**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of ) File No. EB-02-TC-016

)

Suburban Cable TV Co., Inc. ) CUID No. PA1991 (Blue Bell)

)

Complaints Regarding )

Cable Programming Services Tier Rates )

and Petition for Reconsideration )

**ORDER**

**Adopted: July 16, 2002 Released: July 17, 2002**

By the Chief, Enforcement Bureau:[^1]

Number range level0Number range level1Number range level2Number range
level3Number range level4Number range level5Number range level6Number
range level71. In this Order, we consider a petition for reconsideration
(\"Petition\") of Cable Services Bureau Order, DA 95-1226 (\"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] 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.[^16] 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.[^17] Any incurred cost that
is not projected may be accrued with interest and added to rates at a
later time.[^18]

4\. In its Petition, Operator argues that the Cable Services Bureau
erred when imputing normalized taxes to Operator's customer equipment
costs prior to unbundling those costs from Operator's service rates. The
Cable Services Bureau previously addressed this issue at length in
*Suburban Cable*.[^19] The discussion in that case is directly on point
and need not be repeated here. The Cable Services Bureau concluded that
the benchmark rate methodology contemplates the unbundling of normalized
taxes and it would be arbitrary and inconsistent for the Commission to
build normalized taxes into the pricing of tier offerings and only
unbundle actual taxes attributable to equipment costs. We conclude here,
as the Cable Services Bureau did in *Suburban Cable*, that it was not
error for the Cable Services Bureau to impute normalized taxes to
Operator\'s customer equipment costs prior to unbundling those costs
from Operator\'s service rates. Therefore, we deny Operator's Petition.

5\. Upon review of Operator's FCC Form 1200, we accept Operator's
calculated maximum permitted rate (\"MPR\") of \$10.12. Because
Operator's actual CPST rate of \$11.58, effective May 15, 1994 through
December 31, 1994, exceeds its MPR of \$10.12, we find Operator's actual
CPST rate of \$11.58, effective May 15, 1994 through December 31, 1994,
to be unreasonable. Upon review of Operator's FCC Form 1210 covering the
period April 1, 1994 through December 31, 1994, we accept Operator's
calculated MPR of \$10.22. Because Operator's actual CPST rate of
\$11.58, effective January 1, 1995 through June 30, 1995, exceeds its
MPR of \$10.22, we find Operator's actual CPST rate of \$11.58,
effective January 1, 1995 through June 30, 1995, to be unreasonable.
Upon review of Operator's FCC Form 1210 covering the period January 1,
1995 through June 30, 1995, we accept Operator's calculated MPR of
\$12.33. Because Operator's actual CPST rate of \$11.58, effective July
1, 1995, does not exceed its MPR of \$12.33, we find Operator's actual
CPST rate of \$11.58, effective July 1, 1995, to be reasonable.

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

7\. 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 *In
The Matter of Suburban Cable TV Co., Inc.*, DA 95-1226, 10 FCC Rcd 6509
(CSB 1995), granted in *Petitions for Stay of Action*, DA 95-1795, 10
FCC Rcd 10591 (CSB 1995), IS VACATED.

8\. 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
\$11.58, charged by Operator in the community referenced above,
effective October 5, 1993 (the date of the first valid complaint was
filed with the Commission) through June 30, 1995, IS UNREASONABLE.

9\. 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
\$11.58, charged by Operator in the community referenced above,
effective July 1, 1995, IS REASONABLE.

10\. 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 that portion of the amount paid in excess of the maximum
permitted CPST rate of \$9.98 per month (plus franchise fees), plus
interest to the date of the refund, for the period October 5, 1993
through May 14, 1994.

11\. 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 that portion of the amount paid in excess of the maximum
permitted CPST rate of \$10.12 per month (plus franchise fees), plus
interest to the date of the refund, for the period May 15, 1994 through
December 31, 1994.

12\. 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 that portion of the amount paid in excess of the maximum
permitted CPST rate of \$10.22 per month (plus franchise fees), plus
interest to the date of the refund, for the period January 1, 1995
through June 30, 1995.

13\. 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.

14\. 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]: S*ee In The Matter of Suburban Cable TV Co., Inc.*, DA 95-1226, 10
    FCC Rcd 6509 (CSB 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]: *Id.*

[^17]: *Id.*

[^18]: *Id.*

[^19]: *In the Matter of Suburban Cable TV, Inc*., DA 97-2032, 13 FCC
    Rcd 13111 (CSB 1997). *See also, In the Matter of Charter
    Communications*, DA 02-637 (CSB released March 20, 2002).