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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 ) ) Cablevision Systems Corporation ) ) Resolution of ) Cable Programming Service ) Rate Complaints ) ORDER Adopted: August 6, 1998 Released: August 11, 1998 By the Commission: Chairman Kennard issuing a statement; Commissioner Furchtgott-Roth dissenting and issuing a statement. I. INTRODUCTION 1. The Commission has before it a Resolution submitted by Cablevision Systems Corporation ("Cablevision") that will resolve 280 complaints filed against Cablevision from September 1, 1993 through August 1, 1997, regarding the rates Cablevision charged for cable programming services. This Resolution includes complaints as to which the Bureau had issued orders that Cablevision or a local franchising authority challenged through petitions for reconsideration. Together these cases involve 128 franchise areas and approximately 1,160,000 current cable programming service subscribers. For the reasons stated below, and based upon our review of the record, we find that the Resolution we adopt today, including certain modifications discussed herein, serves the interests of Cablevision's subscribers by bringing finality and stability to its cable programming service tier (CPST") rates. Adoption of the Resolution, as amended herein, is consistent with the Commission's responsibility under the Cable Television Consumer and Competition Act of 1992 ("1992 Cable Act") to ensure that consumer interests are protected in the receipt of cable services and that regulated CPST rates are not unreasonable. II. BACKGROUND 2. The 1992 Cable Act gives the Commission and local franchising authorities jurisdiction over the cable programming and equipment rates of cable systems that do not face effective competition, as defined by that Act. Specifically, with respect to cable systems that are not subject to effective competition, the 1992 Cable Act provides that local franchising authorities may regulate the rates for the basic service tier ("BST") pursuant to regulations established by the Commission, and the Commission may regulate the rates for the CPSTs upon the filing of a complaint. The governing standard for reviewing CPST rates is that those rates not be unreasonable. In enacting the legislation, Congress stated its intent that the 1992 Cable Act be implemented to ensure that "consumer interests are protected in the receipt of cable services." 3. On March 25, 1998, the Commission released an order instructing the Bureau to serve the Resolution as proposed ("Proposed Resolution") on all local franchising authorities for the franchises covered by the Proposed Resolution and on any party other than a local franchising authority that filed a valid complaint. The order provided a 30-day comment period for comments on the proposal and a 15-day period for replies. The comment and reply comment period ended May 11, 1998. 4. A total of 213 copies of the Commission's Order and Proposed Resolution were served on complainants and representatives of local franchising authorities. During the comment period, the Commission received comments from four franchising authorities, letters from ten subscribers who had filed complaints, and a request for information from an additional complainant. Cablevision filed reply comments. One commenting complainant responded to Cablevision's reply comments. III. SUMMARY OF RATE RESOLUTION 5. The Resolution resolves all of the CPST cases filed against Cablevision through August 1, 1997. Complaints filed after August 1, 1997 have been resolved outside the Resolution through the 90-day review process established by the Telecommunications Act of 1996. The Resolution provides that Cablevision will refund $1,223,694.49 in the form of credits on subscribers' bills to approximately 300,000 subscribers in 60 franchise areas as provided in Exhibit 2 to the Resolution. This refund amount includes interest calculated through April 30, 1998. The Resolution further provides that, if refunds are not paid in the billing cycle beginning May 1, 1998, Cablevision will adjust the refunds to reflect additional interest from May 1, 1998 until the beginning of the billing cycle in which refunds are paid. 6. The Resolution provides that the rates in effect for most franchises on August 1, 1997 that were computed by the Commission's benchmark and price cap methodology complied with federal regulations. The Resolution provides that rates for Millstone, New Jersey and Dover, Port Chester, and North Haven, New York on August 1, 1997 required adjustment. Rate adjustments after August 1, 1997 in these communities will be based on the maximum permitted rates specified in the Resolution and refund liability will continue to accrue for the August 1, 1997 rates until the adjustment is made. For a few franchises, the Resolution provides that rates in effect earlier in 1997 complied with federal regulations. Rates based on 1997 cost-of-service showings are not included in the Resolution, and 1998 rate adjustments are not included. IV. DISCUSSION 7. As an initial matter, we find that the Commission has authority to approve the Proposed Resolution. The Communications Act of 1934 provides the Commission with wide discretion to resolve rate cases. Section 4(i) of the Communications Act authorizes the Commission to "perform any and all acts . . . not inconsistent with [the] Act, as may be necessary in the execution of its functions." Section 4(j) provides that the "Commission may conduct its proceedings in such manner as will best conduce to the proper dispatch of business and to the ends of justice. . . ." Our action in this case is fully consistent with the 1992 Cable Act and with Congress' dual objectives of simplifying cable rate regulation and protecting consumers. We have concluded in other recent proceedings that the Commission has authority to consider the Proposed Resolution and to determine, after review and consideration of comments, that the rates set forth in the Resolution are not unreasonable. 8. We find that the rates and refunds provided for in the Resolution are not unreasonable. The Bureau reviewed rate forms and issued rate orders for rates determined on FCC Form 393 for 70 of the community units ("CUIDs") in the Resolution, finding the rates either justified or unjustified. Cablevision challenged those findings adverse to Cablevision for 33 CUIDs. The Bureau independently analyzed Cablevision's arguments in its pleadings and determined that some, but not all, of the adjustments claimed by Cablevision were reasonable based on Cablevision's further explanations and in the context of a final resolution of the complaints against Cablevision. The Bureau reviewed each of Cablevision's later filings on Forms 1200 and 1210 for all 70 CUIDs. The Bureau also reviewed each of Cablevision's filings on Forms 393, 1200, and 1210 for CUIDs for which rate orders had not previously been issued. The Resolution takes into consideration certain offsets claimed by Cablevision within individual franchise areas and does not include refreshed inflation data for those CUIDs where Forms 393 had not previously been reviewed. 9. The offsets and use of unrefreshed inflation data agreed to here will facilitate the global resolution of the pending complaints against Cablevision and will bring refunds to subscribers without further litigation. Were the Commission to resolve the pending CPST complaints without the offsets and use of unrefreshed inflation data incorporated in the Resolution, Cablevision would be able to prolong the ultimate resolution of these matters by exhausting the administrative review procedures available before the Commission and by seeking review of the Commission's orders in a federal appeals court. Under the Resolution, Cablevision will not seek further review before the Commission or appellate review of the determinations in the Resolution, and it will issue its refunds expeditiously. 10. The courts have long recognized that regulatory agencies have broad discretion to choose among ratemaking methods and procedures in ratemaking determinations, provided that the resulting rates are within a range of reasonableness. The process of adjudicating each of the rate complaints individually and litigating those rulings through the courts -- a process likely to take several years -- would not benefit subscribers given that the Resolution provides for reasonable rates and refunds immediately. We believe that the refunds required by the Resolution strike an appropriate balance between maximizing the compensation due subscribers for past overcharges and minimizing delay and uncertainty in the payment of refunds. 11. To the extent that adoption of the Resolution requires waiver of any of our rules, or modifications to the information required on Commission forms, we find that such waiver or modification will ensure the expeditious resolution of a large number of rate complaints while protecting consumers' statutory interest in CPST rates that are not unreasonable. We recognize that our rules contemplate an adjudication of each CPST rate complaint pursuant to specific ratemaking standards. Contrary to the views expressed in the dissent, we do not see any indication that section 623(c)(1)(B)'s requirement that the Commission establish rate resolution procedures by regulation was intended by Congress to preclude the Commission from waiving those rate resolution procedures in appropriate circumstances. Indeed, our rules expressly provide for the waiver of any provision of our rules for good cause shown. As noted above, the Bureau has reviewed the rates and refunds for each CUID covered by the Resolution. To the extent that we diverge from these rules by adopting this Resolution, we find good cause to waive these rules pursuant to section 1.3 of our rules, because as further discussed herein, strict compliance with our rules would not serve the public interest under the circumstances before us. We find that a waiver furthers the purpose of the rules because the Resolution effectively achieves the objectives of the 1992 Cable Act by ensuring the expeditious resolution of all pending benchmark rate complaints regarding the affected systems while protecting consumers from unreasonable CPST rates. We further observe that the Commission's authority to resolve cases in an analogous manner has been affirmed in other contexts. 12. The process followed here balances the need to present a reasonable resolution of a myriad of contested rate complaints with a real opportunity for those interested to present their views. Although our standard procedures for the review of CPST rates do not include an opportunity for local franchising authorities, complainants, or others to participate in our decisionmaking process prior to the issuance of an initial order resolving the complaint that triggered our review, local franchising authorities and other interested parties were given a full and fair opportunity to participate in our deliberative process by submitting comments on the Proposed Resolution, which, by its terms, was not binding on any party prior to our adoption of it in this Order as a final Resolution. 13. No local franchising authority opposes the Proposed Resolution. The Massachusetts Office of Consumer Affairs, Department of Telecommunications and Energy, Cable Television Division ("Cable Television Division"), the franchising authority for 16 of the CUIDs in the Resolution, supports the resolution as "fair and reasonable" and "commend[s] the parties for their efforts to resolve these longstanding complaints." With respect to offsets, it notes it had been advised by Commission staff and Cablevision that Commission staff had requested information about BST undercharges used to offset equipment overcharges and that Cablevision had provided the information. Assuming that such information was accurately factored into the Commission's analysis of Massachusetts rate complaints, the Cable Television Division states that the Resolution "represents an appropriate resolution of these complaints." This offset information was factored into the Resolution analysis. For purposes of the Resolution, Cablevision was not credited with any BST undercharges previously used to offset equipment overcharges. 14. The State of New Jersey Board of Public Utilities ("Board"), the franchising authority for 37 of the CUIDs in the Resolution, generally supports the Proposed Resolution. However, it questions the omission of the Township of Millstone, New Jersey, about which it had filed a complaint with the Commission. It asks the Commission to include Millstone in the Resolution and adjust the refund amount accordingly. Cablevision agrees that Millstone is part of its Cablevision of Monmouth system, that the Resolution should be amended to include Millstone, and if refunds are due, that the refund amount in Exhibit 2 to the Proposed Resolution be adjusted accordingly. Millstone was inadvertently omitted from the list of systems included in the Resolution. After reviewing Cablevision's rate forms for Millstone, we conclude that the August 1, 1997 maximum permitted rate for Millstone should be $13.74 and that Cablevision owes a refund for Millstone of $13,500, including interest through April 30, 1998. Resolution paragraph 12(d) and Exhibits 1 and 2 have been adjusted accordingly. 15. The City of Westlake, Ohio "has no objection" to the Resolution. It "looks forward to finalization of this settlement so that subscribers can receive the refunds due." 16. The City of Euclid, Ohio has not objected to the result. However, it seeks amendment of the Proposed Resolution to delete language stating that Cablevision has followed the letter and spirit of the Commission's cable rate regulations and the 1992 Cable Act regarding the regulation of rates. It complains that it has had difficulty getting information from Cablevision relating to BST rates and, in particular, rates to be implemented in 1998, an allegation Cablevision disputes. Because the Resolution addresses only CPST rates within our jurisdiction, the disputed language is not intended to provide any commentary on the BST ratemaking process. Similar language has routinely been included in other CPST rate resolutions adopted by the Commission. The challenged language in paragraph 4 of the Resolution reflects the position of Cablevision only and is not a term of the Resolution. Moreover, the purpose of a resolution is to resolve rate complaints, pay refunds to subscribers, and set reasonable rates. The Resolution is an effort to do so in a manner that is both reasonable and fair to all parties. An admission of wrongdoing is not necessary to achieve this goal. 17. The City of Euclid approves of the language in the Proposed Resolution reserving a franchising authority's right to regulate the basic tier and associated equipment rates. It asks that this language be broadened to preserve its right to enforce compliance with any Commission orders that may be issued regarding pending matters outside the Proposed Resolution. The City is specifically concerned about the appeal of its benchmark order with respect to the calculation of gross revenues when determining franchise fees that was pending before the Commission and subsequently resolved. The Resolution before us is addressed only to CPST rate matters and has no effect on matters outside its scope. For this reason, we see no need to broaden the Resolution language. We clarify, however, that the City's rights with respect to calculating a cable operator's gross revenues for the purpose of collecting franchise fees are unaffected by the Resolution. 18. The Commission received letters from ten subscribers who had filed complaints. Some are supportive of the resolution process. Some of the commenting subscribers are concerned that Cablevision's overall rates are too high. Some question whether their complaints were addressed or whether they will be receiving refunds. One commenting subscriber believes that the overall refund level in the Resolution is too small. As described above, Cablevision's rates were reviewed pursuant to the Commission's rules governing the ratemaking process and calculated using the Commission's forms for computing maximum permitted rates. Although rates for some CUIDs exceeded maximum permitted rates at different times during the period covered by the Resolution, resulting in refund liability for those CUIDs as shown in Exhibit 2 to the Resolution, the only rates current on August 1, 1997 that were found to exceed maximum permitted rates were the rates for Millstone, New Jersey and Port Chester, Dover, and North Haven, New York. The Resolution requires appropriate rate adjustments for those communities as well as refunds. No refund liability was found for the Brookhaven or Huntington, New York CUIDs, which commenters asked about, because either the CPST or the combined BST/CPST rates were at or below the maximum permitted rates calculated using the Commission's rate forms during the period covered by the Resolution. 19. Some commenters raise matters not addressed in the Proposed Resolution. Four commenters raise concerns about rates charged for converter boxes. Because these rates and rates for other equipment are reviewed by local franchising authorities, they have not been reviewed as part of the Resolution. One commenter objects to Cablevision's packaging of a new channel of service in a way that requires a converter. Another objects generally to Cablevision's repackaging of programming. The Communications Act and the Commission's rules implementing the statute prescribe the minimum programming for the basic tier but, apart from that, leave the packaging of programming to the operator's discretion. The Resolution addresses rates for programming on the CPST but does not otherwise review program packaging. Three commenters express concerns about recent rate adjustments taken by Cablevision after August 1, 1997 that are not encompassed within, nor approved by, the Resolution. Finally, one commenter raises what appears to be a billing dispute, which is also outside the scope of the Resolution. V. CONCLUSION AND ORDERING CLAUSES 20. For the reasons discussed above, we conclude that it is in the public interest to adopt the Resolution as amended. 21. Accordingly, IT IS ORDERED that the Resolution attached to this Order as Attachment A IS ADOPTED AND INCORPORATED HEREIN. 22. IT IS FURTHER ORDERED that all rate complaints under the Commission's jurisdiction against Cablevision filed between September 1, 1993 and August 1, 1997 ARE GRANTED to the extent indicated herein and ARE DENIED in all other respects. 23. IT IS FURTHER ORDERED that all proceedings pending review before the Cable Services Bureau and the Commission with respect to rate complaints against the CPST rates of Cablevision Systems Corporation and which were filed between September 1993 and August 1, 1997, to the extent indicated herein, ARE RESOLVED. 24. IT IS FURTHER ORDERED that the orders issued by the Cable Services Bureau, as listed in Attachment B to this Resolution Order, with respect to CPST rate complaints against Cablevision Systems Corporation filed between September 1993 and August 1, 1997, to the extent indicated herein, ARE VACATED and ARE SUPERSEDED by this Resolution. 25. IT IS FURTHER ORDERED that a waiver of 47 C.F.R.  76.922 and 76.950-963, to the extent individual adjudication of CPST rate complaints is required thereby, IS GRANTED. 26. IT IS FURTHER ORDERED that the Cable Services Bureau IS GIVEN delegated authority to oversee implementation of this Resolution, as adopted. 27. IT IS FURTHER ORDERED that this Order IS EFFECTIVE upon adoption. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary ATTACHMENT A TERMS OF RESOLUTION I. Introduction 1. This Resolution finally resolves all Form 393, 1200 and 1210 cable programming services tier ("CPST") complaints pending as of August 1, 1997 against Cablevision Systems Corporation ("Cablevision") and its subsidiaries. II. Background 2. Complaints have been filed with the Federal Communications Commission ("Commission") pursuant to 47 C.F.R.  76.950, concerning the CPST rates charged by Cablevision in the franchises listed in Exhibit 1. Rate justifications were filed in response to such complaints. 3. The Commission's Cable Services Bureau (the "Bureau"), under delegated authority, has reviewed Cablevision's rate justifications pursuant to the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992) ("1992 Cable Act"), and the Commission's cable rate regulations. As a result of that review, the Bureau has determined that certain refunds are owed to subscribers. 4. Cablevision maintains that it has followed the letter and spirit of the Commission's cable rate regulations and the 1992 Cable Act in the rate justification filings it has submitted and that the rates paid by its CPST subscribers are not unreasonable. Notwithstanding this position, Cablevision and the Bureau propose to resolve all of Cablevision's CPST rates cases filed under FCC Form 393, 1200, and 1210, under the terms set forth below. III. Definitions 5. As used herein, the following definitions will apply: (a) "Billing Cycle" means the time period during which monthly bills are sent to subscribers, but in no event longer than 31 days. (b) "BST" means basic service tier as defined in 47 C.F.R.  76.901. (c) "CPST" means cable programming service tier as defined in 47 C.F.R.  76.901. (d) "Commission Rules" means all Commission rules currently in effect, as well as all subsequent clarifications, amendments, and additions thereto, including, but not limited to, changes initiated by the Commission or changes required by or made pursuant to changes in federal law. (e) "Current Rates" means the CPST rates charged by Cablevision as of August 1, 1997 in the franchises listed in Exhibit 1, excluding any CPST rate adjustment implemented in 1997 in any such franchises that is sought to be justified (in whole or in part) through a pending or future Form 1235 filing. (f) "Effective Date" means the date on which the Commission issues the Resolution Order approving this Resolution. (g) "Eligible Subscribers" means CPST subscribers of record to Cablevision's cable franchises listed in Exhibit 2 as of the date bills are issued reflecting Refunds. (h) "Form 393 Series" filings means Forms 393 filed by Cablevision with the Commission for the franchises listed on Exhibits 1 and 2. (i) "Form 1200 Series" filings means Forms 1200 and 1210 filed by Cablevision with the Commission for the franchises listed on Exhibits 1 and 2. (j) "Interest" means the Internal Revenue Service rate of interest for tax overpayments. (k) "Refund" means a credit on a subscriber's bills. (l) "Resolution Order" means an order issued by the Commission approving the terms of this Resolution and any modifications thereto. (m) "Non-Final Bureau Rate Order" means any Bureau rate order issued concerning the reasonableness of Cablevision's CPST rates in the franchises listed in Exhibit 1 for which a Petition for Reconsideration or Application for Review was filed by Cablevision or any other party. IV. Terms 6. Cablevision accepts the jurisdiction of the Commission over it and the subject matter of these rate resolutions for purposes of the Resolution Order approving these terms. 7. All of Cablevision's CPST rates cases involving the franchises listed in Exhibit 1 filed under FCC Forms 393, 1200, and 1210, for the period through August 1, 1997, are finally resolved under the terms provided herein. 8. Cablevision agrees that the terms contained in this Resolution shall be incorporated by reference in the Resolution Order. Assuming the adoption of these terms in the Resolution Order, Cablevision and the Commission will each actively defend the Resolution Order against any appeal of, or other legal challenge to, the Resolution Order by any third party. Cablevision and the Commission will reasonably cooperate in any such defense of these terms. 9. Assuming the adoption of these terms in the Resolution Order, Cablevision agrees that any violation of the Resolution Order approving these terms shall constitute a violation of a Commission Order, entitling the Commission to exercise any rights and remedies attendant to the enforcement of a Commission order. 10. These terms are for purposes of settlement only, and do not constitute an admission by Cablevision of any violation of, or failure to conform to, the 1992 Cable Act, the Commission's Rules, or any other applicable law, rule, or policy. 11. The Commission will not institute, on its own motion, any proceedings against Cablevision based on the information obtained during consideration of the Resolution. In addition, in the absence of additional facts, any allegations and other circumstances involved in consideration of this Resolution will not be used by any party against Cablevision with respect to any future proceeding. 12. In consideration for the resolution of Cablevision's CPST rate cases pending as of August 1, 1997, Cablevision hereby agrees to the following terms, conditions and procedures which will facilitate a fair and expeditious resolution of those matters in a manner that serves the public interest: (a) Cablevision will issue Refunds to the Eligible Subscribers in the amounts listed in Exhibit 2. The Refunds covering the Form 393 Series period issued for Eligible Subscribers in the New Jersey Franchises covered by DA 95-579, DA 95-682, DA 95-683, DA 95-684 and DA 95- 685 have been computed in accordance with the requirements of those Orders. All refunds to Eligible Subscribers will include applicable Interest through April 30, 1998. Refunds will be reflected as a one-time credit on subscriber bills. (b) Cablevision will provide Refunds to Eligible Subscribers during the May 1998 billing cycle or the first monthly billing cycle beginning 60 days after the Effective Date, whichever is later. If Refunds are not included in the Billing Cycle beginning May 1, 1998, Cablevision will adjust the Refunds to reflect additional Interest for the period from May 1, 1998 to the date on which the Billing Cycle that includes the Refunds begins. (c) Except as otherwise noted below in subparagraphs (d) and (e) and in the notes to Exhibit 1, the Resolution Order will find that in each of the Cablevision franchises listed in Exhibit 1 and covered by this Resolution, the Current Rate is deemed not unreasonable under the 1992 Cable Act and Commission Rules. (d) The Resolution Order will find that, as of August 1, 1997, the maximum permitted CPST rates for the franchises listed in this subparagraph are as follows: for Millstone, NJ (NJ0167), $13.74; for Port Chester, NY (NY1092), $13.26; for Dover, NY (NY0213), $13.40; and for North Haven, NY (NY0240), $13.86. Notwithstanding any other provision of this Resolution, any refund liability that may arise from the CPST rates currently charged in any of the franchises listed in this sub-paragraph (d) shall continue to accrue until such time as the present CPST rates are adjusted either (i) to the maximum-permitted levels set forth in this sub-paragraph or (ii) to reflect changes in external and other costs permitted under the Commission's rules, provided that the starting rate for any such adjustment will be the maximum-permitted CPST rates set forth in this sub-paragraph. The CPST rates currently charged in the franchises listed in this subparagraph shall be adjusted in accordance with the requirements of the preceding sentence (and any Refunds owed shall be issued) no later than the first monthly billing cycle beginning 60 days after the Effective Date. Nothing in this subparagraph shall be deemed to constitute a finding that the CPST rates currently charged in the franchises listed in this sub-paragraph are unreasonable. (e) Nothing in this Resolution shall be deemed to resolve the reasonableness of any rate increases implemented in 1997 in any of the franchises listed in Exhibit 1 that Cablevision has sought, or will seek, to justify (in whole or in part) through the filing of a FCC Form 1235. The Resolution Order shall deem not unreasonable the CPST rates in effect in any such franchises up until the implementation of any such 1997 Form 1235 rate increase. (f) As of the Effective Date, any Non-Final Bureau Rate Order concerning Cablevision's CPST rates in any of the franchises listed in Exhibit 1 is hereby vacated. The Resolution Order shall supersede any such vacated Bureau orders. (g) As of the Effective Date, the Petitions for Reconsideration and the Petitions for Stay of any Bureau orders filed by Cablevision with the Commission for any of the franchises listed in Exhibit 1 will be deemed withdrawn. (h) A copy of the Proposed Resolution was provided to: (i) each local franchising authority ("LFA") in the franchises listed in Exhibit 1 and (ii) to each party that filed a valid complaint on FCC Form 329 pursuant to 47 C.F.R.  76.950 in the franchises listed in Exhibit 1, for comment. (i) Except as provided in subparagraph (j) hereof, these terms may not be terminated or modified without the mutual written agreement of Cablevision and the Commission. The Commission's consent to any such modification shall be demonstrated by an order issued by the Bureau or, at the Commission's option, by the Commission itself. (j) Notwithstanding the terms hereof, Cablevision may avail itself of any applicable modifications of any law or regulation governing the CPST rates charged in any Cablevision franchise listed in Exhibit 1, including the adoption by the Commission of any regulation governing rates as applied to the cable industry generally. If Cablevision exercises this election, the terms contained herein shall be superseded upon the effective date of such law or regulation, except that Cablevision shall provide Refunds to Eligible Subscribers pursuant to the terms of this Resolution. 13. The Resolution Order shall affirmatively state that any and all waivers of the Commission's rules, and any modifications to Commission forms, necessary to effectuate these terms are deemed to be granted. Such waivers shall include Cablevision's right to adjust, if necessary, any Form 1240 rate filing to reflect the CPST rates approved by the Resolution Order without affecting the implementation date or annual cycle elected for Form 1240 filings. The Commission will not assert in any proceeding that Cablevision's compliance with the terms of this Resolution violates any Commission rule or order, and, in any proceeding before the Commission brought by a third party, a showing by Cablevision that it has complied with these terms shall constitute a defense to any claim that Cablevision's action in meeting the terms constitute a violation of any applicable Commission rule or order. Notwithstanding the foregoing, nothing in this Resolution should be construed to preempt the authority of a local franchising authority to regulate the basic service tier and related equipment rates, consistent with the Commission's regulations and orders. 14. Assuming the adoption of these terms in the Resolution Order, these terms shall become effective when the Commission issues the Resolution Order approving these terms. 15. If any provisions, clause, or part of this Resolution is invalidated, the remainder of this Resolution shall not be affected thereby and shall remain in effect: provided, however, that if such invalidation is material to this Resolution, Cablevision and the Commission shall attempt in good faith to reconstitute the Resolution in a form that is, to the maximum extent possible, consistent with the original intent of the Resolution. Cablevision Systems Corporation Franchises Covered By Resolution System Franchise CUID No. AR Cable/Massachusetts - Braintree Braintree MA 0217 AR Cable/Massachusetts -Framingham Framingham * MA 0094* AR Cable/Massachusetts - Lexington Bedford Lexington MA 0210 MA 0140 AR Cable/Massachusetts - Middlesex Maynard MA 0146 AR Cable/Massachusetts - Montachusetts Fitchburg Gardner Leominster Templeton Westminister MA 0015 MA 0016 MA 0017 MA 0127 MA 0230 AR Cable/Massachusetts - Nashoba Belmont Townsend Danvers MA 0316 MA 0296 MA 0279 AR Cable/Massachusetts - Norwood Norwood Westwood MA 0148 MA 0204 AR Cable/Massachusetts - Peabody Peabody MA 0119 AR Cable/Maine - Coastal Brewer * ME 0026* Cablevision of Michigan - Kalamazoo Kalamazoo, T Kalamazoo, C MI 0039 MI 0095 Cablevision of Newark - Newark Newark South Orange NJ 0476 NJ 0582 Cablevision of Monmouth - Jackson Jackson Township NJ 0346 Cablevision of Monmouth - Millstone Millstone NJ 0617 Cablevision of Monmouth - Lakewood Lakewood Howell NJ 0503 NJ 0531 Cablevision of Monmouth - Seaside Berkeley Township Dover Township Lavallette Seaside Heights Seaside Park NJ 0214 NJ 0213 NJ 0128 NJ 0127 NJ 0129 * Cablevision's August 1, 1997 CPST rate for this franchise is approved on condition that the rate for basic service in this franchise is not increased in a way that would result in combined rates for the BST and the CPST in excess of the combined maximum permitted level for both tiers as computed under the Commission's rate regulation rules. Cablevision of Monmouth - Wall Asbury Park Avon Belmar Bradley Beach Brielle Farmingdale Interlaken Manasquan Neptune Township Neptune City Ocean Township SeaGirt South Belmar Spring Lake Spring Lake Heights Wall Township NJ 0069 NJ 0277 NJ 0278 NJ 0279 NJ 0280 NJ 0483 NJ 0456 NJ 0281 NJ 0283 NJ 0282 NJ 0161 NJ 0284 NJ 0286 NJ 0285 NJ 0287 NJ 0288 Cablevision of Monmouth - Freehold Colts Neck Englishtown Freehold Township Manalapan Township Marlboro Township NJ 0556 NJ 0429 NJ 0428 NJ 0430 NJ 0557 Cablevision of Hudson County Hoboken North Bergen West New York Union City Weehawken NJ 0111 NJ 0083 NJ 0365 NJ 0366 NJ 0345 Cablevision of Westchester - Dutchess Dover Plains NY 0213 Cablevision of Westchester - Westchester Mount Kisco North Castle Bedford Port Chester Somers Yorktown NY 0427 NY 1056 NY 0426 NY 1092 NY 1066 NJ 0942 Cablevision of Westchester - Yonkers Yonkers NY 0638 AR Cable/New York - Rensselaer Cobleskill, T NY 0986 AR Cable/New York - Wellsville Wellsville, V NY 0019 Cablevision of Long Island - Great Neck Great Neck Great Neck Plaza North Hills Thomaston NY 1033 NY 1034 NY 1047 NY 1040 Cablevision of Long Island - Woodbury Babylon, T East Hills (Roslyn) East Rockaway Hempstead, T * Hempstead, V Huntington ** Islip *** Lindenhurst Long Beach Massapequa Park * North Hempstead Oyster Bay * Rockville Centre Westbury * NY 0423 NY 1032 NY 0849 NY 0454* NY 0772 NY 0392** NY 0379*** NY 0421 NY 0740 NY 0635* NY 0453 NY 0489* NY 0953 NY 0703* Cablevision of Long Island East End - Riverhead East Hampton, T Greenport, V Sag Harbor, V Southampton, T Southampton, V Southold **** NY 0149 NY 0176 NY 0187 NY 0190 NY 0192 NY 0188**** V Cable Long Island Brookhaven, T ***** Islip, T ***** North Haven NY 0237***** NY 0239***** NY 0240 Cablevision of Cleveland Cleveland, C OH 1632 Cablevision of the Midwest Bedford Heights Brook Park Chardon Cuyahoga Heights Hinckley Independence Lakewood North Royalton Richfield, V Brecksville Sheffield Lake Solon Valley View Westlake OH 0967 OH 0823 OH 1109 OH 1196 OH 1601 OH 0993 OH 1449 OH 0971 OH 1275 OH 1274 OH 1022 OH 0968 OH 1195 OH 0746 * CPST rate is approved through April 30, 1997. Current Rate (including Form 1235 component) was approved in DA 97-2512. ** CPST rate is approved through February 28, 1997. Current Rate was approved in DA 97-2403. *** CPST rate is approved through March 31, 1997. Current Rate was approved in DA 97-2283. **** CPST rate is approved through February 28, 1997. Current Rate was approved in DA 97-2422. ***** CPST rate is approved through February 28, 1997. Current Rate was approved in DA 97-2377. V Cable Ohio Bedford Chagrin Falls Cleveland Heights Euclid Gates Mills Granger Township Highland Heights Mayfield Heights Northfield Pepper Pike Richmond Heights Shaker Heights University Heights Willowick Woodmere Mayfield Village OH 0805 OH 0804 OH 0695 OH 0109 OH 1944 OH 1272 OH 0986 OH 0777 OH 0969 OH 1062 OH 0765 OH 0175 OH 0662 OH 0776 OH 0775 OH 0862 US Cable - Gulf Shores Gulf Shores AL 0247 US Cable - Lucedale Lucedale MS 0199 US Cable - Wiggins Wiggins * MS 0155* US Cable - Osceola Osceola MO 0603 * Cablevision's August 1, 1997 CPST rate for this franchise is approved on condition that the rate for basic service in this franchise is not increased in a way that would result in combined rates for the BST and the CPST in excess of the combined maximum permitted level for both tiers as computed under the Commission's rate regulation rules. Community (System) CUID TOTAL Fitchburg MA0015 $34,166.06 Leominster MA0017 $45,554.47 Belmont MA0316 $52,489.22 Brewer ME0026 $5,927.92 Lakewood, Howell NJ0503, NJ0531 $269,998.07 Jackson NJ0346 $45,909.78 Millstone NJ0617 $13,500.00 Seaside Heights: $47,088.09 Seaside Heights, Lavallette NJ0127, NJ0128 Seaside Park, Dover, Berkeley NJ0129, NJ0213, NJ0214 Freehold NJ0428 $58,017.63 Englishtown NJ0429 $2,007.59 Manalapan NJ0430 $64,343.31 Colts Neck NJ0556 $8,649.00 Marlboro NJ0557 $43,371.55 Wall: $188,490.10 Asbury Park, Ocean NJ0069, NJ0161 Avon by the Sea NJ0277 Belmar, Bradley Beach NJ0278, NJ0279 Brielle, Manasquan NJ0280, NJ0281 Neptune City, Neptune Village NJ0282, NJ0283 Sea Girt, Spring Lake NJ0284, NJ0285 South Belmar NJ0286 Spring Lake Heights, Wall NJ0287, NJ0288 Interlaken, Farmingdale NJ0456, NJ0483 Newark, South Orange NJ0476, NJ0582 $42,096.80 Community (System) CUID TOTAL Hudson: $84,232.65 North Bergen, Hoboken NJ0083, NJ0111 Weehawken, West New York, Union NJ0345, NJ0365, NJ0366 Dover NY0213 $7,051.93 North Haven NY0240 $9,479.91 Port Chester NY1092 $90,758.96 Westlake OH0746 $5,474.56 Shaker Heights OH0175 $8,409.00 Bedford Heights OH0967 $4,530.44 Solon OH0968 $9,454.67 Northfield Village OH0969 $5,513.06 North Royalton OH0971 $56,699.15 Independence OH0993 $10,202.10 Sheffield Lake OH1022 $1,753.95 Chardon Village OH1109 $600.80 Valley View OH1195 $345.42 Lakewood OH1449 $429.89 Granger Township OH1272 $472.11 Brecksville OH1274 $4,320.21 Richfield Village OH1275 $896.50 Hinckley OH1601 $674.29 Cuyahoga Heights OH1196 $785.30 TOTAL $1,223,694.49 ATTACHMENT B CABLE SERVICES BUREAU ORDERS VACATED BY RESOLUTION DA 95-484, V Cable, Inc., CUID OH0109, et al., 10 FCC Rcd 10027 (Cab. Serv. Bur. 1995) DA 95-485, V Cable, Inc., CUID OH0967, et al., 10 FCC Rcd 6059 (Cab. Serv. Bur. 1995) DA 95-486, V Cable, Inc., CUID OH0823, et al., 10 FCC Rcd 6062 (Cab. Serv. Bur. 1995) DA 95-487, V Cable, Inc., CUID OH0175, et al., 10 FCC Rcd 6065 (Cab. Serv. Bur. 1995) DA 95-501, V Cable, Inc., CUID OH0776, 10 FCC Rcd 4338 (Cab. Serv. Bur. 1995) DA 95-984, V Cable, Inc., CUID OH0968, 10 FCC Rcd 7337 (Cab. Serv. Bur. 1995) DA 95-1039, Cablevision of New York, CUID NY0190, 10 FCC Rcd 8680 (Cab. Serv. Bur. 1995) DA 95-1639, Cablevision of Riverview, Inc., CUID NJ0083, et al, 10 FCC Rcd 8297 (Cab. Serv. Bur. 1995) DA 95-1717, Cablevision Systems Corp., CUID OH1275, 10 FCC Rcd 8613 (Cab. Serv. Bur. 1995) DA 95-1917, V Cable, Inc., CUID OH1022, 10 FCC Rcd 9944 (Cab. Serv. Bur. 1995) DA 95-1918, Telerama, Inc., CUID OH0804, 10 FCC Rcd 9946 (Cab. Serv. Bur. 1995) DA 95-1986, Telerama, Inc., CUID OH0777, et al., 10 FCC Rcd 10440 (Cab. Serv. Bur. 1995) DA 95-2093, Cablevision of the Midwest, Inc., CUID OH1449, 10 FCC Rcd 11058 (Cab. Serv. Bur. 1995) DA 95-2096, A-R Cable Services, Inc., CUID MA0016, et al, 10 FCC Rcd 11439 (Cab. Serv. Bur. 1995) DA 95-2165, A-R Cable Services, Inc, CUID NY0019, 10 FCC Rcd 11567 (Cab. Serv. Bur. 1995) DA 95-2167, A-R Cable Services, Inc., CUID MA0140, 10 FCC Rcd 11534 (Cab. Serv. Bur. 1995) DA 95-2254, Cablevision of East Hampton, CUID NY0149, 10 FCC Rcd 12545 (Cab. Serv. Bur. 1995) Statement of Chairman William E. Kennard In the Matter of Cablevision Systems Corporation, Final Resolution of Cable Programming Service Rate Complaints The Order we adopt today, like others that have preceded it, resolves 280 complaints and provides approximately 300,000 cable subscribers in 60 communities with refunds for paying cable rates in excess of the maximum permitted rates allowable by the Commission. I believe that this settlement, like the others, is a fair way to address many of the over 17,000 complaints the Commission has received since Congress imposed rate regulation on cable operators in 1992. I also believe that the Order we approve today provided a fair process for those involved to participate. Most importantly, it gives tangible, final and prompt relief that otherwise would not likely be possible. Overall, the Commission already has provided similar relief to more than 4 million subscribers. The Commission has the responsibility to implement the law in the most efficient and effective way. It must do so pragmatically, recognizing that protracted processes undermine the purpose of the law. The Commission's standards for determining whether cable rates are reasonable have been upheld in court. Consumers, local governments, and cable operators have access to the format used by the Commission, as well as information obtained by the Commission, to ascertain a reasonable rate. Because the Commission's standards for determining a reasonable rate are publicly available, along with the rate information submitted by a cable operator as part of the resolution process, I believe that consumers and local governments had a meaningful ability to evaluate the proposed settlement. As the Commission's opinion explains, the law does not limit the ability of the Commission to calculate rates for a group or class, without lengthy adjudications, and to order refunds. I believe that a group resolution is appropriate where there is a single operator, its rate information is reviewed in the process, and it commits to the refunds and rate adjustments resulting from the process without further delay. Here, the Commission released and sought comment on the proposed settlement, as it has for all other settlements. Moreover, as a general matter, the overwhelming number of comments filed in response to rate resolution settlements support the proposals, and other comments actually have resulted in changes to the proposed settlements. Each of these views has been considered and addressed. The Order provides an immediate and significant remedy to consumers. Dissenting Statement of Commissioner Harold Furchtgott-Roth In the Matter of Cablevision Systems Corporation Resolution of Cable Programming Service Rate Complaints For the reasons that follow, I must respectfully dissent from the adoption of this "resolution" of cable programming service tier ("CPST") rate complaints. First, I do not believe that the Commission possesses statutory authority to resolve CPST rate complaints by way of this sort of negotiated global settlement. It is true, as the Commission observes, that section 4(i) of the Communications Act states that the Commission may "issue such orders, not inconsistent with this Act, as may be necessary in the execution of its functions," and that section 4(j) authorizes the Commission to "conduct its proceedings in such a manner as will best conduce to the proper dispatch of business and to the ends of justice." 47 U.S.C. sections 154(i)-(j). But the Communications Act includes another provision -- one that, unlike sections 4(i) and (j), speaks directly to the proper processing of CPST complaints. Unfortunately, the Commission fails to follow the dictates of this provision, which mandates that "the Commission shall, by regulation, establish . . . fair and expeditious procedures for the . . . resolution of complaints from any franchising authority . . . alleging that a rate for cable programming" is unreasonable. 47 U.S.C. section 623(c)(1)(B)(emphasis added). The simple fact, however, is that there are no Commission regulations that even arguably provide procedures for a negotiated settlement such as this; the requirements of this section therefore have not been met. Conversely, the regulations that the Commission has adopted to govern procedures for rate complaints, which, like the statute itself, generally contemplate individualized adjudication of complaints, see, e.g., id. section 623(c)(1)(A); 47 CFR section 76.957, have clearly not been observed here. The Commission's noncompliance with these regulations raises its own separate set of potential legal problems. See generally Service v. Dulles, 354 U.S.363, 388 (1957) (administrative agencies must follow their own regulations). In sum, given the existence of section 623, I simply do not understand how the Commission can assert that the use of this mechanism is "consistent with," supra at 3, the Communications Act. Absent conformity with duly promulgated regulations providing for the use of this procedure, this resolution violates section 623. The existence of section 623 also renders inapposite the caselaw cited by the Commission in support of its position. See supra at 5 & n. 12. To be sure, those cases hold that agencies generally possess broad discretion to choose between administrative processes. But none of those cases involve, as here, an agency's failure to conform with statutorily-prescribed limitations on that discretion. Cf. Heckler v. Chaney, 470 U.S. 821, 833 (1985) (presumption against unreviewability of agency non-enforcement decisions rebutted where "the substantive statute has provided guidelines for the agency to follow"). Indeed, the decisions cited by the Commission are expressly premised on the lack of any statutory language precluding the agency's choice of processess. See, e.g., In re Permian Rate Basin Area Rate Cases, 390 U.S. 747, 797 (1968) (stating, in affirming the Federal Power Commission's two-price rate structure for regulation of gas prices, "[w]e find no objection under the Natural Gas Act to this dual arrangment" and that "[n]othing in the purposes or history of the Act forbids the Commission to require different prices for different sales"). I understand the argument from utility for this sort of creative processing mechanism. If the Commission believes that rate "resolutions" are procedurally necessary, however, section 623 requires that we establish them by regulation, with notice and comment. Pragmatic considerations are undeniably important, but they cannot overcome the clear letter of the law. Our paramount duty is to implement the law as written by Congress and enacted by the President -- not based on our own conceptions of the most efficient and effective way to proceed. See Chevron v. Natural Resources Defense Council, 467 U.S. 837, 842-43 (1985) (where statutory language is clear, "that is the end of the matter," for the agency "must give effect to the unambigously expressed intent of Congress"). Second, I do not believe that the Commission has met its obligation under the Administrative Procedure Act to engage in reasoned decisionmaking. Cf. Koch Gateway Pipeline Co. v. FERC, 136 F.3d 810, 814 (D.C. Cir. 1998)("reasoned decisionmaking" requires "a process demonstrating the connection between the facts found and the choice made"). Although the item contains a generalized description of Commission processes for evaluating rates, see supra at 2-3 & n.6, , there is no substantive explanation as to how the Commission arrived at the aggregated refund amount for the sixty individual franchises that it actually approves by this order. There is no evidence that any of the mandatory factors set out in the statute, see 47 USC section 623(c)(2)(A)-(F), or the objective criteria in our regulations, see 47 CFR section 76.922, for measuring the reasonableness of rates were either considered or applied to the facts of this case. The Commission cannot simply declare, ipso facto, that the rates are reasonable or otherwise comply with federal law without explaining how it arrived at those conclusions. This lack of explanation causes me to suspect that the number at which the Commission and the cable company have arrived has little do with actual rate analysis but more to do with simple horse-trading. And due to this lack of explanation as to how general rate methodology was applied to the underlying complaints, it is extremely difficult for complaining parties to know whether they have been given a fair deal or even what the terms of that deal are, much less for a court to review the rationality of the refund determination. Third, I am deeply concerned that the complainants were not party to the negotiations that produced this "resolution." As I have made clear in other contexts, I believe that it is most unseemly, if not illegal, when regulated entities and regulators go behind closed doors to hammer out settlements. See, e.g., Third Order on Reconsideration, Revision of Universal Service Collection Amounts for 1998, FCC No. 97-411 (Dec. 16, 1997). I realize that the complainants and local franchising authorities had a chance to comment on the final agreement reached by the Commission and the cable company, but that participation came at the eleventh hour, after the terms of the resolution had already been finalized as between the company and the Commission. As the Commission has observed in related proceedings, the complainants and local franchise authorities were not deprived of any participation they would have been afforded in a traditional cable rate adjudication. That is not the point: under a traditional proceeding, municipalities or complainants may not have been able to participate beyond the point of submitting their complaint, but neither would the cable operator have been able to participate beyond the point of submitting their response. The problem for complaining parties is not that they did not get additional participation per se but that cable operators were afforded greater participation rights than they were. Whether or not this amounts to a violation of our ex parte rules, a process in which the heart of the negotiations are conducted without the participation of the complainants themselves is just not a fair process. I appreciate that these "resolutions" are efficient in that they dispose of large numbers of complaints in one fell swoop. The Commission saves itself a lot of time-consuming work, and the cable operator saves itself a lot of regulatory headaches and uncertainty. But it is the complainants, who were not a party to the negotiations that produced this resolution that seem to be getting the short end of this regulatory stick. However convenient global rate resolutions might be for the Commission and for cable companies, they do not appear to be within the bounds of governing law. I therefore cannot sanction their use. * * * In closing, I observe that the administrative burdens that drove the Commission to employ this creative but legally flawed method of resolving consumer complaints are the sorry and inevitable by-product of rate regulation itself. The better method for avoiding the administrative disaster that would be occasioned by individualized adjuducation of these backlogged complaints is simply to abolish rate regulation. That is, in part, precisely what Congress wisely recognized when it mandated that CPST regulation cease in March of 1999. When that time comes, we will be free of the administrative and regulatory demons that haunt this item.