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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 ) ) Falcon Cable Holdings, Inc. ) CUID No. KY0529 (Calvert City) ) ) ) Complaint Regarding ) Cable Programming Services Tier ) ORDER Adopted: February 26, 1998 Released: March 2, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint concerning the rates the above-referenced operator ("Operator") was charging 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 released an order ("Prior Order") which dismissed all the complaints filed prior to July 14, 1994 against Operator's CPST rates in the community referenced above. Accordingly, this Order addresses the reasonableness of Operator's CPST rates in effect from July 14, 1994 to the 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") required the Commission to review CPST rates upon the filing of a valid complaint by a subscriber or local franchising 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 may 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 costs 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. Upon review of Operator's FCC Form 1200 and FCC Form 1210, for the period March 31, 1994 through June 30, 1994, we find that Operator has justified its maximum permitted rate ("MPR") of $1.01, effective July 14, 1994. Because Operator's actual CPST rate was $1.84, effective July 14, 1994, we find that Operator's CPST rate of $1.84 is unreasonable. Upon review of Operator's FCC Form 1210, for the period July 1, 1994 to September 30, 1994, we find that Operator has justified it MPR of $1.02, effective October 1, 1994. Because Operator's actual CPST rate continued to be $1.84, we find that Operator's actual CPST rate of $1.84, effective July 14, 1994 through March 31, 1996 is unreasonable. 6. Upon review of Operator's third FCC Form 1210, for the period January 1, 1995 to March 31, 1996, we find that Operator has justified its MPR of $1.28, effective April 1, 1996. Because Operator's actual CPST rate of $1.28 does not exceed its MPR of $1.28, effective April 1, 1996, we find that Operator's actual CPST rate of $1.28, effective April 1, 1996, is not unreasonable. 7. Upon review of Operator's FCC Form 1240 for the projected period October 1, 1996 to September 30, 1997, we find that Operator has justified its MPR of $1.37, effective October 1, 1996. because Operator's actual CPST rate of $1.37 does not exceed its MPR, we find that Operator's actual CPSt rate of $1.37, effective October 1, 1996, is not unreasonable. 8. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the monthly CPST rate of $1.84 charged by Operator in the community referenced above, effective July 14, 1994 through March 31, 1996, IS UNREASONABLE. 11. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the monthly CPST rate of $1.28 charged by Operator in the franchise area referenced above, effective April 1, 1996 through September 30, 1996, IS NOT UNREASONABLE. 12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the monthly CPST rate of $1.37, charged by Operator in the franchise area referenced above, effective October 1, 1996, IS NOT UNREASONABLE. 13. 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 subscribers in the community set forth above that portion of the amount of the CPST rate increase paid by subscribers that exceeded the maximum permitted CPST rate of $1.01 per month (plus franchise fees), plus interest to the date of the refund, for the period from September 19, 1994 to September 30, 1994. 14. 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 subscribers in the community set forth above that portion of the amount of the CPST rate increase paid by subscribers that exceeded the maximum permitted CPST rate of $1.02 per month (plus franchise fees), plus interest to the date of the refund, for the period from October 1, 1994 to March 31, 1996. 15. 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. 16. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint filed with the Commission September 19, 1994 against the CPST rate charged by Operator, in the community referenced above, IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau