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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 ) ) CUID No. IN0001 (Columbus) Marcus Cable Associates, L.P. ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: February 11, 1999 Released: February 16, 1999 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the June 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the rebuild area of the community referenced above. All prior complaints against Operator's CPST rate increases have been resolved. This Order addresses only the reasonableness of Operator's June 1, 1998 CPST 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. The LFA for the franchise area referenced above filed a complaint with the Commission on November 30, 1998 against Operator's June 1, 1998 CPST rate increase from $13.36 to $17.77 in the rebuild area of the community referenced above. The LFA verified that it received more than one subscriber complaint and that the first valid complaint was received by the LFA on June 11, 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. 4. 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. Additionally, an Operator may file an FCC Form 1235 (Abbreviated Cost of Service Filing for Cable Network Upgrades). The FCC Form 1235 allows cable operators to justify rate increases related to significant capital expenditures used to improve rate- regulated services. This option is extended only in cases of significant upgrades requiring added capital investment, such as bandwidth capacity and conversion to fiber optics, and for system rebuilds. Normal improvements and expansions of service remain subject to the usual rate adjustments allowed by filing FCC Form 1210s, 1220s and 1240s. Cable operators that incur increases in operating costs associated with a significant network upgrade will be permitted to charge additional rates as justified by their FCC Form 1235 filing. 5. Upon review of Operator's FCC Form 1240 for the projected period June 1, 1998 through May 31, 1999, we adjusted the Inflation Factors on Operator's Worksheet 1 (True-Up Period Inflation) which adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0120. We also revised Line C5 (Current FCC Inflation Factor) to 1.0082. These revisions reduced Operator's maximum permitted rate ("MPR") to $13.45 for the projected period June 1, 1998 through May 31, 1999. 6. Our review of Operator's FCC Form 1235, dated November 1, 1998, reveals that Operator has certified that the upgrade meets the minimum technical requirements of FCC Form 1235 and that the upgrade has not been completed. Operator chose to allocate its Monthly Network Upgrade Add-on (Part III, Lines 4 and 5) to its CPST rate. Such an election is consistent with the FCC Form 1235 instructions. Upon review of Operator's FCC Form 1235, we find Operator has justified its MPR of $4.43 for its Monthly Network Add-on for its CPST. When Operator's Monthly Network Add-on is added to its FCC Form 1240 MPR of $13.45, Operator has justified an MPR of $17.88 for its CPST. Because Operator's actual CPST rate of $17.77, effective June 1, 1998, does not exceed its revised MPR, we find Operator's actual CPST rate of $17.77, effective June 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 the CPST rate of $17.77, charged by Operator in the rebuild area of the community referenced above, effective June 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 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. 9. 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 against the CPST rate charged by Operator in the rebuild area of the community referenced above IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Patrick A. Boateng, Acting Chief Financial Analysis and Compliance Division Cable Services Bureau