FOR FCC RECORD ONLY $//V Cable, Inc., Brook Park, Northfield, North Royalton, Independence, and Brecksville, OH, MO&O, DA 95-486//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D.C. DA 95-486 In the Matter of ) ) V Cable, Inc. ) CUID Nos. OH0823, OH0969, OH0971, ) OH0993, OH1274 Brook Park, Northfield, North Royalton, ) Independence, and Brecksville, ) Ohio ) ) Benchmark Filings To Support ) Cable Programming Service Prices ) Memorandum Opinion and Order Adopted: March 14, 1995 Released: March 15, 1995 By the Chief, Cable Services Bureau: Introduction 1. Here we consider complaints about the prices V Cable, Inc. d/b/a Cablevision ("Cablevision") was charging for its cable programming service ("CPS") tier in Brook Park, Ohio, CUID No. OH0823; Northfield, Ohio, CUID No. OH0969; North Royalton, Ohio, CUID No. OH0971; Independence, Ohio, CUID No. OH0993; and Brecksville, Ohio, CUID No. OH1274. Cablevision has chosen to attempt to justify its prices through benchmark showings on FCC Form 393. This Order addresses the reasonableness of Cablevision's prices only through May 14, 1994. At a later date we will issue a separate order addressing the reasonableness of the prices after that date. 2. Under the Cable Television Consumer Protection and Competition Act of 1992, and our rules implementing it, 47 C.F.R. Part 76, Subpart N, the Commission must review CPS prices upon the filing of a valid complaint. The filing of a valid complaint triggers an obligation on behalf of the cable operator to file a justification of its CPS prices. Under our rules, an operator may attempt to justify its prices through either a benchmark showing or a cost-of-service showing. In either case, the operator has the burden of demonstrating that its CPS prices are not unreasonable. 3. The Commission's original rate regulations took effect on September 1, 1993. The Commission subsequently revised its rate regulations effective May 15, 1994. Operators with valid CPS complaints filed against them prior to May 15, 1994 must demonstrate that their CPS prices were in compliance with the Commission's initial rules from the time the complaint was filed through May 14, 1994, and that their prices were in compliance with the revised rules from May 15, 1994 forward. Operators attempting to justify their prices for the period prior to May 15, 1994 through a benchmark showing must complete and file FCC Form 393. Generally, to justify their prices for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form 1200 series. Procedural Matters 4. The first complete and timely CPS complaints in the franchise areas addressed in this Order were completed and served on Cablevision and received by the Commission on the dates set forth in Appendix A. 5. Cablevision filed its FCC Forms 393 for the franchise areas addressed in this Order on the dates set forth in Appendix B. Cablevision amended its justifications on February 17, 1995, in response to a Commission letter which requested further clarification of Cablevision's amended showings. Background 6. Cablevision restructured its rates in an effort to comply with the Commission's Rules on September 1, 1993. In October 1993, Cablevision changed its channel line-up on Channel 37 by deleting HSN II, a satellite channel on the CPS tier, and adding WQHS, a non-satellite channel on the basic tier. On January 1, 1994, Cablevision again changed its channel line-up by moving Channel 17, a satellite channel on the CPS tier, to the basic tier. These changes in Cablevision's channel line-up were unaccompanied by any change in Cablevision's prices for its basic and CPS tiers. Cablevision completed Part II of Form 393 using its channel line-up as of October 1993. In Part I of Form 393, Cablevision performed alternative calculations using its number of channels as of September 1, 1993, and as of October 1993. Discussion 7. Cablevision acknowledges that its CPS prices are higher than the maximum permitted price if Form 393 is calculated using the number of channels Cablevision offered as of October 1993. Thus, Cablevision has failed to demonstrate that its prices for the CPS tier were not unreasonable. Furthermore, upon review of Cablevision's Form 393 filings, we have found that Cablevision has not correctly calculated its maximum permitted prices as of the initial date of regulation and it is therefore appropriate to make the following adjustments to Cablevision's calculations in Form 393: a. Cablevision's calculations for its rate-regulated channels as of the initial date of regulation (Form 393, Part II, Worksheet 1 and Form 393, Part I) count Channel 17 as a regulated satellite channel on the CPS tier. However, according to the channel line-ups submitted by Cablevision and the February 17, 1995 Letter provided by Cablevision, Channel 17 was moved from the CPS tier to the basic tier before the filing of the first valid complaint in these franchise areas. The channels used in completing Form 393 should be those channels offered on the initial date of regulation for each franchise area. Since the change in the use of Channel 17 occurred before any complaints were filed pertaining to these franchise areas, that change must be reflected in the channel counts. b. In order to correct for the effect of the channel-counting error discussed above, we decrease the number of channels on the CPS tier on Part II, Worksheet 1, Line 102 and Part I of Form 393 from 26 to 25 for Brook Park, Ohio, CUID No. OH0823, and for Independence, Ohio, CUID No. OH0993; from 23 to 22 for Northfield, Ohio, CUID No. OH0969; from 22 to 21 for North Royalton, Ohio, CUID No. OH0971; and from 24 to 23 for Brecksville, Ohio, CUID No. OH1274. We also increase the number of channels on the basic tier on Part II, Worksheet 1, Line 102 from 14 to 15 for Brook Park, Ohio, CUID No. OH0823; from 12 to 13 for Northfield, Ohio, CUID No. OH0969; from 13 to 14 for North Royalton, Ohio, CUID No. OH0971, and Independence, Ohio, CUID No. OH0993; and from 11 to 12 for Brecksville, Ohio, CUID No. OH1274. These adjustments have the effect of reducing the number of CPS channels which is multiplied by the maximum per- channel rate on Form 393, Part I. 8. Because Cablevision has failed to demonstrate that its prices for the CPS tier were not unreasonable, we will set prices for this tier, incorporating the adjustments discussed above. In doing so, we must also recalculate the Inflation Adjustment Factor on the basis of the most accurate data currently available for the dates that Cablevision was required to file Form 393 in each franchise area. On July 29, 1994, the Department of Commerce released corrected inflation data including Gross National Product Price Index ("GNP-PI") figures of 122.3 for the third quarter of 1992, 126.5 for the fourth quarter of 1993, and 127.5 for the first quarter of 1994. Using these GNP-PI figures, we calculate 1.039 as the Inflation Adjustment Factor through February 1994, the base date Cablevision should have used in justifying its rates for Brook Park, Ohio, CUID No. OH0823; Northfield, Ohio, CUID No. OH0969; North Royalton, Ohio, CUID No. OH0971; and Independence, Ohio, CUID No. OH0993; and 1.045 through April 1994, the base date Cablevision should have used in justifying its rate for Brecksville, Ohio, CUID No. OH1274. 9. These adjustments have the cumulative effect of yielding the maximum permitted monthly CPS tier price for each franchise area set forth in Appendix C. Conclusions 10. Upon review of the record herein, we conclude that Cablevision's showing supports the maximum reasonable CPS tier price for each franchise area set forth in Appendix C, Column 2 (plus franchise fee) for the period from the filing of the earliest complaint in each franchise area (as set forth on Appendix A) to May 14, 1994. We further determine that we will order appropriate refunds pursuant to Section 76.957 of the Commission's Rules, 47 C.F.R.  76.957, in order to reimburse subscribers for the amount they paid in excess of a reasonable price. 11. We further conclude that, except for CUID No. OH1274, Cablevision must reflect in its FCC Form 1200 rate filings for the period after May 14, 1994 the fact that Cablevision's prices as of March 31, 1994 were unreasonable. We reserve the right to make further adjustments to Cablevision's prices for the period after May 14, 1994, upon completion of our review of Cablevision's FCC Form 1200 rate filings. 12. IT IS FURTHER ORDERED that the complaints referred to in Appendix A against the cable programming service prices charged by V Cable, Inc. d/b/a Cablevision in Brook Park, Ohio, CUID No. OH0823; Northfield, Ohio, CUID No. OH0969; North Royalton, Ohio, CUID No OH0971; Independence, Ohio, CUID No. OH0993; and Brecksville, Ohio, CUID No. OH1274, and all other complaints in these franchise areas related to the same prices, ARE GRANTED TO THE EXTENT INDICATED HEREIN. 13. IT IS FURTHER ORDERED that the benchmark filings submitted by V Cable, Inc. d/b/a Cablevision with respect to Brook Park, Ohio, CUID No. OH0823; Northfield, Ohio, CUID No. OH0969; North Royalton, Ohio, CUID No. OH0971; Independence, Ohio, CUID No. OH0993; and Brecksville, Ohio, CUID No. OH1274 for the period beginning with the filing of the first valid complaint in each franchise area (as set forth in Appendix A) and ending on May 14, 1994 justify the maximum price in each franchise area set forth in Appendix C, Column 2 (plus franchise fee) for V Cable, Inc. d/b/a Cablevision's cable programming service tier. 14. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that V Cable, Inc. d/b/a Cablevision shall refund to subscribers that portion of the amounts paid for cable programming service for the period from the filing of the first valid complaint in each franchise area (as set forth on Appendix A) to May 14, 1994 which exceeded the maximum price for each franchise area set forth in Appendix C, Column 2 (plus franchise fee) per month and was thus unreasonable, plus interest to the date of the refund. 15. IT IS FURTHER ORDERED that V Cable, Inc. d/b/a Cablevision shall promptly determine the overcharges to CPS subscribers for the stated periods, and shall within 30 days of the release of this Order file a report with the Chief, Cable Services 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 thereof. 16. IT IS FURTHER ORDERED, pursuant to Section 76.922(b)(4)(C) of the Commission's Rules, 47 C.F.R.  76.922(b)(4)(C), that V Cable Inc. d/b/a Cablevision shall, within 30 days of the release of this Order, revise its Form 1200 filings with respect to Brook Park, Ohio, CUID No. OH0823; Northfield, Ohio, CUID No. OH0969; North Royalton, Ohio, CUID No. OH0971; and Independence, Ohio, CUID No. OH0993 for the period beginning May 15, 1994, to reduce the monthly charge per tier as of March 31, 1994 for Tier 2 (Line A6b) to equal the maximum price in each franchise area set forth in Appendix C, Column 2 (plus franchise fee). 17. IT IS FURTHER ORDERED that V Cable, Inc. d/b/a Cablevision shall place into effect, within 30 days after its submission of the revised Form 1200 filings required above, prices that reflect the reductions in the CPS rates determined in this Order. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau Appendix A CUID No. Date First Complaint Date Complaint Filed with FCC Served 0823 2/25/942/25/94 0969 2/25/94 2/25/94 0971 2/23/942/23/94 0993 2/23/942/24/94 1274 4/4/94 4/4/94 Appendix B CUID No. Date Form 393 Filed 0823 3/29/94 0969 5/23/94 0971 4/12/94 0993 3/29/94 1274 7/5/94 Appendix C CUID No. Actual Rates Maximum Reasonable Rates 0823 $13.72 $12.73 0969 $13.83 $12.67 0971 $13.26 $12.11 0993 $13.83 $12.67 1274 $14.56 $13.43