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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 ) ) Cox Communications Virginia Beach ) CUID No. VA0166 (Virginia Beach) ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: April 10, 1997 Released: April 14, 1997 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the November 15, 1995 and December 1, 1996 rate increases that the above-captioned operator ("Operator") implemented for its cable programming services tier ("CPST") in the community set forth above. Operator has attempted to justify its CPST rate increases through benchmark showings on FCC Form 1210 and multiple FCC Forms 1240. We have already issued an order which resolved Operator's complaints from September 1, 1993 through June 30, 1995 ("Settlement Order"). Accordingly, this Order addresses the reasonableness of the Operator's CPST rate increases of $1.40 and $1.50 effective November 15, 1995 and December 1, 1996, respectively. 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. If the Commission finds the rate unreasonable, it shall determine the correct rate and any refund liability. The Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") requires the Commission to review CPST rates upon the filing of a valid complaint by a subscriber or local franchise authority ("LFA"). 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 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. 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 attempting to justify rates for the period beginning May 15, 1994 through 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 where the Commission has found the CPST rate to be unreasonable less than one year prior to the filing, or where there is a pending complaint against the CPST rate. 4. Cable 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. 5. On January 22, 1996, the Commission received valid complaints against Operator's November 15, 1995 CPST rate increase. On February 25, 1997 the local franchising authority ("LFA"), filed a complaint against the Operator's December 1, 1996 CPST rate increase. The LFA has certified that it has complied with the Interim Rules. Operator submitted FCC Form 1210 and multiple FCC Forms 1240 for the community set forth above to justify the rate increases that went into effect on November 15, 1995 and December 1, 1996. Therefore, we have jurisdiction to review the CPST rate increases based on the 1992 Cable Act and the 1996 Act. 6. On January 16, 1996, Operator filed with the Commission a FCC Form 1210 and FCC Form 1240 to justify its CPST rate increase of $1.40 effective November 15, 1995 in the community set forth above. Upon review of Operator's FCC Form 1210 for the period April 1, 1995 to September 30, 1995 and Operator's FCC Form 1240, Operator has demonstrated that its CPST rate increase to $16.62 is justified and not unreasonable. 7. On August 1, 1996, Operator reduced its CPST rate from $16.62 to $14.90. Upon review of Operator's amended FCC Form 1240 to justify its CPST rate increase of $1.50 effective December 1, 1996, we find that Operator used the incorrect inflation factor on Module C, Line C1. Accordingly, we have adjusted Operator's amended FCC Form 1240, Module C, Line C1 to reflect the correct inflation factor of 1.0171. Notwithstanding this adjustment, Operator's CPST rate increase to $16.40 is justified and not unreasonable. 8. Accordingly, IT IS ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. Section 0.321 that the CPST rate increase of $1.40 effective November 15, 1995 to implement a CPST rate of $16.62 charged by the Operator in the community set forth above, IS NOT 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 CPST rate increase of $1.50 effective December 1, 1996 to implement a CPST rate of $16.40 charged by the Operator in the community set forth above, IS NOT UNREASONABLE. 10. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. Section 0.321, that the complaints referenced herein against the rate increases charged by Operator in the community set forth above, ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau