**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

) CUID Nos. HI0003 (Hawaii Kai)

TCI of Hawaii, Inc. )

)

Petition for Reconsideration )

**ORDER ON RECONSIDERATION**

##  

**Adopted: February 26, 2002 Released: February 27, 2002**

By the Deputy Chief, Cable Services Bureau:

1\. In this Order we consider a petition for reconsideration
(\"Petition\") of our Order, DA 98-1746 (\"Prior Order\"),[^1] filed
with the Federal Communications Commission (\"Commission\") by the
above-referenced operator (\"Operator\") on October 5, 1998. Our Prior
Order resolved a complaint filed against Operator\'s April 1, 1998 rate
increase for its cable programming service tier (CPST). In this Order,
we grant Operator's Petition in part and amend our Prior Order.

2\. 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.[^2] The Cable Television
Consumer Protection and Competition Act of 1992 (\"1992 Cable
Act\"),[^3] and our rules in effect at the time the referenced complaint
was filed, required the Commission to review CPST rates upon the filing
of a valid complaint by a local franchising authority (\"LFA\"). The
Telecommunications Act of 1996 (\"1996 Act\"),[^4] and our rules
implementing the legislation (\"Interim Rules\"),[^5] 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.[^6] If the Commission finds the rate to
be unreasonable, it shall determine the correct rate and any refund
liability.[^7]

3\. Operators must use the FCC Form 1200 series to justify rates for the
period beginning May 15, 1994.[^8] Cable operators may justify quarterly
rate increases based on the addition and deletion of channels, changes
in certain external costs and inflation, by filing FCC Form 1210.[^9]
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.[^10] Any
incurred cost that is not projected may be accrued with interest and
added to rates at a later time.[^11]

4\. In our Prior Order, we disallowed Operator\'s claim of \$0.40 for
channel additions because our rules do not allow a CAPS method rate
increase for channels added in 1998.[^12] In its Petition, Operator
argues that it added the two channels in issue to its CPST in December
1997. Due to a clerical error, Operator mistakenly indicated on its FCC
Form 1240 that these channels were added in 1998. Operator provided
documentation that the channels were added in 1997 and we find
Operator\'s argument to be compelling. We will amend our Prior Order
accordingly and increase Operator\'s maximum permitted rate (\"MPR\")
from \$16.41 to \$16.81, effective April 1, 1998 through March 31, 1999.
Because Operator's actual CPST rate of \$17.49 exceeds its revised MPR,
we find Operator\'s actual CPST rate of \$17.49 to be unreasonable.

5\. In our Prior Order, we noted that Operator was under an obligation
to true-up its 1997 FCC Form 1240 adjustments in its 1998 FCC Form
1240.[^13] In its Petition, Operator claims that it is eligible to be
treated as an unregulated system pursuant to the *Thirteenth
Reconsideration Order*[^14] because the Commission found that its 1997
rates were reasonable.[^15] Operator argues that once its 1997 CPST
rates were found to be reasonable, it was no longer regulated and should
be relieved of its obligation to true-up its 1997 FCC Form 1240
adjustments in its 1998 FCC Form 1240. In the *Thirteenth
Reconsideration Order*, the Commission decided to end regulatory review
of an operator\'s entire rate structure if no prior complaints had been
filed against the operator\'s CPST rates. The regulatory relief
envisioned by the *Thirteenth Reconsideration Order*, the avoidance of
filing multiple FCC forms to justify a CPST rate, is a moot point in
this case because Operator has already submitted the required FCC forms
in response to complaints filed against Operator\'s CPST rates beginning
in 1994. Indeed, by definition, Operator is not eligible to be treated
as an unregulated operator pursuant to *the Thirteenth Reconsideration
Order*. The relief provided by the *Thirteenth Reconsideration Order*
applies only in those cases where no prior complaints were filed against
an operator.[^16] Therefore, we will deny that portion of Operator\'s
Petition.

6\. 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 GRANTED IN PART AND DENIED IN PART TO THE EXTENT
INDICATED HEREIN.

7\. IT IS FURTHER ORDERED, pursuant to Section 0.32l of the
Commission\'s rules, 47 C.F.R. § 0.321, that In the Matter of TCI of
Hawaii, Inc., DA 98-1746, 13 FCC Rcd 18466 (1998) IS AMENDED TO THE
EXTENT INDICATED HEREIN.

8\. IT IS FURTHER ORDERED, pursuant Section 0.32l of the Commission\'s
rules, 47 C.F.R. § 0.321, that the CPST rate of \$17.49, charged by
Operator in the community referenced above, effective April 1, 1998, IS
UNREASIONABLE.

9\. 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 \$16.81 per
month (plus franchise fees), plus interest to the date of the refund,
for the period April 2, 1998 (the date of the first subscriber
complaint) through March 31, 1999 or the day before Operator implemented
the maximum permitted CPST rate of \$16.81, whichever date is earlier.

10\. IT IS FURTHER ORDERED that Operator shall promptly determine the
overcharges to CPST subscribers for the stated period, 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 interest and franchise fees), describing the
calculation thereof, and describing its plan to implement the refund
within 60 days of Commission approval of the plan.

FEDERAL COMMUNICATIONS COMMISSION

William H. Johnson, Deputy Chief

Cable Services Bureau

[^1]: In the Matter of TCI of Hawaii, Inc., DA 98-1746, 13 FCC Rcd 18466
    (1998).

[^2]: 47 U.S.C. §543(c) (1996).

[^3]: Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^4]: Pub. L. No. 104-104, 110 Stat. 56 (1996).

[^5]: *See* *Implementation of Cable Act Reform Provisions of the
    Telecommunications Act of 1996*, 11 FCC Rcd 5937 (1996).

[^6]: *See* Section 76.956 of the Commission\'s rules 47 C.F.R. §76.956.

[^7]: *See* Section 76.957 of the Commission\'s rules 47 C.F.R. §76.957.

[^8]: *See* Section 76.922 of the Commission\'s rules, 47 C.F.R. §
    76.922.

[^9]: *Id.*

[^10]: *Id.*

[^11]: *Id*.

[^12]: *See* Section 76.922 (g) (3) of the Commission\'s rules, 47
    C.F.R. § 76.922 (g) (3).

[^13]: Prior Order at n. 13. We ordered Operator to take into account
    our FCC Form 1240 adjustments when performing the true-up
    calculation on its next FCC Form 1240. *Id.* at ¶ 9.

[^14]: *See Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation, Thirteenth
    Order on Reconsideration*, MM Docket No. 92-266, 11 FCC Rcd 388
    (1996) (\"*Thirteenth Reconsideration Order*\").

[^15]: *See* In the Matter of TCI of Hawaii, Inc., DA 97-2175, 13 FCC
    Rcd 7951 (1998). We previously resolved complaints filed against
    Operator\'s CPST rates between 1994 and 1996. *See* In the Matter of
    TCI of Hawaii, Inc., DA 97-1050, 12 FCC Rcd 23319 (1997).

[^16]: *Thirteenth Reconsideration Order* at ¶¶ 161, 164.