******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word 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. VA0301 (Fairfax County) ) VA0318 (Vienna) Media General Cable of Fairfax County ) VA0326 (City of Fairfax) ) VA0327 (Falls Church) Petition for Reconsideration ) VA0346 (Herndon) and Refund Plan ) ORDER ON RECONSIDERATION AND REFUND PLAN ORDER Adopted: January 18, 2000 Released: January 20, 2000 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a Petition for Reconsideration ("Petition") filed by the above- referenced operator ("Operator") of our Order, DA 97-1657 ("Prior Order") which granted complaints filed against the rates charged by Operator for its cable programming services tier ("CPST") in the communities referenced above. On September 4, 1997, Operator filed its Petition along with a request for stay of our Prior Order and a refund plan ("Refund Plan") calculated in accordance with Operator's Petition. In this Order, we consider Operator's Petition as well as the request for stay and the Refund Plan. 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 Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") required the Commission to review CPST rates upon the filing of a valid complaint by a subscriber or local franchising authority ("LFA"). The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the legislation ("Interim Rules"), required that a complaint against the CPST rate be filed with the Commission by an LFA that has received more than one subscriber complaint. 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. 3. Operators must use the FCC Form 1200 series to justify rates for the period beginning May 15, 1994. Cable operators may also justify rate increases based on the addition and deletion of channels, changes in certain external costs and inflation, by filing 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. 4. In our Prior Order, upon review of Operator's FCC Form 1240 for the projected period August 1, 1996 through July 31, 1997 ("1996 1240"), we recalculated Operator's Worksheet 1, Line 113 in accordance with FCC Form 1240 instructions. The recalculation reduced Operator's inflation factor at Line C1 to 1.0056 rather than 1.0222. This adjustment resulted in a revised maximum permitted rate ("MPR") for the projected period of $21.21 rather than Operator's calculated MPR of $21.53. Because Operator's actual CPST rate of $21.53, effective August 1, 1996, exceeded its revised MPR, we found Operator's actual CPST rate of $21.53, effective August 1, 1996 through July 31, 1997, to be unreasonable. Upon review of Operator's FCC Form 1240 for the projected period August 1, 1997 through July 31, 1998 ("1997 1240"), we adjusted Operator's Line A1 to reflect Operator's MPR of $21.21 from its previous revised FCC Form 1240. We also adjusted Operator's Modules D, F and H to coincide with the previous revised FCC Form 1240, in accordance with the FCC Form 1240 instructions. These adjustments resulted in a revised MPR of $21.31 rather than Operator's calculated MPR of $21.92. Because Operator's actual CPST rate of $21.92, effective August 1, 1997, exceeded its revised MPR, we found Operator's actual CPST rate of $21.92, effective August 1, 1997, to be unreasonable. 5. In its Petition, Operator admits that it incorrectly calculated its inflation factor on Worksheet 1, Line 113 of its 1996 1240. However, Operator argues that it was entitled to recover previously unclaimed inflation for the period July 1, 1995 through December 31, 1995 in the 1996 1240. We will allow Operator to recover previously unclaimed inflation for this period because Operator is entitled to the inflation adjustment. Operator's additional requests for an increased Current Inflation Factor are without merit and are denied. We adjusted Operator's 1996 1240 to include the unclaimed inflation which resulted in a revised MPR of $21.43, effective August 1, 1996, rather than the rate of $21.21 prescribed in our Prior Order. Because Operator's actual CPST rate of $21.53 exceeds its revised MPR, we find Operator's actual CPST rate of $21.53 to be unreasonable, effective August 1, 1996 through July 31, 1997. We also recalculated the 1997 1240 to adjust Line A1 to $21.43. Our calculations resulted in a revised MPR of $21.74, effective August 1, 1997, rather than the rate of $21.31 prescribed in our Prior Order. Because Operator's actual CPST rate of $21.92 exceeds its revised MPR, we find Operator's actual CPST rate of $21.92 to be unreasonable, effective August 1, 1997 through July 31, 1998. We will modify our Prior Order to reflect the reduction in Operator's refund liability. Because Operator's Refund Plan was calculated incorrectly, we will not accept it and will require Operator to file a revised refund plan in accordance with this Order. Because we resolve Operator's Petition herein, we will dismiss Operator's request for stay as moot. 6. 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 In the Matter of Media General Cable of Fairfax County, DA 97-1657, 12 FCC Rcd 23590 (1997), IS GRANTED IN PART AND DENIED IN PART TO THE EXTENT INDICATED HEREIN. 7. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that In the Matter of Media General Cable of Fairfax County, DA 97-1657, 12 FCC Rcd 23590 (1997), IS AMENDED TO THE EXTENT INDICATED HEREIN. 8. IT IS FURTHER ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R. 1.106, that Operator's Petition for Stay IS DISMISSED AS MOOT. 9. IT IS FURTHER ORDERED, pursuant to Section 76.962 of the Commission's rules, 47 C.F.R.  76.962, that Operator's Refund Plan IS NOT ACCEPTED. 10. 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 $21.53, charged by Operator in the communities referenced above, effective August 1, 1996 through July 31, 1997, IS UNREASONABLE. 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 $21.92, charged by Operator in the communities referenced above, effective August 1, 1997 through July 31, 1998, IS UNREASONABLE. 12. 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 communities referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $21.43 per month (plus franchise fees), plus interest to the date of the refund, for the period April 1, 1997 through July 31, 1997. 13. 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 communities referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $21.74 per month (plus franchise fees), plus interest to the date of the refund, for the period August 1, 1997 through July 31, 1998. 14. 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. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau