**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

)

Bresnan Communications Company ) CUID No. MI0247 (Ishpeming) )

)

Complaints Regarding )

Cable Programming Services Tier Rate )

**ORDER**

**Adopted: January 13, 1999 Released: January 15, 1999**

By the Acting Chief, Financial Analysis and Compliance Division, Cable
Services Bureau:

In this Order we consider complaints[^1] 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 Forms 1200,
1210, 1235 and 1240. We have already issued a separate order (\"Prior
Order\") in which we found that Operator\'s rates for the period
September 1, 1993 through May 14 1994 were reasonable.[^2] This Order
addresses the reasonableness of Operator\'s rates for the period
beginning July 15, 1994, as justified on Operator\'s FCC Forms 1200,
1210, 1235 and 1240.[^3]

The Communications Act[^4] 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[^5] (\"1992 Cable Act\") required the Commission
to review CPST rates upon the filing of a valid complaint by a
subscriber. If the Commission finds rates to be unreasonable, it shall
determine correct rates and any refund liability.

3\. The Commission\'s original rate regulations became effective on
September 1, 1993.[^6] The Commission revised its rate regulations
effective May 15, 1994.[^7] Operators must use the FCC Form 1200 series
to justify their rates for the period beginning May 15, 1994 through a
benchmark showing.[^8] Operators are permitted to make changes to their
rates on a quarterly basis using FCC Form 1210.[^9] Operators may adjust
their rates on an annual basis using FCC Form 1240.[^10] Additionally,
an Operator may file an FCC Form 1235 (Abbreviated Cost of Service
Filing for Cable Network Upgrades). The FCC Form 1235 allows cable
operators to justify rate increases related to significant capital
expenditures used to improve rate-regulated services. This option is
extended only in cases of significant upgrades requiring added capital
investment, such as bandwidth capacity and conversion to fiber optics,
and for system rebuilds. Normal improvements and expansions of service
remain subject to the usual rate adjustments allowed by filing FCC Form
1210\'s, 1220\'s and 1240\'s. Cable operators that incur increases in
operating costs associated with a significant network upgrade will be
permitted to charge additional rates as justified by their FCC Form 1235
filing.

4\. Upon review of Operator\'s FCC Forms 1200, 1210 and 1240, we find
the Operator has justified its CPST rates effective July 15, 1994 to
March 31, 1997.[^11] Upon review of Operator\'s FCC Form 1235, we find
that Operator allocated net upgrade rate base and expense costs based on
a weighted average of the channel ratios before and after the upgrade.
We revised operator\'s allocations based on post-upgrade channel ratios
because post-upgrade tier charges align with those ratios. We also
revised Operator\'s tier income tax allowance based on a 34 percent
Federal tax rate, the maximum applied to United States corporations.
These adjustments reduced Operator\'s maximum permitted rate (\"MPR\")
on its FCC Form 1235 to \$2.54. The revised FCC Form 1235 MPR, when
added to the MPR of \$14.79 from Operator\'s second FCC Form 1240,
produces a combined MPR of \$17.33. Therefore, we find that Operator\'s
actual CPST rate of \$16.90, effective April 1, 1998, is reasonable.

5\. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the
Commission\'s Rules, 47 C.F.R. § 0.321, that the monthly CPST rates
charged by Operator in the community referenced above, from July 15,
1994 to March 31, 1997, ARE REASONABLE.

6\. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the
Commission\'s Rules, 47 C.F.R. § 0.321, that the monthly CPST rate of
\$16.90, effective April 1, 1998, charged by Operator in the community
referenced above, IS REASONABLE.

7\. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the
Commission\'s rules, 47 C.F.R. § 0.321, that the complaints referenced
herein against the CPST rates charged by Operator in the community
referenced above, ARE DENIED.

FEDERAL COMMUNICATIONS COMMISSION

Margaret M. Egler

Acting Chief, Financial Analysis and Compliance Division

Cable Services Bureau

[^1]:     ^?^ The first valid complaint against the Operator\'s CPST
    rates was filed on November 8, 1993.

[^2]:     ^?^ *See* In the Matter of Bresnan Communications Company, 10
    FCC Rcd 3967 (1995).

[^3]:     ^?^ Operator did not implement its FCC Form 1200 rate until
    July 15, 1994.

[^4]:     ^?^ Communications Act, Section 623(c), *as amended*, 47
    U.S.C. Section 543(c)(3) (1996).

[^5]:     ^?^ Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^6]:     ^?^ Order in MM Docket No. 92-266, Implementation of Sections
    of the Cable Consumer Protection and Competition Act of 1992: Rate
    Regulation, FCC 93-372, 58 Fed. Reg. 41042 (Aug. 2, 1993).

[^7]:     ^?^ 47 C.F.R. Section 76.922(b); *see also* Second Order on
    Reconsideration, Fourth Report and Order, and Fifth Notice of
    Proposed Rulemaking, MM Docket No. 92-266, FCC 94-38, 9 FCC Rcd
    4119, 4190 (1994) (\"*Second Order on Reconsideration*\").

[^8]:     ^?^ 47 C.F.R. Section 76.922.

[^9]:     ^?^ *Id*.

[^10]:     ^?^ *Id*.

[^11]:     ^?^ This finding is based solely on the representations of
    Operator. Should information come to our attention that these
    representations were materially inaccurate, we reserve the right to
    take appropriate action. This Order is not to be construed as a
    finding that we have accepted as correct any specific entry,
    explanation or argument made by any party to this proceeding not
    specifically addressed herein.