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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB-
02-TC-016
)
Suburban Cable TV Co., Inc. ) CUID No.
PA1991 (Blue Bell)
)
Complaints Regarding )
Cable Programming Services Tier Rates )
and Petition for Reconsideration )
ORDER
Adopted: July 16, 2002 Released: July 17,
2002
By the Chief, Enforcement Bureau:1
1. In this Order, we consider a petition for
reconsideration ("Petition") of Cable Services Bureau Order,
DA 95-1226 ("Prior Order"),2 filed with the Federal
Communications Commission ("Commission") by the above-
referenced operator ("Operator").3 Operator also requested
a stay of the Prior Order, which was granted.4 The Prior
Order resolved complaints filed against the rates charged by
Operator for its cable programming services tier ("CPST") in
the community 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 In this Order we deny Operator's
Petition, vacate the stay and address the reasonableness of
Operator's CPST rates beginning May 15, 1994.
2. Under the provisions of the
Communications Act6 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")7 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"),8 and the
Commission's rules implementing the legislation ("Interim
Rules"),9 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.10 If the Commission
finds the rate to be unreasonable, it shall determine the
correct rate and any refund liability.11
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 393.12 The benchmark formula
was revised, effective May 15, 1994.13 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.14 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
1200.15 Operators may file an FCC Form 1210 to justify
quarterly rate increases based on the addition and deletion
of channels, changes in certain external costs and
inflation.16 Operators may justify their rates on an annual
basis using an 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.17 Any incurred
cost that is not projected may be accrued with interest and
added to rates at a later time.18
4. In its Petition, Operator 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.19 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. Therefore, we deny Operator's Petition.
5. Upon review of Operator's FCC Form 1200, we accept
Operator's calculated maximum permitted rate ("MPR") of
$10.12. Because Operator's actual CPST rate of $11.58,
effective May 15, 1994 through December 31, 1994, exceeds
its MPR of $10.12, we find Operator's actual CPST rate of
$11.58, effective May 15, 1994 through December 31, 1994, to
be unreasonable. Upon review of Operator's FCC Form 1210
covering the period April 1, 1994 through December 31, 1994,
we accept Operator's calculated MPR of $10.22. Because
Operator's actual CPST rate of $11.58, effective January 1,
1995 through June 30, 1995, exceeds its MPR of $10.22, we
find Operator's actual CPST rate of $11.58, effective
January 1, 1995 through June 30, 1995, to be unreasonable.
Upon review of Operator's FCC Form 1210 covering the period
January 1, 1995 through June 30, 1995, we accept Operator's
calculated MPR of $12.33. Because Operator's actual CPST
rate of $11.58, effective July 1, 1995, does not exceed its
MPR of $12.33, we find Operator's actual CPST rate of
$11.58, effective July 1, 1995, to be reasonable.
6. 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 DENIED.
7. 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 stay of In The Matter of Suburban Cable TV
Co., Inc., DA 95-1226, 10 FCC Rcd 6509 (CSB 1995), granted
in Petitions for Stay of Action, DA 95-1795, 10 FCC Rcd
10591 (CSB 1995), IS VACATED.
8. 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 rate of $11.58, charged by Operator in
the community referenced above, effective October 5, 1993
(the date of the first valid complaint was filed with the
Commission) through June 30, 1995, IS UNREASONABLE.
9. 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 rate of $11.58, charged by Operator in
the community referenced above, effective July 1, 1995, IS
REASONABLE.
10. 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 that portion of the amount paid
in excess of the maximum permitted CPST rate of $9.98 per
month (plus franchise fees), plus interest to the date of
the refund, for the period October 5, 1993 through May 14,
1994.
11. 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 that portion of the amount paid
in excess of the maximum permitted CPST rate of $10.12 per
month (plus franchise fees), plus interest to the date of
the refund, for the period May 15, 1994 through December 31,
1994.
12. 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 that portion of the amount paid
in excess of the maximum permitted CPST rate of $10.22 per
month (plus franchise fees), plus interest to the date of
the refund, for the period January 1, 1995 through June 30,
1995.
13. 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.
14. 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 complaint referenced herein against the
rates charged by Operator in the community referenced above
IS GRANTED.
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 See In The Matter of Suburban Cable TV Co., Inc., DA 95-
1226, 10 FCC Rcd 6509 (CSB 1995).
3 The term "Operator" includes Operator's successors and
predecessors in interest.
4 See Petitions for Stay of Action, DA 95-1795, 10 FCC Rcd
10591 (CSB 1995).
5 Prior Order at n. 1.
6 47 U.S.C. §543(c) (1996).
7 Pub. L. No. 102-385, 106 Stat. 1460 (1992).
8 Pub. L. No. 104-104, 110 Stat. 56 (1996).
9 See Implementation of Cable Act Reform Provisions of the
Telecommunications Act of 1996, 11 FCC Rcd 5937 1996).
10 See Section 76.956 of the Commission's rules, 47 C.F.R.
§76.956.
11 See Section 76.957 of the Commission's rules, 47 C.F.R.
§76.957.
12 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).
13 See Implementation of Sections of the Cable Television
Consumer Protection and Competition Act of 1992: Rate
Regulation, 9 FCC Rcd 4119 (1994).
14 See Section 76.922 of the Commission's rules, 47 C.F.R. §
76.922.
15 Id.
16 Id.
17 Id.
18 Id.
19 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).