******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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) ) Marcus Cable Associates, L.P)CUID Nos.CT0005 (Prospect) )CT0007 (Wolcott) )CT0009 (Waterbury) )CT0010 (Middlebury) )CT0011 (Plymouth) ) Complaint Regarding ) Cable Programming Services Tier Rates) and Rate Increases) ORDER Adopted: December 16, 1996 Released: December 19, 1996 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1.In this Order we consider complaints about the rate increases of Marcus Cable Associates, L.P. ("Marcus Cable) for its cable programming services tier ("CPST") in the communities referenced above. Marcus Cable increased its CPST rate on April 3, 1995, December 21, 1995, and June 1, 1996. Marcus Cable has attempted to justify its CPST rates through benchmark justifications on FCC Forms 1200, 1210, and 1240. We have already issued a separate order addressing the reasonableness of Marcus Cable's rates in effect before May 15, 1994. Accordingly, this Order addresses the reasonableness of Marcus Cable's CPST rate in effect from May 15, 1994 to present. 2.Under the Communications Act, the Commission is authorized to review CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. If the Commission finds rates to be unreasonable, it shall determine correct rates and any refund liability. 3.The Commission's original rate regulations took effect on September 1, 1993. The Commission subsequently revised its rate regulations effective May 15, 1994. Generally, to justify their rates for the period beginning May 15, 1994 through a benchmark showing, operators 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 where the Commission has found the cable programming service rate to be unreasonable less than one year prior to the filing, or where there is a pending complaint against the CPST rate. Operators may alternatively 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. 4.The Commission received the first valid complaint for the communities referenced above on September 2, 1993. Our Memorandum Opinion and Order addressing that complaint indicates that the filings in that review "do not in any way prejudice the reasonableness of the prices for CPS services after May 14, 1994." Consequently, the rates from May 15, 1994 are subject to Commission review and are addressed in this Order along with a complaint subsequently received by the Commission on May 1, 1995. 5.Upon review of Marcus Cable's FCC Form 1200s, we have found no apparent errors that would result in Marcus Cable's actual permitted rate exceeding its maximum permitted rates. Upon review of Marcus Cable's FCC Form 1210 to justify its April 3, 1995 CPST rate increase, we have found no apparent errors that would result in Marcus Cable's actual rate exceeding its maximum permitted rate. Marcus Cable, however, admits by its own calculations, that its amended FCC Form 1210 does not justify its $0.74 CPST rate increase effective December 21, 1995. Although Marcus Cable's FCC Form 1210 and our review confirms a maximum permitted rate of $12.67, Marcus Cable increased its rates to $12.73. Therefore, Marcus Cable's CPST rate increase results in a $0.06 per month overcharge starting December 21, 1995. Thus Marcus has failed to demonstrate on its FCC Form 1210 that the rate for its CPST was not unreasonable. However, on its FCC Form 1240 Marcus Cable calculated a true-up rate of $12.96 for the period. Consequently, there was no overcharge for the period. 6.Upon review of Marcus Cable's FCC Form 1240, we found that its June 1, 1996 rate increase of $1.58 is justified. Marcus Cable used an incorrect inflation factor on Line C3 and therefore applied an incorrect inflation adjustment in the calculation of its projected rates. However, in applying all allowable inflation to Marcus Cable's rates in its FCC Form 1240 filing for review purposes, we find that the June 1, 1996 increase is nevertheless justified. 7.Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that CPST rate charged by Marcus Cable in the franchise areas referenced in the caption during the period May 15, 1994 through December 20, 1995, IS NOT UNREASONABLE. 8.IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate increases charged by Marcus Cable in the franchise areas referenced in the caption during the period beginning December 21, 1995 and June 1, 1996, ARE NOT UNREASONABLE. 9.IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaints referenced herein against the CPST rate charged by Marcus Cable in the franchise areas referenced in the caption during the period May 15, 1994 to present ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau