******************************************************** 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. CA0181 (LaCrescenta) 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 address Operator's Petition and the reasonableness of Operator's June 1, 1998 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 $21.60. 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 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, we ordered Operator to file a revised FCC Form 1240 for the projected period June 1, 1997 through May 31, 1998, which incorporated changes mandated by our Prior Order along with a month by month accounting of its external costs. Operator attached its revised FCC Form 1240 for the projected period June 1, 1997 through May 31, 1998 to its Petition and asked that we revise our Prior Order based on its filing. Because Operator filed its revised form at our request, we will accept and review its revised FCC Form 1240 for the projected period June 1, 1997 through May 31, 1998. 6. Upon review of Operator's revised FCC Form 1240 for the projected period June 1, 1997 through May 31, 1998, we find that Operator has justified its maximum permitted rate ("MPR") of $15.81, for the non-upgrade areas, effective June 1, 1997. Therefore, we will grant Operator's Petition. Because Operator's actual CPST rate of $16.46 for its non-upgrade area, effective June 1, 1997, exceeds its revised MPR, we find Operator's actual CPST rate of $16.46, effective June 1, 1997, to be unreasonable. When operator's FCC Form 1240 MPR of $15.81 is combined with its network upgrade add on in the amount of $3.03, approved by our Prior Order, Operator has justified an MPR of $18.84 for the upgrade areas, effective June 1, 1997. Because Operator's actual CPST rate of $19.50 for its upgrade areas, effective June 1, 1997, exceeds its revised MPR, we find Operator's actual CPST rate of $19.50, effective June 1, 1997, to be unreasonable. 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 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 $18.26 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 $18.26, Operator has justified an MPR of $21.86 for its CPST, effective June 1, 1998. Because Operator's actual CPST rate of $21.60, effective June 1, 1998, does not exceed its revised MPR, we find Operator's actual CPST rate of $21.60, effective June 1, 1998, to be reasonable. 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 GRANTED IN PART TO THE EXTENT INDICATED HEREIN. 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 97-2649, 12 FCC Rcd 21975 (1997), IS VACATED IN PART TO THE EXTENT INDICATED HEREIN. 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 $16.46, charged by Operator in the non-upgrade areas of the community referenced above, effective June 1, 1997 through May 31, 1998, IS UNREASONABLE. 12. 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 $19.50, charged by Operator in the upgrade areas of the community referenced above, effective June 1, 1997 through May 31, 1998, IS UNREASONABLE. 13. 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 $21.60, charged by Operator in the franchise area referenced above, effective June 1, 1998, IS REASONABLE. 14. 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 rates of $15.81 for the non-upgrade areas and $18.84 for the upgrade areas, per month (plus franchise fees), plus interest to the date of the refund, for the period from June 3, 1997 (the date of the first valid complaint) through May 31, 1998. 15. 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. 16. 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. 17. 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 CPST rates charged by Operator in the community referenced above, effective June 1, 1997 through May 31, 1998, IS GRANTED. 18. 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 CPST rates charged by Operator in the community referenced above, effective June 1, 1998, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau