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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554


In the Matter of                )
                                )
Cable Michigan, Inc.               )    CUID No.  MI0733 (Village of Middleville)
                                   )
Complaint Regarding Cable Programming )
Services Tier Rate Increase     )


                             ORDER

   Adopted:  December 23, 1998          Released:  December 28, 1998  

By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau:

     1.   In this Order we consider a complaint against the May 21, 1998 rate increase of the above-
referenced operator ("Operator") for its cable programming services tiers ("CPST") in the community
referenced above.  We have already issued an order ("Prior Order") in which we reviewed the prior FCC Form
filing for this system.  Accordingly, this Order addresses only the reasonableness of Operator's May 21, 1998
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.   The LFA for the franchise area referenced above filed a complaint with the Commission on
October 15, 1998 against Operator's May 21, 1998 CPST rate increases from $10.50 to $10.77 for Tier II
Expanded Basic ("Expanded") and from $5.45 to $7.88 for Tier III  Family Value Package ("FVP").  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 May 22, 1998.  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.   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 February 1, 1998 through
January 31, 1999, we adjusted Operator's Inflation Factors at Worksheet 1 (True-Up Period Inflation) which
adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0188.  We also revised Line C5 (Current FCC
Inflation Factor) to 1.0114.   These adjustments reduced Operator's CPST Expanded MPR to $10.72 and
CPST FVP MPR to $12.43, effective May 21, 1998.  Because Operator's actual CPST Expanded rate of
$10.77, effective May 21, 1998, exceeds its MPR, we find Operator's actual CPST Expanded rate of $10.77,
effective May 21, 1998 to be unreasonable.  However, we determine that the total overcharge per subscriber
is de minimis, and it would not be in the public interest to order a refund.  Because Operator's actual CPST
FVP rate of $7.88, effective May 21, 1998, does not exceed its MPR, we find Operator's actual CPST FVP
rate of $7.88, effective May 21, 1998 to be reasonable.

     6.   Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47
C.F.R. 0.321, that the CPST Expanded rate of $10.77, effective May 21, 1998, IS UNREASONABLE.

     7.   IT IS FURTHER ORDERED,, pursuant to Section 0.321 of the Commission's rules, 47
C.F.R. 0.321, that the CPST FVP rate of $7.88, effective May 21, 1998, IS REASONABLE.

     8.   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.     

     9.   IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.
Section 0.321, that the complaint referenced herein against the CPST rates charged by Operator in the
community referenced above IS GRANTED TO THE EXTENT INDICATED HEREIN.
     
                         FEDERAL COMMUNICATIONS COMMISSION 



                         Margaret M. Egler
                         Acting Chief, Financial Analysis and Compliance Division
                              Cable Services Bureau