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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. HI0003 (Hawaii Kai) ) TCI of Hawaii, Inc. ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: August 31, 1998 Released: September 3, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the April 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. All prior complaints against Operator's CPST rate increases have been resolved. Accordingly, this Order addresses only the reasonableness of Operator's April 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 June 15, 1998 against Operator's April 1, 1998 CPST rate increase from $16.43 to $17.49. The LFA verified that it received more than one subscriber complaint and that the first valid complaint was received by the LFA on April 2, 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, 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 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 1240 for the projected period April 1, 1998 through March 31, 1999, we find that Operator failed to fully remove its estimated true-up amount, found on Lines H7 and H8 of its prior FCC Form 1240, from Line H13 (Total True-Up Adjustment) of its current FCC Form 1240 as required by our instructions in Annual Rate Adjustment System for Cable Service Rates ("Waiver Order"). Consequently, we recalculated Operator's Line H13 on Operator's FCC Form 1240 and this recalculation, performed pursuant to the Waiver Order, reduced Operator's Line H13 to $3,899.9403. We also reduced Line 202, column 4 of Operator's Worksheet 2 (CAPS Method Projected Period) to $0.00. The Commission's rules do not allow the $0.20 per channel rate increase under the CAPS method for channels added in 1998. We adjusted Operator's Current FCC Inflation Factor to reflect the most accurate inflation data currently available. Our adjustments resulted in a revised MPR for the projected period of $16.41 rather than Operator's calculated MPR for the projected period of $17.49. Because Operator's actual CPST rate of $17.49 exceeds its revised MPR, we find Operator's actual CPST rate of $17.49, effective April 1,1998, to be unreasonable. 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 $17.49 charged by Operator in the community referenced above, effective April 1, 1998, IS UNREASONABLE. 7. 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 $16.41 per month (plus franchise fees), plus interest to the date of the refund, for the period April 2, 1998 (the date of the first subscriber complaint) through the day before Operator implements the maximum permitted CPST rate of $16.41. 8. 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. 9 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. 10. 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 GRANTED. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau