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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 ) ) Cox Communications Roanoke ) CUID No. VA0151 (Roanoke County) ) Complaint Regarding ) Cable Programming Services Tier Rates ) and ) Petition for Reconsideration ) ORDER ON RECONSIDERATION and RATE ORDER Adopted: November 10, 1998 Released: November 16, 1998 By the Associate Bureau Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the March 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already issued a rate order concerning Operator's prior CPST rates ("Prior Order"). On December 24, 1997, Operator filed a petition for reconsideration of our Prior Order ("Petition"). In this Order we will consider Operator's Petition as well as the above-referenced complaint. 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 27, 1998 against Operator's March 1, 1998 CPST rate increase from $18.35 to $19.07. 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 March 11, 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. To justify rates for the period beginning May 15, 1994 through a benchmark or cost of service showing, operators must use the FCC Form 1200 series. Cable operators may file an FCC Form 1210 to justify rate increases based on the addition and deletion of channels, changes in certain external costs and inflation. In addition, operators that file the FCC Form 1210 must file one at least 30 days before new rates are scheduled to go into effect, where there is a pending complaint against the CPST rate. 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. In our Prior Order, we made several adjustments to Operator's FCC Form 1240 for the projected period March 1, 1996 through February 28, 1997. Operator claimed a True-Up Period from October 1, 1995 through December 31, 1995. However, our FCC Form 1240 Instructions state that for first time filers of FCC Form 1240, the beginning date of the True-Up Period is the end of the last quarter covered by an FCC Form 1210, if the FCC Form 1210 was used to adjust rates after the release date of our Order establishing the annual rate adjustment method. Because Operator used the FCC Form 1210 for the period October 1, 1995 through December 31, 1995 to adjust the maximum permitted rate ("MPR") for its CPST, we disallowed Operator's True-Up Period. However, we did allow Operator to recover its unclaimed inflation for the period from July 1, 1995 through December 31, 1995. Our adjustments resulted in an MPR of $16.88 while Operator was charging an actual CPST rate of $16.90, effective April 1, 1996. 6. In its Petition, Operator argues that our technical application of the FCC Form 1240 Instructions "is inappropriate in this case" and "fundamentally unfair" to Operator. Operator claims that it merely used the FCC Form 1210 to remove excess inflation it had previously claimed and that it should be allowed to true-up that same period of time. We disagree. The FCC Form 1240 Instructions do not allow a True-Up Period which coincides with a time period covered by an FCC Form 1210. In its Petition, Operator makes reference to a letter which accompanied its filings in which Operator states that although "it may initially appear that the 1240 true-up is not allowed due to overlap with the prior FCC Form 1210 ... the true-up in the FCC Form 1240 for October 1, 1995 to December 31, 1995 to recover inflation for that period is necessary and permitted." Operator's stated purpose for the True-Up Period from October 1, 1995 through December 31, 1995 (despite being in contravention of the FCC Form 1240 Instructions) was to recover inflation for that period. We are not persuaded by Operator's argument that the FCC Form 1240 Instructions should not be applied in this case and we affirm our Prior Order. 7. Operator also argues that it should not incur refund liability for its March 1, 1996 CPST rate increase because no separate complaint was filed against that particular CPST rate increase. Operator argues that its refund liability should not extend beyond its August 1, 1995 CPST rate increase which we found to be reasonable in our Prior Order. Operator cites our rules concerning the filing period for valid complaints in support of its position. Operator states that a complaint must be filed within a limited period of time following a rate increase or else there can be no refund liability for that rate increase. Operator misconstrues the intent of our rules limiting the time period during which a valid complaint may be filed. These rules exist to give operators some certainty, and finality, regarding when a rate is being complained about. They are not applicable to pending complaints which were timely filed, they apply only to complaints that are untimely filed. Operator is under a continuing obligation to provide notice to the Commission prior to a rate change so long as there is a valid pending complaint. The Commission has stated that the "notice is necessary to allow the Commission to ensure that the [CPST] rate is not unreasonable." Operator was on notice that the Commission intended to review Operator's CPST rates for as long as a valid complaint was pending. Therefore, we affirm our Prior Order establishing refund liability based on Operator's March 1, 1996 CPST rate increase. However, to the extent that Operator's refund liability for that period has been incorporated in the true-up calculation of the revised FCC Form 1240 for the projected period March 1, 1997 through February 28, 1998, we will not require Operator to separately calculate its refund liability for the March 1, 1996 through February 28, 1997 period. We continue to find, however, that Operator's CPST rate of $18.35, effective March 1, 1997, is unreasonable. 8. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1998 through February 28, 1999, we adjusted Operator's Worksheet 8 to reflect the actual rates charged during the True-Up Period. We adjusted the Inflation Factors at Worksheet 1 (True-Up Period Inflation) which adjusted Line C1 (Inflation Factor for True-Up Period 1) and we revised Line C3 (Current FCC Inflation Factor) to 1.0114. These adjustments resulted in a revised MPR of $18.91 for the projected period rather than Operator's calculated MPR of $19.07 for the projected period. Because Operator's actual CPST rate of $19.07, effective March 1, 1998, exceeds its revised MPR of $18.91, we find Operator's actual CPST rate of $19.07, to be unreasonable. 9. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R. 1.106, that Operator's Petition for Reconsideration IS DENIED. 10. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. 0.321, that In the Matter of Cox Communications, Inc. (DA 97-2453), 12 FCC Rcd 19634 (1997), IS VACATED TO THE EXTENT INDICATED HEREIN. 11. 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 $16.90, charged by Operator in the franchise area referenced above, effective April 1, 1996 through February 28, 1997, IS UNREASONABLE. 12. 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 $18.35, charged by Operator in the franchise area referenced above, effective March 1, 1997 through February 28, 1998, IS UNREASONABLE. 13. 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 $19.07, charged by Operator in the franchise area referenced above, effective March 1, 1998, IS UNREASONABLE. 14. 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 franchise area referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $18.08 per month (plus franchise fees), plus interest to the date of the refund, for the period March 1, 1997 through February 28, 1998. 15. 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 franchise area referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $18.91 per month (plus franchise fees), plus interest to the date of the refund, for the period March 1, 1998 through the day before Operator implements the maximum permitted CPST rate of $18.91. 16. 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. 17. 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. 18. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the complaint referenced herein against the CPST rate charged by Operator in the community referenced above IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Marjorie Reed Greene Associate Bureau Chief, Cable Services Bureau