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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-02-TC-054
Battlefield Cable TV Company )
) CUID No. GA0068 (Ft.
Oglethorpe)
Petition for Reconsideration )
Complaint Regarding )
Cable Programming Services Tier Rates )
ORDER ON RECONSIDERATION
AND RATE ORDER
Adopted: Septemeber 4, 2002
Released: September 6, 2002
By the Chief, Enforcement Bureau:1
1. In this Order, we consider a petition for
reconsideration ("Petition") of Cable Services Bureau Order,
DA 95-1035 ("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 The Commission's rules provide for a refund
liability deferral period, if timely requested by Operator,
beginning May 15, 1994 and ending July 14, 1994, for any
overcharges resulting from Operator's calculation of a new
maximum permitted rate on the FCC Form 1200.16 However,
Operator will incur refund liability from May 15, 1994
through July 14, 1994 (or the date Operator restructures its
rates, if sooner) for any CPST rates charged above the FCC
Form 393 MPR approved by the Commission.17
4. 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.18 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.19 Any incurred
cost that is not projected may be accrued with interest and
added to rates at a later time.20
5. In its Petition, Operator argues that the Cable
Services Bureau erred in the Prior Order when it adjusted
Operator's inflation factor based on the most recent data
available. We disagree. This issue was addressed by the
Commission in Cencom Cable Income Partners II, L.P.
("Cencom").21 In Cencom, the Commission explained its
policy regarding refreshing inflation:
The Commission is charged with protecting
subscribers from paying unreasonable CPST rates,
while also providing system operators with a fair
return. Accurate information, including accurate
inflation information, is central to setting an
initial regulated rate that meets the standard.
Thus, the Commission requires that data used in
setting a rate be refreshed with the most current
data available when an operator's rates become
regulated and are justified.22 Because final
inflation data for the period addressed in rate
justifications may not be available when a
justification is filed, the Commission directs
operators to estimate inflation by using the most
recently available inflation data published on an
interim basis in the Commerce "Survey of Current
Business" at Table 7.3, Line 5.23 The Bureau
practice when reviewing rate justifications is to
verify that the operator has used this inflation
data. The Bureau also determines whether the
other information in the rate justification is
correct, and on the basis of the inflation and
other information in the form, including any
corrections, whether the operator's rate meets the
statutory requirement that the rate not be
unreasonable. The Bureau does not find a rate
unreasonable solely because more accurate
inflation data has become available by the time it
makes its review. This would churn rates, causing
significant administrative expenses to operators
and confusion to subscribers. However, if a rate
is unreasonable on its face or has to be adjusted
for reasons other than the availability of a more
accurate inflation figure, e.g., because the
operator failed to provide correct information in
its rate justification or failed to complete its
rate justification form correctly, the Bureau
recalculates the maximum permitted rate using the
most accurate inflation information available,
rather than earlier estimates.24 This practice is
consistent with 47 C.F.R. � 76.922(b) (9) (iii),
which provides:
[I]f the rates charged by a cable operator
are not justified by an analysis based on
the data available at the time it initially
adjusted its rates, the cable operator must
adjust its rates in accordance with the
most accurate data available at the time of
the analysis.
[footnotes in original]
6. Because the Cable Services Bureau's action in the
Prior Order is consistent with the Commission's holding in
Cencom, we reject Operator's argument and deny Operator's
Petition.
7. Upon review of Operator's amended FCC Form 1200,
we accept Operator's calculated maximum permitted rate
("MPR") of $11.62. Operator elected to defer refund
liability pursuant to the Commission's rules,25 and
restructured its rates on July 1, 1994. Therefore, from
May 15, 1994 through June 30, 1994, Operator is responsible
for refunding any charges in excess of the FCC Form 393 MPR
of $11.95, approved in the Prior Order. Because Operator's
actual CPST rate of $12.46, effective May 15, 1994 through
June 30, 1994, exceeds its FCC 393 MPR of $11.95, we find
Operator's actual CPST rate of $12.46, effective May 15,
1994 through June 30, 1994, to be unreasonable. Because
Operator's actual CPST rate of $11.93, effective July 1,
1994 through December 31, 1995, exceeds its FCC Form 1200
MPR of $11.62, we find Operator's actual CPST rate of
$11.93, effective July 1, 1994 through December 31, 1995, to
be unreasonable.
8. Upon review of Operator's FCC Form 1210, covering
the period July 1, 1994 through December 31, 1995, we find
Operator's calculated MPR of $12.64 to be reasonable.
Because Operator's actual CPST rate of $11.93, effective
January 1, 1996, does not exceed its MPR of $12.64, we find
Operator's actual CPST rate of $11.93, 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
Operator's petition for reconsideration IS DENIED.
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 the stay of DA 95-1035, granted in Petitions for
Stay of Action, DA 95-1795, 10 FCC Rcd 10591 (CSB 1995), IS
VACATED.
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 rate of $12.46, charged by Operator in
the franchise area referenced above, effective September 10,
1993 (the date the first valid complaint was filed with the
Commission) through June 30, 1994, IS 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 rate of $11.93, charged by Operator in
the franchise area referenced above, effective July 1, 1994
through December 31, 1995, IS 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 rate of $11.93, charged by Operator in
the franchise area referenced above, effective January 1,
1996, IS REASONABLE.
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 community referenced
above that portion of the amount paid in excess of the
maximum permitted CPST rate of $11.95 per month (plus
franchise fees), plus interest to the date of the refund,
for the period September 10, 1993 (the date the first valid
complaint was filed with the Commission) through June 30,
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 referenced
above that portion of the amount paid in excess of the
maximum permitted CPST rate of $11.62 per month (plus
franchise fees), plus interest to the date of the refund,
for the period July 1, 1994 through December 31, 1995.
16. 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.
17. 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 In the Matter of Battlefield Cable Company, DA 95-1035, 10
FCC Rcd 9335 (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 See 47 C.F.R. � 76.922 (b) (6) (ii).
17 47 C.F.R. � 76.922 (b) (6) (ii). Se also Sections of the
Cable Television Consumer Protection and Competition Act of
1992: Rate Regulation, MM Docket No. 92-266, Second Order on
Reconsideration, Fourth Report and Order, and Fifth Notice
of Proposed Rulemaking, 9 FCC Rcd 4119, 4183-4185 (1994)
(the maximum permitted rates determined under Form 393 may
apply from May 15, 1994 until the date that the operator
implemented its new rates, as determined under the Form 1200
series.)
18 Id.
19 Id.
20 Id.
21 In the Matter of Cencom Cable Income Partners II, L.P.,
FCC 97-205 (Released June 13, 1997).
22 See Third Order on Reconsideration, 9 FCC Rcd at 4349-
50; FCC Form 393 at 11 Instruction for Line 122--GNP-PI
(Current) (Aug. 1993). The Bureau has explained the
requirement to use current data in Cable Operators' Rate
Justification Filings, Sections 76.945, 76.946 of the
Commissions rules, 9 FCC Rcd 7752, 7754-55 � 3(8) (Cab.
Serv. Bur. 1994) ("Rate Filings"); Nov. 10, 1993 Public
Notice, Answer to Question No. 6 (in filing rate
justifications, operators must refresh data used in initial
rates with most current information as of the date of
initial regulation); July 30, 1993 Public Notice, Answer to
Question 10.
23 See FCC Form 393 at 11 Instruction for Line 122--GNP-PI
(Current) (Aug. 1993).
24 See Public Notice, Cable Services Bureau Announces
Policy Regarding Inflation Adjustment on FCC Form 393, DA
95-999 at 2 (Cab. Serv. Bur. May 2, 1995). The Bureau gave
operators the opportunity to review and correct errors in
their benchmark rate filings. Operators who had not
previously correctly calculated the inflation adjustment
factor were directed to use the accurate factors through
June 30, 1994. Public Notice, Cable Services Bureau
Announces Optional Procedures with Respect to Pending Pre-
May 15 Benchmark Cases, DA 94-1556 at 3-4 (Dec. 29, 1994).
The Public Notice listed the inflation adjustment factors
through June 30, 1994.
25 See letter dated June 13, 1994 from Gary M. Steffen,
Staff Accountant, Scripps Howard Cable Company.