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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 ) ) CUID No. CA0180 (Glendale) Marcus Cable Associates, L.P. ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: November 10, 1998 Released: November 13, 1998 By the Acting 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. All prior complaints against Operator's CPST rate increases have been resolved by a prior order ("Prior Order"). Accordingly, this Order addresses only the reasonableness of Operator's June 1, 1998 CPST 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. If the Commission finds a rate to be 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 more than one subscriber complaint. 3. The LFA for the community referenced above filed a complaint with the Commission on August 19, 1998, against Operator's June 1, 1998 CPST rate increase from $16.46 to $17.41. 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. 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 adjust their rates on an annual basis using FCC Form 1240. 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. 5. In response to the LFA's complaint, Operator filed an FCC Form 1240 for the projected period June 1, 1998 through May 31, 1999. In response to a request from the Cable Services Bureau staff, Operator also filed a revised FCC Form 1240 for the projected period June 1, 1997 through May 31, 1998, which incorporated changes mandated by our Prior Order along with a month by month accounting of its external costs. We will accept this filing as support for Operator's MPR on Line A1 of its FCC Form 1240 for the projected period June 1, 1998 through May 31, 1999. Operator also filed a revised FCC Form 1235 which purportedly updated the preliminary information provided on its prior FCC Form 1235. 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 in 1997. Operator chose to allocate its Monthly Network Upgrade Add-on (Part III, Lines 4 and 5) to its CPST rates. Such an election is consistent with the FCC Form 1235 instructions. Upon review of Operator's FCC Form 1235, we adjusted Operator's Number of Subscribers at Line 2, Part III to reflect the number of subscribers that Operator reported on its previous FCC Form 1235. Our adjustment resulted in a revised MPR of $3.60 for Operator's Monthly Network Add-on for its CPST, rather than Operator's calculated MPR of $3.96. 7. Upon review of Operator's FCC Form 1240 for the projected period June 1, 1998 through May 31, 1999, we find Operator's calculated maximum permitted rate ("MPR") of $17.68 to be reasonable. Therefore, Operator's total revised MPR for its CPST is $21.28, $17.68 plus $3.60, effective June 1, 1998. Because Operator's actual CPST rate of $17.41, effective June 1, 1998, does not exceed its revised MPR, we find Operator's actual CPST rate of $17.41, effective June 1, 1998, to be reasonable. 8. 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 $17.41, charged by Operator in the community referenced above, effective June 1, 1998, IS REASONABLE. 9. 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 Margaret M. Egler Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau