******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) CUID No. CA0162 (Signal Hill) Long Beach Acquisition Corp. ) d/b/a Charter Communications ) ) Complaints Regarding ) Cable Programming Services Tier Rates ) ORDER Adopted: April 9, 1998 Released: April 10, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the rates charged by the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. Operator has chosen to attempt to justify its CPST rates through a cost of service showing on FCC Form 1220, updated by FCC Form 1210s and FCC Form 1240. This Order addresses the reasonableness of Operator's CPST rate, effective September 1, 1997. 2. We first dismiss a complaint filed April 24, 1995 against Operator's CPST rate in the community set forth above because the complaint concerns a rate that is outside the jurisdiction of the Federal Communications Commission ("Commission"). Under the Communications Act, the Commission regulates the CPST rates of cable systems not subject to effective competition upon the filing of a valid complaint. Section 76.953 of the Commission's rules in effect at the time the complaint was filed provides that complaints regarding a rate change for CPST or associated equipment must be filed with the Commission within 45 days from the date the complainant receives a bill from the cab le operator that reflects the rate change. The Commission received a complaint on April 24, 1995 concerning a rate change scheduled to occur on May 15, 1995. Because this complaint was filed by the complainant prior to the complainant receiving a bill from the Operator that reflects a rate change, we find that the complaint was untimely filed and, consequently, does not trigger the Commission's jurisdiction. 3. Under the Communications Act, the 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 the CPST rates be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 4. The LFA for the franchise area referenced above filed a complaint with the Commission on January 15, 1998, against Operator's September 1, 1997 CPST rate increase from $11.40 to $12.76. 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 September 15, 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. 5. To justify rates for the period beginning May 15, 1994, operators must use the FCC Form 1200 series. Operators attempting to justify CPST rates through a benchmark showing must use the FCC Form 1200. Operators attempting to justify their rates through a cost of service showing must complete and file FCC Form 1220. Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210 to account for the addition and deletion of channels, changes in certain external costs and inflation. In addition, Operators must file FCC Form 1210 at least 30 days before new rates are scheduled to go into effect, where there is a pending complaint against the CPST rate. 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 cost 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. 6. Upon review of Operator's FCC Form 1220, FCC Form 1210 and FCC Form 1240 filings, we made adjustments to Operator's calculated maximum permitted rates ("MPRs"). Despite these adjustments, we find Operator's actual CPST rate of $12.76, effective September 1, 1997, to be reasonable. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the April 24, 1995 complaint against the CPST rate charged by Operator in the community referenced above IS DISMISSED. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the CPST rate of $12.76, effective September 1, 1997, charged by Operator in the franchise area referenced above, IS REASONABLE. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaint IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau