******************************************************** 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 Communications Commission Washington, D.C. 20554 In the Matter of ) CUID Nos. LA0076 (Kenner) ) LA0098 (East Jefferson Parish) Cox Cable Louisiana Metro System ) LA0191 (East St. Charles Parish) ) LA0320 (West St. Charles Parish) Complaints Regarding Cable Programming ) Services Tier Rate Increase ) ORDER Adopted: December 21, 1998 Released: December 24, 1998 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the rates the above-referenced operator ("Operator") was charging for its cable programming services tier ("CPST") in the communities referenced above. We have already issued an order in which we resolved all complaints filed through June 30, 1995 against Operator's CPST rates ("Resolution"). This Order addresses only the reasonableness of Operator's CPST rates after June 30, 1995. 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, beginning February 8, 1996, complaints against CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 3. Valid subscriber complaints were filed against Operator's October 1, 1995 CPST rate increase from $11.77 to $13.02 in two of the communities listed in the attached Appendix. The LFAs for the franchise areas referenced above also filed complaints with the Commission on the dates listed in the attached Appendix against Operator's August 15, 1998 CPST rate increase from $15.95 to $17.45 for the non-rebuild area and from $17.20 to $19.40 for the rebuild area. Each LFA verified that it received more than one subscriber complaint for each franchise area and that the first valid complaints were received by the LFAs on the dates listed in the attached Appendix. The filing of a complete and timely LFA 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. 4. To justify rates for the period beginning May 15, 1994 through a benchmark or cost of service showing, operators must use the FCC Form 1200 series. Cable operators may file an FCC Form 1210 to justify rate increases based on the addition and deletion of channels, changes in certain external costs and inflation. In addition, Operators must file an FCC Form 1210 at least 30 days before new rates are scheduled to go into effect, where there is a pending complaint against the CPST rate. Operators may alternatively 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. 5. Upon review of Operator's FCC Form 1210, covering the period July 1, 1994 through June 30, 1995, which updated the maximum permitted rate ("MPR") approved by the Resolution, we find Operator has justified an MPR of $14.68, effective October 1, 1995. Because Operator's actual CPST rate of $13.02, effective October 1, 1995 through September 30, 1996, does not exceed its MPR, we find Operator's actual CPST rate of $13.02, effective October 1, 1995 through September 30, 1996, to be reasonable. Because Operator's actual CPST rate of $14.45 for its non-rebuild area, effective October 1, 1996 through December 31, 1996, does not exceed its MPR, we find Operator's actual CPST rate of $14.45 for its non-rebuild area, effective October 1, 1996 through December 31, 1996, to be reasonable. Because Operator's actual CPST rate of $15.70 for its rebuild area, effective October 1, 1996 through December 31, 1996, exceeds its MPR, we find Operator's actual CPST rate of $15.70 for its rebuild area, effective October 1, 1996 through December 31, 1996, to be unreasonable. 6. Upon review of Operator's FCC Form 1240s for the projected period January 1, 1997 through December 31, 1997, we find that Operator has justified its MPRs of $18.27 for its non-rebuild area and $20.32 for its rebuild area. Because Operator's actual CPST rates of $14.45 for its non-rebuild area and $15.70 for its rebuild area, effective January 1, 1997 through December 31, 1997, do not exceed its MPRs, we find Operator's actual CPST rates of $14.45 for its non-rebuild area and $15.70 for its rebuild area, effective January 1, 1997 through December 31, 1997, to be reasonable. 7. Upon review of Operator's FCC Form 1240s for the projected period January 1, 1998 through December 31, 1998, we adjusted Lines 804-812 of Operator's Worksheet 8 of its rebuild FCC Form 1240 to reflect the actual CPST rate charged by Operator in its rebuild area in accordance with the rate cards submitted by Operator. We adjusted Line F8 and Module H on both FCC Form 1240s to reflect the change in the number of subscribers for Operator's rebuild and non-rebuild areas. Our adjustments did not affect Operator's calculated MPRs of $20.15 for its non-rebuild area and $22.73 for its rebuild area. Because Operator's actual CPST rates of $15.95 for its non-rebuild area and $17.20 for its rebuild area, effective January 1, 1998 through August 14, 1998, do not exceed its MPRs, we find Operator's actual CPST rates of $15.95 for its non- rebuild area and $17.20 for its rebuild area, effective January 1, 1998 through August 14, 1998, to be reasonable. 8. Upon review of Operator's Mid-Year Channel Additions Supplement to its FCC Form 1240s, we moved Operator's adjustment for mid-year channel additions from Line 4 to Line 2 based on Operator's supplemental filing. We find that Operator has justified its mid-year channel increase in the amount of $0.44 which increases Operator's MPR to $20.59 for its non-rebuild area and $23.17 for its rebuild area. Because Operator's actual CPST rates of $17.45 for its non-rebuild area and $19.40 for its rebuild area, effective August 15, 1998, do not exceed its MPRs, we find Operator's actual CPST rates of $17.45 for its non-rebuild area and $19.40 for its rebuild area, effective August 15, 1998, to be reasonable. 9. 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 $13.02, effective October 1, 1995 through September 30, 1996, IS REASONABLE. 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rate of $14.45 for the non-rebuild area, effective October 1, 1996 through December 31, 1997, IS REASONABLE. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rate of $15.70 for the rebuild area, effective October 1, 1996 through December 31, 1996, IS UNREASONABLE. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rate of $15.70 for the rebuild area, effective January 1, 1997 through December 31, 1997, IS REASONABLE. 13. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rates of $15.95 for the non-rebuild area and $17.20 for the rebuild area, effective January 1, 1998 through August 14, 1998, ARE REASONABLE. 14. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the CPST rates of $17.45 for the non-rebuild area and $19.40 for the rebuild area, effective August 15, 1998, ARE REASONABLE. 15. 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 1240s. 16. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaints referenced herein against the CPST rates charged by Operator in the communities referenced above ARE DENIED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION Margaret M. Egler Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau APPENDIX DATE OF VALID DATE LFA REC'D DATE LFA FILED SUBSCRIBER FIRST VALID COMPLAINT CUID NO. COMMUNITY COMPLAINT * COMPLAINT WITH FCC LA0076 Kenner 8/19/98 12/4/98 LA0098 East Jefferson Parish 10/26/95 8/15/98 10/5/98 LA0191 East St. Charles Parish 10/6/95 8/20/98 10/23/98 LA0320 West St. Charles Parish 8/20/98 10/23/98 *Against Operator's October 1, 1995 CPST rate increase.