******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) Booth American Company ) CUID Nos. CA0003 (Apple Valley) ) CA0072 (Victorville) ) CA0846 (Victorville) ) CA1247 (Hesperia) Petition for Reconsideration ) ORDER ON RECONSIDERATION Adopted: September 8, 1998 Released: September 10, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider an appeal filed by the above-captioned operator ("Operator") against orders involving the above-captioned communities. We have already issued two separate orders ("Prior Orders") concerning Operator's cable programming services tier ("CPST") rates in the communities referenced above. The first Prior Order ("First Order") addressed complaints filed against Operator's CPST rates effective September 1, 1993 through May 14, 1994. The second Prior Order ("Second Order") dismissed CPST rate complaints in CUID CA0003 (Apple Valley), CUID CA0846 (Victorville) and CUID CA1247 (Hesperia) because Operator qualified for small operator status pursuant to the Telecommunications Act of 1996 ("1996 Act"). On August 9, 1995, Operator filed an application for review ("Application") for the first Prior Order. On April 30, 1998, Operator filed a motion ("Motion") requesting that CUID CA0072 (Victorville) be considered unregulated pursuant to the small operator provisions of the 1996 Act. On May 8, 1998, Operator filed a petition requesting that the Bureau consider its Application as a petition for reconsideration. In this Order, we grant Operator's petition and consider its application for review as a petition for reconsideration. We also address Operator's Motion. 2. The Communications Act authorizes the Federal Communications Commission ("Commission") to review the CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. The Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") required the Commission to review CPST rates upon the filing of a valid complaint. If the Commission finds the rate to be unreasonable, it shall determine the correct rate and any refund liability. 3. In its petition for reconsideration, Operator raises four issues. In its first issue, Operator argues that the rate complaints adjudicated by the Bureau in the First Order were properly withdrawn by the complainants in communities CUID CA0003 (Apple Valley), CUID CA0072 (Victorville) and CUID CA0846 (Victorville) prior to the release of the First Order. Our review of the record shows that each complainant wrote to the Commission and requested the dismissal of his or her complaint. Each of these requests was dated in April 1995 while the First Order was released on July 10, 1995. Under our rules, this Commission will regulate CPST rates only when a valid complaint against those rates is filed. In each of the three communities referenced, the only complainant against the Operator in the communities requested the dismissal of his or her complaint prior to the release of the First Order. While our rules forbid collusive agreements regarding forbearance from rate regulation, there is no evidence of such an agreement here. Therefore, we will allow the complainants to withdraw their complaints and vacate the Prior Order concerning communities CUID CA0003 (Apple Valley), CUID CA0072 (Victorville) and CUID CA0846 (Victorville). 4. In its second issue, Operator argues that it is subject to effective competition in CUID CA0846 (Victorville). Because we are dismissing the complaint in that community pursuant to the complainant's request, we do not reach this issue. 5. In its third issue, Operator argues that Booth is subject to effective competition in CUID CA1247 (Hesperia). Operator states that, at the time the complaint was filed, it served 913 subscribers in Hesperia over 35 miles of cable plant which passed approximately 1430 households. Operator contends that, according to the 1990 U.S. Census Report, the City of Hesperia had approximately 16,551 households in 1990. Operator concludes that it provided service to only six percent of the households in Hesperia and is therefore subject to effective competition under our rules. 6. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition. The cable operator bears the burden of rebutting the presumption that effective competition does not exist with evidence that effective competition, as defined by section 76.905 of the Commission's rules, is present within its franchise area. According to Section 76.905(b) of the Commission's rules, [a] cable system is subject to effective competition when . . . [f]ewer than 30 percent of the households in its franchise area subscribe to the cable service of a cable system." Our review of the record before us shows that, at the time the complaint in Hesperia was filed, Operator provided cable service to 913 subscribers while the total number of households in Hesperia was 16,551. A comparison of the total number of subscribers as of 1994 (913) to the total number of households (16,551) yields a penetration rate of 5.51 percent. Accordingly, Operator was subject to effective competition at the time the complaint in Hesperia was filed. Therefore, we will vacate that portion of the First Order subjecting Operator's cable system in CUID CA1247 (Hesperia) to CPST rate regulation. 7. Operator's fourth and final issue concerns whether the Commission permitted Operator to account for external cost increases incurred during the period of time from the effective date of the 1992 Cable Act through the initial date of regulation in its CPST rates (the "Gap Period"). Operator states that in Time Warner Entertainment Co. v. FCC, the United States Court of Appeals for the District of Columbia Circuit held that the Commission improperly failed to permit cable operators to adjust their rates to account for these external cost increases. Operator concludes that it is entitled to offset any refunds owed with any Gap Period external costs that it did not collect. Subsequent to Operator's filing of its Petition, the Commission issued an order ("Gap Period Order") and amended its rules to allow certain cable operators which had not collected external costs incurred during the Gap Period to collect those costs by adjusting their CPST rates. Therefore, to the extent that Operator is entitled to take an adjustment for external costs incurred during the Gap Period, it may do so pursuant to the Commission's rules. 8. In its Motion, Operator requests that its cable system in CUID CA0072 (Victorville) be considered unregulated pursuant to the small operator provisions of the 1996 Act. In the 1996 Act, Congress amended Section 623 of the Communications Act and redefined a small cable operator as one that "directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United states and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000." In our Second Order, we determined that Operator is a small cable operator pursuant to the 1996 Act. Because Operator certifies that its cable system in CUID CA0072 (Victorville) does not serve more that 50,000 subscribers, we find that Operator's cable system in CUID CA0072 (Victorville) is entitled to small operator treatment pursuant to the 1996 Act. 9. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator's Petition to the Cable Services Bureau to consider its Application for Review as a Petition for Reconsideration IS GRANTED. 10. IT IS FURTHER ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R. Section 1.1.06, that Operator's Petition for Reconsideration IS GRANTED. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R. Section 0.321, that In the Matter of Hi-Desert Cablevision (CUID Nos. CA0003 Apple Valley, CA0072 Victorville, CA0846 Uninc. Victorville and CA1247 Hesperia), 10 FCC Rcd 7588 (1995) IS VACATED. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R. Section 0.321, that the Stay granted to Operator In the Matter of Battlefield Cable TV Co. 10 FCC Rcd 10591 (1995) IS VACATED. 13. 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R. Section 0.321, that the Motion to consider Operator's cable system in CUID CA0072 (Victorville) as a small cable operator pursuant to the 1996 Act IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau