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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 of Paterson, Inc. ) CUID No. NJ0566 (Paterson) ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: January 29, 1999 Released: February 2, 1999 By the Assistant Chief, Consumer Protection and Competition Division, Cable Services Bureau: 1. In this Order we consider a complaint against the August 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 resolved all prior complaints against Operator's CPST rates in the community referenced above ("Prior Order"). This Order addresses only the reasonableness of Operator's August 1, 1998 CPST 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. If the Commission finds the rate 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 ("Interim Rules"), require that complaints against the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received subscriber complaints. An LFA may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. 3. To justify rates for the period beginning May 15, 1994, operators must use the FCC Form 1200 series. Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210. 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. 4. The LFA for the franchise area referenced above filed a complaint with the Commission on November 16, 1998, against Operator's August 1, 1998 CPST rate increase from $16.85 to $19.45. The LFA verified that it received more than one subscriber complaint and the first valid complaint was received by the LFA on August 6, 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. The LFA also complained about Operator's rate increase from $1.95 to $3.95 for its New Product Tier ("NPT"). In Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket Nos. 92-266 and 93-215, Sixth Order on Reconsideration, Fifth Report and Order, and Seventh Notice of Proposed Rulemaking ("Going Forward Order"), the Commission established criteria for the creation of new product tiers, which cannot include channels taken from regulated tiers. The Commission concluded, however, that cable operators would be permitted to treat certain packages, in existence as of the Going Forward Order, as new product tiers, so long as such packages involve only a small number of migrated channels. Upon review, we find that Operator's NPT is a new product tier under our Going Forward Order and therefore not subject to regulation. 6. Upon review of Operator's FCC Form 1240 for the projected period August 1, 1997 to July 31, 1998, which updated Operator's maximum permitted rate ("MPR) approved by our Prior Order, we find that Operator has justified its calculated MPR of $16.85. Upon review of Operator's FCC Form 1240 for the projected period August 1, 1998 to July 31, 1999, we find that Operator has justified its calculated MPR of $19.45. Because Operator's actual CPST rate of $19.45, effective August 1, 1998, does not exceed its MPR for the projected period August 1, 1998 to July 31, 1999, we find Operator's actual CPST rate of $19.45, effective August 1, 1998, to be reasonable. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that CPST rate of $19.45, charged by Operator in the community referenced above, effective August 1, 1998, IS REASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint referenced herein IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Patrick A. Boateng, Assistant Chief Consumer Protection and Competition Division Cable Services Bureau