*************************************************** 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, itallic, underlining, etc. from the original document will not show up in this text version. Features of the orginal 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 ) ) Cablevision of Monmouth, Inc. ) CUID Nos. NJ0503 (Lakewood) ) NJ0531 (Howell) ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: September 10, 1998 Released: September 11, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the February 1, 1998 rate increase that the above-captioned operator ("Operator") implemented for its cable programming services tier ("CPST") in the communities set forth above. On August 11, 1998, we issued an Order approving a Resolution ("Resolution") which Operator entered into with the Federal Communications Commission ("Commission"), which resolved all previous complaints filed against Operator's CPST rates from September 1, 1993 through August 1, 1997. Operator has attempted to justify its CPST rate increase through a benchmark showing on FCC Form 1240. Accordingly, this Order addresses the reasonableness of Operator's CPST rate increase, effective February 1, 1998. 2. The Communications Act authorizes the Commission 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 the rate 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 subscriber complaints. An LFA may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. 3. On June 16, 1998, the LFA filed a complaint regarding the February 1, 1998 increase in Operator's CPST rate in the communities referenced above from $13.88 to $17.60. In its complaint, the LFA asserts that it has received more than one subscriber complaint against Operator's CPST rate increase and verified that the first complaint was received on February 19, 1998, thereby triggering the Commission's jurisdiction to review the complaint. The valid complaint from the LFA triggers an obligation by the cable operator to file a justification of its CPST rates with the LFA. Thus, in this case, Operator is required to justify the increase in its CPST rate which is the subject of the LFA's complaint. 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 January 1, 1998 to December 31, 1998, we find that Operator did not correctly calculate its maximum permitted rate ("MPR"). We find that Operator has failed to use the most current FCC Inflation Factors available at the time Operator prepared its FCC Form 1240. Therefore, we revised Worksheet 1 (True-Up Period Inflation) which adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0056. We also revised Line C4 (Inflation Factor for True- Up Period 2) to 1.0060 and Line C5 (Current FCC Inflation Factor) to 1.0114. We disallowed the channel addition of $0.20 on Worksheet 2 - Caps Method True-Up Period, Tier 2, Line 217 because Operator did not add any channels in the True Up Period. We therefore changed Lines 201 and 217 through 219 from $0.40 to $0.20. We also adjusted Line G1 (Caps Method Segment for True-Up Period 2). These revisions reduced Operator's total MPR to $17.11 from Operator's MPR of $17.68, for the projected period January 1, 1998 to December 31, 1998. Because Operator's actual CPST rate, effective February 1, 1998, is $17.60, we find Operator's actual CPST rates, effective February 1, 1998, to be unreasonable. 6. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator's CPST rate of $17.60 effective February 1, 1998 in the communities set forth above, 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 areas referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $17.11, per month (plus franchise fees), plus interest to the date of the refund, for the period February 19, 1998, the date of the first subscriber complaint, through the day before Operator implements the maximum permitted CPST rate of $17.11. 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. Section 0.321, that the complaint referenced herein against the rates charged by Operator in the communities set forth above IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau