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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 ) ) Marcus Cable ) CUID No. NC0098 (Black Mountain) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: September 29, 1998 Released: October 1, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the June 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. This Order addresses only Operator's June 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 LFA for the franchise area referenced above filed a complaint with the Commission on July 29, 1998 against Operator's June 1, 1998 CPST rate increase from $14.25 to $20.61. The LFA verified that it received more than one subscriber complaint for the franchise area and that the first valid complaint was received by the LFA on June 1, 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. 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. Additionally, an Operator may file an FCC Form 1235 (Abbreviated Cost of Service Filing for Cable Network Upgrades). The FCC Form 1235 allows cable operators to justify rate increases related to significant capital expenditures used to improve rate-regulated services. This option is extended only in cases of significant upgrades requiring added capital investment, such as bandwidth capacity and conversion to fiber optics, and for system rebuilds. Normal improvements and expansions of service remain subject to the usual rate adjustments allowed by filing FCC Form 1210s, 1220s and 1240s. Cable operators that incur increases in operating costs associated with a significant network upgrade will be permitted to charge additional rates as justified by their FCC Form 1235 filing. In response to the LFA's complaint, Operator filed an FCC Form 1240 and an FCC Form 1235. 5. Upon review of Operator's FCC Form 1240 for the projected period June 1, 1998 through May 31, 1999, we adjusted Operator's entries at Line D3 (Current CAPS Method Segment) and Line 201 (Total CAPS Adjustment) of Worksheet 2 (CAPS Method 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. Our adjustments resulted in a revised maximum permitted ("MPR") of $17.27, effective June 1, 1998, rather than Operator's calculated MPR of $17.29. 6. Our review of Operator's FCC Form 1235 reveals that Operator has certified that the upgrade meets the minimum technical requirements of FCC Form 1235 and that the upgrade was completed by the end of 1995. Operator chose to allocate its Monthly Network Upgrade Add-on (Section III, Lines 4 and 5) to its CPST rate. Such an election is consistent with the FCC Form 1235 instructions. Upon review of Operator's FCC Form 1235, we find that Operator has correctly calculated its upgrade MPR of $4.28. Thus Operator's total revised MPR for its CPST is $21.55 ($17.27 plus $4.28), effective June 1, 1998. Because Operator's actual CPST rate of $20.61, effective June 1, 1998, does not exceed its revised MPR, we find Operator's actual CPST rate of $20.61, effective June 1, 1998, to be reasonable. 7. 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 $20.61, charged by Operator in the community referenced above, effective June 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 referenced complaint IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau