Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) CUID Nos. CA0251 (Woodland Hill) ) CA1208 (Topanga) Falcon Cablevision ) ) Complaint Regarding ) Cable Programming Services Tier ) ORDER Adopted: May 20, 1999 Released: May 21, 1999 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the October 31, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the communities referenced above. We have already issued an order in which we resolved all prior complaints against Operator's CPST rates in the communities referenced above ("Prior Order"). This Order addresses only the reasonableness of Operator's October 31, 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 areas referenced above filed a complaint with the Commission on March 22, 1999 against Operator's October 31, 1998 CPST rate increase from $7.17 to $9.32. The LFA verified that it received more than one subscriber complaint for each franchise area and that the first valid complaint was received by the LFA on November 2, 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 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. 5. Upon review of Operator's FCC Form 1240, for the projected period October 1, 1998 through September 30, 1999, we adjusted Line 202, Column 7 of Worksheet 2 (Caps Method, True-Up Period) to $0.76. We also adjusted Line 201, Column 7 of Operator's Worksheet 2 (Caps Method, Projected Period) to $0.87 to coincide with the revised Line 213, Column 7 of Worksheet 2 (Caps Method, True-Up Period). We also revised Line C5 (Current FCC Inflation Factor) to 1.0078. We adjusted Lines 804 through 812 of Worksheet 8 (True-Up Rate Charged) to $7.17 to reflect the actual rate charged by Operator during the True- Up Period. Our adjustments resulted in a revised maximum permitted rate ("MPR") of $9.27, effective October 1, 1998. Because Operator's actual CPST rate of $9.32, effective October 31, 1998, exceeds its revised MPR, we find Operator's actual CPST rate of $9.32 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. 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 $9.32, charged by Operator in the franchise areas referenced above, effective October 31, 1998, IS UNREASONABLE. 7. IT IS FURTHER ORDERED, pursuant to Section 0.32l 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 communities 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