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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 ) ) Comcast Cable Communications, Inc. ) CUID No. MS0052 (City of Hattiesburg) d/b/a Pine Belt Cable, Inc. ) ) ) Petition for Reconsideration ) and Petition for Stay ) ORDER ON RECONSIDERATION Adopted: October 3, 1997 Released: October 3, 1997 By the Chief, Cable Services Bureau: 1. In this Order we consider a petition for reconsideration concerning the rates the above- captioned operator ("Operator") was charging for its cable programming services tier ("CPST") in the community referenced above. Operator attempted to justify its CPST rates through benchmark showings on FCC Form 1200 and multiple FCC Forms 1210. We issued an order addressing the reasonableness of Operator's CPST rates in effect from March 1, 1995 to the present (Prior Order"). Our Prior Order held that the Operator's rates in effect beginning July 1, 1995 to the present were unreasonable. Operator filed a Petition for Reconsideration ("Petition") of our Prior Order on August 25, 1997. Operator also filed a Petition for Stay of our Prior Order on August 28, 1997. The Commission has received no opposition to the Petition for Reconsideration or the Petition for Stay. This Order addresses Operator's Petition for Reconsideration of our Prior Order for the community referenced above. Accordingly, we will deny Operator's Petition for Stay as moot. 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"), and our rules implementing the 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"). If the Commission finds the rate to be 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, requires that complaints against 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. Operators with valid CPST complaints filed against them prior to May 15, 1994, were required to 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, and that their prices were in compliance with the revised rules from May 15, 1994 forward. Operators attempting to justify their prices for the period prior to May 15, 1994, through a benchmark showing had to complete and file FCC Form 393. 4. 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. The period under review in our Prior Order was the period beginning March 1, 1995 to the present. 5. In our Prior Order, we found Operator's maximum permitted rate ("MPR") of $14.34, as calculated on Operator's FCC Form 1200, to be reasonable. We further found that Operator's FCC Form 1210 filing, for the period April 1, 1994 to December 31, 1994 (the "1994 FCC Form 1210"), justified a MPR of $15.69 beginning March 1, 1995. However, we found that Operator, on its amended FCC Form 1210 filing, for the period January 1, 1995 to March 31, 1995 (the "First Quarter FCC Form 1210"), had not correctly calculated its MPR. Therefore, we adjusted Operator's First Quarter FCC Form 1210 and changed the inflation factor in Module I, Line I5 to 1.000, thereby removing all inflation, because we believed Operator had already taken an inflation adjustment of 1.0215 in its 1994 FCC Form 1210. This adjustment resulted in a new MPR of $15.69 versus the Operator's MPR of $15.96. Because Operator's actual rate of $16.35 was more than the revised MPR of $15.69, we found that Operator's CPST rates for the period July 1, 1995 to October 31, 1995 was unreasonable. We also found that Operator's CPST rates beginning November 1, 1995 were unreasonable. 6. In its Petition, Operator alleges that the Bureau erred when it removed all inflation from Operator's First Quarter FCC Form 1210 due to the Bureau's belief that Operator had already taken an inflation adjustment of 1.0215 in Operator's 1994 FCC Form 1210. Operator contends that its rates included no inflation component prior to the July 1, 1995 increase which was justified by the First Quarter FCC Form 1210. Operator maintains that, as a "transition rate" system, it had been precluded by the Commission's rules from incorporating any inflation in its rates until April 1, 1995. Operator contends that its 1994 FCC Form 1210 and FCC Form 1200 reflect that Operator was a "transition rate" system and that the MPR derived from the 1994 FCC Form 1210 included no inflation. First, Operator argues that, as shown on its FCC Form 1200, it qualified as a "transition rate" system because its March 31, 1994 rate adjusted for external costs (FCC Form 1200, Line B19) was above its benchmark rate (FCC Form 1200, Line C10), but its full reduction rate (FCC Form 1200, Line J8) was below it. Second, Operator argues that its 1994 FCC Form 1210 applied no inflation adjustment to the transition rate. Operator contends that Module D of the 1994 FCC Form 1210, which adjusted the transition rate for changes in external costs and channel changes, included no provision for an inflation adjustment. In contrast, Module E of the 1994 FCC Form 1210 adjusted the full reduction rate for inflation, changes in external costs, and channel changes. Operator contends that the inflation factor applied to the full reduction rate is reflected on Line E5 of Operator's 1994 FCC Form 1210 (as 1.0215) and the inflation adjustment is calculated on Line E6. Operator further contends, however, that this inflation was never applied to the transition rate in Module D from which Operator's MPR was derived. Operator maintains that the MPR calculated on its 1994 FCC Form 1210 (Line F9) was derived from the Updated Transition Rate (Line F3, Line D4) because the Aggregate Transition Rate (Line F5) exceeded the Aggregate Full Reduction Rate (Line F8). Accordingly, Operator argues that the Bureau's elimination of Operator's 1.0215 inflation adjustment from the First Quarter FCC Form 1210 was based upon the mistaken conclusion that Operator's 1994 FCC Form 1210 had already included this inflation adjustment in the MPR. This error caused the Bureau to reduce the MPR from the First Quarter FCC Form 1210, the starting rate on Line A1 of the Third Quarter FCC Form 1210, and the MPR for the period beginning November 1, 1995. 7. Upon review of Operator's FCC Forms 1200 and 1210 filings, we find that Operator was a transition rate system and that Operator did not take an inflation adjustment in its 1994 FCC Form 1210. Accordingly, we will grant Operator's Petition with respect to this issue and allow Operator to take an inflation adjustment of 1.0215 in its First Quarter FCC Form 1210. 8. However, upon review of Operator's FCC Forms 1210, pursuant to this proceeding, we find that Operator failed to correctly calculate its MPR on its 1994 FCC Form 1210. This is because the Operator added $1.00 to its MPR on Line F9 of its 1994 FCC Form 1210. Operator attached an "Addendum to Form 1210" to justify this $1.00 increase purporting to show that Operator had added four CPST channels and was entitled to increase its rates pursuant to the new going forward rules. A review of Operator's channel line-up cards that it submitted with its Forms 1200 and 1210 reveals that while adding four new channels, Operator dropped two CPST channels. Although Operator's 1994 FCC Form 1210, Line C2 states that Operator had 25 CPST channels, Operator's attached line-up cards dated March 31, 1994 and December 31, 1994 clearly show that Operator had 27 CPST channels. We accept Operator's December 31, 1994 channel line-up card and substitute 27 CPST channels for the 25 listed by Operator on the form. On its March 1, 1995 channel line-up card, also attached to its 1994 FCC Form 1210, Operator represented that it had 29 CPST channels. 9. Thus, for rate purposes Operator is deemed to have substituted two of the new CPST channels for the two CPST channels that it dropped effective March 1, 1995. Operator failed to properly adjust the license fee and residual components for the two substituted channels as required under 47 C.F.R. 76.922(g)(6). Further, for rate purposes Operator is treated as adding only two CPST channels on March 1, 1995. Due to the lack of information regarding the residuals and license fees of the two CPST channels that were dropped, no further review could be made. Consequently, we will order Operator to file a revised FCC Form 1210 for the period April 1, 1994 to December 31, 1994 consistent with the requirements of 47 C.F.R. 76.922(g)(6). Based upon that revised form, Operator should review and revise its subsequent filings as necessitated by the revised FCC Form 1210. Upon receipt of revised forms we will determine Operator's maximum permitted rates for the relevant periods. 10. Accordingly, IT IS ORDERED that Operator shall file a revised FCC Form 1210 with the Chief, Cable Services Bureau, for the period April 1, 1994 to December 31, 1994 revised in accordance with this Order, and any resulting revisions required for subsequent filings, within 30 days of the release of this Order. 11. IT IS FURTHER ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R. Section 1.106, that the Petition for Reconsideration seeking reversal of Comcast Cable Communications, Inc., d/b/a Pine Belt Cable, Inc., DA 97-1562 (released July 24, 1997) IS GRANTED ONLY TO THE EXTENT INDICATED HEREIN AND FURTHER CONSIDERATION THEREOF IS SUSPENDED PENDING OUR RECEIPT OF ADDITIONAL INFORMATION REQUIRED HEREUNDER. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator's Petition for Stay of Comcast Cable Communications, Inc., d/b/a Pine Belt Cable, Inc., DA 97-1562 (released July 24, 1997) IS DENIED AS MOOT. 13. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator's Refund Plan submitted pursuant to Comcast Cable Communications, Inc., d/b/a Pine Belt Cable, Inc., DA 97-1562 (released July 24, 1997), IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau