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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 ) ) Crossroads Cable TV ) CUID No. GA0145 (City of Perry) ) ) Small System Filing to Support ) Basic Service Tier Rate ) ORDER Adopted: March 24, 1997 Released: March 25, 1997 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider the rate that Crossroads Cable TV ("Operator") was charging for its basic service tier ("BST") in the community referenced above. On March 31, 1995, the local franchising authority, the City of Perry, ("City") petitioned the Federal Communications Commission ("Commission") requesting assistance in reviewing the BST cost-of-service showing on FCC Form 1220 filed by Operator on March 23, 1995. On December 12, 1996, Operator substituted this initial cost-of-service showing with a second cost-of-service showing on FCC Form 1230. We will grant the City's request for assistance and review the Operator's FCC Form 1230. 2. Under the Commission's rules, an operator may attempt to justify its BST rate 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 rate is not unreasonable. 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 has 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 and review a cost- of-service showing. The Commission has also understood that this concern may have discouraged certification by many local franchising authorities. Therefore, it has 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-of-service determinations for the BST. Pursuant to Sections 76.7 and 76.933(d) of the Commission's rules, the City has certified that it lacks sufficient adequately trained personnel to conduct the cost-of-service review. Consequently, we grant the City's request for assistance and make a determination on the reasonableness of Operator's BST rate. 3. 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 Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulations; Sixth Report and Order and Eleventh Order on Reconsideration ("Small Systems Order"). In the Small Systems Order, the Commission introduced FCC Form 1230 to simplify the cost-of-service showings for small cable companies and small systems. FCC Form 1230 requires that the Operator Selected Per Subscriber Monthly Programming Rate Per Channel (FCC Form 230, Line A11) not exceed the Per Subscriber, Per Channel Monthly Programming Costs (FCC Form 1230, Line A6). If the maximum rate established on FCC Form 1230 does not exceed $1.24 per channel, the rate shall be presumed reasonable. Cable systems serving 15,000 or fewer subscribers, and owned by a company having 400,000 or fewer subscribers, may elect to use the small system rate mechanism found in FCC Form 1230 in lieu of other Commission rate processes, provided the Commission has not reached a final resolution on the rate complaints filed against the system. In the present case, although Operator had filed FCC Form 1220 with the City, who then filed it with the Commission, prior to filing FCC Form 1230, no final resolution of the FCC Form 1220 had been reached. Consequently, we will consider only Operator's FCC Form 1230. 4. We first determine that Operator is a company with fewer than 400,000 total subscribers and that the system in the community referenced above serves fewer than 15,000 subscribers, making it eligible for small system status. We also determine that, on its FCC Form 1230, filed December 12, 1996, Operator's 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) and the maximum permitted rate (FCC Form 1230, Line A10) does not exceed $1.24. We, therefore, find that Operator's maximum permitted rate is not unreasonable. 5. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the Petition for Special Relief for assistance in reviewing Operator's basic service tier cost-of-service showing, made by the City, IS GRANTED. 6. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator's request for small system relief IS GRANTED. 7. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the monthly BST rate charged by Operator during the period under review in the community referenced above IS JUSTIFIED. 8. IT IS FURTHER ORDERED, pursuant to Section 76.933(d) of the Commission's rules, 47 C.F.R. Section 76.933(d), that this decision is binding on the local franchising authority, the City of Perry, and the cable operator, Crossroads Cable TV. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau