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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. SC0058 (Hilton Head Island) SVHH Cable Acquisition, L.P. ) d/b/a Adelphia Cable Communications ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) 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 August 1, 1998 rate increase by 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 resolved prior complaints filed against Operator's CPST rates. This Order addresses only the reasonableness of Operator's August 1, 1998 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 the 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 26, 1998, against Operator's August 1, 1998 CPST rate increase from $17.19 to $18.44. The LFA verified that it received more than one subscriber complaint. 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 showing, operators must use the FCC Form 1200 series. Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210. 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. 5. In its complaint, the LFA requests that the Commission review Operator's charges for service, specifically the increase in Operator's Trip Charge. Under Section 76.923(a) of the Commission's rules, charges for service of equipment which is used to receive the basic service tier ("BST"), regardless of whether such equipment is also used to receive other tiers, are subject to regulation by the LFA. Section 76.923(n)(3) of the Commission's rules requires an operator, which has chosen to adjust its rates under the annual adjustment system, to file an accurate FCC Form 1205 "[o]n the same date it files its FCC Form 1240." The LFA has jurisdiction to review Operator's FCC Form 1205 to determine if Operator's charges are reasonable. 6. Upon review of Operator's FCC Form 1240 for the projected period August 1, 1998 through July 31, 1999, we adjusted the Inflation Factors at Worksheet 1 (True-Up Period Inflation) which adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0136. We also revised Line C5 (Current FCC Inflation Factor) to 1.0082. Our adjustments resulted in a revised maximum permitted rate ("MPR") of $18.74 for the projected period rather than Operator's calculated MPR for the projected period of $18.78. Because Operator's actual CPST rate of $18.44, effective August 1, 1998, does not exceed its revised MPR, we find Operator's actual CPST rate of $18.44, effective August 1, 1998, to be reasonable. 7. 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 $18.44, charged by Operator in the franchise area referenced above, effective August 1, 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.  0.321, that the referenced complaint IS DENIED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION Margaret M. Egler Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau