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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File Nos.
CUID Nos.
) EB-02-TC-021 SC0065
(Laurens)
Cencom Cable Entertainment, Inc. ) EB-02-TC-041
SC0123 (Mauldin)
Cencom Cable Television, Inc. ) EB-02-TC-022
MO0079 (Florissant)
) EB-02-TC-076 CA0132 (La
Canada) ) EB-02-TC-
079 CA0875 (Alhambra)
) EB-02-TC-027 CA0899
(Walnut)
Complaints Regarding ) EB-02-TC-081
CA1093 (Pasadena)
Cable Programming Services Tier Rates ) EB-02-TC-
090 NC0024 (Lenoir)
and Petition for Reconsideration ) EB-02-TC-
092 NC0148 (Lenoir)
ORDER
Adopted: July 16, 2002 Released: July 17,
2002
By the Chief, Enforcement Bureau:1
1. In this Order, we consider a petition for
reconsideration2 ("Petition") of Cable Services Bureau
Order, DA 95-938 ("Prior Order"),3 filed with the Federal
Communications Commission ("Commission") by the above-
referenced operator ("Operator").4 The Prior Order resolved
complaints filed against the rates charged by Operator for
its cable programming services tier ("CPST") in the
communities referenced above through May 14, 1994. In the
Prior Order, the Cable Services Bureau stated that its
findings "do not in any way prejudge the reasonableness of
the price for CPS service after May 14, 1994 under our new
rate regulations."5 Subsequently, the Cable Services Bureau
issued orders resolving complaints against Operator's CPST
rates beginning May 15, 1994, and found those rates to be
reasonable in the communities of Pasadena,6 Walnut,7
Alhambra8 and La Canada.9 The Cable Services Bureau found
the CPST rates to be unreasonable in the community of Lenoir
until January 1, 1995 ("Lenoir Order").10 In this Order we
deny Operator's Petition in part, grant it in part, and
address the reasonableness of Operator's CPST rates in the
remaining communities beginning May 15, 1994.
2. Under the provisions of the
Communications Act11 that were in effect at the time the
complaints were filed, 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. The Cable Television Consumer Protection and
Competition Act of 1992 ("1992 Cable Act")12 and the
Commission's rules required the Commission to review CPST
rates upon the filing of a valid complaint by a subscriber
or local franchising authority ("LFA"). The
Telecommunications Act of 1996 ("1996 Act"),13 and the
Commission's rules implementing the legislation ("Interim
Rules"),14 required that a complaint against the CPST rate
be filed with the Commission by an LFA that has received
more than one subscriber complaint. The filing of a valid
complaint triggers an obligation upon the cable operator to
file a justification of its CPST rates.15 If the Commission
finds the rate to be unreasonable, it shall determine the
correct rate and any refund liability.16
3. During the first phase of rate regulation, from
September 1, 1993 until May 15, 1994, the benchmark rate
analysis and comparison with an operator's actual rates were
calculated using the FCC Form 393.17 The benchmark formula
was revised, effective May 15, 1994.18 Systems first
becoming subject to rate regulation after May 15, 1994 were
required to justify their initial regulated rates using
forms in the FCC Form 1200 series.19 Systems against which
rate complaints were still pending when the Commission
revised its benchmark formula were required to recalculate
their benchmark rates as of May 15, 1994 using the FCC Form
1200.20 The Commission's rules provide for a refund
liability deferral period, if timely requested by an
operator, beginning May 15, 1994 and ending July 14, 1994,
for any overcharges resulting from the operator's
calculation of a new maximum permitted rate on its FCC Form
1200.21 However, an operator will incur refund liability
from May 15, 1994 through July 14, 1994 for any CPST rates
charged above the FCC Form 393 maximum permitted rate.
Cable operators may update the initial FCC Form 1200
benchmark rate calculation by filing an FCC Form 1210 to
justify quarterly rate increases based on the addition and
deletion of channels, changes in certain external costs and
inflation.22
4. In its Petition, Operator raises a number of
issues that have been addressed in previous orders. Operator
first argues that the Cable Services Bureau erred when
imputing normalized taxes to Operator's customer equipment
costs prior to unbundling those costs from Operator's
service rates. The Cable Services Bureau previously
addressed this issue at length in Suburban Cable.23 The
discussion in that case is directly on point and need not be
repeated here. The Cable Services Bureau concluded that the
benchmark rate methodology contemplates the unbundling of
normalized taxes and it would be arbitrary and inconsistent
for the Commission to build normalized taxes into the
pricing of tier offerings and only unbundle actual taxes
attributable to equipment costs. We conclude here, as the
Cable Services Bureau did in Suburban Cable, that it was not
error for the Cable Services Bureau to impute normalized
taxes to Operator's customer equipment costs prior to
unbundling those costs from Operator's service rates.
5. The remaining issues raised by Operator in its
Petition, concerning the adjustment of its inflation factor,
offsetting of overcharges, sufficiency of the explanations
of calculations and allegations of retroactive ratemaking,
were all thoroughly addressed by the Commission in Cencom
Cable Income Partners ("Cencom").24 For all the reasons
stated in that order, which we do not need to repeat here,
we reject Operator's arguments concerning these issues.
However, as in Cencom, we will allow Operator an inflation
adjustment period equal to the number of whole months from
September 1992 to the date Operator was required to file its
FCC Form 393 in each community, in accordance with the
public notice issued May 2, 1995.25 As a result of our
adjustment, we find the total overcharges for the FCC Form
393 review period to be de minimis, and it would not be in
the public interest to order refunds, in the communities of
Laurens, Mauldin, Lenoir, Florissant and Alhambra. As
Operator filed refund deferral letters in all of these
communities, we will review the reasonableness of subsequent
CPST rates in these communities beginning July 15, 1994, to
the extent they have not been previously reviewed by the
Cable Services Bureau, and modify the Prior Order and the
Lenoir Order to be consistent with our review.
6. First, however, we address the FCC Form 393 period
for the remaining communities where the total overcharges
were not de minimis. Our adjustment to Operator's inflation
adjustment period for each community results in revised
maximum permitted rates ("MPRs") and refund liability as
follows, and we modify our Prior Order accordingly.26
Community/ Li- Li- Prior Re- Ac- Monthly Refund27
CUID No. ne ne MPR vised tual Over- Period
124 125 MPR Rate charge
La Canada/ 15 15 $10.98 $11.- $11.- $0.32 12/22/9-
CA0132 08 40 3-
5/14/94
Walnut/ 12 12 $10.98 $11.- $11.- $0.39 9/3/93-
CA0899 01 40 5/14/94
Pasadena/ 16 15 $10.98 $11.- $11.- $0.30 1/5/94-
CA1093 10 40 5/14/94
7. Next, we address the reasonableness of Operator's
CPST rates beginning July 15, 1994 in the communities of
Laurens, Mauldin, Lenoir and Florissant. In Laurens and
Maulden, our review reveals that the total overcharges for
the FCC Form 1200 review period are de minimis and it would
not be in the public interest to order refunds. Our
adjustment to Operator's FCC Form 393 in the community of
Lenoir did not effect the MPRs calculated by the Cable
Services Bureau in the Lenoir Order. Therefore Operator's
refund liability in that community beginning July 15, 1994
remains as follows:
Community/ Prior Re- Ac- Monthly Refund
CUID No. MPR vised tual Over- Period
MPR Rate charge
Lenoir/ $15.- $15.- $16.- $0.89 7/15/94-
NC0024 and 43 43 32 9/30/94
NC0148
$15.- $15.- $16.- $0.67 10/1/94-
65 65 32 12/31/94
8. Finally, we address the reasonableness of the CPST
rates in Florissant beginning July 15, 1994. Upon review of
Operator's FCC Form 1200, we adjusted Line G2 (Monthly
Charge per Tier as of 9/30/92) of the FCC Form 1200 from
$12.15 to $10.65 to match Worksheet 2, Line 201, Column B
(Tier Charge (Monthly) - Tier 2) of the FCC Form 393 and the
rate card provided by Operator for the September 30, 1992
CPST rate.28 This resulted in reducing the FCC Form 1200
MPR from $11.46 to $10.85. This adjustment was carried
through to each of Operator's subsequent FCC Form 1210
update filings, summarized as follows:
Com- Form Calculated Re- Ac- Monthly Refund
munity/ 1210 MPR vised tual Over- Period
CUID No. Period MPR Rate charge
Floris- 4/1- $11.85 $11.- $11- $0.61 7/15/94-
sant/ 6/30 24 .85 9/30/94
MO0079 1994
7/1- $12.01 $11.- $12- $0.61 10/1/94-
9/30 40 .01 12/31/94
1994
10/1- $12.31 $11.- $12- $0.62 1/1/95-
12/31 69 .31 3/31/95
1994
1/1- $12.47 $11.- $12- $0.62 4/1/95-
3/31 85 .47 9/30/95
1995
4/1- $13.35 $12.- $13- $1.17 10/1/95-
9/30 18 .35 12/31/95
1995
10/1- $14.20 $13.- $13- none none
12/31 47 .35
1995
Because Operator's actual CPST rates, effective July 15,
1994 through December 31, 1995, exceed its MPRs, we find
Operator's actual CPST rates, effective July 15, 1994
through December 31, 1995, to be unreasonable. We find
Operator's actual CPST rate of $13.35, effective January 1,
1996, to be reasonable.
9. Accordingly, IT IS ORDERED, pursuant to Section
1.106 of the Commission's rules, 47 C.F.R. § 1.106, that the
petition for reconsideration filed by Operator is GRANTED IN
PART AND DENIED IN PART TO THE EXTENT INDICATED HEREIN.
10. IT IS FURTHER ORDERED, pursuant to Sections 0.111
and 0.311 of the Commission's rules, 47 C.F.R. §§ 0.111 and
0.311, that In the Matter of Cencom Cable Entertainment,
Inc. and Cencom Cable Television, Inc., DA 95-938, 11 FCC
Rcd 2573 (CSB 1995) and In the Matter of Cencom Cable
Television, Inc., DA 97-1210, 12 FCC Rcd 23386 (CSB 1997)
ARE MODIFIED TO THE EXTENT INDICATED HEREIN.
11. IT IS FURTHER ORDERED, pursuant to Sections 0.111
and 0.311 of the Commission's rules, 47 C.F.R. §§ 0.111 and
0.311, that the CPST rates, charged by Operator in the
communities of La Canada, CA (CUID No. CA0132), Walnut, CA
(CUID NO. CA0899) and Pasadena, CA (CUID NO. CA1093),
effective from the date that the first valid complaint was
filed with the Commission for each community through May 14,
1994, ARE UNREASONABLE.
12. IT IS FURTHER ORDERED, pursuant to Sections 0.111
and 0.311 of the Commission's rules, 47 C.F.R. §§ 0.111 and
0.311, that the CPST rates, charged by Operator in the
community of Lenoir, NC (CUID Nos. NC0024 and NC0148),
effective July 15, 1994 through December 31, 1994, ARE
UNREASONABLE.
13. IT IS FURTHER ORDERED, pursuant to Sections 0.111
and 0.311 of the Commission's rules, 47 C.F.R. §§ 0.111 and
0.311, that the CPST rates, charged by Operator in the
community of Florissant, MO, (CUID No. MO0079), effective
July 15, 1994 through December 31, 1995, ARE UNREASONABLE.
14. IT IS FURTHER ORDERED, pursuant to Section 76.961
of the Commission's rules, 47 C.F.R. § 76.961, that Operator
shall refund to subscribers in the communities of La Canada,
CA (CUID No. CA0132), Walnut, CA (CUID NO. CA0899) and
Pasadena, CA (CUID NO. CA1093), that portion of the amount
paid in excess of the maximum permitted CPST rates set forth
in this order for each community per month (plus franchise
fees), plus interest to the date of the refund, for the
period from the date that the first valid complaint was
filed with the Commission for each community through May 14,
1994.
15. IT IS FURTHER ORDERED, pursuant to Section 76.961
of the Commission's rules, 47 C.F.R. § 76.961, that Operator
shall refund to subscribers in the community of Lenoir, NC
(CUID Nos. NC0024 and NC0148), that portion of the amount
paid in excess of the maximum permitted CPST rates set forth
in this order per month (plus franchise fees), plus interest
to the date of the refund, for the period from July 15, 1994
through December 31, 1994.
16. IT IS FURTHER ORDERED, pursuant to Section 76.961
of the Commission's rules, 47 C.F.R. § 76.961, that Operator
shall refund to subscribers in the community of Florissant,
MO, (CUID No. MO0079), that portion of the amount paid in
excess of the maximum permitted CPST rates set forth in this
order per month (plus franchise fees), plus interest to the
date of the refund, for the period from July 15, 1994
through December 31, 1995.
17. IT IS FURTHER ORDERED that Operator shall promptly
determine the overcharges to CPST subscribers for the stated
periods, and shall within 30 days of the release of this
Order, file a report with the Chief, Enforcement Bureau,
stating the cumulative refund amount so determined
(including franchise fees and interest), describing the
calculation thereof, and describing its plan to implement
the refund within 60 days of Commission approval of the
plan.
18. IT IS FURTHER ORDERED, pursuant to Sections 0.111
and 0.311 of the Commission's rules, 47 C.F.R. §§ 0.111 and
0.311, that the complaints referenced herein against the
CPST rates charged by Operator in the communities referenced
above ARE GRANTED TO THE EXTENT INDICATED HEREIN.
FEDERAL COMMUNICATIONS
COMMISSION
David H. Solomon
Chief, Enforcement Bureau
_________________________
1 Effective March 25, 2002, the Commission transferred
responsibility for resolving cable programming services tier
rate complaints from the former Cable Services Bureau to the
Enforcement Bureau. See Establishment of the Media Bureau,
the Wireline Competition Bureau and the Consumer and
Governmental Affairs Bureau, Reorganization of the
International Bureau and Other Organizational Changes, FCC
02-10, 17 FCC Rcd 4672 (2002).
2 Operator originally filed its petition as an application
for review. However, by letter dated March 5, 2002,
Operator requested that we treat its application as a
petition for reconsideration.
3 See In The Matter of Cencom Cable Entertainment, Inc. and
Cencom Cable Television, Inc., DA 95-938, 11 FCC Rcd 2573
(CSB 1995).
4 The term "Operator" includes Operator's successors and
predecessors in interest.
5 Prior Order at n. 2.
6 See In the Matter of Charter Communications Entertainment
II, LP, DA 98-463, 13 FCC Rcd 10573 (CSB 1998).
7 See In the Matter of Charter Communications Entertainment
II, LP, DA 98-452, 13 FCC Rcd 10551 (CSB 1998).
8 See In the Matter of Charter Communications Entertainment
II, LP, DA 98-462, 13 FCC Rcd 10570 (CSB 1998).
9 See In the Matter of Charter Communications Entertainment
II, LP, DA 98-8, 13 FCC Rcd 10171 (CSB 1998).
10 See In the Matter of Cencom Cable Television, Inc., DA
97-1210, 12 FCC Rcd 23386 (CSB 1997).
11 47 U.S.C. §543(c) (1996).
12 Pub. L. No. 102-385, 106 Stat. 1460 (1992).
13 Pub. L. No. 104-104, 110 Stat. 56 (1996).
14 See Implementation of Cable Act Reform Provisions of the
Telecommunications Act of 1996, 11 FCC Rcd 5937 1996).
15 See Section 76.956 of the Commission's rules, 47 C.F.R.
§76.956.
16 See Section 76.957 of the Commission's rules, 47 C.F.R.
§76.957.
17 See Implementation of Sections of the Cable Television
Consumer Protection and Competition Act of 1992: Rate
Regulation, 8 FCC Rcd 5631, 5755-56, 5766-67, 5881-83
(1993).
18 See Implementation of Sections of the Cable Television
Consumer Protection and Competition Act of 1992: Rate
Regulation, 9 FCC Rcd 4119 (1994).
19 See Section 76.922 of the Commission's rules, 47 C.F.R. §
76.922.
20 Id.
21 See 47 C.F.R. § 76.922(b)(6)(ii).
22 Id.
23 In the Matter of Suburban Cable TV, Inc., DA 97-2032, 13
FCC Rcd 13111 (CSB 1997). See also, In the Matter of
Charter Communications, DA 02-637 (CSB released March 20,
2002).
24 In the Matter of Cencom Cable Income Partners II, LP, FCC
97-205, 12 FCC Rcd 7948 (1997).
25 See Public Notice "Cable Services Bureau Announces Policy
Regarding Inflation Adjustment on Form 393," DA 95-999
(1995).
26 These findings are based solely on the representations of
Operator. Should information come to our attention that
these representations were materially inaccurate, we reserve
the right to take appropriate action. This Order is not to
be construed as a finding that we have accepted as correct
any specific entry, explanation or argument made by any
party to this proceeding not specifically addressed herein.
Information regarding the specific adjustments made to
Operator's FCC Forms can be found in the public files for
the above-referenced community which are available in the
FCC Reference Information Center, Portals II, 445 12th
Street, SW, Room CY-A257, Washington, DC, 20554. This
document may also be purchased from the Commission's
duplicating contractor, Qualex International, Portals II,
445 12th Street, SW, Room CY-B402, Washington, DC, 20554,
telephone 202-863-2893, facsimile 202-863-2898, or via e-
mail qualexint@aol.com.
27 The refund periods for the FCC Form 393 overcharges begin
on the date that the first valid complaint was filed with
the Commission against the CPST rates charged by Operator
for each specific community.
28 Line 201, found on Worksheet 2 ("Calculation of Rates in
Effect on September 30, 1992 and Benchmark Comparison") of
the FCC Form 393 and Line G2 of the FCC Form 1200 both
require the entry of the monthly tier charge as of September
30, 1992.