**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

) File No. EB-02-TC-054

Battlefield Cable TV Company )

) CUID No. GA0068 (Ft. Oglethorpe)

Petition for Reconsideration )

Complaint Regarding )

Cable Programming Services Tier Rates )

**ORDER ON RECONSIDERATION**

## AND RATE ORDER

**Adopted: Septemeber 4, 2002 Released: September 6, 2002**

By the Chief, Enforcement Bureau:[^1]

1\. In this Order, we consider a petition for reconsideration
(\"Petition\") of Cable Services Bureau Order, DA 95-1035 (\"Prior
Order\"),[^2] filed with the Federal Communications Commission
(\"Commission\") by the above-referenced operator (\"Operator\").[^3]
Operator also requested a stay of the Prior Order, which was
granted.[^4] The Prior Order resolved complaints filed against the rates
charged by Operator for its cable programming services tier (\"CPST\")
in the community referenced above through May 14, 1994. In the Prior
Order, the Cable Services Bureau stated that its findings \"do not in
any way prejudge the reasonableness of the price for CPS service after
May 14, 1994 under our new rate regulations.\"[^5] In this Order we deny
Operator's Petition, vacate the stay and address the reasonableness of
Operator's CPST rates beginning May 15, 1994.

2\. Under the provisions of the Communications Act[^6] that were in
effect at the time the complaints were filed, 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.
The Cable Television Consumer Protection and Competition Act of 1992
(\"1992 Cable Act\")[^7] and the Commission\'s rules required the
Commission to review CPST rates upon the filing of a valid complaint by
a subscriber or local franchising authority (\"LFA\"). The
Telecommunications Act of 1996 (\"1996 Act\"),[^8] and the Commission\'s
rules implementing the legislation (\"Interim Rules\"),[^9] required
that a complaint against the CPST rate be filed with the Commission by
an LFA that has received more than one subscriber complaint. The filing
of a valid complaint triggers an obligation upon the cable operator to
file a justification of its CPST rates.[^10] If the Commission finds the
rate to be unreasonable, it shall determine the correct rate and any
refund liability.[^11]

3\. During the first phase of rate regulation, from September 1, 1993
until May 15, 1994, the benchmark rate analysis and comparison with an
operator's actual rates were calculated using the FCC Form 393.[^12] The
benchmark formula was revised, effective May 15, 1994.[^13] Systems
first becoming subject to rate regulation after May 15, 1994 were
required to justify their initial regulated rates using forms in the FCC
Form 1200 series.[^14] Systems against which rate complaints were still
pending when the Commission revised its benchmark formula were required
to recalculate their benchmark rates as of May 15, 1994 using the FCC
Form 1200.[^15] The Commission\'s rules provide for a refund liability
deferral period, if timely requested by Operator, beginning May 15, 1994
and ending July 14, 1994, for any overcharges resulting from Operator\'s
calculation of a new maximum permitted rate on the FCC Form 1200.[^16]
However, Operator will incur refund liability from May 15, 1994 through
July 14, 1994 (or the date Operator restructures its rates, if sooner)
for any CPST rates charged above the FCC Form 393 MPR approved by the
Commission.[^17]

4\. Operators may file an FCC Form 1210 to justify quarterly rate
increases based on the addition and deletion of channels, changes in
certain external costs and inflation.[^18] Operators may justify their
rates on an annual basis using an 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.[^19] Any incurred cost that is not projected
may be accrued with interest and added to rates at a later time.[^20]

5\. In its Petition, Operator argues that the Cable Services Bureau
erred in the Prior Order when it adjusted Operator's inflation factor
based on the most recent data available. We disagree. This issue was
addressed by the Commission in *Cencom Cable Income Partners II, L.P.*
*(\"Cencom\")*.[^21] In *Cencom*, the Commission explained its policy
regarding refreshing inflation:

The Commission is charged with protecting subscribers from paying
unreasonable CPST rates, while also providing system operators with a
fair return. Accurate information, including accurate inflation
information, is central to setting an initial regulated rate that meets
the standard. Thus, the Commission requires that data used in setting a
rate be refreshed with the most current data available when an
operator\'s rates become regulated and are justified.[^22] Because final
inflation data for the period addressed in rate justifications may not
be available when a justification is filed, the Commission directs
operators to estimate inflation by using the most recently available
inflation data published on an interim basis in the Commerce \"Survey of
Current Business\" at Table 7.3, Line 5.[^23] The Bureau practice when
reviewing rate justifications is to verify that the operator has used
this inflation data. The Bureau also determines whether the other
information in the rate justification is correct, and on the basis of
the inflation and other information in the form, including any
corrections, whether the operator\'s rate meets the statutory
requirement that the rate not be unreasonable. The Bureau does not find
a rate unreasonable solely because more accurate inflation data has
become available by the time it makes its review. This would churn
rates, causing significant administrative expenses to operators and
confusion to subscribers. However, if a rate is unreasonable on its face
or has to be adjusted for reasons other than the availability of a more
accurate inflation figure, e.g., because the operator failed to provide
correct information in its rate justification or failed to complete its
rate justification form correctly, the Bureau recalculates the maximum
permitted rate using the most accurate inflation information available,
rather than earlier estimates.[^24] This practice is consistent with 47
C.F.R. § 76.922(b) (9) (iii), which provides:

\[I\]f the rates charged by a cable operator are not justified by an
analysis based on the data available at the time it initially adjusted
its rates, the cable operator must adjust its rates in accordance with
the most accurate data available at the time of the analysis.

\[footnotes in original\]

6\. Because the Cable Services Bureau's action in the Prior Order is
consistent with the Commission\'s holding in *Cencom*, we reject
Operator\'s argument and deny Operator\'s Petition.

7\. Upon review of Operator\'s amended FCC Form 1200, we accept
Operator's calculated maximum permitted rate (\"MPR\") of \$11.62.
Operator elected to defer refund liability pursuant to the Commission\'s
rules,[^25] and restructured its rates on July 1, 1994. Therefore, from
May 15, 1994 through June 30, 1994, Operator is responsible for
refunding any charges in excess of the FCC Form 393 MPR of \$11.95,
approved in the Prior Order. Because Operator's actual CPST rate of
\$12.46, effective May 15, 1994 through June 30, 1994, exceeds its FCC
393 MPR of \$11.95, we find Operator's actual CPST rate of \$12.46,
effective May 15, 1994 through June 30, 1994, to be unreasonable.
Because Operator's actual CPST rate of \$11.93, effective July 1, 1994
through December 31, 1995, exceeds its FCC Form 1200 MPR of \$11.62, we
find Operator's actual CPST rate of \$11.93, effective July 1, 1994
through December 31, 1995, to be unreasonable.

8\. Upon review of Operator\'s FCC Form 1210, covering the period July
1, 1994 through December 31, 1995, we find Operator\'s calculated MPR of
\$12.64 to be reasonable. Because Operator\'s actual CPST rate of
\$11.93, effective January 1, 1996, does not exceed its MPR of \$12.64,
we find Operator\'s actual CPST rate of \$11.93, effective January 1,
1996, to be reasonable.

9\. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the
Commission\'s rules, 47 C.F.R. § 1.106, that Operator\'s petition for
reconsideration IS DENIED.

10\. IT IS FURTHER ORDERED, pursuant to Sections 0.111 and 0.311 of the
Commission's rules, 47 C.F.R. §§ 0.111 and 0.311, that the stay of DA
95-1035, granted in *Petitions for Stay of Action*, DA 95-1795, 10 FCC
Rcd 10591 (CSB 1995), IS VACATED.

11\. IT IS FURTHER ORDERED, pursuant to Sections 0.111 and 0.311 of the
Commission's rules, 47 C.F.R. §§ 0.111 and 0.311, that the CPST rate of
\$12.46, charged by Operator in the franchise area referenced above,
effective September 10, 1993 (the date the first valid complaint was
filed with the Commission) through June 30, 1994, IS UNREASONABLE.

12\. IT IS FURTHER ORDERED, pursuant to Sections 0.111 and 0.311 of the
Commission's rules, 47 C.F.R. §§ 0.111 and 0.311, that the CPST rate of
\$11.93, charged by Operator in the franchise area referenced above,
effective July 1, 1994 through December 31, 1995, IS UNREASONABLE.

13\. IT IS FURTHER ORDERED, pursuant to Sections 0.111 and 0.311 of the
Commission's rules, 47 C.F.R. §§ 0.111 and 0.311, that the CPST rate of
\$11.93, charged by Operator in the franchise area referenced above,
effective January 1, 1996, IS REASONABLE.

14\. 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 community referenced above that portion of the amount
paid in excess of the maximum permitted CPST rate of \$11.95 per month
(plus franchise fees), plus interest to the date of the refund, for the
period September 10, 1993 (the date the first valid complaint was filed
with the Commission) through June 30, 1994.

15\. 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 community referenced above that portion of the amount
paid in excess of the maximum permitted CPST rate of \$11.62 per month
(plus franchise fees), plus interest to the date of the refund, for the
period July 1, 1994 through December 31, 1995.

16\. 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,
Enforcement 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.

17\. IT IS FURTHER ORDERED, pursuant to Sections 0.111 and 0.311 of the
Commission's rules, 47 C.F.R. §§ 0.111 and 0.311, that the complaint
referenced herein against the rates charged by Operator in the community
referenced above IS GRANTED.

FEDERAL COMMUNICATIONS COMMISSION

David H. Solomon

Chief, Enforcement Bureau

[^1]: Effective March 25, 2002, the Commission transferred
    responsibility for resolving cable programming services tier rate
    complaints from the former Cable Services Bureau to the Enforcement
    Bureau. *See* *Establishment of the Media Bureau, the Wireline
    Competition Bureau and the Consumer and Governmental Affairs Bureau,
    Reorganization of the International Bureau and Other Organizational
    Changes*, FCC 02-10, 17 FCC Rcd 4672 (2002).

[^2]: In the Matter of Battlefield Cable Company, DA 95-1035, 10 FCC Rcd
    9335 (1995).

[^3]: The term \"Operator\" includes Operator's successors and
    predecessors in interest.

[^4]: *See Petitions for Stay of Action*, DA 95-1795, 10 FCC Rcd 10591
    (CSB 1995).

[^5]: Prior Order at n. 1.

[^6]: 47 U.S.C. §543(c) (1996).

[^7]: Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^8]: Pub. L. No. 104-104, 110 Stat. 56 (1996).

[^9]: *See Implementation of Cable Act Reform Provisions of the
    Telecommunications Act of 1996*, 11 FCC Rcd 5937 1996).

[^10]: *See* Section 76.956 of the Commission\'s rules, 47 C.F.R.
    §76.956.

[^11]: *See* Section 76.957 of the Commission\'s rules, 47 C.F.R.
    §76.957.

[^12]: See *Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation*, 8 FCC Rcd
    5631, 5755-56, 5766-67, 5881-83 (1993).

[^13]: *See Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation*, 9 FCC Rcd
    4119 (1994).

[^14]: *See* Section 76.922 of the Commission\'s rules, 47 C.F.R. §
    76.922.

[^15]: *Id.*

[^16]: *See* 47 C.F.R. § 76.922 (b) (6) (ii).

[^17]: 47 C.F.R. § 76.922 (b) (6) (ii). *Se also Sections of the Cable
    Television Consumer Protection and Competition Act of 1992: Rate
    Regulation*, MM Docket No. 92-266, *Second Order on Reconsideration,
    Fourth Report and Order, and Fifth Notice of Proposed Rulemaking*, 9
    FCC Rcd 4119, 4183-4185 (1994) (the maximum permitted rates
    determined under Form 393 may apply from May 15, 1994 until the date
    that the operator implemented its new rates, as determined under the
    Form 1200 series.)

[^18]: *Id.*

[^19]: *Id.*

[^20]: *Id.*

[^21]: *In the Matter of Cencom Cable Income Partners II, L.P.*, FCC
    97-205 (Released June 13, 1997).

[^22]: *See Third Order on Reconsideration*, 9 FCC Rcd at 4349-50; FCC
    Form 393 at 11 Instruction for Line 122\--GNP-PI (Current) (Aug.
    1993). The Bureau has explained the requirement to use current data
    in Cable Operators\' Rate Justification Filings, Sections 76.945,
    76.946 of the Commissions rules, 9 FCC Rcd 7752, 7754-55 ¶ 3(8)
    (Cab. Serv. Bur. 1994) (\"*Rate Filings*\"); Nov. 10, 1993 Public
    Notice, Answer to Question No. 6 (in filing rate justifications,
    operators must refresh data used in initial rates with most current
    information as of the date of initial regulation); July 30, 1993
    Public Notice, Answer to Question 10.

[^23]: *See* FCC Form 393 at 11 Instruction for Line 122\--GNP-PI
    (Current) (Aug. 1993).

[^24]: *See* Public Notice, Cable Services Bureau Announces Policy
    Regarding Inflation Adjustment on FCC Form 393, DA 95-999 at 2 (Cab.
    Serv. Bur. May 2, 1995). The Bureau gave operators the opportunity
    to review and correct errors in their benchmark rate filings.
    Operators who had not previously correctly calculated the inflation
    adjustment factor were directed to use the accurate factors through
    June 30, 1994. Public Notice, Cable Services Bureau Announces
    Optional Procedures with Respect to Pending Pre-May 15 Benchmark
    Cases, DA 94-1556 at 3-4 (Dec. 29, 1994). The Public Notice listed
    the inflation adjustment factors through June 30, 1994.

[^25]: See letter dated June 13, 1994 from Gary M. Steffen, Staff
    Accountant, Scripps Howard Cable Company.