NOTICE ************************************************************************* NOTICE ************************************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file pnmc5021. File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) Harron Communications Corp. ) ) ) Small System Filing to Support ) CUID No. TX 1338 (City of Southlake) Cable Programming Services ) Tier and Basic Service Tier Rates ) ORDER Adopted: August 16, 1996 Released: August 23, 1996 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint filed on January 21, 1994 regarding the rate that Harron Communications Corp. ("Harron") was charging for its cable programming services tier ("CPST") in the franchise area referenced above. Additionally, on July 29, 1994, the City of southlake ("City") petitioned the Federal Communications Commission ("Commission"), requesting assistance in reviewing the Basic Service Tier ("BST") cost of service showing filed by Harron on June 15, 1994. The Commission granted the City's request on May 23, 1995, and agreed to review Harron's BST cost of service filing. 2. On November 29, 1995, Harron filed FCC Form 1230, seeking to justify its CPST and BST rates through the simplified small system cost of service procedures under the Commission's Small System Order. In this Order we grant Harron's request for small system relief under the Small System Order and, based on our review of Harron's FCC Form 1230 filings, deny the pending CPST complaint, and find the CPST and BST rates to be not unreasonable. 3. Under the Cable Television Consumer Protection and Competition Act of 1992, and the Commission's rules implementing it, the Commission must review a cable operator's rates for its CPST 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 CPST rates. Additionally, once a franchising authority has been certified by the Commission, the cable operator is required to file a justification of its BST rate with the franchising authority. Under the Commission's rules, an operator may attempt to justify its CPST and BST rates through a benchmark showing, a cost of service showing, or a small system cost of service showing. In any case, the operator has the burden of demonstrating that its rates are not unreasonable. 4. Under cost of service regulation a cable system's rates are reviewed under traditional rate of return analysis. Cost of service regulation imposes heavy burdens upon regulators and the regulated entity because of the significant administrative and compliance costs associated with this regulatory model. The Commission recognized that some local franchising authorities may have resources and personnel sufficient to conduct a review of the rate-setting justification based on the benchmark approach but not to examine a cost of service showing. The Commission also understood that this concern may have discouraged certification by many local franchising authorities. Therefore, it established procedures under which the Commission, if requested by the local franchising authority in a petition for special relief under Section 76.7 of the Commission's rules, will issue a ruling that makes cost determinations for the BST. 5. The Commission's original rate regulations took effect on September 1, 1993. The Commission subsequently revised its rate regulations effective May 15, 1994. In a further effort to offer small cable companies administrative relief from rate regulation, the Commission amended the definition of small cable companies and small systems and introduced a simplified form of small system rate relief in the Small System Order. Cable systems serving 15,000 or fewer subscribers, and owned by a company having 400,000 or fewer subscribers, may elect to use the new small cable system rate mechanism in lieu of other Commission rate processes, provided the Commission has not reached a final resolution on the rate complaints filed against the system. Operators attempting to justify their rates through small system relief must file FCC Form 1230. If the maximum rate established on FCC Form 1230 does not exceed $1.24 per channel, the rate shall be presumed reasonable. 6. On November 29, 1995, Harron filed FCC Form 1230 seeking to justify its CPST and BST rates through the simplified small system cost of service procedures under the Commission's Small System Order. We find that Harron is a company with fewer than 400,000 total subscribers and that the system in question serves fewer than 15,000 subscribers, making it eligible for small system relief. Further, Harron's filing shows that its actual rate per channel for regulated cable service (FCC Form 1230, Line A11) does not exceed its per subscriber, per channel monthly programming costs (FCC Form 1230, Line A6). Neither Line A6 nor the Maximum Permitted Rate (FCC Form 1230, Line A10) on Harron's filings exceeds $1.24. We, therefore, find the rates to be not unreasonable. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Harron's request for small system relief IS GRANTED. 8. IT IS FURTHER ORDERED that the BST rate charged by Harron during the period under review with respect to the above-referenced CUID number IS JUSTIFIED. 9. IT IS FURTHER ORDERED, pursuant to Section 76.933(d) of the Commission's Rules, 47 C.F.R.  76.933(d), that this decision is binding on the local franchising authority, the City of Southlake, Texas and the cable operator, Harron Communications Corp. 10. IT IS FURTHER ORDERED that the CPST rate charged by Harron during the period under review for the above-referenced CUID number IS JUSTIFIED. 11. IT IS FURTHER ORDERED that the complaint against the CPST rate charged by Harron during the period under review with respect to the above-referenced CUID number IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau