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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 ) ) Continental Cablevision )CUID Nos.MN0515 (Inver Grove Heights) )MN0516 (Lilydale) )MN0517 (Mendota) Complaints Regarding )MN0518 (Mendota Heights) Cable Programming Services Tier Rates)MN0519 (South Saint Paul) )MN0520 (Sunfish Lake) )MN0521 (West Saint Paul) ORDER Adopted: July 22, 1997 Released: July 25, 1997 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1.In this Order we consider complaints about the January 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") and migrated product tier ("MPT") in the communities referenced above. Operator has attempted to justify its CPST rates through a benchmark showing on FCC Forms 1200, 1210 and a Social Contract Rate Form ("Rate Form"). We have already issued an order which resolved complaints filed against Operator from September 1, 1993 through April 3, 1995. Accordingly, this Order addresses the reasonableness of Operator's CPST rate of $16.37 (exclusive of franchise fees) and MPT rate of $4.00 (exclusive of franchise fees), effective January 1, 1997. 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 Telecommunications Act of 1996 ("1996 Act") and our rules implementing the new legislation, require that complaints against the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received subscriber complaints. An LFA may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber rate complaint. 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. Cable operators may file an FCC Form 1210 to justify rate increases based on the addition and deletion of channels, changes in certain external costs, and inflation. In addition, Operators must file FCC Form 1210 with the Commission within thirty days of the date of service of the complaint regarding the new rate. 4.On August 1, 1995, the Commission adopted an order approving the Social Contract entered into between the Continental and the Commission. Under the terms of the Social Contract, Continental is required to invest at least $1.35 billion to rebuild and upgrade all of its United States Cable systems from 1995 through 2000. By January 1, 1996, Continental must create in its systems a lifeline basic service tier by reducing rates on the basic service tier by 15% to 20% and offset this reduction in a revenue neutral manner by adjusting the rates on the CPS tier. Continental may migrate up to four existing services from its CPST to an MPT and Continental may add an unlimited number of channels to an MPT at $.20 per added channel plus license fees. 5.There are no official forms available for use to implement the one-time changes in rates by January 1, 1996, as required by the Social Contract. The Commission, seeking to simplify the implementation of the Social Contract, found that the Rate Form proposed by Continental to implement the rate restructuring under the Social Contract, was consistent with the methodologies of the Commission's Forms 1200 and 1210 and greatly simplified the review of the restructured rates under the Social Contract. Therefore, pursuant to the terms of the Social Contract, the Commission permitted Continental to file a Rate Form to establish its CPS tier rates. 6.In a letter dated June 24, 1997, Operator wrote to the Commission requesting that the complaint filed by the LFA be dismissed. Operator argues that there is an insufficient number of complaints for the communities referenced above, and these complaints do not refer specifically to CPST. On July 2, 1997, the LFA responded that it complied with the Commission's rules by certifying that it has received more than one subscriber complaint for each of the communities referenced above, and that to the best of the LFA's knowledge the information provided on the complaint is true and correct. The LFA, by a Municipal Ordinance, is the LFA for all of the communities referenced above. Additionally, we find the complaint clearly states that CPST and MPT rate increases are being challenged. Therefore, we find that the complaint is in compliance with the Commission's rules and will not be dismissed. 7.On May 22, 1997, the LFA for the communities referenced above filed a complaint regarding the January 1, 1997 increase in Operator's CPST and MPT rates in the communities referenced above. In its complaint, the LFA asserts that it has received more than one subscriber complaint against Operator's CPST and MPT rate increases, thereby triggering the Commission's jurisdiction to review this complaint. The valid complaint from the LFA triggers an obligation on behalf of the cable operator to file a justification of its CPST rates with the LFA. Thus, in this case, Operator is required to justify the increase in its CPST rate which is the subject of the LFA's complaint. In its response, Operator asserts that its January 1, 1997 rate increase is justified by the FCC Form 1200 filed August 8, 1994, the Rate Form filed December 1, 1995 and FCC Form 1210, including notice of the Rate Form and FCC Form 1200, filed along with the LFA's complaint on May 22, 1997. 8.Upon review of Operator's FCC Form 1200, we find Operator's CPST maximum permitted rate ("MPR") of $12.10 (excluding franchise fees) to be reasonable. Upon review of Operator's Rate Form used to set the initial MPR in accordance with the Social Contract we find Operator's actual CPST rate of $14.42 (excluding franchise fees) to be reasonable. Upon review of Operator's FCC Form 1210, we find Operator's actual CPST rate of $16.37 (excluding franchise fees) to be reasonable. Upon review of Operator's MPT, we find that Operator added four channels to the MPT and increased its MPR for the MPT to $4.00 (excluding franchise fees), including permitted programming costs and inflation. Therefore, Operator's actual MPT rate of $4.00 (excluding franchise fees) is not unreasonable. 9.Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $16.37 (excluding franchise fees) charged by Operator in the communities referenced above, effective January 1, 1997, IS REASONABLE. 10.Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the MPT rate of $4.00 (excluding franchise fees) charged by Operator in the communities referenced above, effective January 1, 1997, IS REASONABLE. 11.Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaints referenced herein with respect to cable programming services charged by Operator in the communities referenced above ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Margaret M. Egler Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau