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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 ) ) Cablevision Systems ) CUID No. NY0790 (New Hyde Park) ) ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: September 11, 1998 Released: September 15, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the January 1, 1998 rate increase that the above- captioned operator ("Operator") implemented for its cable programming services tier ("CPST") in the community set forth above. Operator has attempted to justify its CPST rate increase through a benchmark showing on FCC Form 1240. This Order addresses the reasonableness of Operator's CPST rate increase, effective January 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 30, 1998, the LFA filed a complaint regarding the January 1, 1998 increase in Operator's regular CPST rate in the community referenced above from $15.44 to $16.93. 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 January 27, 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 through December 31, 1998, we find that Operator has not correctly calculated its maximum permitted rate ("MPR"). Operator also included true-up adjustments for the period April 1, 1997 through July 31, 1997. However, because Operator filed its FCC Form 1240 with the Commission in response to a complaint, and Operator was not subject to regulation by the Commission at the time the complaint was filed, Operator is not entitled to any true-up adjustment. Therefore, we recalculated Operator's FCC Form 1240 without the true-up adjustment in Module I, Line I8. We also adjusted Operator's Line I1 and Worksheet 2 (CAPS Method Segment for Projected Period) in accordance with the FCC Form 1240 Instructions for operators not subject to regulation. These adjustments required that we adjust Operator's inflation factor at Operator's Line C3 (Inflations Factor fore True-Up Period 1) to 1.0000 and Line C4 (Inflation Factor for True-Up Period 2) to 1.0000. We also adjusted Line C5 (Current FCC Inflation Factor) to 1.0114. Our adjustments resulted in a revised MPR of $16.84 for the projected period rather than Operator's calculated MPR of $18.09 for the projected period. Because Operator's actual CPST rate of $16.93, effective January 1, 1998, exceeds its revised MPR of $16.84, we find Operator's actual CPST rate of $16.93 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 $16.93 effective January 1, 1998 in the community 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 area referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $16.84, per month (plus franchise fees), plus interest to the date of the refund, for the period January 27, 1998, the date of the first subscriber complaint, through the day before Operator implements the maximum permitted CPST rate of $16.84. 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 community set forth above IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau