******************************************************** 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 of Georgia ) CUID No. GA0038 (Nashville) ) Complaints Regarding ) Cable Programming Services Tier ) Rate Increases ) ORDER Adopted: March 20, 1997 Released: March 26, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider complaints concerning the rate increases of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community designated above. The first valid complaint concerning the CPST rate increases of Operator, in the community designated above, was received by the Federal Communications Commission ("Commission") on January 20, 1995. Accordingly, this Order addresses only the reasonableness of Operator's rates from January 20, 1995 to date. Operator has attempted to justify its CPST rates through benchmark showings on FCC Form 1200, FCC Forms 1210 and FCC Form 1240. We conclude, for the reasons discussed below, that the rates charged by Operator are unreasonable. 2. The Communications Act authorizes the Commission to review the CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. The Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") required the Commission to review CPST rates upon the filing of a valid complaint by a subscriber or local franchise authority ("LFA"). The filing of a valid complaint triggers an obligation on behalf of the cable operator to file a justification of its CPST rates. If the Commission finds the rates to be unreasonable, it shall determine the correct rates and any refund liability. 3. The Commission's original rate regulations took effect on September 1, 1993. The Commission revised its rate regulations effective May 15, 1994. Cable operators that have valid CPST complaints filed against them prior to May 15, 1994 must demonstrate that their CPST rates were in compliance with the Commission's initial rules from the time the first valid complaint was filed through May 14, 1994. Cable operators must also demonstrate that their rates were in compliance with the revised rules from May 15, 1994 forward. Cable operators attempting to justify their rates for the period beginning May 15, 1994 by a benchmark showing must use the FCC Form 1200 series. Cable operators may also justify rate increases based on the addition and deletion of channels, changes in certain external costs, and inflation, by filing FCC Form 1210. FCC Form 1210 must be filed at least 30 days before new rates are scheduled to go into effect when the Commission has found the CPST rate to be unreasonable less than one year prior to the filing. In addition, FCC Form 1210 may be filed where there is a pending complaint against the CPST rate. 4. 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 differ 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. 5. On January 20, 1995 and January 30, 1995 valid complaints were filed against the January 1, 1995 and February 1, 1995 CPST rate increases that were implemented by Operator in this community. Accordingly, these complaints trigger the Commission's jurisdiction to review Operator's CPST rates under the 1992 Cable Act. 6. Upon review of Operator's FCC Form 1200, multiple FCC Forms 1210 and FCC Form 1240, we find that Operator charged in excess of its calculated maximum permitted rate ("MPR") or has not correctly calculated its MPR beginning February 1, 1995 as discussed in the paragraphs below. 7. FCC Forms 1200, 1210 and 1240 Filings: On September 10, 1996, Operator filed its FCC Form 1200 to justify CPST rates in effect after May 14, 1994. We find that Operator did not correctly calculate its MPR on this filing. We corrected Module C, Line C2 to reflect the correct number of CPST channels and the correct number of regulated non-broadcast channels as determined in our rate review. These adjustments resulted in a reduction of the MPR for CPST to $9.73 from the rate of $9.92 filed by Operator. 8. On September 10, 1996, Operator filed an FCC Form 1210 to justify a rate increase of $0.50, from $10.24 to $10.74, effective January 1, 1995, and another increase of $1.57, from $10.74 to $12.31, effective February 1, 1995. We find that Operator did not correctly calculate its MPR on this filing. The correct MPR from Operator's previous FCC Form 1200 filing was $9.73. We adjusted Module A, Line A1 of Operator's FCC Form 1210 to reflect the corrected previous MPR of $9.73 for CPST. We adjusted Line B13 of Operator's FCC Form 1210 to reflect the previous external costs as indicated on the previous FCC Form 1200 filing. Our corrections reduced the MPR for CPST from $12.31 to $12.06. Thus, Operator demonstrated that its January 1, 1995 rate of $10.74 for its CPST is justified and reasonable. However, Operator has failed to demonstrate that its February 1, 1995 rate of $12.31 for its CPST was not unreasonable. 9. On March 20, 1995, Operator filed an FCC Form 1210 to justify a CPST rate increase of $0.50, from $12.31 to $12.81, effective July 1, 1995. We find that Operator did not correctly calculate its MPR on this filing. The correct MPR from Operator's previous FCC Form 1210 filing was $12.06. We adjusted Operator's FCC Form 1210 to reflect the corrected previous permitted rate of $12.06 for CPST. Upon review of this FCC Form 1210, we determined that, due to the addition of channels to the CPST and increases due to inflation, this filing justified a MPR for the CPST of $12.56. Thus, Operator failed to demonstrate that its July 1, 1995 rate of $12.81 for its CPST was not unreasonable. 10. On September 6, 1996, Operator filed an FCC Form 1240 to justify a CPST rate increase of $1.28, from $12.81 to $14.09, effective June 1, 1996. We find that Operator did not correctly calculate its MPR on this filing. We adjusted Module A, Line A1 of this FCC Form 1240 to reflect the corrected MPR of $12.56 brought forward from the prior FCC Form 1210. Our adjustments to Operator's FCC Form 1240 resulted in a reduction of the MPR for CPST to $13.53 from the rate of $14.09 filed by Operator. Thus, Operator failed to demonstrate that its June 1, 1996 rate of $14.09 for its CPST was not unreasonable. 11. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rates charged by Operator in this community, from February 1, 1995 to June 30, 1995, ARE 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 rates charged by Operator in this community, from July 1, 1995 to May 31, 1996, ARE UNREASONABLE. 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 charged by Operator in this community, from June 1, 1996 to the present, ARE UNREASONABLE. 14. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint against the CPST rate increase, effective January 1, 1995, charged by Operator in this community, IS DENIED. 15. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint against the CPST rate increase, effective February 1, 1995, charged by Operator in this community, IS GRANTED. 16. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in this community that portion of the amount paid in excess of the maximum permitted CPST rate of $12.06 per month (plus franchise fees), plus interest to the date of the refund, for the period from February 1, 1995 to June 30, 1995. 17. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in this community that portion of the amount paid in excess of the maximum permitted CPST rate of $12.56 per month (plus franchise fees), plus interest to the date of the refund, for the period from July 1, 1995 to May 31, 1996. 18. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in this community that portion of the amount paid in excess of the maximum permitted CPST rate of $13.53 per month (plus franchise fees), 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 $13.53. 19. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator, in this community, revise its calculation of its maximum permitted CPST rate in its next FCC Form 1240 filing. 20. 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