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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. KY0061 (Bell County) ) Marcus Cable Associates, LP ) ) Petition for Reconsideration ) and Complaint Regarding Cable Programming ) Services Tier Rates ) ORDER ON RECONSIDERATION AND RATE ORDER Adopted: January 26, 2000 Released: February 2, 2000 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the rates charged by the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We also consider a petition for reconsideration ("Petition") of our Order, DA 97-2426 ("Refund Plan Order"), filed with the Federal Communications Commission ("Commission") by Operator on December 19, 1997. In our Refund Plan Order, we did not accept a refund plan ("1995 Refund Plan") filed by Operator in response to our Order, DA 95- 676 ("Prior Order"), which found Operator's CPST rates in the above-referenced community to be unreasonable, effective November 15, 1993 through May 14, 1994. Operator also filed revised refund plans ("1997 Refund Plans") with its Petition. In this Order we address Operator's Petition, the 1997 Refund Plans, and the reasonableness of Operator's CPST rates beginning May 15, 1994. 2. Under the Communications Act, the 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"), and our rules in effect at the time the complaints were filed, 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"), require 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 valid complaint triggers an obligation upon the cable operator to file a justification of its CPST rates. If the Commission finds the 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 justify quarterly 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. Upon review of Operator's FCC Form 1200, we find Operator's calculated maximum permitted rate ("MPR") of $7.47 to be reasonable. Because Operator's actual CPST rate of $7.67 exceeds its MPR, we find Operator's actual CPST rate of $7.67 to be unreasonable, effective May 15, 1994. The Commission's rules provide for a refund liability deferral period, if timely requested by Operator, beginning May 15, 1994 and ending July 14, 1994, for any overcharges resulting from Operator's calculation of a new MPR on FCC Form 1200. Operator elected to defer refund liability pursuant to the Commission's rules. However, Operator will incur refund liability from May 15, 1994 through July 14, 1994 for any CPST rates charged above the FCC Form 393 MPR approved by the Commission. In our Prior Order, we found that Operator had justified an MPR of $7.55. Because Operator's actual CPST rate of $7.67, effective May 15, 1994 through July 14, 1994, exceeds its MPR of $7.55, we find Operator's actual CPST rate of $7.67, effective May 15, 1994 through July 14, 1994, to be unreasonable. Operator included this period in its 1997 Refund Plans, which we review herein. Because Operator's actual CPST rate of $7.67 exceeds its MPR of $7.47, effective July 15, 1994, we find Operator's actual CPST rate of $7.67, effective July 15, 1994 through January 31, 1995, to be unreasonable. Upon review of Operator's FCC Form 1210, updating its FCC Form 1200, we find Operator's actual CPST rate of $9.00, effective February 1, 1995, to be reasonable. 5. In its Petition, Operator argues that it should have been allowed to raise the issue of inter-tier offsets for the first time when it filed its 1995 Refund Plan. Because we reject Operator's request for offsets on substantive grounds, we find the procedural argument to be moot and decline to address it. In its Petition, Operator argues that it should be permitted to offset its past CPST overcharges with its past basic service tier ("BST") undercharges. This is essentially the same argument advanced by Operator with its 1995 Refund Plan. The Commission has addressed the issue of inter-tier offsets in Cencom Cable Income Partners ("Cencom"). In Cencom, the Commission determined that such inter-tier offsets are "inconsistent with the Commission's conclusion in the [Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992, Rate Regulation, MM Docket 92-266, Report and Order and Further Notice of Proposed Rulemaking] that cable operators should not balance low BST rates with CPST rates that exceed the maximum permitted rate for the tier." Therefore, we will not allow Operator to offset its CPST overcharges with its BST undercharges and we will deny Operator's Petition. 6. Although Operator included two 1997 Refund Plans with its Petition, we review only the 1997 Refund Plan which did not include inter-tier offsets. Our review of Operator's 1997 Refund Plan reveals that Operator failed to calculate its interest properly. Therefore, we have calculated the total refund amount due from Operator to the CPST subscribers in the community referenced above. Our calculations take into account Operator's overcharges to subscribers for the period beginning November 15, 1993 (the date the first valid complaint was filed with the Commission) through July 14, 1994, with interest calculated through January 31, 2000. Our calculations result in a total refund liability of $762.75. We will order Operator to refund this amount plus franchise fees to its CPST subscribers within 60 days of the release of this Order. We will also order Operator to calculate separately its refund liability for the period July 15, 1994 through January 31, 1995 and file a refund plan for that period. 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 $7.67, charged by Operator in the community referenced above, effective May 15, 1994 through January 31, 1995, 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 $9.00, charged by Operator in the community referenced above, effective February 1, 1995, IS REASONABLE 9. 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 Reconsideration of Marcus Cable Associates, LP, DA 97-2426, 12 FCC Rcd 19524 (1997) IS DENIED. 10. 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's Refund Plans ARE NOT ACCEPTED. 11. 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 shall refund to subscribers in the franchise areas referenced above the total amount of $762.75 plus franchise fees within 60 days of the release of this Order, for the period November 15, 1993 through July 14, 1994. 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 $7.47 per month (plus franchise fees), plus interest to the date of the refund, for the period July 15, 1994 through January 31, 1995. 13. IT IS FURTHER ORDERED that Operator shall promptly determine the overcharges to CPST subscribers for the period July 15, 1994 through January 31, 1995, 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. 14. 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. 15. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint against the CPST rates charged by Operator in the community referenced above, IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau