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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 No. FL0100 (North Fort Myers) ) MediaOne ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: August 21, 1998 Released: August 26, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the January 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") and Cable Plus tier ("CPT") in the community referenced above. 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 Amended Social Contract which incorporated and amended the terms of the Social Contract ("Amended Social Contract"). This Order addresses only the reasonableness of Operator's January 1, 1998 CPST and CPT rate increases for its rebuild and non-rebuild areas, 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 legis legislation ("Interim Rules"), require that complaints against 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 area referenced above filed a complaint with the Commission on June 2, 1998 against Operator's January 1, 1998 CPST rate increase from $12.93 to $15.06 and CPT increase from $1.95 to $2.19 in its rebuild area and CPST rate increase from $15.01 to $16.19 and CPT increase from $1.56 to $1.58 in its non-rebuild area. The LFA verified that it received more than one subscriber complaint and that the first valid complaint was received by the LFA on January 16, 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. 4. 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. 5. In its complaint, the LFA states that Operator has refused to provide upgraded service to a portion of the franchise area known as the Forest Park Property Owner's Association ("FPPOA"), a private residential community. Operator responded that subscribers in the FPPOA are being charged the same rate as other subscribers in the non-rebuild area of the community and that Operator had engaged in discussions with the FPPOA "regarding the terms and conditions under which [Operator] would propose to rebuild its plant and provide upgraded service" to the FPPOA. Under the terms of the Amended Social Contract, Operator is permitted to increase the monthly rate for the CPST by $1.00 per year from 1996 through 1999. Operator is required to invest $1.7 billion to upgrade its cable systems. In implementing its upgrades, Operator agreed that it will not discriminate on the basis of the socio-economic status of subscribers. Operator must meet certain minimum conditions for each of its systems by December 31, 2000. Operator charges the subscribers in the FPPOA the same rate as it charges other individual subscribers in the same franchise area and that rate includes the $1.00 per year allowed under the Social Contract. We do not find any distinction between the individual subscribers in the FPPOA and other individual subscribers in the franchise area which would preclude the subscribers in the FPPOA from receiving the minimum upgrade requirements under the Amended Social Contract. 6. Upon review of Operator's SC Rate Form, setting an initial maximum permitted rate ("MPR") in accordance with the Amended Social Contract, and Operator's FCC Form 1210, covering the period from the SC Rate Form through December 31, 1996, and Operator's FCC Form 1210 covering the period from January 1, 1997 through December 31, 1997, we find Operator's actual CPST rate of $15.06 for the rebuild area and $16.19 for the non-rebuild area, effective January 1, 1998, to be reasonable. We find Operator's CPT rates of $2.19 for its rebuild area and $1.58 for its non-rebuild area, effective January 1, 1998, to be in compliance with the Amended Social Contract. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rates of $15.06 for the rebuild area and $16.19 for the non-rebuild area, charged by Operator in the community referenced above, effective January 1, 1998, ARE REASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPT rates of $2.19 for the rebuild area and $1.58 for the non-rebuild area, charged by Operator in the community referenced above, effective January 1, 1998, ARE REASONABLE. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that Operator's system serving the subscribers in the Forest Park Property Owner's Association must meet the minimum conditions required by In the Matter of Social Contract for Continental Cablevision, 10 FCC Rcd 299 (1995) and In the Matter of Continental Cablevision, 11 FCC Rcd 11118 (1996). 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint against Operator's January 1, 1998 CPST and CPT rate increases in the community referenced above, IS DENIED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau