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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 ) ) TCI Communications, Inc. ) CUID No. IL0555 (Village of Bartlett) d/b/a Telenois, Inc. ) ) Complaint Regarding ) Cable Programming Services Tier Rates) ) ORDER Adopted: December 15, 1997 Released: December 16, 1997 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the June 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have already issued an order resolving all the complaints filed from September 1, 1993 through September 15, 1995 against Operator's CPST rates ("First Order"). Most recently, we issued an Order in which we found Operator's June 1, 1996 rate increase to be reasonable ("Second Order"). Accordingly, this Order addresses only the reasonableness of Operator's June 1, 1997 CPST rate increase. 2. Under the Communications Act, the Federal Communications Commission ("Commission") is authorized 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 a 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 ("Interim Rules"), require that complaints against CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 3. The LFA for the franchise area referenced above filed a complaint with the Commission on September 18, 1997 against Operator's June 1, 1997 CPST rate increase from $15.22 to $16.68. The LFA verified that it received more than one subscriber complaint for the franchise area and that the first valid complaint was received by the LFA on July 2, 1997. The filing of a complete and timely LFA complaint triggers an obligation upon the cable operator to file a justification of its CPST rates. The Operator has the burden of demonstrating that the CPST rates complained about are reasonable. 4. To justify rates for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form 1200 series. Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210. Operators may alternatively 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. 5. On February 22, 1996, the Commission issued an order granting Operator a waiver ("Waiver Order") of certain rate adjustment requirements in its initial filing of the Commission's annual rate adjustment form (FCC Form 1240). Specifically, the Waiver Order allowed Operator, in its initial FCC Form 1240 filings, to include estimated changes in costs, inflation, channels and subscriber information attributable to the period between the last date for which actual cost data was available and the effective date of the new rates. In the Waiver Order, Operator was instructed to include in its initial FCC Form 1240 filing certain calculations, such calculations to be performed on FCC Form 1240 (primarily in Module G), or off FCC Form 1240, in an alternative showing done pursuant to the Waiver Order's "General Guidelines." Operator chose to use an alternative showing pursuant to the "General Guidelines" rather than perform its calculations directly on FCC Form 1240. 6. On October 25, 1996, Operator wrote to the Commission requesting review and approval of a modified FCC Form 1240 to justify rates for the projected period from June 1, 1997 to May 31, 1998. On January 9, 1997 the Commission consented to the Operator's use of the form for such period in lieu of filings on the Commission's standard FCC Form 1240. 7. To justify its CPST rate increase, effective June 1, 1997, Operator filed FCC Form 1240 for the projected period June 1, 1997 to May 31, 1998 ("Second Form 1240"). Operator had previously filed FCC Form 1240 for the projected period June 1, 1996 through May 31, 1997, to justify its June 1, 1996 CPST rate increase ("First Form 1240"). Operator's First Form 1240 used Operator's alternative showing, calculated pursuant to the Waiver Order. Operator's Second Form 1240 followed the format set forth in Operator's October 25, 1996 letter. Upon review of the submitted forms, the Commission determined that neither of the submitted forms produced identical results to filings that would have been made on the Commission's standard FCC Form 1240. 8. Accordingly, on December 4, 1997, Operator submitted two new standard FCC Forms 1240, for the projected periods June 1, 1996 to May 31, 1997 and June 1, 1997 to May 31, 1998, on which Operator performed the Waiver Order's calculations directly on the standard FCC Forms 1240 as well as the calculations described in Operator's October 25, 1996 letter. Review of both standard FCC Forms 1240 is necessary to calculate the appropriate MPR and the refund amount, if any, for the period beginning June 1, 1997. Operator also submitted a refund plan which calculated the amount of refunds owed to subscribers in the community referenced above for the duration of the one year projected period ending May 31, 1998. 9. Upon review of Operator's new FCC Form 1240, for the projected period June 1, 1996 to May 31, 1997, we find that Operator has correctly calculated its maximum permitted rate ("MPR") of $15.70. Upon review of Operator's new FCC Form 1240, for the projected period June 1, 1997 to May 31, 1998, we find that Operator has correctly calculated its MPR of $16.04. However, Operator's actual CPST rate, effective June 1, 1997, is $16.68. Operator has submitted a refund plan which calculates, with interest, the total amount of overcharges that will be collected from CPST subscribers in the community referenced above from July 2, 1997 (the date of the first subscriber complaint) to May 31, 1998. Upon review of Operator's refund plan, we find that Operator has correctly calculated, with interest, the amount of overcharges that will be received from subscribers during the projected period ending May 31, 1998. These calculations result in a total refund amount of $7.41, per CPST subscriber, including interest. We will order Operator to pay the refund amount of $7.41 to each current CPST subscriber within 60 days of the release of this order. We will also order that any rate Operator charges on and after June 1, 1998 shall be premised on Operator's use of (1) the standard FCC Form 1240 for rate calculation purposes and (2) $16.04 as Operator's Current Maximum Permitted Rate as called for on Line A1 of its FCC Form 1240 filing for the projected period beginning June 1, 1998. Contingent upon Operator's refund payment to its subscribers, we have determined that Operator's total CPST rate collections in the community referenced above, for the projected period June 1, 1997 to May 31, 1998, will be reasonable. 10. Accordingly, IT IS ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R. Section 76.961, that Operator shall refund to CPST subscribers in the franchise area referenced above the amount of $7.41 within 60 days of the release of this Order. 11. IT IS FURTHER ORDERED, pursuant to Section 76.962 of the Commission's rules, 47 C.F.R. Section 76.962, that Operator, within 90 days of the release of this Order, shall file with the Chief, Cable Services Bureau, a certification of its compliance with the refund requirements of this Order, and a certification of its intent to comply with all other aspects of this Order. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator shall use (1) the standard FCC Form 1240 for rate calculation purposes and (2) $16.04 as Operator's Current Maximum Permitted Rate as called for on Line A1 of its FCC Form 1240 filing for the projected period beginning June 1, 1998. 13. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint referenced herein against the rates charged by Operator in the community set forth above IS GRANTED TO THE EXTENT INDICATED HEREIN. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau