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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) )CUID No. MD0172 (Prince George's County) Maryland Cable Partners, L.P. ) ) Complaints Regarding ) Cable Programming Services Tier ) Rate Increase ) ORDER Adopted: December 9, 1996Released: December 9, 1996 By the Chief, Cable Services Bureau: 1. In this Order we consider complaints concerning the rate increases of Maryland Cable Partners, L.P. ("Maryland Cable") for its cable programming services tier ("CPST") in Prince George's County, CUID No. MD0172. This Order addresses only the reasonableness of Maryland Cable's rates after May 14, 1994. We have already issued a separate order addressing the reasonableness of Maryland Cable's CPST rate in effect prior to that date. Maryland Cable has attempted to justify its CPST rates through benchmark showings on FCC Form 1200, FCC Forms 1210 and FCC Form 1240. We conclude, for the reasons discussed below, that the rates charged by Maryland Cable are unreasonable. 2. The Communications Act authorizes the Federal Communications Commission ("Commission") to review the CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. The Cable Television and Consumer Protection and Competition Act of 1992, ("1992 Cable Act") required the Commission to review CPST rates upon the filing of a valid complaint by a subscriber. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the new legislation, require that complaints against the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received subscriber complaints. An LFA may not file a CPST rate complaint unless it receives more than one subscriber complaint within 90 days after such increase becomes effective. The filing of a valid complaint triggers an obligation on behalf of the cable operator to file a justification of its CPST rates. If the Commission finds the rate to be unreasonable, it shall determine the correct rate and any refund liability. 3. The Commission's original rate regulations took effect on September 1, 1993. The Commission revised its rate regulations effective May 15, 1994. Cable operators that have valid CPST complaints filed against them prior to May 15, 1994 must demonstrate that their CPST rates were in compliance with the Commission's initial rules from the time the complaint was filed through May 14, 1994. Cable operators must also demonstrate that their rates were in compliance with the revised rules from May 15, 1994 forward. Cable operators attempting to justify their rates for the period beginning May 15, 1994 by a benchmark showing must use the FCC Form 1200 series. Cable operators may also justify rate increases based on the addition and deletion of channels, changes in certain external costs, and inflation, by filing FCC Form 1210. FCC Form 1210 must be filed at least 30 days before new rates are scheduled to go into effect when the Commission has found the cable programming service rate to be unreasonable less than one year prior to the filing. In addition, FCC Form 1210 may be filed where there is a pending complaint against the CPST rate. 4. Operators may justify adjustments to their rates on an annual basis using 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. Any incurred cost that is not projected may be accrued with interest and added to rates at a later time. If actual and projected costs are different during the rate year a "true-up" mechanism is available to correct estimated costs with actual cost changes. The "true-up" requires operators to decrease their rates or alternatively permits them to increase their rates to make an adjustment for over or under estimations of these cost changes. 5. On April 13, 1995 and on September 20, 1995 valid complaints were filed against the May 1, 1995 and October 1, 1995 rate increases that were to be implemented by Maryland Cable in Prince George's County. In addition, pursuant to the 1996 Act, the local franchise authority, Prince George's County Government ("County") filed a valid complaint on July 30, 1996, regarding Maryland Cable's rate increase. 6. Upon review of Maryland Cable's FCC Form 1200, multiple FCC Forms 1210 and FCC Form 1240, we find that Maryland Cable charged in excess of its calculated maximum permitted rate or has not correctly calculated its maximum permitted rate beginning May 15, 1994, as discussed in the paragraphs below. 7. FCC Forms 1200, 1210 and 1240 Filings: On August 15, 1994, Maryland Cable filed its FCC Form 1200 to justify CPST rates in effect after May 14, 1994. Maryland Cable calculated a maximum permitted rate for the CPST of $9.01. However, Maryland Cable was actually charging $9.04 for its CPST. Thus Maryland Cable has failed to demonstrate that its rate for the CPST was not unreasonable. 8. On September 1, 1994, Maryland Cable filed an FCC Form 1210 to justify a rate increase of $0.18 effective October 1, 1994. We find that Maryland Cable correctly calculated a maximum permitted rate of $9.26 justifying the October 1, 1994 CPST charge of $9.22. 9. On February 27, 1995 Maryland Cable filed an FCC Form 1210 to justify a CPST rate increase of $0.26 effective May 1, 1995. We find that Maryland Cable did not correctly calculate its maximum permitted rate on this filing. Maryland Cable claimed previous permitted charges of $9.37 for CPST on Line A2 of it FCC Form 1210 filing. The correct maximum permitted rate from its previous FCC Form 1210 was $9.26. We adjusted Line A2 to reflect the corrected previous permitted rate to $9.26 for CPST. In addition, Maryland Cable did not bring forward the correct previous external cost amounts as filed on Line B10 of its previous FCC Form 1210. In accordance with FCC Form 1210 instructions, we corrected Line B13 on the May 1, 1995 FCC Form 1210 filing to reflect the external costs recorded on Line B10 of the previous FCC Form 1210 filing. Our correction reduced the maximum permitted rate for CPST from $9.45 to $9.33. Thus, Maryland Cable failed to demonstrate that its May 1, 1995 rate of $9.48 for its CPST was not unreasonable. 10. On October 17, 1995, Maryland Cable filed its FCC Form 1210 to justify a CPST rate increase of $0.29 effective October 1, 1995. Upon review of the FCC 1210, we adjusted Module A, Line 2 to reflect our corrections to the maximum permitted rates on the previous FCC Form 1210. Finally, we adjusted Maryland Cable's inflation to conform with the FCC published rate for the 12 months ending June 30, 1995. These adjustments resulted in a reduction of the maximum permitted rate for CPST to $9.61 from the rate of $9.74 filed by Maryland Cable. Thus, Maryland Cable failed to demonstrate that its October 1, 1995 rate of $9.77 for its CPST was not unreasonable. 11. On April 30, 1996 Maryland Cable filed FCC Form 1240. We adjusted Module A, Line 1 of that Form to reflect the corrected maximum permitted rate of $9.61 brought forward from the prior FCC Form 1210. In addition, we again adjusted Maryland Cable's inflation to conform with the FCC published rate. We also corrected Worksheet 8 and Line H1 to reflect the maximum permitted rate corrections we made on FCC Forms 1210 for prior months included in the true-up period. As a result of our adjustments the maximum permitted rate of $11.11 calculated by Maryland Cable on its FCC Form 1240 for CPST has been corrected to $10.78. Thus, Maryland Cable failed to demonstrate that its June 1, 1996 rate of $11.13 for its CPST was not unreasonable. 12. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rates charged by Maryland Cable in the Prince George's County, Maryland, CUID No. MD0172, from May 15, 1994 to September 30, 1994, ARE UNREASONABLE. 13. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rates charged by Maryland Cable in the Prince George's County, Maryland, CUID No. MD0172, from May 1, 1995 to the present, ARE UNREASONABLE. 14. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaints against the CPST rates charged by Maryland Cable in Prince George's County, Maryland, CUID No. MD0172 from May 15, 1994 to September 30, 1994 ARE GRANTED TO THE EXTENT DISCUSSED HEREIN. 15. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaints against the CPST rates charged by Maryland Cable in Prince George's County, Maryland, CUID No. MD0172 from May 1, 1995 to the present ARE GRANTED TO THE EXTENT DISCUSSED HEREIN. 16. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Maryland Cable shall refund to subscribers in CUID No. MD0172 that portion of the amount paid in excess of the maximum permitted CPST rate of $9.01 per month (plus franchise fee), plus interest to the date of the refund, for the period from May 15, 1994 to August 31, 1994. 17. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Maryland Cable shall refund to subscribers in CUID No. MD0172 that portion of the amount paid in excess of the maximum permitted CPST rate of $9.33 per month (plus franchise fee), plus interest to the date of the refund, for the period from May 1, 1995 to September 30, 1995. 18. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Maryland Cable shall refund subscribers in CUID No. MD0172 that portion of the amount of the CPST rate increase paid by subscribers that exceeded that the maximum permitted CPST rate of $9.61 per month (plus franchise fee), plus interest to the date of the refund for the period from October 1, 1995 to May 31, 1996. 19. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Maryland Cable shall refund subscribers in CUID No. MD0172 that portion of the amount of the CPST rate increase paid by subscribers that exceeded that the maximum permitted CPST rate of $10.78 per month (plus franchise fee), plus interest to the date of the refund for the period from June 1, 1996 to the day before Maryland Cable implements the maximum permitted CPST rate of $10.78. 20. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Maryland Cable Partners, L.P. in Prince George's County, CUID No. MD0172, revise its calculation of its maximum permitted CPST rate in its next FCC Form 1240 filing. 21. IT IS FURTHER ORDERED that Maryland Cable 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, 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 of the plan. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Service Bureau