******************************************************** 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 ) ) Media One of Massachusetts, Inc.) CUID Nos. MA0006 (Yarmouth) ) MA0039 (Barnstable) ) MA0040 (Harwich) ) MA0041 (Dennis) Complaints Regarding ) MA0058 (Chatham) Cable Programming Services Tier Rates) ORDER Adopted: March 19, 1998 Released: March 23, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the July 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the communities referenced above. Operator has attempted to justify its CPST rates through a benchmark showing on FCC Forms 1240. We have already issued orders which resolved complaints filed against Operator from September 1, 1993 through September 15, 1995. Accordingly, this Order addresses the reasonableness of Operator's CPST rate increase effective July 1, 1997. 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. 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 the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 3. 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. 4. On August 1, 1995, the Commission adopted an order approving the Social Contract entered into between the Continental and the Commission. Under the terms of the Social Contract, Continental is required to invest at least $1.35 billion to rebuild and upgrade all of its United States Cable systems from 1995 through 2000. By January 1, 1996, Continental must create in its systems a lifeline basic service tier by reducing rates on the basic service tier by 15% to 20% and offset this reduction in a revenue neutral manner by adjusting the rates on the CPST. Continental may migrate up to four existing services from its basic service tier ("BST") and/or CPST to a migrated product tier ("MPT") and Continental may add an unlimited number of channels to an MPT at $.20 per added channel plus license fees. 5. The LFA for the franchise area referenced above filed a complaint with the Commission on December 29, 1997, against Operator's July 1, 1997 CPST rate increase from $16.16 to $16.72. The LFA verified that it received more than one subscriber complaint. 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. 6. Upon review of Operator's FCC Form 1240, for the projected period June 1, 1996 to May 31, 1997, we find Operator's maximum permitted rate ("MPR") of $16.24 (Line I9) to be justified. Upon review of Operator's FCC Form 1240, for the projected period July 1, 1997 to June 30, 1998, we find that Operator has not correctly calculated it's MPR. We adjusted Module A, Line A1 (Current Maximum Permitted Rate) to conform to Line I9 from the previous FCC Form 1240. We also adjusted Module C, Line C4 (Inflation Factor for True-Up Period 2) and Line C5 (Current FCC Inflation Factor) to reflect adjustments made to Line A1. In addition, we adjusted Module D, Line D6 (Current True-Up Segment), Module F, Line F8 (True-Up Segment for True-Up Period 1), Module G, Line G8 (True-Up Segment for True-Up Period 2) and Module H, Line H12 (Previous Remaining True-Up Adjustment), to conform to the prior FCC Form 1240. We also adjusted Worksheet 1 due to the above adjustments. The result of these adjustments is a revised MPR of $19.70. Because Operator's actual CPST rate of $16.72 is lower than its revised MPR of $19.70, we find Operator's actual CPST rate of $16.72, effective July 1, 1997, to be reasonable. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the CPST rate of $16.72 charged by Operator in the communities referenced above, effective July 1, 1997, IS REASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaints against Operator's July 1, 1997 CPST rate increase in the communities referenced above, ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau