******************************************************** 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 ) ) ) TCI Cablevision of Wisconsin, Inc.) CUID No. WI0058 (Madison) . ) ) Complaint Regarding ) Cable Programming Services Tier Rates) ORDER Adopted: October 26, 1998 Released: October 29, 1998 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the June 1, 1998 rate increase that the above- captioned operator ("Operator") implemented for its cable programming services tier ("CPST") in the community referenced above. Operator has attempted to justify its CPST rate increase through a benchmark showing on FCC Forms 1240. We have already issued a separate order which resolved complaints concerning Operator's CPST rates from September 1, 1993 through September 15, 1995. Accordingly, this Order addresses only the reasonableness of Operator's June 1, 1998 CPST rate increase. 2. The Communications Act authorizes the Federal Communications Commission ("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, require that complaints against the CPST rates be filed with the Commission by a franchising authority that has received subscriber complaints. A franchising authority may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. 3. Cable operators attempting to justify their rates for the period beginning May 15, 1994 using a benchmark showing must complete and file the FCC Form 1200 series. Cable operators may also justify rate increases based on the addition and deletion of channels, changes in certain external costs, and inflation, by filing FCC Form 1210. FCC Form 1210 must be filed at least 30 days before new rates are scheduled to go into effect where the Commission has found the cable programming service rate to be unreasonable less than one year prior to the filing, or where there is a pending complaint against the CPST rate. Cable operators may justify adjustments to 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. If actual and projected costs are different during the rate year a "true-up" mechanism is available to correct estimated costs with actual cost changes. 4. The LFA for the franchise area referenced above filed a complaint with the Commission on August 11, 1998 against Operator's June 1, 1998 CPST rate increase from $15.14 to $17.27 The LFA verified that it received more than one subscriber complaint and that the first valid complaint was received by the LFA on June 1, 1998. The filing of a complete and timely LFA 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. 5. On February 22, 1996, the Commission issued an order granting Operator a waiver (the "Waiver Order") of certain rate adjustment requirements in its initial filing of the Commission's annual rate adjustment form (FCC Form 1240). Specifically, the Waiver Order allowed Operator, in its initial FCC Form 1240 filings, to include estimated changes in costs, inflation, channels and subscriber information attributable to the period between the last date for which actual cost data was available and the effective date of the new rates. In the Waiver Order, Operator was instructed to include in its initial FCC Form 1240 filing certain calculations, such calculations to be performed on FCC Form 1240 (primarily in Module G), or off FCC Form 1240, in an alternative showing done pursuant to the Waiver Order's "General Guidelines." Operator chose to use an alternative showing pursuant to the "General Guidelines" rather than perform its calculations directly on FCC Form 1240. 6. To justify its CPST rate, effective June 1, 1998, Operator submitted three FCC Forms 1240, the first for the projected period June 1, 1996 to May 31, 1997, the second for the projected period June 1, 1997 to May 31, 1998, and the third for the projected period June 1, 1998 to May 31, 1999. 7. Upon review of Operator's new FCC Form 1240, for the projected period June 1, 1996 to May 31, 1997, we find that Operator has not correctly calculated its maximum permitted rate ("MPR"). Operator used an alternative showing pursuant to the "General Guidelines" rather than perform its calculations directly on FCC Form 1240. Because Operator's calculations in its alternative showing did not completely comply with the Waiver Order, we adjusted Operator's calculations and performed them on FCC Form 1240, in compliance with the General Guidelines. This adjustment resulted in a revised CPST MPR of $14.14, effective June 1, 1996. 8. Upon review of Operator's new FCC Form 1240, for the projected period June 1, 1997 to May 31, 1998, we find that Operator has not correctly calculated its MPR. We adjusted Line A1 (Current Maximum Permitted Rate) to $14.14 to conform to the previously revised FCC Form 1240. We revised Worksheet 1 (True-Up Period Inflation) which adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0220. We also revised Line C5 (Current FCC Inflation Factor) to 1.0183. We also adjusted Lines D6 (Current True-Up Segment), D7 (Current Inflation Segment), F8 (True-Up Segment for True-Up Period 1), G5 (Inflation Segment for True-Up Period 2), and Line H12 (Previous Remaining True-Up Adjustment) to conform to the previously revised FCC Form 1240. These revisions resulted in a revised CPST MPR of $14.94, effective June 1, 1997. 9. Upon review of Operator's FCC Form 1240, for the projected period June 1, 1998 to May 31, 1999, we find that Operator has not correctly calculated its MPR. We adjusted Line A1 (Current Maximum Permitted Rate) to $14.94 to conform to the previously revised FCC Form 1240. We revised Worksheet 1 (True-Up Period Inflation) which adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0187. We also revised Line C5 (Current FCC Inflation Factor) to 1.0114. We also adjusted Lines D6 (Current True-Up Segment), D7 (Current Inflation Segment) and F8 (True-Up Segment for True-Up Period 1), to conform to the previously revised FCC Form 1240. These revisions resulted in a revised CPST MPR of $17.64, effective June 1, 1998. Because Operator was actually charging a CPST rate of $17.27, we find Operator's actual CPST rate, effective June 1, 1998, to be reasonable. 10. 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 $17.27 charged by Operator in the community referenced above, effective June 1, 1998, IS REASONABLE. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator shall use (1) the standard FCC Form 1240 for rate calculation purposes and (2) $17.64 as Operator's Current Maximum Permitted Rate as called for on Line A1 of its FCC Form 1240 filing for the projected period beginning June 1, 1998. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint against Operator's June 1, 1998 CPST rate increase, in the community referenced above, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Margaret M. Egler Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau