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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 ) ) U.S. Cable of Lake County ) CUID No. IL0468 (North Chicago) ) ) Complaints Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: May 9, 1997 Released: May 13, 1997 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint about the rates of the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. Operator has attempted to justify its CPST rates through benchmark showings on FCC Form 1200, multiple FCC Forms 1210, and FCC Form 1240. We have already issued an order in which we determined that Operator's CPST rate in effect prior to May 15, 1994 was unreasonable ("Prior Order"). Accordingly, this Order addresses the reasonableness of Operator's CPST rates in effect from May 15, 1994 to present. 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 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"). If the Commission finds the rate to be unreasonable, it shall determine the correct rate 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 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 must 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 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. 5. Our Prior Order addressing the first valid complaint for the community referenced above indicates that the findings in that review "do not in any way prejudge the reasonableness of the prices for CPS service after May 14, 1994." Consequently, the rates beginning May 15, 1994, and subsequent rate increases, are subject to Commission review and are addressed in this Order. 6. Upon review of the record before us, we find no apparent errors in Operator's calculation of it maximum permitted rates. Thus, Operator has justified its CPST rates from May 15, 1994 to the present. Operator's FCC Forms 1200 and 1210 justify its CPST rates effective May 15, 1994 through July 31, 1996. Operator's FCC Form 1240 justifies a CPST rate of $13.36 effective August 1, 1996. 7. 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 rates charged by Operator in the community referenced above, from May 15, 1994 to July 31, 1996, ARE NOT UNREASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47 C.F.R. Section 0.321 that the monthly CPST rate of $13.36, charged by Operator in the community referenced above, beginning August 1, 1996, 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 complaint against the CPST rates from May 15, 1994 to present, charged by Operator in the community referenced above IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau