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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 ) ) Cox Communications Roanoke ) CUID No. VA0152 (Vinton) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: August 13, 1998 Released: August 17, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the March 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. This Order addresses only Operator's March 1, 1998 CPST rate increase. 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. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the legislation ("Interim Rules"), require that a complaint against the CPST rate 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 area referenced above filed a complaint with the Commission on May 28, 1998 against Operator's March 1, 1998 CPST rate increase from $18.35 to $19.34. The LFA verified that it received more than one subscriber complaint for the franchise area and that the first valid complaint was received by the LFA on March 3, 1998. The filing of a complete and timely 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. If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability. 4. 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 justify 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. Upon review of Operator's FCC Form 1200, we find Operator's maximum permitted rate ("MPR") for its CPST to be reasonable. Upon review of Operator's FCC Form 1210s, which covered the periods from April 1, 1994 through December 31, 1995, we find Operator's MPRs for its CPST to be reasonable. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1996 through February 28, 1997, we find that Operator has not correctly calculated its MPR. Operator included true-up adjustments for the period October 1, 1995 through December 31, 1995. Operator cannot begin its True-Up Period earlier than the end of the period covered by its most recent FCC Form 1210. However, we allow Operator to claim any unclaimed inflation for the period July 1, 1995 through December 31, 1995. We adjusted Operator's inflation factor at Operator's Line C3 (Current FCC Inflation Factor) to include the unclaimed inflation. These adjustments resulted in a revised MPR of $16.77 for the projected period. 6. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1997 through February 28, 1998, we adjusted Operator's Line A1 to coincide with Operator's revised MPR from its previous FCC Form 1240. We also adjusted Operator's Worksheet 8 to reflect the actual rates charged during the True- Up Period. We adjusted the Inflation Factors at Worksheet 1 (True-Up Period Inflation) which adjusted Line C1 (Inflation Factor for True-Up Period 1) and we revised Line C3 (Current FCC Inflation Factor) to 1.0270. We adjusted Line D7 (Current Inflation Segment) to exclude the unclaimed inflation included in Operator's prior revised FCC Form 1240. These adjustments resulted in a revised MPR of $18.20 for the projected period. 7. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1998 through February 28, 1999, we adjusted Operator's Line A1 to coincide with Operator's revised MPR from its previous FCC Form 1240. We also adjusted Operator's Worksheet 8 to reflect the actual rates charged during the True- Up Period. We adjusted the Inflation Factors at Worksheet 1 (True-Up Period Inflation) which adjusted Line C1 (Inflation Factor for True-Up Period 1) and we revised Line C3 (Current FCC Inflation Factor) to 1.0114. 8. Operator also claimed an adjustment of $0.1670 to its MPR, calculated pursuant to Section 76.922(f)(4) of the Commission's Rules. Section 76.922(f)(4) allows certain cable operators, who initially calculated their CPST rates on FCC Form 1200, to make an "adjustment for changes in external costs for the period September 30, 1992, and the initial date of regulation or February 28, 1994, whichever is applicable . . . ." The Commission released a methodology for the calculation of this adjustment on December 31, 1996. Because Operator was a transition operator, based on its FCC Form 1200 calculations, Operator is not entitled to an adjustment under Section 76.922(f)(4). Therefore, we will remove Operator's adjustment of $0.1670 from its proposed MPR. These adjustments resulted in a revised MPR of $18.85 for the projected period rather than Operator's calculated MPR of $19.34 for the projected period. Because Operator's actual CPST rate of $19.34, effective March 1, 1998, exceeds its revised MPR of $18.85, we find Operator's actual CPST rate of $19.34, 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 $19.34, charged by Operator in the franchise area referenced above, effective March 1, 1998, IS UNREASONABLE. 10. 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 franchise area referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $18.85 per month (plus franchise fees), plus interest to the date of the refund, for the period March 3, 1998, the date of the first subscriber complaint, through the day before Operator implements the maximum permitted CPST rate of $18.85. 11. 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. 12. 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. 13. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the complaint referenced herein against the CPST rate charged by Operator in the community referenced above IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau