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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Tele-Media Company of the Mid-South ) CUID No. IN0213 City of Loogootee ) ) Small System Filing to Support ) Basic Service Tier Rate ) ) ORDER Adopted: September 23, 1996 Released: September 24, 1996 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider the rate that Tele-Media Company of the Mid-South ("Tele-Media") was charging for its basic service tier ("BST") in the franchise area referenced above. On September 16, 1994, the City of Loogootee ("the City") petitioned the Federal Communications Commission ("Commission") requesting assistance in reviewing the BST cost of service showing filed by Tele-Media on August 17, 1994. The Commission granted the City's request on February 10, 1995, and agreed to review Tele-Media's BST cost of service filing. 2. On December 15, 1995, Tele-Media filed FCC Form 1230, seeking to justify its BST rates through the simplified small system cost of service procedures under the Commission's Small System Order. In this Order we grant Tele-Media's request for small system relief under the Small System Order and, based on our review of Tele-Media's FCC Form 1230 filing, find the BST rate to be not unreasonable. 3. Under the Commission's rules, an operator may attempt to justify its BST rate through a benchmark showing, a cost of service showing, or a small system cost of service showing. In any case, the operator has the burden of demonstrating that its rate is not unreasonable. Under cost of service regulation a cable system's rates are reviewed under traditional rate of return analysis. Cost of service regulation imposes heavy burdens upon regulators and the regulated entity because of the significant administrative and compliance costs associated with this regulatory model. The Commission recognized that some local franchising authorities may have resources and personnel sufficient to conduct a review of the rate-setting justification based on the benchmark approach but not to examine a cost of service showing. The Commission also understood that this concern may have discouraged certification by many local franchising authorities. Therefore, it established procedures under which the Commission, if requested by the local franchising authority in a petition for special relief under Section 76.7 of the Commission's rules, will issue a ruling that makes cost determinations for the BST. 4. The Commission's original rate regulations took effect on September 1, 1993. The Commission subsequently revised its rate regulations effective May 15, 1994. In a further effort to offer small cable companies administrative relief from rate regulation, the Commission amended the definition of small cable companies and small systems and introduced a simplified form of small system rate relief in the Small System Order. Cable systems serving 15,000 or fewer subscribers, and owned by a company having 400,000 or fewer subscribers, may elect to use the new small cable system rate mechanism in lieu of other Commission rate processes, provided the Commission has not reached a final resolution on the rate complaints filed against the system. Operators attempting to justify their rates through small system relief must file FCC Form 1230. FCC Form 1230 requires that the Operator Selected Per Subscriber Monthly Programming Rate Per Channel (FCC Form 1230, Line A11) not exceed the Per Subscriber, Per Channel Monthly Programming Costs (FCC Form 1230, Line A6). If the maximum rate established on FCC Form 1230 does not exceed $1.24 per channel, the rate shall be presumed reasonable. 5. On December 15, 1995, Tele-Media filed FCC Form 1230 seeking to justify its BST rate through the simplified small system cost of service procedures under the Commission's Small System Order. We find that Tele-Media is a company with fewer than 400,000 total subscribers and that the system in question serves fewer than 15,000 subscribers, making it eligible for small system relief. Further, Tele-Media's filing shows that its actual rate per channel for regulated cable service (FCC Form 1230, Line A11) does not exceed its per subscriber, per channel monthly programming costs (FCC Form 1230, Line A6) and the Maximum Permitted Rate (FCC Form 1230, Line A10) does not exceed $1.24. We, therefore, find the rate to be not unreasonable. 6. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Tele-Media's request for small system relief is GRANTED. 7. IT IS FURTHER ORDERED that the BST rate charged by Tele-Media during the period under review with respect to the above-referenced CUID number IS JUSTIFIED. 8. IT IS FURTHER ORDERED, pursuant to Section 76.933(d) of the Commission's Rules, 47 C.F.R.  76.933(d), that this decision is binding on the local franchising authority, the City of Loogootee, Indiana and the cable operator, Tele-Media Company of the Mid-South. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau