******************************************************** 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 ) ) Cablevision of Lake Travis d/b/a ) CUID No. TX0323 (Lakeway) J.R. King Enterprises, Inc. ) ) Complaint Regarding Cable Programming ) Services Tier and Refund Plan ) DISMISSAL ORDER AND REFUND PLAN ORDER Adopted: September 21, 1999 Released: September 23, 1999 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a refund plan ("Refund Plan") filed by the above-referenced operator ("Operator") pursuant to our order, In the Matter of Cablevision of Lake Travis ("Prior Order"). On May 19, 1995, we released our Prior Order concerning Operator's cable programming services tier ("CPST") rates in the community referenced above, effective October 12, 1993 through May 14, 1994. In our Prior Order, we stated that our findings "do not in any way prejudge the reasonableness of the price for CPS service after May 14, 1994 under our new rate regulations." We now dismiss the complaint against the rates that Operator was charging for its CPST in the community referenced above, effective May 15, 1994. We have determined that in the relevant franchise area the cable operator provides cable service to fewer than 50,000 subscribers and that Operator fits the definition of a "small cable operator" as defined in Section 623(m)(2) of the Communications Act of 1934, as amended ("Communications Act") and the Commission's rules, effective May 15, 1994. 2. Section 623(c) of the Communications Act authorizes the Federal Communications Commission ("Commission"), upon receipt of a valid complaint, to review the CPST rates of cable systems not subject to effective competition to ensure that the rates charged are not unreasonable and to determine maximum rates and any refund liability. Throughout the rate regulation process, special attention has been given to the needs of small cable systems. 3. In the Telecommunications Act of 1996 ("1996 Act"), Congress amended Section 623 of the Communications Act and redefined a small cable operator as one that "directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000." The Commission's rules currently define one percent of all cable subscribers in the United States as equivalent to 617,000 subscribers. The Commission's rules also define an affiliated entity as one which "holds a 20 percent or greater equity interest, passive or active, in the operator or exercises de jure or de facto control over the operator." In the 1996 Act, Congress determined that, effective February 8, 1996, the Commission shall not apply its CPST rate regulation rules, promulgated under Sections 623(a), (b) and (c) of the Communications Act, to a small cable operator in any franchise area in which that operator services 50,000 or fewer subscribers. 4. Our review reveals that Operator is a small cable company pursuant to Section 623(m)(2) of the Communications Act. Because Operator serves fewer than 50,000 subscribers in the franchise area in which the community listed above is located, the Operator's CPST rates in this community have effectively been deregulated by the 1996 Act. The pending complaint against the CPST rates, effective May 15, 1994, was filed prior to the passage of the 1996 Act. We conclude, given all of the circumstances presented including, in particular, the Congressional finding that post-1996 CPST rate regulation is unjustified for systems of this size, that there is no likelihood that adjudication of this complaint through to the end of the process would result in a net rate benefit to subscribers. To the contrary, this process would engage the resources of both the private parties involved and the Commission, while the system operator, in light of Section 623(m), could not effectively be restricted from offsetting any possible prior years' liability against a contemporaneous rate increase. Accordingly, the pending complaint against the CPST rates, effective May 15, 1994, will be dismissed. We find this course of action not only consistent with Section 623 but necessary to implement the Congressional intent embodied in the small company provisions of the 1996 Act and to avoid futile adjudications. 5. Upon review of Operator's Refund Plan filed pursuant to our Prior Order, we adjusted the interest calculation using the Internal Revenue Service rate of interest for tax over-payments for the appropriate time periods. Our adjustment resulted in a revised refund liability of $8,270.00. Operator is also required to calculate and refund the appropriate franchise fees for the refund period. We will approve Operator's Refund Plan provided Operator modifies its Refund Plan to the extent indicated herein. 6. Accordingly, IT IS ORDERED, pursuant to Sections 0.321 and 76.962 of the Commission's rules, 47 C.F.R. 0.321 and 76.962, that Operator's Refund Plan IS APPROVED provided Operator modifies its Refund Plan to the extent indicated herein, and IT IS ORDERED that Operator implement its refund plan within 60 days of the date of this Order. 7. IT IS FURTHER ORDERED, pursuant to Sections 0.321 and 76.962 of the Commission's rules, 47 C.F.R. 0.321 and 76.962, that Operator file a certificate of compliance with the Chief, Cable Services Bureau, within 90 days of the release of this Order certifying its compliance with this Order. 8. IT IS FURTHER ORDERED, pursuant to Sections 4(i), 4(j), 303(r) and 623(m) of the Communications Act of 1934, as amended, 47 U.S.C. Sections 154(i), 154(j), 303(r) and 543(m), that the complaint against the CPST rate charged by Operator in the community referenced above, effective May 15, 1994, IS DISMISSED. 9. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321. If any section, subsection, paragraph, sentence, clause or phrase of this Order is declared invalid for any reason, the remaining portions of this Order shall be severable from the invalid part and shall remain in full force and effect. FEDERAL COMMUNICATIONS COMMISSION Patrick A. Boateng, Acting Chief Financial Analysis and Compliance Division Cable Services Bureau