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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 ) ) CUID No. CA0161 (Long Beach) Long Beach Acquisition Corp. ) d/b/a Charter Communications ) ) Complaints Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: April 9, 1998 Released: April 10, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the rates charged by the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already issued an order in which we reviewed Operator's CPST rates in effect through July 14, 1994. Operator has chosen to attempt to justify its CPST rates after July 14, 1994 through a cost of service showing on FCC Form 1220, updated by FCC Form 1210s and FCC Form 1240. This Order addresses the reasonableness of Operator's CPST rates after July 14, 1994. 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 the 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 January 14, 1998, against Operator's September 1, 1997 CPST rate increase from $11.40 to $12.76. 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. 4. To justify rates for the period beginning May 15, 1994, operators must use the FCC Form 1200 series. Operators attempting to justify CPST rates through a benchmark showing must use the FCC Form 1200. Operators attempting to justify their rates through a cost of service showing must complete and file FCC Form 1220. Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210 to account for the addition and deletion of channels, changes in certain external costs and inflation. In addition, Operators must file 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 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. If actual and projected costs are different during the rate year a "true-up" mechanism is available to correct estimated costs with actual cost changes. The "true-up" requires operators to decrease their rates or alternatively permits them to increase their rates to make an adjustment for over or under estimations of these cost changes. 5. Upon review of Operator's FCC Form 1220, FCC Form 1210 and FCC Form 1240 filings, we made adjustments to Operator's calculated maximum permitted rates ("MPRs"). Despite these adjustments, we find Operator's actual CPST rates, effective July 15, 1994 through August 31, 1997, to be reasonable. Based upon our review, we also find Operator's current actual CPST rate of $12.76, effective September 1, 1997, to be reasonable. 6. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rates charged by Operator in the franchise area referenced above, effective July 14, 1994 through August 31, 1997, ARE REASONABLE. 7. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the current CPST rate of $12.76 charged by Operator in the franchise area referenced above, IS REASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaints ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau