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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 ) ) TCA Cable Partners . ) CUID No. AR0037 (Fayetteville) d/b/a TCA Cable TV ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) and ) Petition for Reconsideration ) ORDER ON RECONSIDERATION AND RATE ORDER Adopted: December 8, 1998 Released: December 11, 1998 By the Deputy 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 an order resolving earlier complaints against Operator's CPST rates ("Prior Order"). Operator has attempted to justify its CPST rates through a benchmark showing on FCC Forms 393, 1200 and 1210. On December 20, 1996, Operator filed a timely Petition for Reconsideration of our Prior Order ("Petition") as well as a Petition for Stay Pending Reconsideration. Because we are addressing Operator's Petition for Reconsideration, we will deny Operator's Petition for Stay. In this Order, we address Operator's Petition and the reasonableness of Operator's April 1, 1998 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. The Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act"), and our rules implementing the 1992 Cable Act, required the Commission to review CPST rates upon the filing of a valid complaint by a subscriber or local franchise authority ("LFA"). If the Commission finds the 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, requires that complaints against 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. The Commission's original rate regulations took effect on September 1, 1993. The Commission revised its rate regulations effective May 15, 1994. Operators with valid CPST complaints filed against them prior to May 15, 1994, were required to demonstrate that their CPST rates were in compliance with the Commission's initial rules from the time the complaint was filed through May 14, 1994, and that their prices were in compliance with the revised rules from May 15, 1994 forward. Operators attempting to justify their prices for the period prior to May 15, 1994, through a benchmark showing had to complete and file FCC Form 393. 4. Cable operators attempting to justify rates for the period beginning May 15, 1994 through a benchmark showing must use 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 CPST 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. 5. The LFA for the franchise area referenced above filed a complaint with the Commission on September 24, 1998 against Operator's April 1, 1998 CPST rate increase from $17.36 to $18.95. 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 June 22, 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. 6. In its Petition, Operator alleges that the Bureau's adjustment of equipment revenue in the Prior Order on FCC Form 1200 Line G5 (Total Equipment Revenue as of 9/30/92) was incorrect because it ignored the difference between the instructions of FCC Form 393 and FCC Form 1200. In our Prior Order, we adjusted Operator's full reduction rate (Module G, Line G5) on its FCC Form 1200 to reflect September 30, 1992 equipment revenue and franchise fee figures reported in the revised FCC Form 393. Specifically, we changed Line G5 from $83,792.00 to $65,703.00. 7. The instructions for FCC Form 1200, Line G5 require the entry of equipment revenue information "for the last whole monthly billing period ending on or before September 30, 1992." In contrast the relevant instructions for FCC Form 393 direct cable operators to calculate their "monthly average equipment revenue [using] total revenues . . . earned over the last fiscal year for the community unit . . . ." Operator argues that the FCC Form 1200 requires equipment revenue information from a particular month, while the FCC Form 393 requires an annual monthly average of equipment revenue. Therefore, Operator contends that it correctly entered September 1992 equipment revenue information on Line G5 of its FCC Form 1200, which the Bureau replaced with average annual equipment revenues derived from FCC Form 393. 8. Upon consideration of Operator's Petition with respect to the adjustment of equipment revenue on Line G5 of FCC Form 1200, we find that Operator correctly followed the FCC Form 1200 instructions. Accordingly, we will grant Operator's Petition with respect to this issue and permit Operator to use the equipment revenue information that it entered on Line G5 of its FCC Form 1200. 9. In its Petition, Operator challenges the Prior Order for failing to apply the special waiver of the Commission's rule 47 C.F.R.  76.922 (d)(3)(iii) for the addition of the FX channel. On April 19, 1994, the Commission issued a special waiver ("Waiver") for the launch of the FX channel. Operator added the FX channel to its CPST channel line-up on June 1, 1994. The Waiver permits Operators to include in its maximum permitted rate ("MPR") the costs incurred due to the addition of the FX channel prior to July 1, 1994. This is effective June 1, 1994, the day Operator added the FX Channel. Because we find that our action in our Prior Order and Erratum is inconsistent with the Commission's Waiver, we find Operator's argument to be valid. We therefore grant Operator's Petition on this issue. 10. Operator also alleges error in the Bureau's failure to use the correct CPST MPR in its Prior Order Erratum. The Bureau stated a CPST MPR of $12.77 in paragraph 9 and a CPST MPR of $12.69 in the Ordering Clause, paragraph 16. We find Operator's argument to be valid. Therefore, we grant Operator's Petition on this issue. 11. Operator contends that the Prior Order Erratum erroneously states that Operator did not elect the refund liability deferral period from May 15, 1994 through July 14, 1994. Operator provides a letter dated May 24, 1994, in which Operator advised the Commission that it had elected, as provided in the Commission's rules, to take advantage of the refund liability deferral period from May 15, 1994 through July 13, 1994. We accept Operator's argument and therefore grant Operator's Petition on this issue. 12. Finally, Operator argues that it was entitled to the CPST MPR of $13.22 on its amended FCC Form 393 filed July 8, 1994, rather than the CPST MPR of $13.18 on its FCC Form 393 filed November 1993. Operator contends that the Bureau incorrectly reviewed Operator's November 1993 FCC Form 393 filing rather than Operator's amended July 8, 1994 FCC Form 393 filing. 13. Upon review of Operator's amended FCC Form 393 filed July 8, 1994, we find that Operator has not correctly calculated its MPR. We adjusted Worksheet 1, Line 121, Part II (Benchmark Per Channel Rate) to $0.6027 rather than Operator's $0.6042. We also adjusted Worksheet 1, Line 104, Part II (Equipment Revenue Per Month) to $25,779 rather than Operator's $65,703. These adjustments reduced Operator's CPST MPR to $12.97, effective September 1, 1993. Because Operator's actual CPST rate of $13.22, effective September 1, 1993, exceeds its MPR, we find Operator's actual CPST rate of $13.22 to be unreasonable. Consequently, we deny Operator's Petition with respect to this issue. 14. Upon review of Operator's FCC Form 1200 filed August 12, 1994 to justify Operator's rates beginning July 15, 1994, we find that Operator has not correctly calculated its MPR. We adjusted Line A6 (Monthly Charge per Tier as of 3/31/94) to $12.97 to conform to Operator's previous revised FCC Form 393. The adjustments reduced Operator's CPST MPR to $12.70, effective May 15, 1994. Because Operator's actual CPST rate of $13.22, effective May 15, 1994, exceeds its MPR, we find Operator's actual CPST rate of $13.22, effective May 15, 1994, to be unreasonable. On June 1, 1994, Operator added the FX channel to its CPST which increased Operator's CPST MPR to $12.99, effective June 1, 1994 pursuant to the Waiver instructions. Because Operator's actual CPST rate of $13.22 continues to exceed its MPR of $12.99, we find Operator's actual CPST rate of $13.22, effective June 1, 1994, to be unreasonable. 15. Upon review of Operator's FCC Form 1210 covering the period April 1, 1994 to September 30, 1994, we find that Operator has not correctly calculated its MPR. We adjusted Line A2 [Full Reduction Rate per Tier (Previous)] to $12.6993 to conform to Operator's previous revised FCC Form 1200. We also adjusted Line B10 (Current Ext. Costs per Tier per Sub) to $2.5895 and Line B13 (Previous Ext. Costs per Tier per Sub) to $2.3222. We adjusted Line B15 (Net External Costs per Tier per Sub) to $0.2673. These adjustments reduced Operator's CPST MPR to $13.21, effective December 1, 1994. Because Operator's actual CPST rate of $13.57, effective December 1, 1994, exceeds its MPR, we find Operator's actual CPST rate of $13.57 effective December 1, 1994 to be unreasonable. 16. Upon review of Operator's FCC Form 1210 covering the period January 1, 1995 to March 31, 1995, we find that Operator has not correctly calculated its MPR. We adjusted Line A2 (Permitted Charge) to $13.2110 to conform to Operator's previous revised FCC Form 1210. This adjustment reduced Operator's CPST MPR to $14.65, effective January 1, 1995. Because Operator's actual CPST rate of $15.01 exceeds its MPR, we find Operator's actual CPST rate of $15.01, effective January 1, 1995 to be unreasonable. 17. Upon review of Operator's FCC Form 1210 covering the period October 1, 1995 to December 31, 1995, we find that Operator has not correctly calculated its MPR. We adjusted Line A2 (Permitted Charge) to $14.6501 to conform to Operator's previous revised FCC Form 1210. We adjusted Lines C14 (Previous Ext. Costs per Tier per Sub) and C15 (Adjusted Prev. Ext. Costs) to $2.5895 to conform to Operator's previous revised FCC Form 1210. These adjustments reduced Operator's CPST MPR to $16.89, effective January 1, 1996. Because Operator's actual CPST rate of $15.01 did not exceed its MPR, we find Operator's actual CPST rate of $15.01, effective January 1, 1996 to be reasonable. On June 1, 1996, Operator increased its CPST rate to $17.36. Because Operator's actual CPST rate of $17.36 exceeds its MPR, we find Operator's actual CPST rate of $17.36, effective June 1, 1996 to be unreasonable. 18. Upon review of Operator's FCC Form 1210 covering the period January 1, 1998 to March 31, 1998, we find that Operator has not correctly calculated its MPR. We adjusted Line A2 (Permitted Charge) to $16.8891 to conform to Operator's previous revised FCC Form 1210. We disallowed Operator's $0.04 adjustment on Line G7 (Per Channel Adjustment per Tier) under the "markup method" because Operator elected the "CAPS method" in its previous FCC 1210s. These adjustments reduced Operator's CPST MPR to $18.78, effective April 1, 1998. Because Operator's actual CPST rate of $18.95 exceeds its MPR, we find Operator's actual CPST rate of $18.95, effective April 1, 1998 to be unreasonable. 19. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R. Section 1.106, that the Petition for Reconsideration filed by Operator IS GRANTED IN PART AND DENIED IN PART TO THE EXTENT INDICATED HEREIN. 20. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that In the Matter of TCA Cable TV, 11 FCC Rcd 15024 (1996) and Erratum (released November 27, 1996) IS VACATED IN PART AND AFFIRMED IN PART TO THE EXTENT INDICATED HEREIN. 21. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator's Petition for Stay of In the Matter of TCA Cable TV, 11 FCC Rcd 15024 (1996) and Erratum (released November 27, 1996) IS DENIED AS MOOT. 22. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $13.22 charged by Operator in the community referenced above, effective September 1, 1993 IS UNREASONABLE. 23. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $13.22 charged by Operator in the community referenced above, effective June 1, 1994 IS UNREASONABLE. 24. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $13.29 charged by Operator in the community referenced above, effective July 15, 1994 IS UNREASONABLE. 25. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $13.57 charged by Operator in the community referenced above, effective December 1, 1994, IS UNREASONABLE. 26. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $15.01 charged by Operator in the community referenced above, effective January 1, 1995, IS UNREASONABLE. 27. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $15.01 charged by Operator in the community referenced above, effective January 1, 1996, IS REASONABLE. 28. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $17.36 charged by Operator in the community referenced above, effective June 1, 1996, IS UNREASONABLE. 29. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $18.95 charged by Operator in the community referenced above, effective April 1, 1998, IS UNREASONABLE. 30. 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 community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $12.97 per month (plus franchise fees), plus interest to the date of the refund, for the period from September 13, 1993 to May 31, 1994. 31. 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 community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $12.99 per month (plus franchise fees), plus interest to the date of the refund, for the period from June 1, 1994 to July 14, 1994. 32. 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 community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $12.99 per month (plus franchise fees), plus interest to the date of the refund, for the period from July 15, 1994 to September 30, 1994. 33. 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 community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $13.21 per month (plus franchise fees), plus interest to the date of the refund, for the period from October 1, 1994 to November 30, 1994. 34. 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 community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $13.21 per month (plus franchise fees), plus interest to the date of the refund, for the period from December 1, 1994 to December 31, 1994. 35. 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 community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $14.65 per month (plus franchise fees), plus interest to the date of the refund, for the period from January 1, 1995 to December 31, 1995. 36. 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 community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $16.89 per month (plus franchise fees), plus interest to the date of the refund, for the period from June 1, 1996 to March 31, 1998. 37. 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 community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $18.78 per month (plus franchise fees), plus interest to the date of the refund, for the period April 1, 1998 through the day before Operator implements the maximum permitted CPST rate of $18.78. 38. 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. 39. 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 1210 adjustments on its next FCC Form 1210. 40. 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 William H. Johnson Deputy Chief, Cable Services Bureau