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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 Nos.MN0313 (Birchwood Village) ) MN0314 (Dellwood) Meredith Cable ) MN0315 (Lake Elmo) ) MN0316 (Mahtomedi) ) MN0317 (Maplewood) ) MN0318 (North St. Paul) ) MN0319 (Oakdale) ) MN0320 (Vadnais Heights) Complaints Regarding ) MN0321 (White Bear Lake) Cable Programming Services Tier Rates ) MN0322 (Willernie) ) MN0323 (Grant) ) MN0324 (White Bear) ) MN0335 (White Bear Lake) ORDER Adopted: June 30, 1998 Released: July 2, 1998 By the Acting Chief, Cable Services Bureau: 1. In this Order we consider complaints about the rates charged by the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the communities referenced above. Operator has attempted to justify its CPST rates through benchmark justifications on FCC Form 1200, multiple FCC Form 1210s and FCC Form 1240. We have already issued a separate order in which we found Operator's rates in effect before May 15, 1994 to be reasonable. We have also issued an order in which we denied Operator's petition for special relief regarding its CPST rates in the communities referenced above. Therefore, this Order addresses only the reasonableness of Operator's CPST rates in effect after May 14, 1994. 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 CPST rate to be unreasonable, it shall determine the correct rate and any refund liability. 3. To justify rates for the period beginning May 15, 1994 through a benchmark or cost of service showing, operators must use the FCC Form 1200 series. Cable operators may file an FCC Form 1210 to justify rate increases based on the addition and deletion of channels, changes in certain external costs and inflation. In addition, Operators must file an FCC Form 1210 at least 30 days before new rates are scheduled to go into effect, where there is a pending complaint against the CPST rate. 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. 4. Upon review of Operator's FCC Form 1200, we find Operator's calculated maximum permitted rate ("MPR") of $12.30 to be reasonable. However, Operator's actual CPST rate in effect from May 15, 1994 through July 13, 1994 was $13.24. Because Operator's actual CPST rate exceeds its MPR, we find Operator's actual CPST rate of $13.24, effective May 15, 1994 through July 13, 1994, to be unreasonable. We find Operator's actual CPST rate of $12.30, effective July 14, 1994 through March 31, 1995 to be reasonable. 5. Upon review of Operator's FCC Form 1210 covering the period April 1, 1994 through March 31, 1995, we find Operator's MPR of $13.06 to be reasonable. Because Operator's actual CPST rate of $13.06, effective April 1, 1995 through June 30, 1995, does not exceed its MPR, we find Operator's actual CPST rate of $13.06, effective April 1, 1995 through June 30, 1995, to be reasonable. Operator subsequently filed a revised FCC Form 1210 covering the period April 1, 1994 through March 31, 1995, which included an Inflation Adjustment Factor of 1.0521 rather than the 1.0215 Operator previously claimed. Because Operator had taken a 3 percent inflation adjustment in its FCC Form 1200 filing, it was not entitled to take the 3 percent inflation adjustment again by applying the 5.21 percent inflation rate. However, because Operator used the 5.21 percent rate based on its good faith reliance on Commission instructions, we have allowed the full 5.21 percent inflation adjustment through December 31, 1995. Upon review of Operator's revised FCC Form 1210 covering the period April 1, 1994 through March 31, 1995, we find Operator's MPR of $13.33 to be reasonable. Because Operator's actual CPST rate of $13.33, effective July 1, 1995 through December 31, 1995, does not exceed its MPR, we find Operator's actual CPST rate of $13.33, effective July 1, 1995 through December 31, 1995, to be reasonable. 6. Upon review of Operator's FCC Form 1210 covering the period April 1, 1995 through December 31, 1995, we adjusted Operator's Lines A1 and A2 to coincide with Operator's previous unrevised FCC Form 1210, thereby removing the excess 3 percent inflation. This adjustment resulted in a revised MPR of $12.27 rather than Operator's MPR of $12.43. Because Operator's actual CPST rate of $14.46, effective January 1, 1996 through December 31, 1996, exceeds its revised MPR, we find Operator's actual CPST rate of $14.46, effective January 1, 1996 through December 31, 1996, to be unreasonable. 7. Upon review of Operator's FCC Form 1210 covering the period January 1, 1996 through December 31, 1996, we adjusted Operator's Lines A1 and A2 to coincide with Operator's previous revised FCC Form 1210. We also adjusted Operator's Inflation Factor to 1.0214. These adjustments resulted in a revised MPR of $14.11 rather than Operator's MPR of $14.28. Because Operator's actual CPST rate of $16.46, effective January 1, 1997 through December 31, 1997, exceeds its revised MPR, we find Operator's actual CPST rate of $16.46, effective January 1, 1997 through December 31, 1997, to be unreasonable. 8. Upon review of Operator's FCC Form 1240 for the projected period January 1, 1998 through December 31, 1998, we adjusted Operator's Line A1 to $14.11 to coincide with the MPR from Operator's previous revised FCC Form 1210. We adjusted the Inflation Factors on Operator's Worksheet 1 and Line C1 (Unclaimed Inflation) to reflect the most accurate inflation data currently available. This resulted in an adjustment to Operator's Line C1 and Operator's Line C3 (Inflation Factor for True-Up Period 1) and Line C4 (Inflation Factor for True-Up Period 2). We also adjusted Operator's Line C5 (Current FCC Inflation Factor) to 1.0143. We adjusted Operator's Worksheet 8 (True-Up Rate Charged) to reflect the actual rate charged during the True-Up Period in accordance with the FCC Form 1240 Instructions. These adjustments resulted in a revised MPR of $13.71 rather than Operator's MPR of $16.43. Because Operator's actual CPST rate of $17.98, effective January 1, 1998, exceeds its revised MPR, we find Operator's actual CPST rate of $17.98, effective January 1, 1998, 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 $13.24, charged by Operator in the franchise areas referenced above effective May 15, 1994 through July 13, 1994, IS UNREASONABLE. 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rates, charged by Operator in the franchise areas referenced above, effective July 14, 1994 through December 31, 1995, ARE 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 $14.46, charged by Operator in the franchise areas referenced above effective January 1, 1996 through December 31, 1996, 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 $16.46, charged by Operator in the franchise areas referenced above effective January 1, 1997 through December 31, 1997, IS UNREASONABLE. 13. 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 $17.98, charged by Operator in the franchise areas referenced above effective January 1, 1998, IS UNREASONABLE. 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 communities referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $12.30 per month (plus franchise fees), plus interest to the date of the refund, for the period May 15, 1994 through July 13, 1994. 15. 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 communities referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $12.27 per month (plus franchise fees), plus interest to the date of the refund, for the period January 1, 1996 through December 31, 1996. 16. 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 communities referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $14.11 per month (plus franchise fees), plus interest to the date of the refund, for the period January 1, 1997 through December 31, 1997. 17. 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 communities referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $13.71 per month (plus franchise fees), plus interest to the date of the refund, for the period January 1, 1998 through the day before Operator implements the maximum permitted CPST rate of $13.71. 18. 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. 19. 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. 20. 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. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Acting Chief, Cable Services Bureau