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S- X   N X- #Xj\  P6G;9XP# #&a\  P6G;&P#Federal Communications Commission`(#C DA 98410 #Xj\  P6G;9XP#у  yxdddy  X- ĨՊ KP #&a\  P6G;&P#Before thelU Federal Communications Commission  S-""Washington, D.C. 20554 ă In the Matter ofj) j)  S-Cablevision of the Midwest, Inc.j)CUID No. OH0663 (City of Lyndhurst)  S-and Telerama, Inc.j)pp   S-d/b/a CSC/VTV Ohioj)pp   Sp-j)pp  SH -j)pp Complaints Regardingj) Cable Programming Services Tier Ratesj)  S -T ORDER ă  S0- Adopted: February 26, 1998 VppReleased: March 2, 1998  S- By the Deputy Chief, Cable Services Bureau:  S-  Q 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 June and July, 1997 rate increase that   the abovecaptioned 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 cost of   Lservice showing on FCC Form 1235. This Order addresses only the reasonableness of Operator's CPST  S-rate of $17.18 that became effective in June and July, 1997. yOX-#X\  P6G;P#э#X\  P6G;P# The complaints state that the rate increases took place between June 24, 1997 and July 5, 1997.#X\  P6G;P#  S-  2.` ` The Communications ActX {O-#X\  P6G;P#э#X\  P6G;P# Section 623(c) of the Communications Act of 1934, as amended, 47 U.S.C. Section 543(c) (1996).#X\  P6G;P# authorizes the Federal Communications Commission   ("Commission") to review the CPST rates of cable systems not subject to effective competition to ensure   jthat rates charged are not unreasonable. If the Commission finds the rate unreasonable, it shall determine  S(-  the correct rate and any refund liability.( {O-#X\  P6G;P#э#X\  P6G;P##X\  P6G;P# See 47 C.F.R. Section 76.957.#X\  P6G;P# The Telecommunications Act of 1996 ("1996 Act")(| yOD!-#X\  P6G;P#Ѝ#X\  P6G;P# Pub. L. No. 104104, 110 Stat. 56 (1996). #X\  P6G;P# and our  S-  jrules implementing the new legislation ("Interim Rules"),y  {O#- xi#X\  P6G;P#Ѝ#X\  P6G;P##X\  P6G;P# See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd  yOv$-5937 (1996).#X\  P6G;P#y require that complaints against the CPST rates   be filed with the Commission by a local franchising authority ("LFA") that has received subscriber"f ,))ZZ="   complaints. An LFA may not file a CPST rate complaint unless, within 90 days after such increase  S-becomes effective, it receives more than one subscriber complaint. yO@-  #X\  P6G;P#э#X\  P6G;P# The LFA's complaint is also against the Operator's CPST rate increase from $13.37 to $14.18, effective May   1, 1997. The FCC Form 329 requires the LFA to certify that it has "filed this complaint with the Commission within  {O-  w180 days of the date the rate increase became effective." See FCC Form 329 at p. 2, para. 5. Because the LFA filed   its FCC Form 329 complaint with the Commission on December 10, 1997, the LFA's complaint was not timely filed   Jwith respect to Operator's May 1, 1997 CPST rate increase. Accordingly, we will not consider the LFA's complaint  yO*-against Operator's May 1, 1997 CPST rate increase.#X\  P6G;P#ѐ  S-  S-  A3.` ` 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  Sp-their FCC Form 1235 filing.   S -  4.` ` On December 10, 1997, the LFA filed a complaint regarding the June and July, 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 in the  S -  community set forth above, thereby triggering the Commission's jurisdiction to review these complaints.Z B {O-  #X\  P6G;P#э#X\  P6G;P# The first subscriber complaint was received by the LFA on September 1, 1997. See Letter to the Federal   Communications Commission from Rick J. Carbone, Carr, Feneli and Carbone Co., L.P.A., Attorneys and  yO-Counsellors at Law, dated December 2, 1997 on behalf of the LFA.#X\  P6G;P#   kThe valid complaint from the LFA triggers an obligation by the cable operator to file a justification of  SX-  its CPST rates with the LFA.Xd  yO\-#X\  P6G;P#э#X\  P6G;P# 47 C.F.R. Section 76.1402.#X\  P6G;P#Ѹ 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 Form 1235 for the community set forth above to justify the rate increase that went into effect in June and July, 1997.  S-  #5.` ` Operator's June and July, 1997 rate increase reflects the recovery of costs for its network   upgrade as reflected on FCC Form 1235. Operator initially filed its FCC Form 1235 on April 21, 1997  Sh-  [and selected the preapproval option for the FCC Form 1235.S h  yO-  #X\  P6G;P##X\  P6G;P#э#X\  P6G;P# The preapproval option is provided to assist operators in projecting cash flows and obtaining capital for the   construction of upgraded cable systems. The FCC Form 1235 can be filed for preapproval any time prior to the   upgrade services becoming available to subscribers using projected upgrade costs. The Network Upgrade Addon   (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.#X\  P6G;P#S Operator subsequently filed an amended  S@-  FCC Form 1235 on January 7, 1998. Z@ {O%-  #X\  P6G;P#э#X\  P6G;P# See Letter to Meredith Jones, Chief, Cable Services Bureau, Federal Communications Commission, from   Thomas Pascucci, Vice President Financial Planning Cable Operations, Cablevision Systems Corporation dated  yO'-January 7, 1998.#X\  P6G;P# On its amended FCC Form 1235, Operator chose to allocate its"@ ,-(-(ZZT"   yMonthly Network Upgrade Addon (Part III, Lines 4 and 5) to both its basic service tier ("BST") and its  S-  CPST rates.  {O@-#X\  P6G;P#э#X\  P6G;P# See Operator's FCC Form 1235, Part III, Lines 4 and 5, as amended January 5, 1998.#X\  P6G;P# Such an election is consistent with the FCC Form 1235 instructions. Z {O-#X\  P6G;P##X\  P6G;P#э#X\  P6G;P# See FCC Form 1235 Instructions at 8.#X\  P6G;P# Upon review of   Operator's amended FCC Form 1235, we find that Operator has correctly calculated its CPST upgrade increase of $4.14.  S8-  6.` ` Therefore, when Operator's actual CPST rate of $14.18 is combined with the FCC Form   >1235 MPR of $4.14, the combined MPR is $18.32. Operator is actually charging a combined rate of   $17.18, effective June and July, 1997. We conclude that the CPST rate of $17.18 is reasonable for the  S-upgraded system.  yOL -  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  yO-by any party to this proceeding not specifically addressed herein.#X\  P6G;P#ю  Sp-  7.` ` 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 $17.18 effective June and July, 1997 in the community set forth above, IS NOT UNREASONABLE.   X` hp x (#%'0*,.8135@8: