******************************************************** 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 Nos. NJ0503 (Lakewood) ) NJ0531 (Howell) Cablevision of Monmouth, Inc. ) ) Complaints Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: February 22, 1999 Released: February 25, 1999 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the October 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the communities referenced above. We have previously resolved all prior complaints against Operator's CPST rates in the above-referenced communities ("Prior Order"). This Order addresses only the reasonableness of Operator's October 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. If the Commission finds a rate to be 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 CPST rates 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 areas referenced above filed a complaint with the Commission on January 12, 1999 against Operator's October 1, 1998 CPST rate increase from $17.60 to $19.74. The LFA verified that it received more than one subscriber complaint and that the first valid complaint was received by the LFA on October 8, 1998 for Howell (CUID No. NJ0531) and on October 12, 1998 for Lakewood (CUID No. NJ0503). The filing of a complete and timely LFA 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. 4. 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 alternatively justify adjustments to their rates on an annual basis using FCC Form 1240 to reflect reasonable certain and quantifiable changes in external cost, inflation, and the number of regulated channels that are projected for the twelve months following their rate change. Any incurred cost that is not projected may be accrued with interest and added to rates at a later time. 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. In response to the LFA's complaints, Operator filed an FCC Form 1240, for the projected period January 1, 1998 to December 31, 1998, and FCC Form 1235. We have already reviewed Operator's FCC Form 1240 in our Prior Order and found that Operator had justified a maximum permitted rate ("MPR") of $17.11. We have also previously reviewed Operator's FCC Form 1235 and found that Operator had justified a maximum permitted network upgrade add on in the amount of $4.79. Operator's MPR equals $17.11 plus $4.79 for a total upgrade MPR of $21.90. Because Operator's actual CPST rate of $19.74 does not exceed its MPR of $21.90, we find Operator's actual CPST rate of $19.74, effective October 1, 1998, to be reasonable. 6. 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 $19.74 charged by Operator in the communities referenced above, effective October 1, 1998, IS REASONABLE. 7. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint against Operator's October 1, 1998 CPST rate increase in the communities referenced above, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Patrick A. Boateng Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau