******************************************************** 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. NJ0463 (Hillsborough) ) NJ0491 (Lebanon) ) NJ0492 (Clinton Town) ) NJ0493 (Readington) RCN Cable of New Jersey, Inc. ) NJ0494 (Clinton Township) ) NJ0495 (Passaic/Longhill Township) ) NJ0504 (Branchburg) Complaint Regarding ) NJ0505 (Bernardsville) Cable Programming Services Tier Rates ) NJ0506 (Flemington) ) NJ0507 (Raritan) ) NJ0509 (Chatham) ) NJ0510 (Franklin) ) NJ0565 (Mendham Township) ) NJ0576 (Montgomery) ) NJ0586 (East Amwell) ) NJ0591 (Franklin) ORDER Adopted: October 22, 1998 Released: October 26, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the April 26, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the communities referenced above. We have already released a proposed resolution which addresses complaints against Operator's CPST rates and any potential refund liability for the period prior to April 26, 1998. This Order addresses only Operator's April 26, 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 August 4, 1998 against Operator's April 26, 1998 CPST rate increase from $10.93 to $11.90. The LFA verified that it received more than one subscriber complaint for each franchise area and that the first valid complaint for each franchise area was received by the LFA on the date listed in the Appendix attached hereto. 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 1240 for the projected period February 1, 1998 through January 31, 1999, we adjusted Operator's Line C1 (Unclaimed Inflation: Operator switching from 1210 to 1240) to 1.00 rather than 1.0037 in accordance with FCC Form 1240 Instructions. We revised Worksheet 1 (True-Up Period Inflation) which adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0188. We also revised Line C5 (Current FCC Inflation Factor) to 1.0114. Our adjustments resulted in a revised maximum permitted rate ("MPR") of $11.79, effective February 1, 1998. Because Operator's actual CPST rate of $11.90, effective April 26, 1998, exceeds its revised MPR, we find Operator's actual CPST rate of $11.90, effective April 26, 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 the CPST rate of $11.90, charged by Operator in the communities referenced above, effective April 26, 1998, 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 communities referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $11.79 per month (plus franchise fees), plus interest to the date of the refund, for the period beginning on the date listed in the attached Appendix (the date of the first subscriber complaint), through the day before Operator implements the maximum permitted CPST rate of $11.79. 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 complaints referenced herein against the CPST rate charged by Operator in the communities referenced above ARE GRANTED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau APPENDIX FRANCHISE NAME Community Unit ID # DATE FIRST VALID COMPLAINT FILED WITH LFA HILLSBOROUGH NJ0463 6/1/98 LEBANON NJ0491 6/4/98 CLINTON TWP NJ0492 5/27/98 READINGTON NJ0493 6/17/98 CLINTON NJ0494 5/8/98 LONG HILL TWP (Passaic) NJ0495 6/10/98 BRANCHBURG NJ0504 4/28/98 BERNARDSVILLE NJ0505 4/29/98 FLEMINGTON NJ0506 4/27/98 RARITAN NJ0507 5/27/98 CHATHAM NJ0509 6/11/98 FRANKLIN NJ0510 4/28/98 MENDHAM TWP NJ0565 6/1/98 MONTGOMERY NJ0576 5/6/98 EAST AMWELL NJ0586 5/26/98 FRANKLIN NJ0591 5/5/98