******************************************************** 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 ) ) TCI Communications, Inc. ) CUID No. DC0002 (Washington, D.C.) d/b/a District Cablevision ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: February 9, 1998 Released: February 12, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the June 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already resolved all the complaints filed from September 1, 1993 through May 31, 1997 against Operator's CPST rates. This Order addresses only the reasonableness of Operator's June 1, 1997 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 November 18, 1997 against Operator's June 1, 1997 CPST rate increase from $17.75 to $19.98. 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 June 5, 1997. 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 showing, operators must use the FCC Form 1200 series. Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210. 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. On February 22, 1996, the Commission issued an order granting Operator a waiver ("Waiver Order") of certain rate adjustment requirements in its initial filing of the Commission's annual rate adjustment form (FCC Form 1240). Specifically, the Waiver Order allowed Operator, in its initial FCC Form 1240 filings, to include estimated changes in costs, inflation, channels and subscriber information attributable to the period between the last date for which actual cost data was available and the effective date of the new rates. In the Waiver Order, Operator was instructed to include in its initial FCC Form 1240 filing certain calculations, such calculations to be performed on FCC Form 1240 (primarily in Module G), or off FCC Form 1240, in an alternative showing done pursuant to the Waiver Order's "General Guidelines." Operator chose to use an alternative showing pursuant to the "General Guidelines" rather than perform its calculations directly on FCC Form 1240. 6. On October 25, 1996, Operator wrote to the Commission requesting review and approval of a modified FCC Form 1240 to justify rates for the projected period from June 1, 1997 to May 31, 1998. On January 9, 1997 we consented to the Operator's use of the form for such period in lieu of filings on the Commission's standard FCC Form 1240. 7. To justify its CPST rate increase, effective June 1, 1997, Operator filed FCC Form 1240 for the projected period June 1, 1997 to May 31, 1998 ("Second Form 1240"). Operator had previously filed FCC Form 1240 for the projected period June 1, 1996 through May 31, 1997, to justify its June 1, 1996 CPST rate increase ("First Form 1240"). Operator's First Form 1240 used Operator's alternative showing, calculated pursuant to the Waiver Order. Operator's Second Form 1240 followed the format set forth in Operator's October 25, 1996 letter. Upon review of the submitted forms, we determined that neither of the submitted forms produced identical results to filings that would have been made on the Commission's standard FCC Form 1240. 8. Accordingly, on December 10, 1997, Operator submitted two new standard FCC Forms 1240, for the projected periods June 1, 1996 to May 31, 1997 and June 1, 1997 to May 31, 1998, on which Operator performed the Waiver Order's calculations directly on the standard FCC Forms 1240 as well as the calculations described in Operator's October 25, 1996 letter. Review of both standard FCC Forms 1240 is necessary to calculate the appropriate maximum permitted rate ("MPR") and the refund amount, if any, for the period beginning June 1, 1997. 9. Upon review of Operator's new FCC Form 1240, for the projected period June 1, 1996 to May 31, 1997, and Operator's new FCC Form 1240, for the projected period June 1, 1997 through May 31, 1998, we find Operator's actual CPST rate of $19.98, effective June 1, 1997, to be reasonable. We will order that any rate Operator charges on or after June 1, 1998 shall be premised on Operator's use of the standard FCC Form 1240 for rate calculation purposes. 10. 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 $19.98, charged by Operator in the franchise area referenced above, effective June 1, 1997, IS REASONABLE. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator shall use the standard FCC Form 1240 for rate calculation purposes for any rate Operator charges on or after June 1, 1998. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaint IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau