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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 Cablevision ) CUID No. OR0162 (Clackamas County) d/b/a Falcon Cable TV ) ) Complaint Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: April 3, 1998 Released: April 8, 1998 By the Acting Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the rate the above-referenced operator ("Operator") was charging for its cable programming services tier ("CPST") in the community referenced above. This Order addresses only Operator's October 1, 1997 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. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the legislation ("Interim Rules"), require that a complaint against the CPST rate 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 January 13, 1998 against Operator's October 1, 1997 CPST rate increase from $5.31 to $5.57. 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 October 9, 1997. The filing of a complete and timely 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. If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability. 4. Operators may justify 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. Upon review of Operator's FCC Form 1240 for the projected period October 1, 1997 through September 30, 1998, we find that Operator has not correctly calculated its maximum permitted rate ("MPR"). Operator used a rate higher than its actual CPST rate as the starting rate on Line A1 of its FCC Form 1240. Operator also included true-up adjustments for the period July 1, 1996 through June 30, 1997. However, because Operator filed its FCC Form 1240 with the Commission in response to a complaint, and Operator was not subject to regulation by the Commission at the time the complaint was filed, Operator is not entitled to any true-up adjustment. Therefore, we substituted Operator's actual CPST rate as the starting rate on Line A1 of its FCC Form 1240 and recalculated Operator's FCC Form 1240 without the true-up adjustment in Module I, Line I8. We also adjusted Operator's Line I1 and Worksheet 2 (CAPS Method Segment for Projected Period) in accordance with the FCC Form 1240 Instructions for operators not subject to regulation. These adjustments required that we refresh Operator's inflation factor at Line C5 (Current FCC Inflation Factor) to 1.0143. This resulted in a revised MPR of $5.48 for the projected period rather than Operator's calculated MPR of $5.57 for the projected period. Because Operator's actual CPST rate of $5.57, effective October 1, 1997, exceeds its revised MPR of $5.48, we find Operator's actual CPST rate of $5.57 to be unreasonable. 6. 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 $5.57, charged by Operator in the franchise area referenced above, effective October 1, 1997 through the present, IS UNREASONABLE. 7. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  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 $5.48 per month (plus franchise fees), plus interest to the date of the refund, for the period October 9, 1997, the date of the first subscriber complaint, through the day before Operator implements the maximum permitted CPST rate of $5.48. 8. 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. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator take into account our FCC Form 1240 adjustments when calculating its maximum permitted rate and performing the true-up calculation on its next FCC Form 1240. 10. 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 Acting Chief, Cable Services Bureau