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 ) ) CENTURY COMMUNICATIONS ) CORPORATION ) ) Resolution of ) Rate Complaints ) ) ORDER Adopted: August 22, 1996 Released: August 23, 1996 By the Commission: 1. Pursuant to 47 C.F.R.  1.1204(b)(7), the Cable Services Bureau staff met with Century Communications Corporation to discuss the resolution of issues relating to complaints regarding the rates charged for cable programming service offerings. The staff of the Cable Services Bureau received from Century the attached proposal to resolve the rate complaints. On initial review the Commission believes that the proposal is a reasonable approach to resolve these matters. The Commission directs the Cable Services Bureau to serve a copy of this Proposed Resolution on (i) all local franchising authorities in the benchmark franchises at issue here; and (ii) any party other than a local franchising authority who filed a valid complaint for their comment. Parties wishing to comment on the proposal should do so by filing with the Secretary within thirty days of the date of this Order. There will be a fifteen day period for reply comments. Because it would be unduly burdensome to require that each complainant be served with every comment, pursuant to our Rate Order, we will not require the parties to serve their comments on all parties. All comments and reply comments will be publicly available. 2. ACCORDINGLY, IT IS ORDERED That the staff shall serve the franchising authorities and complainants with this Proposed Resolution and provide thirty days for comments and fifteen days for reply comments. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary TERMS OF PROPOSED RESOLUTION I. INTRODUCTION. 1. These terms constitute a resolution of refunds owed subscribers in certain Los Angeles cable communities in which cable systems (referred and defined herein as the "Los Angeles Area Systems") owned and operated by Century Communications Corporation and its affiliates and subsidiaries (collectively "Century") created packages of a la carte channels. CPST rate complaints are pending with respect to each of these communities. II. BACKGROUND. 2. In each of the Los Angeles Area Systems, Century began providing packages of a la carte channels (the "Century Select" offerings) between April 1, 1993 and September 30, 1994. On December 22, 1994, the Commission's Cable Services Bureau ("Bureau") released a Letter of Inquiry ("LOI") ruling finding that the Century Select offerings in Century's Los Angeles and Beverly Hills systems must be treated as regulated CPSTs (DA 94-1553). Century has filed an Application for Review of the Los Angeles/Beverly Hills LOI ruling. In addition, the Bureau has issued eight CPST rate orders relying on the Los Angeles/Beverly Hills LOI ruling in finding that the Century Select offerings in the Los Angeles Area Systems must be treated as regulated CPSTs. (DA 95-314, DA 95-433, DA 95-478, DA 95-498, DA 95-499, DA 95-500, DA 95-516, DA 95-525). Century has filed Applications for Review of these rate orders. 3. Thereafter, the Bureau staff met with Century to discuss resolution of issues relating to the rate complaints and the LOI decision. Century represented to the Commission that its initial decision to use the Commission's benchmark formula to establish its rates was premised upon its good-faith assumption that its Century Select package was a lawful a la carte offering. Century further represented that, in light of the LOI decision, application of the benchmark formula produced different maximum permitted rates in the Los Angeles Area Systems than the rates actually charged by Century. As part of this process, Century submitted benchmark rate filings for the Los Angeles Area Systems premised on the exclusion of four of the Century Select channels from the count of regulated channels for purposes of calculating Century's maximum permitted benchmark rates (Forms 393, 1200 series, 1210, 1240). 4. Century maintains that it followed the letter and spirit of the Commission's rules and the 1992 Cable Act in creating its Century Select offerings and that those offerings should not be treated as regulated tiers. Century and the Commission desire to resolve the pending CPST rate cases involving the Los Angeles Area Systems and the various issues regarding the Century Select offerings described above under the terms set forth below. III. DEFINITIONS. 5. As used herein, the following definitions will apply: (a) "BST" means the tier of "Basic Service" as defined in Section 76.901 of the Commission's rules, 47 C.F.R.  76.901. (b) "CPST" means any tier of cable programming service as defined in Section 76.901 of the Commission's rules, 47 C.F.R.  76.901. (c) "Effective Date" means the date on which the Commission issues the Resolution Order. (d) "Implementation Deadline" means the date occurring 90 days after the Opt-Out Deadline. (e) "Interest" means the Internal Revenue Service rate of interest for tax overpayments. (f) "Los Angeles Area Systems" means the cable systems owned and operated by Century serving the City of Los Angeles (Areas F, G, and H), Santa Monica, Beverly Hills, West Hollywood, Marina Del Rey, and Bell Canyon, California. (g) "Los Angeles Area System Eligible Subscribers" means all non-bulk, residential subscribers of record in the Century systems listed in Exhibit 1 as of the date bills are issued reflecting Refunds. (h) "Opt-Out Deadline" means the date occurring 30 days after the Effective Date. (i) "Publication Date" means the date on which the Commission releases its initial Order relating to this Proposed Resolution. (j) "Refunds" means credits on subscriber bills. (k) "Resolution Order" means an order issued by the Commission approving the terms of this Proposed Resolution. IV. TERMS. 6. Century accepts the jurisdiction of the Commission over it and the subject matter of these rate resolutions for purposes of the Resolution Order. 7. All of Century's CPST rate cases for the Los Angeles Area Systems for the period through the Publication Date are finally resolved under the terms provided herein. 8. Century agrees that the terms contained in this Proposed Resolution shall be incorporated by reference in the Resolution Order. Assuming the adoption of these terms in the Resolution Order, Century and the Commission will each actively defend the Resolution Order against any appeal of, or other legal challenge to, the Resolution Order by any third party. Century and the Commission will reasonably cooperate in any such defense of these terms. 9. Assuming the adoption of these terms in the Resolution Order, Century agrees that any violation of the Resolution Order shall constitute a violation of a Commission order, entitling the Commission to exercise any rights and remedies attendant to the enforcement of a Commission order. 10. These terms are for purposes of resolving outstanding CPST complaints in the Los Angeles Area Systems and the various issues regarding the Century Select offerings and do not constitute an admission by Century of any violation of, or failure to conform to, the 1992 Cable Act, Commission Rules, or any other applicable law, rule, or policy. 11. The Commission will not institute, on its own motion, any proceedings against Century based upon the information obtained during consideration of the Proposed Resolution. In addition, in the absence of additional facts, any allegations and other circumstances involved in consideration of this Proposed Resolution will not be used by any party against Century with respect to any future proceeding. 12. In settlement of all of Century's CPST rate cases in the Los Angeles Area Systems and the various issues regarding the Century Select offerings, Century hereby agrees to the following terms, conditions, and procedures which will facilitate a fair and expeditious resolution of those matters in a manner that serves the public interest: (a) The Bureau has reviewed Century's revised benchmark rate submissions (Forms 393, 1200 Series, 1210, and 1240) and has determined a maximum permitted per channel rate in each of the Los Angeles Area Systems reflecting the exclusion of four of the Century Select channels from the count of regulated channels for purposes of applying the Commission's benchmark rate rules. (b) Subject to the right of local franchising authorities ("LFAs") to opt out under this subparagraph, Century shall issue Refunds to Los Angeles Area System Eligible Subscribers as set forth in Exhibit 1. Such Refunds cover the period through October 31, 1996 and already include applicable Interest through October 31, 1997. An LFA may elect to opt out of the Refunds established under this subparagraph and set forth in Exhibit 1 by providing notice to the Commission and Century no later than 30 days following the Effective Date. Such notice shall: (a) be in writing; (b) be addressed to the Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554, with a copy to Century Communications Corporation, 50 Locust Avenue, New Canaan, Connecticut 06840, attention: George Franciscovich, Senior Vice President, Legal Affairs, Cable Television Division; (c) identify the local franchising authority and community unit identification number for the franchise area; and (d) reflect the clear intent to opt out of the Refund provision of this subparagraph. However, such notice need not meet any other requirements and may be in letter form. An election by a particular LFA to opt out of the Refunds under this subparagraph will not otherwise affect the applicability of the remaining provisions of this Proposed Resolution in the system regulated by such LFA, including but not limited to subparagraphs (e), (f), and (h) hereof. (c) With respect to the City of Los Angeles, the payment by Century of the Refunds specified in Exhibit 1 will be deemed to account for and finally resolve all BST and CPST amounts owed to subscribers in Areas F, G and H for the period beginning November 1, 1995 through October 31, 1996. The payment of such Refunds will have no effect on the refunds included in the resolution concerning Century's BST rates adopted by the Los Angeles City Council on June 12, 1996 with respect to BST refunds due for the period of September 1, 1993 through October 31, 1995 in Los Angeles Areas F, G, and H. In the event the City of Los Angeles exercises its right to opt out described in subparagraph (b) with respect to Areas F, G, and H, the terms of subparagraph (e) regarding the calculation of Century's rates under the Commission's benchmark rate rules shall apply for purposes of determining any rates or refunds in the City of Los Angeles (Areas F, G, and H). (d) Century will begin providing Refunds to Los Angeles Area System Eligible Subscribers no later than the Implementation Deadline and the provision of such Refunds will be completed in a period not to exceed 12 months. At least one-twelfth of the total Refunds in each of the Los Angeles Area Systems will be reflected in the form of credits on subscriber bills for each month of the payment period, provided further that in no case, except the final month of the payment period, will the amount of the monthly credit on subscriber bills calculated pursuant to this subparagraph be less than $1.00. In the event the Implementation Deadline is later than November 1, 1996, Century shall be required to calculate and pay additional Refunds and Interest based on the difference, if any, between the combined BST and CPST rates being charged from November 1, 1996 until the Implementation Deadline, and the combined BST and CPST rates put into effect as of the Implementation Deadline. Century also will be required to calculate and pay additional Interest through the date on which all Refunds are fully paid in the event that the date on which the payment of Refunds is due to be complete under this subparagraph is later than October 31, 1997. (e) Subject to the right of LFAs to opt out under subparagraph (b), and except as provided in subparagraph (c), the Refunds issued pursuant to subparagraph (b) shall account for and finally resolve (i) all BST and CPST rate cases filed prior to the Publication Date and (ii) the reasonableness of the BST and CPST rates specified on Exhibit 2. In the event that an LFA of a Los Angeles Area System exercises its right to opt out of the Refunds under subparagraph (b), any rate order adopted by said LFA or by the Commission with respect to Century's Form 393 and Form 1200 series maximum permitted rates will reflect the exclusion of four of the Century Select channels from the count of regulated channels for purposes of applying the Commission's benchmark rate rules. The maximum permitted rate for those four Century Select channels, on a per channel basis, will be equal to the maximum permitted rate, on a per channel basis, for the other CPST channels in such systems. The effect on Century's maximum permitted rates of any additions, deletions, or substitutions of channels will be governed by Commission rules applicable at the time such channel additions, deletions or substitutions were made. See, e.g., Warner Cable Communications (Milwaukee, WI), DA 94-1285 (CSB, rel. Nov. 18, 1994); Century Southwest Cable Television I (Los Angeles, Area G), DA 95-516 (CSB, rel. March 17, 1995). (f) Century will not seek repayment from any LFA of any Los Angeles Area System of franchise fee overpayments otherwise due Century as a result of the payment of the Refunds specified in Exhibit 1. This provision will not apply in any Los Angeles Area System as to which the LFA exercises its opt out election as described in subparagraph (b). (g) Century has calculated maximum permitted regulated BST and CPST rates for the Los Angeles Area Systems as of May 1, 1996 using Form 1240. In calculating such rates, for systems where the previous FCC Form 1210 maximum permitted rates exceeded the actual rates being charged as of April 30, 1996, Century has capped its previous Form 1210 maximum permitted CPST rates so that the combined Form 1210 maximum permitted BST and CPST rate did not exceed the combined BST and CPST rates actually being charged as of April 30, 1996. (h) No later than the Implementation Deadline, Century will implement the BST and CPST rates specified in Column (A) of Exhibit 2. The implementation of these rates will result in a reduction in the BST rates in each of the Los Angeles Area Systems. In addition, the CPST rates implemented pursuant to this subparagraph reflect Century's agreement to defer, for a twelve- month period commencing on the Implementation Deadline, a portion of the otherwise permitted Form 1240 increase in the CPST rates of the Los Angeles Area Systems, as reflected in Column (B) of Exhibit 2. Notwithstanding the scheduled date of its next annual Form 1240 adjustment, Century, at the end of the twelve-month deferral period, and upon thirty days notice to subscribers, may adjust its CPST rates to recover any amounts deferred under this subparagraph, such recovery to be calculated in accordance with the Commission's rules governing the recovery of deferred Form 1240 rate adjustments. (i) The rate adjustments described herein will be binding on Century except that, in the event the LFA of a Los Angeles Area System exercises its opt out election pursuant to subparagraph (b), Century will not be required to implement any reduction in the BST rates of such system until such time as any rate order adopted by said LFA becomes final. Nothing in this Proposed Resolution limits Century's right to adjust its rates for unrecovered inflation and external costs pursuant to Commission rules. (j) As of the Effective Date, the Resolution Order will vacate and supersede the Los Angeles/Beverly Hills LOI ruling and the aforementioned CPST orders. The decision that four Century Select channels are to be excluded from the count of regulated channels for benchmark rate calculations, as incorporated in the Resolution Order, will be binding on any decision relating to Century's BST or CPST rates. Upon adoption of the Resolution Order, Century's applications for review of the LOI ruling and the CPST orders will be deemed to be withdrawn. (k) A copy of this Proposed Resolution shall be provided for comment to all LFAs in the Los Angeles Area Systems and to each additional party that filed a valid complaint on FCC Form 329, pursuant to 47 C.F.R.  76.950. (l) Except as provided in subparagraph (m) hereof, these terms may not be terminated or modified without the mutual written agreement of Century and the Commission. The Commission's consent to any such modification or termination shall be demonstrated by an order by the Bureau or, at the Commission's option, by the Commission itself. (m) Notwithstanding the terms hereof, Century may avail itself of any applicable modifications of any law or regulation governing the rates charged in the Los Angeles Area Systems, including the adoption by the Commission of any regulation governing rates as applied to the cable industry generally. If Century exercises this election, the terms contained herein shall be superseded upon the effective date of such law or regulation, except that Century shall provide Refunds to Los Angeles Area System Eligible Subscribers pursuant to the terms of this Proposed Resolution. (n) Nothing herein shall restrict the ability of Century to adjust its rates of any of the Los Angeles Area Systems in the event such rates are not regulated for any reason, including changes from the 1996 Telecommunications Act or relevant Commission rules. 13. The Resolution Order shall affirmatively state that any and all waivers of Commission Rules, and any modifications to Commission forms, necessary to effectuate these terms are deemed to be granted. The Commission will not assert in any proceeding that Century's compliance with the terms of the Proposed Resolution violates any Commission rule or order, and, in any proceeding before the Commission brought by a third party, a showing by Century that it has complied with these terms shall constitute a defense to any claim that Century's actions in meeting the terms constitute a violation of any applicable Commission rule or order. 14. Assuming the adoption of these terms, these terms shall become effective when the Commission issues the Resolution Order. 15. If any provision, clause, or part of this Proposed Resolution is invalidated, the remainder of this Proposed Resolution shall not be affected thereby and shall remain in effect; provided, however, that if such invalidation is material to this Proposed Resolution, Century and the Commission shall attempt in good faith to reconstitute the Proposed Resolution in a form that is, to the maximum extent possible, consistent with the original intent of the Proposed Resolution. EXHIBIT 1 REFUNDS Refund Interest Total Beverly Hills, CA (CA 0457) 370,270 65,622 435,892 Los Angeles, CA (CA 0253) 500,825 43,820 544,645 Santa Monica, CA (CA 0456) 478,944 66,605 545,549 West Hollywood, CA (CA 0254) 350,949 46,134 397,083 TOTAL 1,923,169 EXHIBIT 2 A B Form 1240 Rates To Be Implemented On Implementation Date Amount Of Form 1240 CPST Increase Deferred Bell Canyon BST 28.05 --- CPST 9.30 .75 Beverly Hills BST 25.80 --- CPST 1 5.54 .63 CPST 2 6.96 .95 Los Angeles:Area F BST 25.28 --- CPST 10.27 .81 Area G BST 27.13 --- CPST 10.24 .80 Area H BST 22.90 --- CPST 8.76 .72 Marina Del Rey BST 25.28 --- CPST 1 5.75 .46 CPST 2 6.65 .28 Santa Monica BST 23.54 --- CPST 8.95 .67 West Hollywood BST 21.83 --- CPST 1 5.13 .39 CPST 2 6.35 .69