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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 ) ) Comcast Cablevision of ) CUID No. NJ0397 (East Windsor) Central New Jersey, Inc. ) NJ0414 (Hightstown) ) Complaint Regarding ) Programming Services Tier Rates ) ORDER Adopted: June 2, 1998 Released: June 5, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the rates the above-referenced operator ("Operator") was charging for its cable programming services tier ("CPST") in the communities referenced above. We have already issued a rate order in which we determined Operator's refund liability and finally resolved all pending complaints against Operator's CPST rates for the Period September 1993 through December 1, 1995. We also issued a rate order concerning Operator's January 1, 1997 CPST rate increase ("Prior Order"). Accordingly, this Order addresses only the reasonableness of Operator's January 1, 1998 CPST rate increase in the above referenced franchise areas. 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. 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. The LFA for the franchise areas referenced above filed a complaint with the Commission on March 23, 1998, against Operator's January 1, 1998 CPST rate increase from $16.89 to $17.07. The LFA verified that it received more than one subscriber complaint for the above referenced franchise areas. The filing of a complete and timely LFA 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. Operator filed FCC Form 1240 for the projected period January 1, 1998 through December 31, 1998 to justify its CPST rates. This is Operator's second FCC Form 1240 for the franchise are referenced above. Upon review of this FCC Form 1240, we find Operator did not correctly calculate its maximum permitted rate ("MPR"). We adjusted Module F, Line F8 (True-Up Segment for True-Up Period 1) to $0.5872 in accordance with FCC Form 1240 Instructions. Although Operator took advantage of the estimated true-up methodology found in Annual Rate Adjustment System for Cable Service Rates ("Waiver Order"), Operator failed to fully remove its estimated true-up amount, found on Lines H7 and H8 of its first FCC Form 1240, from Line H13 (Total True-Up Adjustment) in its second FCC Form 1240 as required by the Waiver Order. Consequently, we recalculated Operator's Line H13 on Operator's Second Form 1240 and this recalculation, performed pursuant to the Waiver Order, reduced Operator's Line H13. These adjustments required us to adjust the Inflation Factors on Operator's Worksheet 1 to reflect the most accurate inflation data currently available. This resulted in an adjustment to Operator's Line C3 (Inflation Factor for True-Up Period 1) to 1.0193, and Operator's Line C5 (Current FCC Inflation Factor) to 1.0143. Our adjustments resulted in a revised MPR for the projected period of $17.60 rather than Operator's calculated MPR for the projected period of $17.90. Because Operator's actual CPST rate of $17.07 is less than its revised MPR, we find Operator's actual CPST rate of $17.07 effective November 1, 1997, to be reasonable. 6. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $17.07 charged by Operator in the communities referenced above, effective January 1, 1998, IS REASONABLE. 7. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaint IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau