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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 ) ) ) TCI Cablevision of Arlington, Inc. ) CUID No. TX0826 (Arlington) ) Complaints Regarding ) Cable Programming Services Tier ) Rates ) ORDER Adopted: February 10, 1998 Released: February 12, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider complaints against the June 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the non-rebuild and rebuild areas in the community referenced above for Deluxe Cable ("Tier 2"). and Cable Plus ("Tier 3"). We have already resolved all prior complaints filed against Operator's CPST rates. This Order addresses only the reasonableness of Operator's June 1, 1997 CPST rate increases. 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 complaints with the Commission on October 7, 1997 against Operator's June 1, 1997 CPST rate increases from $7.48 to $8.03 in its non- rebuild area and from $9.27 to $10.52 in its rebuild area of Tier 2, and from $4.74 to $4.94 in its non- rebuild and re-build area of Tier 3. 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 4, 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 rates, effective June 1, 1997, Operator submitted two sets of FCC Form 1240s, the first set covered the projected period June 1, 1996 to May 31, 1997 ("First Form 1240s") for both its non-rebuild and rebuild areas, and the second set covered the projected period June 1, 1997 to May 31, 1998 ("Second Form 1240s") for both its non-rebuild and rebuild areas. Operator's First Form 1240s used Operator's alternative showing, calculated pursuant to the Waiver Order. Operator's Second Form 1240s 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 sets of forms produced identical results to filings that would have been made on the Commission's standard FCC Form 1240. 8. Accordingly, on December 9, 1997, Operator submitted two new sets of standard FCC Form 1240s for both its non-rebuild and rebuild areas, 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 Form 1240s as well as the calculations described in Operator's October 25, 1996 letter. Review of all standard FCC Form 1240s for the non-rebuild and rebuild areas is necessary to calculate the appropriate maximum permitted rate ("MPR") and the refund amount, if any, for the period beginning June 1, 1997. Operator also submitted two refund plans which calculated the amount of refunds owed to subscribers in the community referenced above for the duration of the one year projected period ending May 31, 1998 for both its non-rebuild and rebuild areas. 9. Upon review of Operator's new FCC Form 1240s, for the projected period June 1, 1996 to May 31, 1997, we find that Operator has correctly calculated its MPR of $7.55 for its Tier 2 non- rebuild area, and $9.35 for its Tier 2 rebuild area. Operator has also correctly calculated its maximum permitted rate MPR of $4.76 for its Tier 3 non-rebuild and rebuild areas. Upon review of Operator's new FCC Form 1240s, for the projected period June 1, 1997 to May 31, 1998, we find that Operator has correctly calculated its MPR of $8.03 for its Tier 2 non-rebuild area and $10.09 for its Tier 2 rebuild area. Operator has also correctly calculated its maximum permitted rate MPR of $4.87 for its Tier 3 non- rebuild and rebuild areas. However, Operator's actual CPST rates, effective June 1, 1997, are $8.03 for its Tier 2 non-rebuild area, $10.52 for its Tier 2 rebuild area, and $4.94 for its Tier 3 non-rebuild and rebuild areas. Operator has submitted refund plans which calculate, with interest, the total amount of overcharges that will be collected from CPST subscribers in the community referenced above from June 4, 1997 (the date of the first subscriber complaint) to May 31, 1998. Upon review of Operator's refund plans, we find that Operator has correctly calculated, with interest, the amount of overcharges that will be received from subscribers during the projected period ending May 31, 1998. These calculations result in a total refund amount of $0.84, per CPST subscriber, including interest, in its non-rebuild area for Tier 3, $5.36 per CPST subscriber, including interest, in its rebuild area for Tier 2, and $0.83 per CPST subscriber, including interest, in its rebuild area for Tier 3. We will order Operator to pay $0.84 to each current CPST subscriber in its non-rebuild area for Tier 3, $5.36 to each current CPST subscriber in its rebuild area for Tier 2, and $0.83 to each current CPST subscriber in its rebuild area for Tier 3, within 60 days of the release of this order. We will also order that any rate Operator charges on and after June 1, 1998 shall be premised on Operator's use of (1) the standard FCC Form 1240 for rate calculation purposes and (2) $8.03 in the non-rebuild area for Tier 2, $10.09 in the rebuild area for Tier 2, and $4.87 in the non-rebuild and rebuild area for Tier 3 as Operator's Current Maximum Permitted Rate as called for on Line A1 of its FCC Form 1240 filings for the projected period beginning June 1, 1998. Contingent upon Operator's refund payment to its subscribers, we have determined that Operator's total CPST rate collections in the community referenced above, for the projected period June 1, 1997 to May 31, 1998, will be reasonable. 10. Accordingly, IT IS ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R. Section 76.961, that Operator shall refund $0.84 to each current CPST subscriber in its non- rebuild area for Tier 3, $5.36 to each current CPST subscriber in its rebuild area for Tier 2, and $0.83 to each current CPST subscriber in its rebuild area for Tier 3, within 60 days of the release of this order. 11. IT IS FURTHER ORDERED, pursuant to Section 76.962 of the Commission's rules, 47 C.F.R. Section 76.962, that Operator, within 90 days of the release of this Order, shall file with the Chief, Cable Services Bureau, a certification of its compliance with the refund requirements of this Order, and a certification of its intent to comply with all other aspects of this Order. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator shall use (1) the standard FCC Form 1240 for rate calculation purposes and (2) $8.03 in the non-rebuild area for Tier 2, $10.09 in the rebuild area for Tier 2, and $4.87 in the non-rebuild and rebuild area for Tier 3 as Operator's Current Maximum Permitted Rate as called for on Line A1 of its FCC Form 1240 filings for the projected period beginning June 1, 1998. 13. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaints referenced herein against the rates charged by Operator in the community set forth above ARE GRANTED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau