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                                Before the
                     Federal Communications Commission
                          Washington, D.C. 20554

In the Matter of                     )
                                     )
Marcus Cable Associates, L.P.        )     CUID No. IN0702
                                     )     (Community of Bartholomew)
                                     )
Complaints Regarding                 )
Cable Programming Services Tier Rates)


                                  ORDER

   Adopted:  February 20, 1998                     Released:  February 23, 1998     

By the Deputy Chief, Cable Services Bureau:

  1.    In this Order we consider complaints concerning the rates of the above-captioned operator
("Operator") for its cable programming services tier ("CPST") in the community referenced above. 
Operator's response includes benchmark justifications filed on FCC Form 1200, FCC Form 1210 and
two FCC Forms 1240.  We have already issued an order which found that Operator's CPST rates in
effect before May 15, 1994 ("1994 Order") were unreasonable.  In this Order we address Operator's
refund plan ("1994 Refund Plan") filed in response to our 1994 Order.  This Order also addresses the
reasonableness of Operator's rates for the period beginning May 15, 1994, as justified on Operator's FCC
Forms 1200, 1210 and 1240. 

  2.    We first address Operator's 1994 Refund Plan.  Our review of Operator's 1994 Refund
Plan reveals that the refund plan does not comply with the requirements of our 1994 Order.  In its 1994
Refund Plan, Operator states that it does not dispute the Commission's findings, regarding its CPST rates,
however, Operator raises an issue which Operator believes requires a calculation of the refund amount
which differs from the calculation prescribed in the 1994 Order.  Operator did not file a petition for
reconsideration or application for review of the 1994 Order.  Consequently, Operator is now attempting
to raise in its refund plan an issue concerning inter-tier offsets that it failed to properly place before the
Commission in accordance with the Commission's Rules.    

  3.    Specifically, Operator argues, in its refund plan, that it is entitled to offset its
undercharges on its basic service tier ("BST") with its overcharges on its cable programming services tier
("CPST").  The Commission has addressed the issue of inter-tier offsets in Cencom Cable Income
Partners ("Cencom").  In Cencom, the Commission determined that such inter-tier offsets are
"inconsistent with the Commission's conclusion in the [Implementation of Sections of the Cable
Television Consumer Protection and Competition Act of 1992, Rate Regulation, MM Docket 92-266,
Report and Order and Further Notice of Proposed Rulemaking] that cable operators should not balance
low BST rates with CPST rates that exceed the maximum permitted rate for the tier."  Based on the
Commission's holding in Cencom we have determined that Operator's refund plan is unacceptable and
that Operator has failed to comply with the 1994 Order.  Operator shall have thirty days from the release
of this Order to resubmit a refund plan which complies with this Order and with the 1994 Order.

  4.    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.  The Cable Television Consumer Protection
and Competition Act of 1992 ("1992 Cable Act"), and our rules in effect at the time the complaints were
filed, required the Commission to review CPST rates upon the filing of a valid complaint by a subscriber. 
The filing of a valid complaint triggers an obligation on behalf of the cable operator to file a justification
of its CPST rates.  If the Commission finds the rate to be unreasonable, it shall determine the correct
rate and any refund liability.  

  5.    The Commission's original rate regulations took effect on September 1, 1993.  The
Commission subsequently revised its rate regulations effective May 15, 1994.  Cable operators with
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, and 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 prior to May 15, 1994 using
a benchmark showing must complete and file FCC Form 393.  Operators must use the FCC Form 1200
series to justify their rates for the period  beginning May 15, 1994 using a benchmark showing.  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 cable
programming service rate to be unreasonable less than one year prior to the filing, or where there is a
pending complaint against the CPST rate.  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. 

  6.    The Commission's rules also provide for a refund liability deferral period, if timely
requested by Operator, beginning May 15, 1994 and ending July 14, 1994, for any overcharges resulting
from Operator's calculation of a new maximum permitted rate ("MPR") on FCC Form 1200.  This
deferral of refund liability, however, does not apply to refund liability that may have occurred because
Operator's March 31, 1994 rates for its CPST subject to regulation were higher than levels permitted
under the Commission's rules in effect before May 15, 1994.  Accordingly, while the liability period
for Operator's overcharges associated with its FCC Form 1200 filing does not begin to run until July 15,
1994, Operator will incur refund liability between May 15, 1994 and July 14, 1994 for any CPST rates
charged above the MPR approved by the Commission on Operator's FCC Form 393.

  7.    Upon review of Operator's FCC Form 1200, filed to justify its CPST rates beginning
May 15, 1994, we adjusted Line A6 to $10.15 to correspond to the maximum permitted rate ("MPR")
determined in our 1994 Order.  We find Operator's CPST MPR of $9.25 to be reasonable.  Because
Operator's actual CPST rate was $10.47, however, we find Operator's CPST rate to be unreasonable
for the period May 15, 1994 through July 14, 1994.  However, Operator elected to take advantage of the
refund liability deferral period in accordance with the Commission's Rules.  Accordingly, Operator does
not incur refund liability for charging in excess of the MPR calculated on its FCC Form 1200 for the
period May 15, 1994 through July 14, 1994.  However, Operator does incur refund liability for charging
a CPST rate of $10.47, for the period May 15, 1994 through July 14, 1994, which is above the MPR
of $10.15 approved by the Commission on Operator's FCC Form 393.  In addition, because Operator's
actual CPST rate of $11.21, in effect from July 15, 1994 through October 31, 1995, exceeded its FCC
Form 1200 MPR, we find Operator's actual CPST rate of $11.21 to be unreasonable effective July 15,
1994 through October 31, 1995.

  8.    Upon review of Operator's FCC Form 1210 covering the period March 31, 1994 to
September 30, 1995, we find that Operator claimed an excessive inflation factor.  Operator is a
"transition rate" benchmark operator and, therefore, may apply an inflation adjustment factor of no more
than 1.0215 for the period October 1, 1993 to June 30, 1994.  Accordingly, we adjusted Operator's
inflation factor on Lines I5 (Inflation Adjustment Factor) and J5 (Inflation Adjustment Factor) each from
1.0521 to 1.0215.  These adjustments to Operator's FCC Form 1210 have reduced Operator's MPR from
$9.81 to $9.65, effective October 1, 1995.  Because Operator's actual CPST rate continued to be $11.21,
from October 1, 1995 through October 31, 1995, we find Operator's CPST rate, effective October 1,
1995, to be unreasonable.  On November 1, 1995 Operator implemented a CPST rate $9.81 to conform
with its FCC Form 1210 filing.  Because Operator's actual CPST rate of $9.81 exceeded its reduced
MPR of $9.65, we find Operator's actual CPST rate of $9.81, effective November 1, 1995 through May
31, 1996, to be unreasonable.  However, because Operator's rates have been adjusted to remove excess
inflation, pursuant to our "Public Notice: Cable Rates for Inflation Applied to Transition Rates," Operator
will not incur refund liability because of its excess inflation until April 1, 1996.    

  9.    Upon review of Operator's first FCC Form 1240 for the period June 1, 1996 through
May 31, 1997, we have adjusted Module A, Line A1 to reflect Operator's previous MPR of $9.65.  On
its first FCC Form 1240, Operator's selected time period for performing its true-up adjustments
overlapped the time period covered by Operator's prior FCC Form 1210.  This is incorrect.  The FCC
Form 1240 instructions clearly state that "[f]or first time filers of FCC Form 1240, the beginning date
of the True-Up Period on the initial filing is . . . the end of the last quarter to which [an operator's] most
recently filed Form 1210 applied if the rate adjustment after . . . September 22, 1995 was done with
Form 1210."  

  10.   Based on this instruction, we have adjusted the true-up period in Operator's first FCC
Form 1240 from 11 months to 8 months.  This adjustment reduced the number of months on Worksheet
1, True Up Period 1, from 11 months to 8 months.  Our adjustments to Worksheet 1 required that we
revise Operator's inflation factors.  As a result, the inflation factor in Module C, Line C1 for the 8 month
true-up period was corrected to 1.0152.

  11.   The reduction in the length of the true-up period also results in a reduction in Line H2
(Revenue From MPR for Period 1).  This results in a corresponding reduction in Line I8 (True-Up
Segment for the Projected Period).  In total, our adjustments to Operator's first FCC Form 1240 result
in a reduction of the MPR for the Projected Period to $11.32 (Line I9).  Thus, Operator has failed to
demonstrate that its June 1, 1996 rate of $11.69 for its CPST was not unreasonable.  To the extent that
external costs from the 3 months disallowed from Operator's true-up period have been averaged into
the rates charged in the 8 months allowed in Operator's true-up period, and have not been removed by
our adjustments, we will order Operator to make a month-by-month accounting of such external costs. 
Such accounting shall allow a comparison of the actual external costs for the permitted 8 month true-up
period with the recovery of external costs afforded by the external cost segment for that period as
calculated on Worksheet 7.  We will order the removal of any over-recovery, plus interest, identified
thereby in Operator's next FCC Form 1240 filed with the Commission.  Any such over-recovery of
external costs shall be added to the amount otherwise reportable on Line H1 of Operator's next FCC
Form 1240 rate calculation.  

  12.   Upon review of Operator's second FCC Form 1240 for the period June 1, 1997 through
May 31, 1998, we have adjusted Module A, Line A1 to reflect Operator's previous MPR of $11.32.  On
its second FCC Form 1240, Operator's selected time period for performing its true-up adjustments
overlapped its selected time period for true-up adjustments from its first FCC Form 1240.  As discussed
above, this is incorrect.  In addition, Operator made true-up adjustments through to the effective date of
the increase.  This is also incorrect.  The annual adjustment afforded by FCC Form 1240 allows
operators to project changes in external costs, inflation, and the number of regulated channels.  This
structure avoids the delay some operators experienced in recouping costs through multiple rate
adjustments throughout the year.  Because projections will not reflect the costs that actually occur, the
Commission provided, as part of the annual adjustment, a "true-up" to correct projected cost changes with
the actual cost changes.  However, the Commission has noted that, as FCC Form 1240 must be filed 90
days before an increase is to take effect, the period for the true-up will not coincide with the previous
year's projections.  The true-up data is intended to indicate real, not projected data.  This policy is
reflected in the instructions accompanying FCC Form 1240.

  13.   Based on this instruction and considering evidence in the filing and reasonable time for
closing accounts and completing forms, we have adjusted the true-up period in Operator's second FCC
Form 1240 from 15 months to 11 months.  This adjustment reduced the number of months on
Worksheet 1, True Up Period 1, from 12 months to 11 months and eliminated the three months that
Operator had listed for True Up Period 2.  Our adjustments to Worksheet 1 required that we refresh
Operator's inflation factors.  In particular, on Worksheet 1, Operator incorrectly reported the inflation
factor of 2.22 percent for the first 4 months of True Up Period 1 and 2.21 percent for the remaining 11
months listed in True Up Periods 1 and 2.  As a result, Operator reported the incorrect inflation factor
of 1.0221 on Lines C1 and C3 of its second FCC Form 1240.  Therefore, we have adjusted Worksheet
1 to reflect the correct inflation factor of 2.22 percent, 2.21 percent, 1.83 percent, 2.70 percent, and 1.77
percent for the second quarter of 1996, the third quarter of 1996, the fourth quarter of 1996, the first
quarter of 1997, and the first month of the second quarter of 1997, respectively.  As a result, the inflation
factor in Module C, Line C1 for the 11 month true-up period was corrected to 1.0202 instead of the
1.0221 used by the Operator for a 12 month period.  The current inflation factor in Module C, Line C3
was corrected to 1.0177 instead of the 1.0221 used by the Operator.   

  14.   The reduction in the length of the true-up period also results in a reduction in Line H2
(Revenue From MPR for Period 1).  This results in a corresponding reduction in Line I8 (True-Up
Segment for the Projected Period).  In total, our adjustments to Operator's second FCC Form 1240 result
in a reduction of the MPR for the Projected Period to $12.06 (Line I9).  Thus, Operator has failed to
demonstrate that its June 1, 1997 rate of $13.38 for its CPST was not unreasonable.  To the extent that
external costs from the four months disallowed from Operator's true-up period have been averaged into
the rates charged in the 11 months allowed in Operator's true-up period, and have not been removed by
our adjustments, we will order Operator to make a month-by-month accounting of such external costs. 
Such accounting shall allow a comparison of the actual external costs for the permitted 11 month true-up
period with the recovery of external costs afforded by the external cost segment for that period as
calculated on Worksheet 7.  We order the removal of any over-recovery, plus interest, identified thereby
in Operator's next FCC Form 1240 filed with the Commission.  Any such over-recovery of external costs
shall be added to the amount otherwise reportable on Line H1 of Operator's next FCC Form 1240 rate
calculation.  

  15.   Accordingly, IT IS ORDERED, pursuant to Section 76.962 of the Commission's rules,
47 C.F.R. 76.962, that Operator's 1994 Refund Plan IS NOT ACCEPTED.

  16.   IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47
C.F.R. Section 76.961, that Operator revise its 1994 Refund Plan as detailed herein and resubmit its plan
to the Chief, Cable Services Bureau, within thirty days of the release of this Order.  

  17.   IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47
C.F.R. Section 0.321 that Operator's CPST rate of $10.47, effective May 15, 1994 through July 14,
1994, in the community set forth above, IS UNREASONABLE. 

  18.   IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47
C.F.R. Section 0.321 that Operator's CPST rate of $11.21, effective July 15, 1994 through October 31,
1995, in the community set forth above, IS UNREASONABLE. 

  19.   IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47
C.F.R. Section 0.321 that Operator's CPST rate of $9.81, effective November 1, 1995 through May 31,
1996, in the community set forth above, IS UNREASONABLE.

  20.   IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47
C.F.R. Section 0.321 that Operator's CPST rate of $11.69, effective June 1, 1996 through May 31,
1997, in the community set forth above, IS UNREASONABLE.

  21.   IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47
C.F.R. Section 0.321 that Operator's CPST rate of $13.38, effective June 1, 1997 through May 31,
1998, in the community set forth above, IS UNREASONABLE.

  22.   IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47
C.F.R. Section 76.961, that Operator shall refund to subscribers in the franchise area referenced above
that portion of the amount paid in excess of the maximum permitted CPST rate of $10.15 per month (plus
franchise fees), plus interest to the date of the refund, for the period  May 15, 1994 through July 14,
1994.

  23.   IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47
C.F.R. Section 76.961, that Operator shall refund to subscribers in the franchise area referenced above
that portion of the amount paid in excess of the maximum permitted CPST rate of $9.25 per month (plus
franchise fees), plus interest to the date of the refund, for the period July 15, 1994 through September
30, 1995.

  24.   IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47
C.F.R. Section 76.961, that Operator shall refund to subscribers in the franchise area referenced above
that portion of the amount paid in excess of the maximum permitted CPST rate of $9.65 per month (plus
franchise fees), plus interest to the date of the refund, for the periods October 1, 1995 through
October 31, 1995 and April 1, 1996 through May 31, 1996.

  25.   IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47
C.F.R. Section 76.961, that Operator shall refund to subscribers in the franchise area referenced above
that portion of the amount paid in excess of the maximum permitted CPST rate of $11.32 per month (plus
franchise fees), plus interest to the date of the refund, for the period June 1, 1996 through May 31, 1997.


  26.   IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47
C.F.R. Section 76.961, that Operator shall refund to subscribers in the franchise area referenced above
that portion of the amount paid in excess of the maximum permitted CPST rate of $12.06 per month (plus
franchise fees), plus interest to the date of the refund, for the period June 1, 1997 to the day before it
reduces its rate to $12.06. 

  27.   IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47
C.F.R. Section 0.321, that Operator shall conduct a month-by-month accounting of its external costs from
Operator's eight-month true-up as found on Operator's first FCC Form 1240 Worksheets, and from
Operator's eleven-month true-up as found on Operator's second FCC Form 1240 Worksheets, and that
Operator shall file, within 30 days of the release of this Order, a report detailing the over-recovery of
all external costs, plus interest, with the Chief, Cable Services Bureau. 

  28.   IT IS FURTHER ORDERED that Operator shall promptly determine the overcharges to
CPST subscribers for the stated periods, and shall within 30 days of the release of this Order, file a
report with the Chief, Cable Services Bureau, stating the cumulative refund amount so determined
(including franchise fees and interest), describing the calculation thereof, and describing its plan to
implement the refund within 60 days of Commission approval of the plan. 

  29.   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 rates charged by Operator in the
community set forth above ARE GRANTED.
  30.   IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47
C.F.R. Section 0.321, that Operator revise the calculation of its maximum permitted CPST rate in its next
FCC Form 1240 filing in accordance with our findings in this order.

        FEDERAL COMMUNICATIONS COMMISSION 


        John E. Logan 
        Deputy Chief, Cable Services Bureau