******************************************************** 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 Commu nications Commission Washington, D.C. 20554 ) In the Matter of ) ) TCI American Cable Holdings, II, L.P.) CUID No. CA0925 (City of Burlingame) ) ) Complaint Regarding ) Cable Programming Services Tier Rates) ) ORDER Adopted: January 5, 1998 Released: January 8, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the June 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have previously issued an order in which we found that Operator's rates in effect before May 15, 1994 were unreasonable ("First Order"). Subsequently, we issued an order in which we found that Operator's rates for the period May 15, 1994 through May 31, 1997 were unreasonable ("Second Order"). Accordingly, this Order addresses only the reasonableness of Operator's June 1, 1997 CPST rate increase. 2. Under the Communications Act, the Federal Communications Commission ("Commission") is authorized to review the CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the new legislation ("Interim Rules"), require that complaints against CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 3. On October 14, 1997, the local franchising authority ("LFA") filed its complaint against Operator's June 1, 1997 CPST rate increase. In its complaint, the LFA asserts that it has received more than one subscriber complaint against Operator's CPST rate increase, thereby triggering the Commission's jurisdiction to review this complaint. 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 June 1, 1997 through May 31, 1998, we adjusted Line A1 to $15.57 to coincide with the maximum permitted rate ("MPR") from the Second Order. This adjustment resulted in a revised MPR of $15.71 for the projected period rather than Operator's calculated MPR of $17.29 for the projected period. Because Operator's actual CPST rate of $17.29, effective June 1, 1997, exceeds its revised MPR of $15.71, we find Operator's actual CPST rate of $17.29 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 $17.29, charged by Operator in the franchise area referenced above, effective June 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 $15.71 per month (plus franchise fees), plus interest to the date of the refund, for the period July 28, 1997 through the day before Operator implements the maximum permitted CPST rate of $15.71. 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