City of Dallas, Texas v. Federal Communications Commission, 118 F.3d 393 (5th Cir. 1997).  S - ` ~x13.` ` With regard to the June 1, 1997 rate increase, the Communications Act, ; {O-ԍ Section 623(c) of the Communications Act of 1934, as amended, 47 U.S.C. Section 543(c) (1996). authorizes the  xFederal Communications Commission ("Commission") to review the CPST rates of cable systems not  xsubject to effective competition to ensure that rates charged are not unreasonable. If the Commission  S - xfinds the rate unreasonable, it shall determine the correct rate and any refund liability.Z- ; {O-ԍ  See 47 U.S.C. Section 543(c) (1993).Z The  SX- xTelecommunications Act of 1996 ("1996 Act")S.X; yO-ԍ Pub. L. No. 104104, 110 Stat. 56 (1996).S and our rules implementing the new legislation,/X; {O- xԍ See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd  {Op -5937 ("Interim Rules"). require  x0that complaints against the CPST rates be filed with the Commission by a LFA that has received  xsubscriber 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 rate complaint. " /,p(p(88"Ԍ S- ` 3x14.` ` To justify rates for the period beginning May 15, 1994 through a benchmark showing,  S- x[operators must use the FCC Form 1200 series.i0^; {O@- xԍ 47 C.F.R. Section 76.922(b)(6); see also Second Order on Reconsideration, Fourth Report and Order, and  {O - xFifth Notice of Proposed Rulemaking, MM Docket No. 92266, FCC 9438, 9 FCC Rcd 4119, 4190 (1994) ("Second  {O-Order on Reconsideration").i Operators may justify adjustments to their rates on an  xannual basis using FCC Form 1240 to reflect reasonably certain and quantifiable changes in external costs,  xyinflation and the number of regulated channels that are projected for the twelve months following the rate  S`- xchange.p1\`; {O- xԍ See In the Matter of Implementation of Sections of the Cable Television Consumer Protection and  x=Competition Act of 1992: Rate Regulation, MM Docket No. 92266, Thirteenth Order on Reconsideration  {O -("Thirteenth Reconsideration Order"), 11 FCC Rcd 388, 391 (1995).p Any incurred cost that is not projected may be accrued with interest and added to rates at a later  S8- x.time.D28; {O -ԍ  Id. at 392. D If actual and projected costs are different during the rate year a "trueup" mechanism is available  S- xto correct estimated costs with actual cost changes.33; {OT-ԍ Id.3 The "trueup" requires operators to decrease their  xNrates or alternatively permits them to increase their rates to make an adjustment for over or under estimations of these cost changes.  Sp- ` Ax15.` ` FCC Form 1235 is an abbreviated cost of service filing used in cases of network upgrades.  xIt allows cable operators to justify rate increases related to significant capital expenditures used to improve  x rateregulated services. This option is extended only in cases of significant upgrades requiring added  xcapital investment, such as bandwidth capacity and conversion to fiber optics, and for system rebuilds.  xFor an operator to receive rate increases justified on an FCC Form 1235, the Commission requires: (1)  xkthat the upgrade be 'significant' and require added capital investment, such as expansion of bandwidth  xcapacity, conversion to fiber optics or system rebuilds; (2) that the upgrade actually benefit subscribers  x[through improvements in the regulated services subject to rate increase; (3) that the upgrade rate increase  x=not be assessed until the upgrade is complete and providing benefits to subscribers of regulated services;  x(4) that the operator demonstrate its net increase in costs, taking into account current depreciation expense,  x/projected changes in maintenance and other expenses, and changes in other revenues; and (5) that the  xoperator allocate its costs to ensure that only costs allocable to subscribers of regulated services are  S- x.imposed upon them.4"6 ; yOf- xwЍ Implementation of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation  xJand Adoption of Uniform Accounting System for Provision of Regulated Cable Service, 9 FCC Rcd 4527, par. 287  {O- x289 (1994). See 47 C.F.R. Section 76.922(j). See also Public Notice: Cable Services Bureau Develops System Upgrade Form, 11 FCC Rcd 5554 (1995).  Normal improvements and expansions of service will remain subject to the usual  xrate adjustments allowed by filings of FCC Forms 1210, 1220 and 1240. Cable operators that incur  xMincreases in operating costs associated with a significant network upgrade will be permitted to charge additional rates as justified by their FCC Form 1235 filing.  S- x " 4,p(p(88%"Ԍ S- ` x16.` ` The 1996 Act, and our rules implementing the new legislation ("Interim Rules"),5; {Oh- xԍ#X\  P6G;IP# See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 5937 (1996). require  xthat complaints against CPST rates be filed with the Commission by a local franchising authority ("LFA")  xthat has received subscriber complaints. An LFA may not file a CPST rate complaint unless, within 90  x days after such increase becomes effective, it receives subscriber complaints. The LFA in the above S`- x.referenced community filed an FCC Form 329 Complaint with the Commission on September 22, 1997.  xThe LFA has certified that it has complied with the Interim Rules. The valid complaint from the LFA  xtriggers an obligation on behalf of the cable operator to file a justification of its CPST rates with the  S- xLFA.C6"; yO -ԍ 47 C.F.R Section 76.1402.C Thus, in this case, Operator is required to justify the increase in its CPST rate which is the subject  xof the LFA's complaint. As required by our rules, Operator filed FCC Forms 1240 and 1235 with the LFA as justification for this rate increase.  SH - ` Ax17.` ` Accordingly, we have reviewed Operator's FCC Form 1240, for the projected period June  x<1, 1997 to May 31, 1998, and found that Operator has not correctly calculated its MPR. We have adjusted  xModule A, Line A1 to reflect the MPR of $10.51 calculated in the previous FCC Form 1240. In addition,  xOperator made trueup adjustments through to the effective date of the rate increase. This is incorrect.  xThe annual adjustment afforded by the FCC Form 1240 allows operators to project changes in external  xcosts, inflation, and the number of regulated channels. This structure avoids the delay some operators  xexperienced in recouping costs through multiple rate adjustments throughout the year. Because projections  x[will not reflect the costs that actually occur, the Commission provided, as part of the annual adjustment,  xa "trueup" to correct projected cost changes with the actual cost changes. However, the Commission has  xnoted that, as FCC Form 1240 must be filed 90 days before an increase is to take effect, the period for  S- xthe trueup will not coincide with the previous year's projections.t7; {O -ԍ Thirteenth Reconsideration Order, 11 FCC Rcd 388, 420 fn 151 (1995).t The trueup data is intended to  S- xindicate real, not projected data.38D; {Ot-ԍ Id.3 This policy is reflected in the instructions accompanying FCC Form  Sh-1240.a9h; {O-ԍ See FCC Form 1240 Instructions for Timing at 34.a  S- ` %x18.` ` Based on this instruction and considering evidence in the filing, reasonable time for  xclosing accounts and completing forms, we have adjusted Operator's trueup period from 12 months to  xM9 months. This adjustment requires that we adjust Worksheet 1 accordingly by removing Operator's  xfigures on Lines 110, 111 and 112. We have adjusted Module E, and have corrected the number of  xmonths on Line E2 (TrueUp Period 1) to 9 months. We have also adjusted Module F which has resulted in a reduction on Line F9 (MPR for TrueUp Period 1) to $12.29.  S- ` ~x19.` ` The reduction in the length of the trueup period also results in a reduction in Line H13  xL(Total TrueUp Adjustment) and Line H14 (Amount of TrueUp Being Claimed This Projected Period).  xThis results in a corresponding reduction in Line I8 (TrueUp Segment for the Projected Period). In total,  xjour adjustments to Operator's FCC Form 1240 result in a reduction of the MPR for the Projected Period"h 9,p(p(88"  x=to $15.28 (Line I9). Thus, Operator has failed to demonstrate that its June 1, 1997 MPR rate of $16.55 for its CPST was justified.  S- ` x20.` ` To the extent that external costs from the three months disallowed from Operator's trueup  S`- xperiodT:`; yO-ԍ As found on Operator's Worksheets 7 and 8.T have been averaged into the rates charged in the nine months allowed in Operator's trueup  xperiod, and have not been removed by our adjustments, we will order Operator to make a monthbymonth  xaccounting of such external costs. Such accounting shall allow a comparison of the actual external costs  x=for the permitted ninemonth trueup period with the recovery of external costs afforded by the external  xcost segment for that period as calculated on Worksheet 7. We will order the removal of any over xyrecovery, plus interest, identified thereby in Operator's next FCC Form 1240 filed with the Commission.  xAny such overrecovery of external costs shall be added to the amount otherwise reportable on Line H1 of Operator's next FCC Form 1240 rate calculation.  S - ` Qx21.` ` Operator's rate increase reflects not only the annual increase as reported on FCC Form  x1240 but also the recovery of costs for its network upgrade as reflected on Operator's FCC Form 1235  xdated April 30, 1997. Operator elected to apply all of its FCC Form 1235 allowable basic service tier and  S - xCPST increases to its CPST MPR.; X; yOx- xԍ Consistent with FCC Form 1235, Operator has elected to recover the total Monthly Network Upgrade Addon  {O@-through the CPST rate. See Operator's FCC Form 1235 filed September 22, 1997, Part III, Lines 4 and 5. Upon review of Operator's FCC Form 1235 we made certain  xadjustments. Operator allocated its revenue and income adjustments to its tiers based on ratios of tier  xchannels to total channels. However, all of Operator's revenue and income adjustments represented  x1advertising revenues that will accrue under the upgrade. Because nearly all advertising time is  xconcentrated on the CPST, and to properly match the revenues with corresponding expenses in accordance  xwith the matching principle under Generally Accepted Accounting Principles ("GAAP"), we reassigned  xOperator's revenue and income adjustments directly to the CPST. After adjustment, the CPST upgrade increase justified by Operator was $3.03, or $0.10 less than Operator's calculated MPR of $3.13.  S- ` `x22.` ` Therefore, when the FCC Form 1240 MPR of $15.28 is combined with the FCC Form  x1235 MPR of $3.03, and the previous FCC Form 1235 MPR of $2.84 (as determined in the 1997 Order),  xthe combined MPR is $21.15. Operator was actually charging a combined rate of $16.46. We conclude  S-that the CPST rate of $16.46 is reasonable for the upgraded system.  SP- ` x23.` ` Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47  xC.F.R.  1.106, that the Petition for Reconsideration seeking corrections to Marcus Cable Associates, L.P., DA 97983 (released May 9, 1997) IS GRANTED IN PART AND DENIED IN PART.  S- ` x24.` ` IT IS FURTHER ORDERED, pursuant to Section 76.962 of the Commission's rules, 47 C.F.R.  76.962, that Operator's 1994 and 1997 Refund Plans ARE NOT ACCEPTED.  S8- ` x25.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47  xLC.F.R.  76.961, that Operator revise its 1994 and 1997 Refund Plans as detailed herein and resubmit its plans to the Chief, Cable Services Bureau, within thirty days of the release of this Order." ;,p(p(88e""Ԍ S- ` x26.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  x.C.F.R.  0.321, that the CPST rates charged by Operator in the abovereferenced community from May 15, 1994 through May 31, 1996 ARE UNREASONABLE.  S`- ` x27.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  xC.F.R.  0.321, that the CPST rates charged by Operator in the abovereferenced community from June 1, 1997 to the present ARE REASONABLE.  S- ` x28.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47  xC.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion  xof the amount paid in excess of the maximum permitted CPST rate of $8.57 per month (plus franchise fees), plus interest to the date of the refund, for the period from October 18, 1993 through July 14, 1994.  S - ` x29.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47  xC.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion  xof the amount paid in excess of the maximum permitted CPST rate of $8.33 per month (plus franchise fees), plus interest to the date of the refund, for the period from July 15, 1994 through March 31, 1995.  S0- ` x30.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47  xC.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion  xof the amount paid in excess of the maximum permitted CPST rate of $9.07 per month (plus franchise fees), plus interest to the date of the refund, for the period from April 1, 1995 to March 31, 1996.  Sh- ` x31.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47  xC.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion  xof the amount paid in excess of the maximum permitted CPST rate of $8.94 per month (plus franchise fees), plus interest to the date of the refund, for the period from April 1, 1996 to May 31, 1996.  S- ` Ax32.` ` IT IS FURTHER ORDERED, that Operator shall promptly determine the overcharges to  xCPST subscribers for the stated periods, and shall within 30 days of the release of this Order, file a report  xkwith the Chief, Cable Services Bureau, stating the cumulative refund amount so determined (including  xfranchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of Commission approval of the plan.  S- ` x33.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  xC.F.R.  0.321, that Operator revise the calculations of its maximum permitted CPST rates in its next FCC Form 1240 filing in accordance with this order.  S - ` x34.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  xC.F.R.  0.321, that the referenced complaints regarding Operator's June 1, 1997 CPST rate increase in the community referenced above ARE DENIED. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@John E. Logan x` `  hh@Deputy Chief, Cable Services Bureau"& ;,p(p(88n("Ԍ S-ԙ  X` hp x (#%'0*,.8135@8: