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                                Before the
                     Federal Communications Commission
                          Washington, D.C. 20554

In the Matter of                     )
                                     )
Cencom Cable Income                  )
Partners II, L.P.                    )           CUID No. TX0061 (Jasper, TX)
                                     )
Benchmark Filing to Support          )
Cable Programming Service Price      )


                       MEMORANDUM OPINION AND ORDER

        Adopted:  October 8, 1997                  Released:  October 14, 1997

By the Commission:  Commissioner Quello Concurring in the Result.   

  1.    Before the Commission is a petition for reconsideration of the Commission's Order in
Cencom Cable Income Partners II, L.P. ("Cencom Order") filed by Cencom Cable Income Partners II,
L.P. ("Cencom").  In the Cencom Order, the Commission substantially affirmed the action by the Cable
Services Bureau in Cencom Cable Income Partners II, L.P., Memorandum Opinion and Order ("Bureau
Order") and ordered that Cencom refund overcharges collected from subscribers to its cable programming
services tier ("CPST") from November 16, 1993 through May 14, 1994.  We are denying Cencom's
petition for reconsideration of the Cencom Order.

  2.    Section 1.106 of the Commission's rules governs petitions for reconsideration.  Section
1.106(b)(2) provides that, where the Commission has previously denied an application for review, the
Commission will entertain a petition for reconsideration only if:  (1) the petition relies on facts which
relate to events that have occurred or circumstances that have changed since the petitioner's last
opportunity to present such matters; or (2) the petition relies on facts unknown to the petitioner until after
his last opportunity to present such matters which could not, through ordinary diligence, have been learned
prior to such opportunity.

  3.    Cencom previously applied for review of the Bureau Order in which the Bureau found
that Cencom had not justified its CPST rate.  The Bureau recalculated Cencom's maximum permitted
CPST rate and ordered refunds of the overcharge amount.  In recalculating Cencom's maximum permitted
rate, the Bureau corrected errors in the inflation information Cencom used in its inflation calculation in
Form 393, the form for calculating initial regulated rates with the benchmark methodology, and the
Bureau "refreshed" the inflation figure with the most accurate data from the U.S. Department of
Commerce Gross National Product Price Index ("GNP-PI").  Cencom argued in its application for review
that the Commission should not refresh inflation data and also argued that it should allow the operator
to offset alleged undercharges for its basic service tier against the CPST refunds it owed.  Cencom also
argued that it should be allowed to take advantage of the inflation adjustment allowed by the Commission
for a longer period of time than it had claimed in its rate form.

  4.    In the Cencom Order, the Commission agreed that, although Cencom had not claimed the
longer period for the inflation adjustment, it could have done so.  The Commission recalculated Cencom's
rate with this adjustment.  The Commission rejected Cencom's arguments against Bureau use of refreshed
inflation data.  The Commission explained that determining an operator's initial regulated rate as
accurately as possible when an operator's actual rate is not justified by the operator's calculation is neither
unlawful nor contrary to Commission policy, is not inconsistent with instructions given operators on rate
forms, and is not inconsistent with the Commission's stated intention not to penalize operators for good
faith efforts to restructure rates when rate regulation became effective.  Cencom's arguments in its petition
for reconsideration repeat its earlier arguments without alleging new or newly discovered facts or changed
circumstances that would warrant further review.

  5.    In the Cencom Order, the Commission also rejected Cencom's argument that it should be
allowed to take offsets in order to reduce its CPST refund liability.  Cencom had charged CPST
subscribers for one more channel than it delivered to them and used the higher channel count in its rate
calculation.  Because the total number of channels delivered by a cable system is one of the variables
affecting the per channel maximum permitted rate determined by the benchmark methodology, the higher
channel count Cencom used in its rate calculation resulted in a slightly lower permitted rate on a per
channel basis than Cencom could have used in setting its rates.  Cencom claimed that it could have
charged basic service tier ("BST") subscribers a higher per channel rate, and therefore a higher tier rate,
if it had used the correct channel count in the first instance.  It sought to use this BST "undercharge" to
offset its CPST overcharge.  The Commission explained that the Communications Act sets up a dual
regulatory structure for cable services, giving local franchising authorities jurisdiction to regulate BST and
associated equipment rates and the Commission jurisdiction to regulate CPST upon the filing of a valid
complaint.  The Commission also explained that allowing inter-tier offsets would create practical problems
in determining the correct CPST rates for offset purposes and would be discordant with the dual regulatory
structure established by Congress.  The Commission stated that the precedents cited by Cencom addressed
offsets within the BST but did not support offsets between tiers that are subject to review by different
regulatory authorities.

  6.    In its petition for reconsideration, Cencom takes issue with the Commission's reasoning. 
According to Cencom, the Commission has jurisdiction over BST rates.  Also according to Cencom, there
is no administrative impediment to calculating net refunds because offsets do not require a review of BST
rates, only a review of the data on the Form 393 filed with the Commission in response to a CPST rate
complaint.  Cencom's arguments do not allege new or newly discovered facts or changed circumstances
as required by  1.106(b)(2).  In addition, Cencom's arguments substantively are without merit.  The Cable
Television Consumer Protection and Competition Act of 1992 established a regulatory structure based on
federal guidelines, but it placed jurisdiction to determine BST rates and associated equipment basket
charges with the local franchising authority.  The Commission sets guidelines for BST regulation and
hears appeals of local rate orders involving interpretation of these guidelines, but it does not set or review
BST rates in the first instance unless a franchising authority's certification has been denied or revoked or
the franchising authority asks the Commission to assume jurisdiction until it becomes certified.  If the
Commission reverses a local franchising authority's decision, it will not substitute its own decision, but
will remand the matter to the franchising authority.    

  7.    Cencom argues that the Commission need not set or review BST rates when allowing
offsets because the Form 393 filed with the Commission includes sufficient information for calculating
a permitted BST rate.  However, if a local franchising authority assumes jurisdiction over an operator's
BST rate at a different point in time, the permitted BST rate it determines may differ somewhat from that
which might be calculated at the time of the CPST rate justification because of intervening changes in
inflation or other costs.  Offsets may have been used at the local level pursuant to  76.942 of the
Commission's rules in determining net refunds for BST and equipment and installation costs.  Local rates
may have changed during the period under consideration.  Local review may be in a different status than
the Commission's review.  None of this information is required in the CPST rate justification filed with
the Commission, but it is relevant to determining refund offsets across tiers.  Cencom argues that local
franchising authorities see the CPST rate justifications filed with the Commission, but nothing in the
Commission's rules or procedures would alert a franchising authority that BST rate issues are relevant to
the Commission's CPST review.  An inter-tier offset without either a determination of the BST rates used
in computing the offset or an opportunity for local franchising authorities to address the offset issue would
not assure subscribers of accurate offset amounts and reasonable refunds.  

  8.    Cencom also argues that consideration of administrative burden was rejected in Time
Warner Entertainment Co., L.P. v. FCC.  The court reviewed the Commission's decision not to allow
cable operators to adjust their September 30, 1992 rates for external costs incurred between September
30, 1992 and the date rates became subject to regulation at the federal or local level, the "gap period." 
The court rejected the Commission's argument that the burden of dealing with gap period external costs
justified its decision.  In that case, the Commission had acknowledged that allowing these costs would
make rates more accurate, and the documentation needed would not differ from the documentation used
to review external costs after the gap period.  The offsets requested in the instant case do not affect the
accuracy of the CPST rates.  The Commission has no mechanism for collecting information about local
rate proceedings outside of the process for hearing appeals of local rate orders, and it has no need for such
information.

  9.    Cencom argues in its Petition for Reconsideration that the staff worksheet used to
recompute the maximum permitted CPST rate for the Cencom Order was not placed in the public file
before the deadline for filing its petition.  Although Cencom is correct about the delay, the Cencom Order
thoroughly discussed the adjustments made in calculating Cencom's maximum permitted CPST rate and
did not rely on the staff worksheet to explain its action.  No rule requires that staff worksheets be placed
in the public file.  However, to avoid any prejudice to Cencom, Cencom was offered the opportunity to
supplement its petition in light of the staff worksheet.  It did not do so.  No further Commission
response is warranted.

  10.   ACCORDINGLY, IT IS ORDERED, pursuant to section 1.106 of the Commission's rules,
47 C.F.R.  1.106, that the Petition for Reconsideration of the  Commission's Order in Cencom Cable
Income Partners II, L.P., FCC 97-205, 12 FCC Rcd 7948 (1997),  filed by Cencom Cable Income Partners
II, L.P.  IS DENIED.  

        FEDERAL COMMUNICATIONS COMMISSION



        William F. Caton
        Acting Secretary