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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. TX0805 (Fort Worth) Marcus Cable Associates, L.P. ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: May 4, 1999 Released: May 6, 1999 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the September 1, 1998 rate increase of the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in non-rebuild and rebuild areas of the community referenced above. We have already issued a rate order concerning Operator's prior CPST rates ("Prior Order"). In this Order we consider only the reasonableness of Operator's September 1, 1998 CPST rate increase for its non-rebuild and rebuild areas. 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 February 25, 1999 against Operator's September 1, 1998 CPST rate increase from $12.73 to $14.45 for its non-rebuild area and $18.63 to $21.09 for its rebuild area. The LFA verified that it received more than one subscriber complaint and the first valid complaint was received by the LFA on September 7, 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. 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. 5. Upon review of Operator's FCC Form 1240 for the projected period September 1, 1998 through August 31, 1999, 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 and Line C4 (Inflation Factor for True-Up Period 2) to 1.0023. We also revised Line C5 (Current FCC Inflation Factor) to 1.0100. Our adjustments resulted in a revised MPR of $14.41 for the non-rebuild area, for the projected period September 1, 1998 through August 31, 1999. Because Operator's actual CPST rate of $14.45 for the non-rebuild area, effective September 1, 1998, exceeds its revised MPR, we find Operator's actual CPST rate of $14.45 for the non- rebuild area, effective September 1, 1998, to be unreasonable. However, we determine the total refund liability to be de minimis, and it would not be in the public interest to order a refund. 6. Upon review of Operator's FCC Form 1235, we find Operator has justified an MPR of $8.10 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 $14.41, Operator has justified a total MPR of $22.51 for its CPST in its rebuild area. Because Operator's actual CPST rate of $21.09 for its rebuild area, effective September 1, 1998, does not exceed its revised MPR, we find Operator's actual CPST rate of $21.09 for its rebuild area, effective September 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 $14.45, charged by Operator in the non-rebuild area of the community referenced above, effective September 1, 1998, IS UNREASONABLE. 8. 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 $21.09, charged by Operator in the rebuild area of the community referenced above, effective September 1, 1998, IS REASONABLE. 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 above IS GRANTED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION Patrick A. Boateng Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau