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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** B efore the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Comcast Cablevision of Indianapolis, Inc. ) CUID No. IN0556 (Marion County) ) ) ) Petition for Reconsideration ) ORDER ON RECONSIDERATION Adopted: January 8, 1998 Released: January 12, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a Petition for Reconsideration ("Petition") filed by the above- referenced Operator for the community set forth above. We have issued an order ("Final Resolution") that resolved all pending complaints against Operator's rates charged from September 1, 1993 through July 14, 1994. We subsequently issued an order ("Prior Order") in which we found that Operator's cable programming services tier ("CPST") rates effective November 1, 1996 for Operator's existing rebuild systems in the community referenced above were unreasonable. The Operator filed a Petition for Reconsideration of our Prior Order on April 7, 1997. The Commission has received no opposition to the Petition. 2. The Communications Act authorizes the Federal Communications Commission ("Commission") 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 the rate 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 the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received subscriber complaints. An LFA may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. 3. To justify rates for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form 1200 series. Operators may 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. 4. In the Prior Order, we found that Operator incorrectly took a $0.20 per channel adjustment for both the existing and re-build systems in its separate Projected Periods, as of January 1997. In Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket Nos. 92-266 and 93-215, Sixth Order on Reconsideration, Fifth Report and Order, and Seventh Notice of Proposed Rulemaking ("Going Forward Order"), the Commission established an alternative methodology to adjust rates for changes in the number of channels offered on the CPST or a single tier system between May 15, 1994 and December 31, 1997. Using this methodology, known as the "Caps Methodology," cable operators "may increase their rates between January 1, 1995, and December 31, 1997, by up to 20 cents per channel, exclusive of programming costs, for new channels added to CPSTs on or after May 15, 1994." However, cable operators "may not make rate adjustments totalling more than $1.20 per month, per subscriber through December 31, 1996, and by more than $1.40 per month, per subscriber through December 31, 1997 (the 'Operator's Cap')." The Executive Summary of the Going Forward Order provides that Operators may make a $0.20 per channel adjustment in 1997 only for channels added in that year. Operator added the channel in question on October 1, 1996 and the $0.20 adjustment is reflected in Worksheet 2 - Caps Method, for the Projected Period, on Line 204 (Month 3) which represents the third month of Operator's projected period. Because Operator's projected period began November 1, 1996, the third month of Operator's projected period is January, 1997. 5. In its Petition, Operator argues that the Commission erred when it eliminated the $0.20 adjustment on Line 204 for the addition of a seventh channel added as of October 1, 1996. Operator contends that the Going Forward Order was intended to provide additional incentives for cable operators to expand their facilities while limiting associated rate increases to a total of $1.50 over the first two years with an additional $0.20 per channel adjustment which could not be implemented prior to 1997. Operator acknowledges that the Executive Summary of the Going Forward Order states that "[o]perators may make the 20 cents per channel adjustment in the third year only for channels added in that year." Operator also notes that the Commission, in the Going Forward Order, states that "a seventh channel may be added between January 1, 1997 and December 31, 1997 for an additional 20 cents." However, Operator contends that the statement must be considered in the context of the Commission's stated policies and the going-forward rules. Operator maintains that under the Commission's rules the relevant date for determining whether a rate increase counts against the maximum allowable rate increase under the Caps Methodology is when a rate is increased rather than when a cable operator makes a channel addition. Operator argues that our adjustment in the Prior Order penalized Operator for adding more channels to its CPST than it was permitted to charge for under our rules and that the early addition of the channels benefited subscribers by expanding their programming options without a corresponding rate increase. 6. Operator further argues that the $0.20 adjustment made in the Prior Order is inconsistent with the FCC Form 1240 methodology which provides that operators, absent certain exceptions, may only adjust its rates for additional channels once each year. Operator contends that it was required to include in its amended FCC Forms 1240, for the projected period November 1, 1996 to October 31, 1997, a pro rata charge for the seventh channel beginning in 1997 whether the program service was added on October 1, 1996 or January 1, 1997. Operator requests a waiver of the going forward rules if we determine that no more that six channels could be added during the first two years that the operator cap is in effect. 7. As stated above, cable operators are permitted to use the Caps Methodology to increase their CPST rates between January 1, 1995, and December 31, 1997, by up to $0.20 per channel, exclusive of programming costs, for the addition of new channels, however, cable operators are prohibited from making rate adjustments totalling more than $1.20 per month, per subscriber through December 31, 1996, and by more than $1.40 per month, per subscriber, through December 31, 1997. Section 76.922(g)(3)(iv) of the Commission's rules provide that "for purposes of determining whether a rate increase counts against the maximum rate increase specified" under the Caps Methodology for new channels on all CPSTs through December 31, 1997 and for per channel adjustments, "the relevant date shall be when rates are increased as a result of channel additions, not when the addition occurs." We find that under the annual rate filing methodology of the FCC Form 1240, Operator is permitted to reflect the addition of the seventh channel to the CPST rate in the projected period beginning January 1997, notwithstanding the fact that the channel was added in October 1996. We further find that the Operator has demonstrated that its amended FCC Forms 1240 for the projected period November 1, 1996 to October 31, 1997 were consistent with our rules regarding the $0.20 per channel adjustment for both the existing and re-build systems. Therefore, we will allow Operator's FCC Forms 1240 to reflect the $0.20 per channel adjustment for the existing and re-build systems for January 1997 at Worksheet 2, Line 204 and Module I, Line I1. 8. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R.  1.106 that the Petition for Reconsideration of Comcast Cablevision of Indianapolis, Inc, DA 97-481 (released March 7, 1997), IS GRANTED. 9. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R.  0.321, Comcast Cablevision of Indianapolis, Inc, DA 97-481 (released March 7, 1997), IS VACATED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau