******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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. CA1441 (Montrose) Marcus Cable Associates, L.P. ) ) Complaint Regarding Cable Programming ) Services Tier Rates ) and ) Petition for Reconsideration ) ORDER ON RECONSIDERATION and RATE ORDER Adopted: February 22, 1999 Released: February 25, 1999 By the Deputy Chief, 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 community referenced above. We have previously resolved all prior complaints against Operator's CPST rates in the above- referenced community ("Prior Order"). On January 20, 1998, Operator filed a petition for reconsideration of our Prior Order ("Petition"). In this Order we will address Operator's Petition and 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. 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 adjust their rates on an annual basis using FCC Form 1240. 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. 4. 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 $19.50 to $21.34. The LFA verified that it received more than one subscriber complaint and 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. 5. In our Prior Order, upon review of Operator's FCC Form 1240 for the projected period June 1, 1997 through May 31, 1998, we treated Operator as an unregulated operator in accordance with Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Thirteenth Order on Reconsideration, MM Docket No. 92-266 ("Thirteenth Reconsideration Order") and the FCC Form 1240 Instructions. Because the filing was Operator's first FCC Form 1240 filing with the Commission, and Operator was not previously regulated by the Commission, Operator was not entitled to any true-up adjustment. We recalculated Operator's FCC Form 1240 without the true-up adjustment. This resulted in a revised maximum permitted rate ("MPR") of $13.57 rather than Operator's calculated MPR of $15.92. 6. In its Petition, Operator argues that it should be allowed to file an FCC Form 1240 for the projected period June 1, 1996 to May 31, 1997, that Operator completed but never submitted to the Commission, and an amended FCC Form 1240 for the period June 1, 1997 to May 31, 1998. In response to the complaint against Operator's June 1, 1997 CPST rate increase, Operator could have filed a complete FCC Form 1200 Series in support of its MPR, but instead filed only a single FCC Form 1240 for the period June 1, 1997 through May 31, 1998, on which it indicated that it had not previously filed an FCC Form 1240, FCC Form 1210 or FCC Form 1200 with the Commission. Once an operator has filed FCC Forms with the Commission, each of which requires a signed certification statement that the information on the FCC Form is true and correct, we are entitled to act upon that information. Moreover, once we have released an order concerning those FCC Forms, we cannot ordinarily allow an operator to amend those FCC Forms on appeal with information that should have been submitted in the original certification. In the present case, we will not allow Operator to file amended FCC Forms because we did not instruct Operator to make such filings. Absent such explicit instructions, we must reject the amended FCC Forms filed by Operator. Therefore, we affirm our Prior Order establishing refund liability based on Operator's June 1, 1997 CPST rate increases for its upgrade and non-upgrade areas. 7. Upon review of Operator's FCC Form 1240 for the projected period June 1, 1998 through May 31, 1999, we adjusted Operator's Line A1 (Current Maximum Permitted Rate), Module D (Calculating the Base Rate), Line F8 (Current True-Up Segment for True-Up Period 1) and Worksheet 2 (CAPS Method) to conform to Operator's previously revised FCC 1240 for the period June 1, 1997 through May 31, 1998. We adjusted the Inflation Factors at Worksheet 1 (True-Up Period Inflation) which adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0157. We also revised Line C5 (Current FCC Inflation Factor) to 1.0082. We adjusted Worksheet 8 (True-Up Rate Charged) to reflect the actual rate charged by Operator during the True-Up Period. Our adjustments resulted in a revised MPR of $15.09 for Operator's FCC Form 1240 for the projected period June 1, 1998 through May 31, 1999. 8. We have previously reviewed Operator's revised FCC Form 1235. We determined that Operator had justified an MPR for its network upgrade add on in the amount of $3.60. When Operator's monthly network add on is combined with its FCC Form 1240 MPR of $15.09, Operator has justified an MPR of $18.69 for its CPST, effective June 1, 1998. Because Operator's actual CPST rate of $21.34, effective June 1, 1998, exceeds its revised MPR, we find Operator's actual CPST rate of $21.34, effective June 1, 1998, to be unreasonable. 9. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R. 1.106, that Operator's Petition for Reconsideration IS DENIED. 10. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. 0.321, that In the Matter of Marcus Cable Associates, L.P., DA 97-2648, 12 FCC Rcd 21970 (1997), IS AFFIRMED. 11. 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 $21.34, charged by Operator in the franchise area referenced above, effective June 1, 1998, IS UNREASONABLE. 12. 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 $18.69 per month (plus franchise fees), plus interest to the date of the refund, for the period June 11, 1998 (the date of the first valid complaint) through the day before Operator implements the maximum permitted CPST rate of $18.69. 13. 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. 14. 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. 15. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the complaint referenced above IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau