******************************************************** 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 ) ) TCI Cablevision of Washington, Inc. ) CUID No. WA0008 (Olympia) ) ) Complaint Regarding ) Cable Programming Services ) Rate Increase ) ORDER Adopted: February 24, 1997 Released: February 24, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the June 1, 1996 rate increase that the above-captioned operator ("Operator") implemented for its cable programming services tier ("CPST") in the community set forth above. We have already issued a separate order addressing the reasonableness of the rates prior to that date. We conclude, for the reasons discussed below, that the CPST rate increase of $2.60 charged by Operator that began June 1, 1996 is unreasonable. 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. The Telecommunications Act of 1996 ("the 1996 Act") and our rules implementing the new legislation require that complaints against the CPST rates be filed with the Commission by a franchising authority that has received subscriber complaints. A franchising authority may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. If the Commission finds the rate unreasonable, it shall determine the correct rate and any refund liability. 3. 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. 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. The "true-up" requires operators to decrease their rates or alternatively permits them to increase their rates to make an adjustment for over or under estimations of these cost changes. The Commission granted Operator a waiver to allow Operator, in its initial filing of FCC Form 1240, to include cost adjustments over the period of time between the last date for which actual cost data is available and the effective date of Operator's new rates (hereinafter referred to as "Waiver Period"). 4. On November 25, 1996, the local franchise authority ("LFA") filed a valid complaint against Operator's June 1, 1996 CPST rate increase in the community set forth above. The LFA has certified that it has received subscriber complaints and has complied with the Interim Rules. Operator submitted FCC Form 1240 to justify the rate increase that went into effect June 1, 1996. 5. The Waiver Period for this community began December 1, 1995 and ended May 31, 1996. On March 1, 1996 Operator, which had just completed a rebuild of the entire system, raised its CPST rate to $12.78. Consequently, we changed the rate reported on Waiver Period Worksheet 8 in Operator's FCC Form 1240 to $12.78 for March, April and May of 1996. This change led to an adjustment in Line 15 of Operator's self-styled "First Time Filers of FCC Form 1240 'Gap' Period Calculation" ("Waiver Period Calculation"). 6. On September 25, 1996, we released an Order concerning this community and instructed Operator to reduce its then maximum permitted rate ("MPR") to $12.65 effective March 1, 1996. Operator did not use $12.65 when calculating its total revenue from the MPR for the Waiver Period. Consequently, we adjusted Line 16 of Operator's Waiver Period Calculation by using the previously ordered $12.65. 7. The effect of these adjustments on Lines 15 and 16 result in a reduction of Operator's projected MPR from $15.38 to $14.87 on Line 22 of Operator's Waiver Period Calculation. Consequently, we find that Operator has failed to demonstrate that its CPST rate increase of $2.60 was reasonable. Based upon the record before us, we find that Operator has provided sufficient evidence to support a CPST rate increase of only $2.09. This represents an overcharge of $0.51 per month per subscriber since June 1, 1996. 8. Accordingly, IT IS ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. Section 0.321 that the monthly CPST rate increase of $2.60 charged by Operator in the community set forth above beginning June 1, 1996, IS UNREASONABLE. 9. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint referenced herein against the June 1, 1996 CPST rate increase charged by Operator in the community set forth above, IS GRANTED. 10. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund subscribers in the community set forth above that portion of the amount of the CPST rate increase paid by subscribers that exceeded the maximum permitted CPST rate of $14.87 per month (plus franchise fee), plus interest to the date of the refund, for the period from June 1, 1996 to the day before Operator implements the maximum permitted CPST rate of $14.87. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator in the community set forth above, revise its calculation of its maximum permitted CPST rate in its next FCC Form 1240 filing. 12. IT IS FURTHER ORDERED that Operator shall promptly determine the overcharges to CPST subscribers for the stated periods, and shall within 30 days of the release of this Order, file a report with the Chief, Cable Services Bureau, stating the cumulative refund amount so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of Commission approval of the plan. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau