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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 ) ) Suburban Cable TV, Inc. ) CUID No. PA1686 (Northampton) ) Complaint Regarding ) Cable Programming Services Tier Rates ) and ) Petition for Reconsideration ) ) ORDER ON RECONSIDERATION AND RATE ORDER Adopted: November 18, 1998 Released: November 20, 1998 By the Associate Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the April 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have previously issued orders resolving earlier complaints against Operator's rates. We issued an order on September 16, 1997, resolving complaints against Operator's rates May 15, 1994 through November 20, 1996 and against Operator's April 1, 1997 rate increase ("Prior Order"). On October 16, 1997, Operator filed a timely Petition for Further Reconsideration of our Prior Order ("Petition"). On October 17, 1997, Operator filed a timely Refund Plan pursuant to our Prior Order ("Refund Plan"). In this Order, we address Operator's Petition, Refund Plan and the reasonableness of Operator's April 1, 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. Our review of Operator's Refund Plan reveals that principal and interest attributable to the period November 8, 1993 to November 30, 1993 are understated by $169.78. Subject to Operator accruing this shortfall plus interest due between January 1, 1998 and the date refunds are issued, we approve Operator's refund plan. 4. The LFA for the franchise area referenced above filed a complaint with the Commission on August 27, 1998 against Operator's April 1, 1998 CPST rate increase from $16.65 (exclusive of franchise fees) to $18.95 (exclusive of franchise fees). 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 April 9, 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. 5. 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. 6. In our Prior Order, we made several adjustments to Operator's FCC Form 1240 for the projected period April 1, 1997 to March 31, 1998. The only issue in dispute in Operator's Petition is our adjustment of Module F, Line F8. We adjusted Line F8 (True-Up Segment for True-Up Period 1) to $1.14 to conform to Operator's previous revised FCC Form 1240 for the projected period April 1, 1996 to March 31, 1997. This adjustment, in addition to other revisions, not in contention in the Petition, resulted in a revised maximum permitted rate ("MPR") of $17.16 for the projected period. Because Operator's actual CPST rate of $16.65, did not exceed its MPR, we found Operator's actual CPST rate, effective April 1, 1997, to be reasonable. 7. In its Petition, Operator makes reference to the Instructions for FCC Form 1240 ("Instructions") and argues that the Bureau erred in adjusting Line F8 to $1.14 on Operator's FCC Form 1240 for the projected period. Operator contends that according to the Instructions the correct figure for Line F8 is $2.29. Operator states that if $2.29 was used for Line F8, Operator's CPST MPR would be $17.72. Operator requests that the Bureau correct the calculation on Line F8 and adjust Operator's CPST MPR for the projected period. 8. Upon review of Operator's FCC Form 1240 for the projected period April 1, 1997 to March 31, 1998, we find Operator's argument in its Petition to be valid. We therefore grant Operator's Petition. We corrected Line F8 to $2.29, to reflect the Instructions. This correction resulted in a revised CPST MPR of $17.72 for the projected period. Because Operator's actual CPST rate of $16.65 (exclusive of franchise fees), does not exceed its revised MPR of $17.72, we find Operator's actual CPST rate, effective April 1, 1997, to be reasonable. 9. Upon review of Operator's FCC Form 1240 for the projected period April 1, 1998 through March 31, 1999, we adjusted Line A1 (Current Maximum Permitted Rate) to $17.72 to conform to Operator's previous revised FCC Form 1240. We also adjusted Line D3 (Current Caps Method Segment) to $0.49 to coincide with Line I1 of Operator's prior revised FCC Form 1240. We also revised Line C5 (Current FCC Inflation Factor) to 1.0082. In addition, we adjusted Line F8 from $0.7229 to $1.2809 to conform to Operator's previous revised FCC Form 1240. Further, we adjusted Line I10 (Operator Selected Rate for the Projected Period) to $18.95 to reflect the actual rate in accordance with the rate card. These adjustments resulted in a revised CPST MPR of $18.08 rather than Operator's MPR of $18.59. Because Operator's actual CPST rate of $18.95 (exclusive of franchise fees), effective April 1, 1998, exceeds its revised MPR, we find Operator's actual CPST rate of $18.95 (exclusive of franchise fees) to be unreasonable. 10. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R.  1.106, that the Petition for Further Reconsideration filed by Operator is GRANTED. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R. Section 0.321, that Operator's Refund Plan IS APPROVED as modified and IT IS ORDERED, pursuant to Section 76.962 of the Commission's Rules, 47 C.F.R. Section 76.962, that Operator implement its refund plan within 60 days of the date of this Order. 12. IT IS FURTHER ORDERED, pursuant to Section 76.962 of the Commission's Rules, 47 C.F.R. Section 76.962, that Operator file a certificate of compliance with the Chief, Cable Services Bureau, within 90 days of the release of this Order certifying its compliance with this Order regarding Operator's Refund Plan. 13. IT IS FURTHER ORDERED, that In The Matter of Suburban Cable TV Co., Inc., 12 FCC Rcd 23862 (1997) IS VACATED IN PART AND AFFIRMED IN PART TO THE EXTENT INDICATED HEREIN. 14. 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 $16.65 (exclusive of franchise fees), charged by Operator in the franchise area referenced above, effective April 1, 1997, IS REASONABLE. 15. 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 $18.95 (exclusive of franchise fees), charged by Operator in the franchise area referenced above, effective April 1, 1998, IS UNREASONABLE. 16. 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 April 9, 1998 through the day before Operator implements the maximum permitted CPST rate of $18.08. 17. 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. 18. 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. 19. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint against the April 1, 1998 rate increase IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Marjorie Reed Greene Associate Chief, Cable Services Bureau