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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 ) ) MediaOne of New England, Inc. ) CUID No. NH0020 (Concord) ) ) Complaints Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: August 19, 1998 Released: August 25, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the January 1, 1996 and January 1, 1998 rate increases of the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already issued orders which resolved complaints filed against Operator from September 1, 1993 through April 3, 1995. On August 1, 1995, the Federal Communications Commission ("Commission") adopted an order approving a Social Contract entered into between Operator and the Commission ("Social Contract"). On August 21, 1996, the Commission adopted an order approving an Amended Social Contract entered into between Operator and the Commission ("Amended Social Contract"). This Order addresses the reasonableness of Operator's CPST rates, beginning January 1, 1996, consistent with the terms of the Amended Social Contract. 2. Under the Communications Act, the 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. A valid complaint was filed with the Commission on February 5, 1996 against Operator's January 1, 1996 rate of $21.71. The actual CPST rate, which we will review, was $12.34. The filing of a complete and timely complaint triggers an obligation on behalf of the cable operator to file a justification of its CPST rates. The Operator has the burden of demonstrating that its CPST rates are reasonable. 4. The LFA for the franchise area referenced above filed a complaint with the Commission on June 1, 1998, against Operator's January 1, 1998 rate increase from $25.99 to $27.75. The actual CPST rate increase, which we will review, is from $14.42 to $16.40. We will also review the rate increase for Operator's "Cable 1" tier which is a migrated product tier ("MPT"), created in compliance with the Amended Social Contract. The LFA verified that it received more than one subscriber complaint and that the first complaint was received by the LFA on March 30, 1998. 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. 5. To justify rates for the period beginning May 15, 1994, 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. There are no official forms available for use to implement the one-time changes in rates as required by the Amended Social Contract. The Commission, seeking to simplify the implementation of the Amended Social Contract, found that the rate form proposed by Operator ("SC Rate Form") to implement the rate restructuring under the Amended Social Contract, was consistent with the methodologies of the Commission's Forms 1200 and 1210 and greatly simplified the review of the restructured rates under the Amended Social Contract. Therefore, pursuant to the terms of the Amended Social Contract, the Commission permitted Operator to file an SC Rate Form to establish its CPST rates. 6. Under the terms of the Amended Social Contract, Operator is required to invest $1.35 billion to rebuild and upgrade all of its domestic cable systems from 1995 through 2000. By January 1, 1996, Operator must create, on systems serving at least 80% of its total subscribers, a lifeline basic service tier by reducing rates on the basic service tier by 15% to 20% and offset this reduction in a revenue neutral manner by adjusting the rates on the CPST. Operator may migrate up to four existing services from its CPST to an MPT and Operator may add an unlimited number of channels to an MPT at $0.20 per added channel plus license fees. 7. Upon review of Operator's SC Rate Form, setting an initial maximum permitted rate ("MPR") in accordance with the Amended Social Contract, we find that Operator has justified its actual CPST rate of $12.34, effective January 1, 1996. Upon review of Operator's FCC Form 1210 covering the period from January 1, 1996 through December 31, 1996, we find Operator's actual CPST rate of $14.42, effective January 1, 1997, to be reasonable. Upon review of Operator's FCC Form 1210 covering the period from January 1, 1997 through December 31, 1997, we find Operator's actual CPST rate of $16.40, effective January 1, 1998, to be reasonable and its MPT rate of $4.34 to be in compliance with the Amended Social Contract. 8. 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 $12.34 charged by Operator in the community referenced above, effective January 1, 1996, IS REASONABLE. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $14.42 charged by Operator in the community referenced above, effective January 1, 1997, IS REASONABLE. 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $16.40 charged by Operator in the community referenced above, effective January 1, 1998, IS REASONABLE. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the MPT rate of $4.34 charged by Operator in the community referenced above, effective January 1, 1998, IS REASONABLE. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the above-referenced complaints against Operator's CPST and MPT rate increases, in the community referenced above, ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau .