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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 ) ) Media One of Eastern Michigan, Inc. ) CUID No. MI0330 (Ann Arbor) ) ) Complaint Regarding ) Cable Programming Services Tier Rates) ORDER Adopted: February 26, 1998 Released: March 3, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the July 1, 1997 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. Operator has attempted to justify its CPST rates through a benchmark showing on FCC Forms 1210 and a Social Contract Rate Form ("S.C. 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 increase effective July 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 CPST. Continental may migrate up to four existing services from its basic service tier ("BST") and/or CPST to a migrated product tier ("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 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. The LFA for the franchise area referenced above filed a complaint with the Commission on December 3, 1997 against Operator's July 1, 1997 CPST rate increase from $16.65 (including franchise fees) to $18.74 (including franchise fees). 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 1, 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. 7. Upon review of Operator's S.C. Rate Form dated August 26, 1996 we find that Operator correctly set its maximum permitted rate in accordance with the Social Contract. Upon review of Operator's FCC Form 1210 filed for the period June 30, 1996 to June 30, 1997, we find Operator's actual CPST rate of $18.74 (including franchise fees) to be reasonable. 8. 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 $18.74 (including franchise fees) charged by Operator in the community referenced above, effective July 1, 1997, IS REASONABLE. 9. 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 rate charged by Operator in the community referenced above ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Deputy Chief, Cable Services Bureau