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PŽ6G;9XP#бУ Уб#&aє\  PŽ6G;С&P#бFederal Communications CommissionƒС`}(#СDA 98ЉФ ФУ УФ ФУ У2314Ф Фƒ д идкyxАˆdddyк \еб#&aє\  PŽ6G;С&P#бŠб#&aє\  PŽ6G;С&P#бСрvь3СУ Уб#єXє\  PŽ6G;‰јєP#бBefore theƒ д …SиД-дб#&aє\  PŽ6G;С&P#бСрџ ьоСFederal Communications Commissionƒ д …SАД-дСр"ь СWashington, D.C. 20554Ф Фƒ д …S`Д-дIn the Matter ofСрЭьRС)ƒСhС д …S8Д-дСрЭьRС)ƒСhССppССШШИС д …SД-дMarcus Cable Associates, L.P.СрЭьRС)ƒСhСCUID No. СШШИСCA0189 (Whittier) д …SшД-дСрЭьRС)ƒСhССppССШШИС д …SРД-дComplaint RegardingСрЭьRС)ƒСhССppССШШИС д …S˜Д-дCable Programming Services Tier RateСрЭьRС)ƒСhССppССШШИС СxСС` `  ССИ И ШС д …SH Д-ддl%RСрььTССxС даадTьдУ У д …S Д-дд<ЂдORDERФ Ф дTьдаадPАд д …Sа Д-дааXА` И hРpШ xа (#€%и'0*ˆ,р.813ш5@8˜:№дadded capital investment, such as bandwidth capacity and conversion to fiber optics, and for system д Аxедrebuilds. For an operator to receive rate increases justified on an FCC Form 1235, the Commission д Аxддrequires: (1) that the upgrade be 'significant' and require added capital investment, such as expansion of д Аxђдbandwidth capacity, conversion to fiber optics or system rebuilds; (2) that the upgrade actually benefit д Аxдsubscribers through improvements in the regulated services subject to rate increase; (3) that the upgrade д Аx™дrate increase not be assessed until the upgrade is complete and providing benefits to subscribers of д Аx.дregulated services; (4) that the operator demonstrate its net increase in costs, taking into account current д Аxдdepreciation expense, projected changes in maintenance and other expenses, and changes in other д Аxдrevenues; and (5) that the operator allocate its costs to ensure that only costs allocable to subscribers of д …SУ- Аxˆдregulated services are imposed upon them.жі "з*д yOИД- Аx,даа УУФФImplementation of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation д АxJдand Adoption of Uniform Accounting System for Provision of Regulated Cable Service, 9 FCC Rcd 4527, par. 287 Њд {OHЅ- Аxёд 289 (1994). УУФФУУSeeФФ 47 C.F.R. Section 76.922(j). УУSee alsoФФ Public Notice: Cable Services Bureau Develops System Upgrade Form, 11 FCC Rcd 5554 (1995). іж Normal improvements and expansions of service will remain д Аxфдsubject to the usual rate adjustments allowed by filings of FCC Forms 1210, 1220 and 1240. Cable д Аxkдoperators that incur increases in operating costs associated with a significant network upgrade will be д …SД-дpermitted to charge additional rates as justified by their FCC Form 1235 filing. д …S@Д- ` Ш`дСxС5.С` `  СOn August 18, 1998, the LFA filed a complaint regarding the January 1, 1998 increase д Аxудin Operator's regular CPST rate in the community referenced above from $14.69 to $15.95 for its nonЊд Аxудrebuild segment, and $18.99 to $20.25 for its rebuild segment. In its complaint, the LFA asserts that it д Аxдhas received more than one subscriber complaint against Operator's CPST rate increase and verified that д Аxzдthe first complaint was received on June 11, 1998, thereby triggering the Commission's jurisdiction to д Аxдreview the complaint. The valid complaint from the LFA triggers an obligation by the cable operator to д …SPУ- АxЕдfile a justification of its CPST rates with the LFA.ж’ ШPњ з*д yOъ%Д-дб#єXє\  PŽ6G;‰јєP#б б#єXє\  PŽ6G;‰јєP#б47 C.F.R. Section 76.1402.’ж Thus, in this case, Operator is required to justify the increase in its CPST rate which is the subject of the LFA's complaint. д …SД-д д"Š ˆ,p(p(88zс"дŒд …SД- ` Ш`дСxС6.С` `  СIn a letter filed May 18, 1994, Operator advised the Commission that it had elected, as д АxЕдprovided in the Commission's rules, to take advantage of the refund liability deferral period from Mayд l%R д д l%R д15, д Аxlд1994 through July 13, 1994, for any overcharges resulting from the calculation of a new maximum д …SˆУ- Аx™дpermitted rate ("MPR") on the FCC Form 1200.жу ’ˆз*д {O№Д- Аxд УУSeeФФ letter from John C. Fletcher, Vice President Operations, US Cable Corporation, to Federal д yOКЅ-дCommunications Commission, dated June 7, 1994. УУФФуж Accordingly, the liability period for any CPST д Аx\дovercharges by Operator associated with its FCC Form 1200 filing did not begin to run until July 14, д …S8У-д1994.ж>”8"з*д {OњД- АxгдУУ SeeФФ 47 C.F.R. 76.922 (b)(6)(ii); УУsee alsoФФ УУSecond Order on ReconsiderationФФ, 9 FCC Rcd at 4183;УУ see alsoФФ д {OФ Ѕ-дPublic Notice "Questions and Answers on Cable Television Rate Regulation" (April 26, 1994); УУsee supraФФ para. 3. >ж д …SшД- ` ШЊдСxС7.С` `  СUpon review of Operator's FCC Form 1200, we find that Operator has correctly calculated д Аxдit's MPR of $8.17. Because Operator's actual CPST rate of $8.12, effective July 15, 1994 to д АxудDecemberд l%R д д l%R д31, 1994, is less than its MPR of $8.17, we find Operator's actual CPST rate of $8.12 to be д АxЖдreasonable. Operator increased its CPST rate to $9.75, effective January 1, 1995. Because Operator's д АxХдMPR continued to be $8.17, we find that Operator's CPST rate of $9.75, effective January 1, 1995, to д Аx]дbe unreasonable. Operator again raised its CPST rate to $11.26, effective April 1, 1995. Because д АxˆдOperator's MPR continued to be $8.17, we find Operator's CPST rate of $11.26, effective April 1, 1995, to be unreasonable. д …S€ Д- ` ШдСxС8.С` `  СUpon review of Operator's FCC Form 1210, covering the period March 31, 1994 to д АxгдJuneд l%R д д l%R д30, 1995, we find that Operator has not correctly calculated its CPST MPR. In Module G, Line G7, д Аx—дwe disallowed Operator's $0.10 adjustment for channel additions under the "markup method" because we д …SУ- Аxгдallowed Operator's $1.50 adjustment for channel additions under the "CAPS method".ж5Z~з*д {O&Д- Аxёд УУSeeФФ 47 C.F.R. РР76.922(g)(1). Operators must elect between the "markup method" channel addition rules д АxХдcontained in 47 C.F.R. РР76.922(g)(2) or the "CAPS method" channel addition rules contained in 47 C.F.R. РР76.922(g)(3).5ж We adjusted Line д АxІдI5 (Inflation Adjustment Factor) and Line J5 (Inflation Adjustment Factor) to 5.21%. These adjustments д Аxjдresulted in a revised CPST MPR of $11.20, effective July 1, 1995. Because Operator's actual CPST rate д Аxдcontinued to be $11.26, we find Operator's actual CPST rate to be unreasonable, effective July 1, 1995. д АxyдOn November 4, 1995, Operator reduced its CPST rate to $11.25. Because Operator's actual CPST rate д Аxтдcontinued to exceed its MPR of $11.20, we find Operator's actual CPST rate, effective November 4, 1995, to be unreasonable. д …SШД- ` ШїдСxС9.С` `  С Upon review of Operator's FCC Form 1240 for the projected period June 1, 1996 to д Аx.дMayд l%R д д l%R д31, 1997 we find that Operator has not correctly calculated its CPST MPR. We adjusted Line A1 д Аxёд(Current Maximum Permitted Rate) to $11.20 to conform to Operator's previous revised FCC Form 1210. д АxЉдAdditionally, Operator incorrectly indicated that a TrueЉUp Period of 7.5 months. The unit of д …S(У- Аx—дmeasurement used by the FCC Form 1240 is the month.жWШ( з*д yOh$Д-д УУФФ See FCC Form 1240 Instructions at p.8.Wж Therefore, we eliminated a halfЉmonth of trueЊд Аx?дup. We adjusted Line E2 (Number of Months in the TrueЉUp Period) to 7 months. We adjusted д АxЇдWorksheet 2 (Caps Method TrueЉUp Period, Tier 2), Question 3 to 7 months. We disallowed a halfЊд Аxтдmonth inflation on Line 108 on Worksheet 1 (TrueЉUp Period Inflation). We also disallowed a halfЉmonthд"А0 ˆ,p(p(88с"д д АxХдinflation on Worksheet 8, Line 808 (TrueЉUp Rate Charged)) and adjusted Worksheet 8, Question 1 to д АxЉд7 months. We also adjusted Line C1 (Inflation Factor for TrueЉUp Period 1) to 1.0431. These д АxХдadjustments have resulted in a revised CPST MPR of $12.25. Because Operator's actual CPST rate of д Аxд$12.45, effective June 1, 1996, exceeds its revised MPR of $12.25, we find Operator's actual CPST rate of $12.45 to be unreasonable. д …SД- ` ШЪдСxС10.С` `  СUpon review of Operator's FCC Form 1240 for the projected period June 1, 1997 to д АxгдMayд l%R д д l%R д31, 1998 we find that Operator has not correctly calculated its CPST MPR. In particular, Operator д Аx—дmade trueЉup adjustments through to the effective date of the rate increase. This is incorrect. The annual д Аxдadjustment afforded by FCC Form 1240 allows operators to project changes in external costs, inflation, д АxMдand the number of regulated channels. This structure avoids the delay some operators experienced in д Аx<дrecouping costs through multiple rate adjustments throughout the year. Because projections will not reflect д Аx.дthe costs that actually occur, the Commission provided, as part of the annual adjustment, a "trueЉup" to д Аxддcorrect projected cost changes with the actual cost changes. However, the Commission has noted that, д Аxддas FCC Form 1240 must be filed 90 days before an increase is to take effect, the period for the trueЉup д …SЈ У- Аxjдwill not coincide with the previous year's projections.жsЪЈ з*д {OД-д УУThirteenth Reconsideration OrderФФ, 11 FCC Rcd 388, 420 fn 151 (1995).sж The trueЉup data is intended to indicate real, not д …S€ У-дprojected data.ж3Ъ€ Zз*д {OzД-д УУId.ФФ3ж This policy is reflected in the instructions accompanying FCC Form 1240.жaЪ€ ьз*д {O Д-д УУSeeФФ FCC Form 1240 Instructions for Timing at 3Љ4.aж д …S0Д- ` ШRдСxС11.С` `  С Based on this instruction and considering evidence in the filing, reasonable time for д АxMдclosing accounts and completing forms, we adjusted Operator's trueЉup period from 12 months to 11 д …SрУ- Аxудmonths.ж^Шр~з*д yOўД-д Operator signed this FCC Form 1240 on April 30, 1997.^ж This required that we adjust Worksheet 1 accordingly by disallowing one month of inflation д АxФдon Worksheet 1. As a result, the trueЉup inflation factor in Module C, Line C1 (Inflation Factor for TrueЊд АxХдUp Period) for the 11 month period was corrected to 1.0202. We also adjusted Line C3 (Current FCC д АxѓдInflation Factor) to 1.0177. We also adjusted Worksheet 2 Caps Method accordingly. As a result, Module F, Line F9 (MPR for TrueЉUp Period 1) was corrected to $12.7747. д …S№Д- ` Ш$дСxС12.С` `  СThe reduction in the length of the trueЉup period also results in a reduction in Line H2 д АxЈд(Revenue From MPR for Period 1). This results in a corresponding reduction in Line I8 (TrueЉUp д Аx/дSegment for the Projected Period). We also adjusted Line A1 (Current Maximum Permitted Rate) to д Аxдд$12.2466 to conform to Operator's previous revised FCC Form 1240. These adjustments resulted in a д Аxђдrevised CPST MPR of $14.28. Because Operator's actual CPST rate of $14.69, effective June 1, 1997, exceeds its revised MPR of $14.28, we find Operator's actual CPST rate of $14.69, to be unreasonable. д …SиД- ` ШчдСxС13.С` `  СTo the extent that external costs from the one month disallowed from Operator's trueЉup д …SАУ- АxzдperiodжTШАз*д yO^%Д-д As found on Operator's Worksheets 7 and 8.Tж have been averaged into the rates charged in the twelve months allowed in Operator's trueЉup д Аxдperiod, and have not been removed by our adjustments, we will order Operator to make a monthЉbyЉmonth д Аxђдaccounting of such external costs. Such accounting shall allow a comparison of the actual external costsд"`žˆ,p(p(88рс"д д Аxгдfor the permitted elevenЉmonth trueЉup period with the recovery of external costs afforded by the external д Аxудcost segment for that period as calculated on Worksheet 7. We will order Operator to incorporate this accounting report into its refund plan and refund any over-recovery, plus interest, to subscribers. СxС д …S`Д- ` Ш_дСxС14.С` `  СUpon review of Operator's FCC Form 1240 for the projected period June 1, 1998 through д АxyдMay 31, 1999, in the community referenced above, we find that Operator has not correctly calculated its д АxђдCPST MPR. We adjusted Line A1 (Current Maximum Permitted Rate) to $14.2767, Line D6 (Current д АxЖдTrueЉUp Segment) to $0.3009, Line D7 (Current Inflation Segment) to $0.1140 and Line F8 (TrueЉUp д Аx=дSegment for TrueЉUp Period 1) to $0.4272, to conform with the previous revised FCC Form 1240. We д АxХдrevised Worksheet 1 (TrueЉUp Period Inflation) which adjusted Line C1 (Inflation Factor for TrueЉUp д …SpУ- АxёдPeriod 1) to 1.0105.жъ@pз*д yOи Д- АxГд These findings are based solely on the representations of Operator. Should information come to our attention д АxYдthat these representations were materially inaccurate, we reserve the right to take appropriate action. This Order is д Аxдnot to be construed as a finding that we have accepted as correct any specific entry, explanation or argument made д Аxxдby any party to this proceeding not specifically addressed herein. Information regarding the specific adjustments д АxІдmade to Operator's FCC Forms can be found in the public files for the aboveЉreferenced community which are д Аxjдavailable in the Cable Services Bureau's public reference room, or through the Commission's copy contractor, д АxЅдInternational Transcription Services (ITS), 1231 20th Street N.W., Washington, DC, 20554, or by calling ITS at д yOPЅ-д(202) 857Љ3800.УУФФъж We also revised Line C5 (Current FCC Inflation Factor) to 1.0114. These revisions д Аx=дreduced Operator's MPR to $15.42 for its nonЉrebuild segment, for the projected period June 1, 1998 to д АxждMay 31, 1999. Because Operator's actual CPST rate, effective June 1, 1998, is $15.95, we find Operator's actual CPST rate in its nonЉbuild segment, effective June 1, 1998, to be unreasonable. СxС д …SЈ Д- ` ШидСxС15.С` `  СOperator's rate increase in the rebuild segment of the system reflects not only the annual д Аxyдincrease as reported on FCC Form 1240 for the nonЉrebuild segment of the system, but also the recovery д Аxудof costs for its network upgrade as reflected on FCC Form 1235 for the rebuild segment of the system. д АxЖдOperator elected to apply all of its FCC Form 1235 allowable basic service tier and CPST increases to д …SУ- Аxдits CPST MPR.ж3”аз*д {OxД- АxТд УУ ФФ УУФФConsistent with FCC Form 1235, Operator has elected to recover the total Monthly Network Upgrade AddЉon д {OBЅ-дthrough the CPST rate. УУSeeФФ Operator's revised FCC Form 1235 filed October 17, 1997, Part III, Lines 4 and 5.3ж Upon review of Operator's FCC Form 1235, dated July 23, 1998, for the rebuild д Аxzдsegment of the system of the community referenced above, we propose no adjustments to Operator's д Аxˆдfiling. This resulted in the basic service tier and CPST upgrade increase justified by Operator to be $4.30 ($1.50 for the basic service tier and $2.80 for the CPST). д …S@Д- ` ШКдСxС16.С` `  СWhen the FCC Form 1240 MPR of $15.42 is combined with the FCC Form 1235 MPR д Аxддof $4.30, the combined revised CPST MPR is $19.72. Operator was actually charging a combined rate д Аxудof $20.25 in the rebuild segment of the system. Therefore we find that the CPST rate of $20.25, in the rebuild segment of the system, effective June 1, 1998, to be unreasonable. д …SxД- ` ШчдСxС17.С` `  СAccordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д Аx˜дC.F.R. РР 0.321, that the CPST rate of $8.12 charged by Operator in the community referenced above, effective July 15, 1994, IS REASONABLE. д", ˆ,p(p(88>с"дŒд …SД- ` ШдСxС18.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д Аx˜дC.F.R. РР 0.321, that the CPST rate of $9.75 charged by Operator in the community referenced above, effective January 1, 1995, IS UNREASONABLE. д …S`Д- ` ШдСxС19.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д АxХдC.F.R. РР 0.321, that the CPST rate of $11.26 charged by Operator in the community referenced above, effective April 1, 1995, IS UNREASONABLE. д …SРД- ` ШдСxС20.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д АxХдC.F.R. РР 0.321, that the CPST rate of $11.25 charged by Operator in the community referenced above, effective November 4, 1995, IS UNREASONABLE. д …S Д- ` ШдСxС21.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д АxХдC.F.R. РР 0.321, that the CPST rate of $12.45 charged by Operator in the community referenced above, effective June 1, 1996, IS UNREASONABLE. д …S€ Д- ` ШдСxС22.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д АxХдC.F.R. РР 0.321, that the CPST rate of $14.69 charged by Operator in the community referenced above, effective June 1, 1997, IS UNREASONABLE. д …SрД- ` ШдСxС23.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д Аx/дC.F.R. РР 0.321, that the CPST rate of $15.95 charged by Operator in the nonЉrebuild segment of the system in the community referenced above, effective June 1, 1998, IS UNREASONABLE. д …S@Д- ` ШдСxС24.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д АxђдC.F.R. РР 0.321, that the CPST rate of $20.25 charged by Operator in the rebuild segment of the system in the community referenced above, effective June 1, 1998, IS UNREASONABLE. СxС д …S Д- ` ШчдСxС25.С` `  СIT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 д АxгдC.F.R. РР 76.961, that Operator shall refund to subscribers in the community referenced above that portion д АxЇдof the amount paid in excess of the maximum permitted CPST rate of $8.17 per month (plus franchise д …S(Д-дfees), plus interest to the date of the refund, for the period from January 1, 1995 to June 30, 1995.С(#(#XСУ УФ ФУ УФ ФУ УФ Ф д …SиД- ` ШчдСxС26.С` `  СIT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 д АxІдC.F.R. РР 76.961, that Operator shall refund to subscribers in the nonЉrebuild segment of the system in the д АxLдcommunity referenced above that portion of the amount paid in excess of the maximum permitted CPST д Аxyдrate of $15.42 per month (plus franchise fees), plus interest to the date of the refund, for the period from June 1, 1998 to the day before Operator implements the maximum permitted CPST rate of $15.42. д …Sш Д- ` ШчдСxС27.С` `  СIT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 д АxЦдC.F.R. РР 76.961, that Operator shall refund to subscribers in the rebuild segment of the community д Аxфдreferenced above that portion of the amount paid in excess of the maximum permitted CPST rate of д АxІд$19.72 per month (plus franchise fees), plus interest to the date of the refund, for the period from June 1, 1998 to the day before Operator implements the maximum permitted CPST rate of $19.72. д …S %Д-д У УФ ФСxСУ У д …Sј%Д- ` ШдФ ФСxС28.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д АxдC.F.R. РР 0.321, that Operator shall conduct a monthЉbyЉmonth accounting of its external costs fromд"а&ˆ,p(p(88n(с"д д АxёдOperator's twelveЉmonth trueЉup period as found on Operator's Worksheets in its FCC Form 1240 for the д Аxˆдprojected period June 1, 1997 to May 31, 1998 and that Operator shall file, within 30 days of the release д Аxддof this Order, a report detailing the overЉrecovery of external costs, plus interest, with the Chief, Cable Services Bureau. д …S8Д- ` ШЋдСxС29.С` `  С IT IS FURTHER ORDERED, that Operator shall promptly determine the overcharges д Аxдto CPST subscribers for the stated periods, including any over-recovery as detailed in its accounting д Аx=дreport, and shall file, within 30 days of the release of this Order, a report with the Chief, Cable Services д Аx дBureau, stating the cumulative refund amounts so determined (including franchise fees and interest), д Аxдdescribing the calculation thereof, and describing its plan to implement the refund within 60 days of the Commission approval of the plan. д …S Д- ` ШдСxС30.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д АxzдC.F.R. РР 0.321, that Operator take into account our FCC Form 1240 adjustments when calculating its д …Sа Д-дmaximum permitted rate and performing the trueЉup calculation on its next FCC Form 1240.Са а 0С д …S€ Д- ` ШдСxС31.С` `  СIT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 д АxдC.F.R. Section 0.321, that the complaints referenced herein against the rates charged by Operator in the communities referenced above ARE GRANTED. д …SрД-дУ УФ ФУ УФ Фа АААА аааXА` И hРpШ xа (#€%и'0*ˆ,р.813ш5@8˜:№