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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 ) ) RIGPAL Communications, Inc. ) CUID No. PA1232 (Borough of Pleasant Hills) d/b/a Adelphia Cable Communications) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: April 14, 1998 Released: April 17, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the August 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 issued an order ("Prior Order") in which we resolved all the complaints filed against Operator's rates supported by benchmark rate justifications for the period September 1, 1993 through December 31, 1995. This Order addresses only the reasonableness of Operator's August 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 January 28, 1998 against Operator's August 1, 1997 CPST rate increase from $14.60 to $17.69, including franchise fees. 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 August 11, 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. Upon review of Operator's FCC Form 1240 for the projected period August 1, 1996 to July 31, 1997, we find that Operator has miscalculated its maximum permitted rate ("MPR"). We have adjusted Line A1 to reflect the starting rate of $13.23 pursuant to the Prior Order. In addition, we have adjusted Operator's inflation on Line C3 (Current FCC Inflation Factor) from 1.0222 to 1.0221. We have also reduced the inflation rate from 0.2014 to 0 on Line D7 (Current Inflation Segment). Our changes required that we adjust Line I5 (Inflation Segment for Projected Period) from .22346 to .2270 and adjust Line I8 (True-Up Segment for Projected Period) from 1.1976 to 2.1135. Based on our adjustments we have calculated an MPR of $17.43, effective August 1, 1996. 6. Upon review of Operator's FCC Form 1240 for the projected period August 1, 1997 to July 31, 1998, we find that Operator has miscalculated its MPR. We have adjusted Line A1 to carry forward the starting rate of $17.43 calculated above. In addition, we have adjusted Line C3 (Inflation Factor for True-Up Period 1) from 1.0220 to 1.0206 and we corrected Operator's inflation factor from 1.0177 to 1.0143. We also adjusted Line D6 (Current True-Up Segment) from 1.1976 to 2.1135 to reflect the correct current true-up segment and we adjusted Line D7 (Current Inflation Segment) from 0.2234 to 0.2270 to reflect the correct current inflation segment. 7. In addition, we corrected Line F1 (Caps Method For True-Up Period 1) from 1.9352 to 1.4467, we corrected Line F5 (Inflation Segment for True-Up Period 1) from 0.2248 to 0.2046, and we corrected Line F8 (True-Up Segment for True-Up Period 1) from 1.187 to 2.0992. Finally, we have adjusted Worksheet 2, Line 201 from $.79 to $.30 in accordance with Operator's First FCC Form 1240. Our adjustments result in a MPR of $18.09. Notwithstanding our adjustments, Operator has justified its CPST rate of $17.69, including franchise fees, effective August 1, 1997. 8. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator's CPST rate of $17.69, including franchise fees, effective August 1, 1997, in the franchise area referenced above IS REASONABLE. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the complaint referenced herein against the rates charged by Operator in the community set forth above IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau