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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. DE0011 (New Castle) ) Lenfest New Castle County ) d/b/a Suburban Cable TV ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ) ORDER Adopted: December 23, 1997 Released: December 24, 1997 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the July 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already issued an order in which we found that Operator's rates in effect prior to May 15, 1994 were unreasonable ("First Order"). Subsequently, we issued an order vacating and superseding our First Order and resolving all the complaints filed from September 1, 1993 through September 15, 1995 against Operator's CPST rates ("Second Order"). Accordingly, this Order addresses only Operator's July 1, 1997 rate increase. 2. Under the Communications Act, the Commission is authorized to review the CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the legislation ("Interim Rules"), require that a complaint against the CPST rate be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 3. The LFA for the franchise area referenced above filed a complaint with the Commission on September 30, 1997. The LFA verified that it received more than one subscriber complaint for the franchise area and that the first valid complaint was received by the LFA on July 22, 1997. The filing of a complete and timely complaint triggers an obligation upon the cable operator to file a justification of its CPST rates. The Operator has the burden of demonstrating that the CPST rates complained about are reasonable. If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability. 4. Operators may justify 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. 5. Upon review of Operator's FCC Form 1240 for the projected period March 1, 1996 through February 28, 1997, we adjusted Line A1 to $14.71 to coincide with the maximum permitted rate ("MPR") from the Second Order. This adjustment required that we refresh Operator's inflation factors to 1.0222 for the third and fourth quarter of 1995 and 1.0239 for the first quarter of 1996 and adjust Worksheet 1 (True-Up Period Inflation) accordingly. These adjustments resulted in a revised MPR of $15.98 rather than Operator's calculated MPR of $17.19. Upon review of Operator's FCC Form 1240 for the projected period July 1, 1997 through June 30, 1998, we adjusted Line A1 to $15.98 to coincide with the MPR from the prior revised FCC Form 1240. We also used the data from Operator's prior revised FCC Form 1240 where required by FCC Form 1240 instructions. These adjustments resulted in a revised MPR of $18.66 for the projected period rather than Operator's calculated MPR of $20.61 for the projected period. Because Operator's actual CPST rate of $19.46, effective July 1, 1997, exceeds its revised MPR of $18.66, we find Operator's actual CPST rate of $19.46 to be unreasonable. 6. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $19.46, charged by Operator in the franchise area referenced above, effective July 1, 1997, IS UNREASONABLE. 7. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in the franchise area referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $19.27 per month (plus franchise fees), plus interest to the date of the refund, for the period July 22, 1997 through the day before Operator implements the maximum permitted CPST rate of $18.66. 8. IT IS FURTHER ORDERED that Operator 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. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator take into account our FCC Form 1240 adjustments when calculating its maximum permitted rate and performing the true-up calculation on its next FCC Form 1240. 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaint IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau