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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 ) ) Century Cable of Northern California ) CUID No. CA0024 (San Buenaventura) ) Complaint Regarding Cable Programming ) Services Tier Rate Increase ) ORDER Adopted: December 23, 1998 Released: December 28, 1998 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the August 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already issued an order dismissing previous complaints against Operator's CPST. On December 16, 1998, we issued an order in which we found that Operator is not subject to effective competition in the franchise area referenced above. Operator has attempted to justify its CPST rates through a benchmark justification on FCC Form 1200, FCC Form 1210 and multiple FCC Form 1240s. This Order addresses only the reasonableness of Operator's August 1, 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. If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the new legislation ("Interim Rules"), require that complaints against CPST rates 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 September 30, 1998 against Operator's August 1, 1998 CPST Century Cable Select 12 rate increase from $4.09 to $15.29. The LFA verified that it received more than one subscriber complaint for the franchise area and that the first valid complaint was received by the LFA on August 1, 1998. The filing of a complete and timely LFA 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. 4. To justify rates for the period beginning May 15, 1994 through a benchmark or cost of service showing, operators must use the FCC Form 1200 series. Cable operators may file an FCC Form 1210 to justify rate increases based on the addition and deletion of channels, changes in certain external costs and inflation. In addition, Operators must file an FCC Form 1210 at least 30 days before new rates are scheduled to go into effect, where there is a pending complaint against the CPST rate. Operators may alternatively justify adjustments to 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. In its complaint, the LFA also questions rate increases for other cable services provided by Operator, specifically Operator's Century Cable Select 6A rate increase from $2.62 to $9.79 and Century Cable Select 6B rate increase from $2.62 to $9.79. Operator contends that Century Cable Select 6A and Century Cable Select 6B are New Product Tiers ("NPTs") under the Commission's rules and therefore not subject to rate regulation. Operator did not provide FCC filings for these tiers, which contain six channels in each tier. In Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket Nos. 92-266 and 93-215, Sixth Order on Reconsideration, Fifth Report and Order, and Seventh Notice of Proposed Rulemaking ("Going Forward Order"), the Commission established criteria for the creation of NPTs, which cannot include channels taken from regulated tiers. We find that many of the channels listed in Operator's Century Cable Select 6A and Century Cable Select 6B are also listed in CPST Century Select 12. Therefore, we will order Operator to provide FCC Form filings for Century Cable Select 6A and Century Cable Select 6B tiers or provide justification as to why these tiers should be treated as NPTs under our Going Forward Order and therefore not subject to regulation. Therefore, we will only consider the CPST Century Select 12 tier rate in this order. . 6. Upon review of Operator's FCC Form 1200, we find that Operator has justified a maximum permitted rate ("MPR") of $6.98. Upon review of Operator's FCC Form 1210, covering the period July 1, 1994 through June 30, 1995, we find that Operator has justified a maximum permitted rate ("MPR") of $7.34. 7. Upon review of Operator's FCC Form 1240 for the projected period May 1, 1996 through April 30, 1997, we revised Line C5 (Current FCC Inflation Factor) to 1.0222. Our adjustment reduced Operator's MPR to $10.72. Upon review of Operator's FCC Form 1240 for the projected period May 1, 1997 through April 30, 1998, we adjusted Operator's Lines A1 (Current Maximum Permitted Rate) to $10.7181 to conform to the prior revised FCC Form 1240. We revised Line C5 (Current FCC Inflation Factor) to 1.0177. These revisions reduced Operator's MPR to $16.42. 8. Upon review of Operator's FCC Form 1240 for the projected period May 1, 1998 through April 30, 1999, we adjusted Operator's Lines A1 (Current Maximum Permitted Rate) to $16.4184, D6 (Current True-Up Segment) to $7.9265, D7 (Current Inflation Segment) to $0.0845 and F8 (True-Up Segment For True-Up Period 1) to $7.9081 to conform to the prior revised FCC Form 1240. These revisions reduced Operator's MPR to $22.80. Because Operator's actual CPST rate of $15.29, effective August 1, 1998, does not exceed its revised MPR, we find Operator's actual CPST rate of $15.29, effective August 1, 1998, to be reasonable. 9. 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 $15.29, effective August 1, 1998, IS REASONABLE. 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator, within 30 days of the release of this order, file with the Chief, Cable Services Bureau, FCC Form filings for Century Cable Select 6A and Century Cable Select 6B tiers or provide justification as to why these tiers should be treated as NPTs under our Going Forward Order and therefore not subject to regulation. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator take into account our FCC Form 1240 adjustments when calculating its maximum permitted rate and performing the true-up calculation on its next FCC Form 1240. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint referenced herein against the CPST rate charged by Operator in the community referenced above IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Margaret M. Egler Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau