******************************************************** 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 ) ) CUID Nos. GA0169 (Cobb County) MediaOne ) GA0236 (Cobb County) ) GA0386 (Douglas County) Complaints Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: September 18, 1998 Released: September 24, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the January 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the rebuild and non- rebuild areas of the communities referenced above. This Order addresses only Operator's January 1, 1998 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 LFAs for the franchise areas referenced above filed complaints with the Commission on June 30, 1998 against Operator's January 1, 1998 CPST rate increase from $16.72 to $18.75. Each LFA verified that it received more than one subscriber complaint for each franchise area and that the first valid complaint was received by the LFA on January 5, 1998 for Cobb County, CUID Nos. GA0169 and GA0236, and on March 26, 1998 for Douglas County, CUID No. GA0386. 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. 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 1240s 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 filed its FCC Form 1240s with the Commission in response to a CPST complaint, and Operator was not subject to regulation by the Commission at the time the complaint was filed. We adjusted Operator's Line 201 (Total CAPS Adjustment) of Worksheet 2 (CAPS Method Projected Period) and Line I1 (CAPS Method Segment for Projected Period) in accordance with the FCC Form 1240 Instructions for operators not subject to regulation. We also revised Line C5 (Current FCC Inflation Factor) to 1.0114. These adjustments resulted in a revised MPR of $19.33 for the projected period for the rebuild area rather than Operator's calculated MPR of $19.98. Because Operator's actual CPST rate of $18.75, effective January 1, 1998, does not exceed its revised MPR, we find Operator's actual CPST rate of $18.75 to be reasonable for the rebuild area. These adjustments resulted in a revised MPR of $18.74 for the projected period for the non-rebuild area rather than Operator's calculated MPR of $19.39. Because Operator's actual CPST rate of $18.75, effective January 1, 1998, exceeds its revised MPR, we find Operator's actual CPST rate of $18.75 to be unreasonable for the non-rebuild area. However, we determine that the total overcharge per subscriber is de minimis, and it would not be in the public interest to order a refund. 6. Operator also claimed an adjustment of $1.01 to its MPR, calculated pursuant to Section 76.922(f)(4) of the Commission's Rules. Section 76.922(f)(4) allows certain cable operators, who initially calculated their CPST rates on FCC Form 1200, to make an "adjustment for changes in external costs for the period September 30, 1992, and the initial date of regulation or February 28, 1994, whichever is applicable . . . ." The Commission released a methodology for the calculation of this adjustment on December 31, 1996. Operator filed only one FCC Form 1240, in each of its areas, in response to the LFA complaint. Because Operator was not previously subject to CPST rate regulation, and because it did not use an FCC Form 1200 to calculate its CPST rates, Operator is not entitled to an adjustment under Section 76.922(f)(4). Therefore, we will deny Operator's adjustment of $1.01. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rate of $18.75, charged by Operator in the rebuild area of the communities referenced above, effective January 1, 1998, IS REASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rate of $18.75, charged by Operator in the non-rebuild area of the communities referenced above, effective January 1, 1998, IS UNREASONABLE. 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 complaints referenced herein against the CPST rate charged by Operator in the communities referenced above ARE GRANTED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau