**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

) CUID No. KY1145 (Floyd County)

Inter Mountain Cable, Inc. )

)

Small System Filing to Support )

Cable Programming Services Tier Rates )

**ORDER**

**Adopted: January 12, 1999 Released: January 14, 1999**

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

In this Order we consider a complaint against the rate that the
above-captioned operator (\"Operator\") implemented for its cable
programming services tier (\"CPST\") in the community referenced
above.[^1] We have already issued an order which granted the Operator
small system relief (\"Waiver Order\").[^2] On June 10, 1998 Operator
filed FCC Form 1230, seeking to justify its CPST rate through the
simplified small system cost of service procedures pursuant to the
Federal Communications Commission\'s (\"Commission\") *Sixth Report and
Order and Eleventh Order on Reconsideration* (\"Small Systems
Order\").[^3] In this Order, we grant Operator\'s request for small
system relief under the Small Systems Order and, based on our review of
Operator\'s FCC Form 1230 filing, deny the pending CPST complaint and
find the CPST rate to be not unreasonable.

2\. Under the Communications Act,[^4] 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\"),[^5] and our rules in effect at the time the complaints were
filed, required the Commission to review CPST rates upon the filing of a
valid complaint by a subscriber. The filing of a valid complaint
triggers an obligation on behalf of the cable operator to file a
justification of its CPST rates.[^6] Under the Commission\'s rules, an
operator may attempt to justify its CPST rate through a benchmark
showing, a cost of service showing, or a small system cost of service
showing. In any case, the operator has the burden of demonstrating that
its rate is not unreasonable.[^7] If the Commission finds a rate to be
unreasonable, it shall determine the correct rate and any refund
liability.[^8]

3\. The Commission\'s original rate regulations took effect on September
1, 1993.[^9] The Commission subsequently revised its rate regulations
effective May 15, 1994.[^10] In a further effort to offer small cable
companies administrative relief from rate regulation, the Commission
amended the definition of small cable companies and small systems and
introduced a simplified form of small system rate relief in the Small
Systems Order. Operators attempting to justify their rates through small
system relief must file FCC Form 1230.[^11] FCC Form 1230 requires that
the Operator Selected Per Subscriber Monthly Programming Rate Per
Channel (FCC Form 1230, Line A11) not exceed the Per Subscriber, Per
Channel Monthly Programming Costs (FCC Form 1230, Line A6).[^12] If the
maximum rate established on FCC Form 1230 does not exceed \$1.24 per
channel, the rate shall be presumed reasonable.[^13] Cable systems
serving 15,000 or fewer subscribers, and owned by a company having
400,000 or fewer subscribers, may elect to use the small system rate
mechanism found in FCC Form 1230 in lieu of other Commission rate
processes, provided the Commission has not reached a final resolution on
the rate complaints filed against the system.[^14]

4\. On June 10, 1998 Operator filed FCC Form 1230 for the community
referenced above seeking to justify its CPST rate through the simplified
small system cost of service procedures under the Commission\'s Small
Systems Order. In its June 10, 1998 filing, Operator states that the
entities legally affiliated with Operator, for purposes of small system
rate relief, serve less than 400,000 subscribers and that Operator\'s
system in the community referenced above served approximately 105
subscribers. Pursuant to Section 76.934 of the Commission\'s rules,
\"the size of a system or company shall be determined by reference to
its size as of the date the system files with its franchising authority
or the Commission the documentation necessary to qualify for the relief
sought or, at the option of the company, by reference to system or
company size as of the effective date \[of these rules\].\"[^15] The
Small Systems Order provides that:

A system\'s initial and continued eligibility for this new form of
relief shall be determined in the same manner as any other relief now
available to them.[^16] Thus, if a system qualifies for relief under
this approach as of the effective date of this order[^17] or as of the
date it files Form 1230, it shall remain eligible for so long as it
serves 15,000 or fewer subscribers, regardless of whether it, or the
cable operator that owns the system, is subsequently acquired by a
company that exceeds the 400,000 subscriber limit, or if its current
operator subsequently exceeds 400,000 subscribers due to the normal
growth of its systems.[^18] When a system that has established rates in
accordance with Form 1230 exceeds 15,000 subscribers, the system may
maintain its then existing rates. However, any further adjustments shall
not reflect increases in external costs, inflation or channel additions
until the system has re-established initial permitted rates in
accordance with our benchmark or cost-of-service rules.[^19]

Small Systems Order at ¶ 73.

5\. In addition, the Small Systems Order provides that \"\[o\]nce the
operator has established rates at a level permitted by Form 1230, it may
increase rates thereafter at its discretion until it reaches the maximum
level permitted by the form, subject only to the 30 days\' notice
requirement.\"[^20] The Small Systems Order explains that \"\[a\]s long
as the actual rate does not exceed the maximum permitted rate, the
operator may adjust its actual rate as and when it desires, subject to
the notice requirement. In addition, at any time an operator may adjust
its maximum permitted rate simply by filing a new Form 1230.\"[^21]

6\. We find that as of the effective date of the Small Systems Order,
August 21, 1995, Operator was a company with fewer than 400,000 total
subscribers and that the system in question served fewer than 15,000
subscribers, thereby making it eligible for small system relief.
Further, Operator\'s filings show that the Operator Selected Per
Subscriber Monthly Programming Rate Per Channel (FCC Form 1230, Line
A11) does not exceed \$1.24 per channel. We, therefore, find that
Operator\'s actual CPST rate of \$8.80 is not unreasonable.[^22]

7\. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the
Commission\'s rules, 47 C.F.R. Section 0.321, that the monthly CPST rate
of \$8.80 charged by Operator in the community referenced above IS NOT
UNREASONABLE.

8\. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the
Commission\'s rules, 47 C.F.R. Section 0.321, that the complaint against
the monthly CPST rate charged by Operator during the period under review
in the community referenced above IS DENIED.

9\. This action is taken pursuant to delegated authority under Section
0.321 of the Commission\'s rules, 47 C.F.R. Section 0.321.

FEDERAL COMMUNICATIONS COMMISSION

Margaret M. Egler

Acting Chief, Financial Analysis and Compliance Division

Cable Services Bureau

[^1]:     ^?^ The complaint was filed by Oliver & Lorraine Prater with
    the Commission on July 21, 1994.

[^2]:     ^?^ See In the Matter of Inter Mountain Cable, Inc., 11 FCC
    Rcd 7081 (1996).

[^3]:     ^?^ Implementation of Sections of the Cable Television
    Consumer Protection and Competition Act of 1992: Rate Regulation;
    Sixth Report and Order and Eleventh Order on Reconsideration, MM
    Docket Nos. 92-266 and 93-215, FCC 95-196, 10 FCC Rcd 7393 (1995).

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

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

[^6]:     ^?^ 47 C.F.R. Section 76.956.

[^7]:     ^?^ 47 C.F.R. Sections 76.956(b) and 76.934.

[^8]:     ^?^ *See* Section 76.957 of the Commission\'s Rules, 47 C.F.R.
    Section 76.957.

[^9]:     ^?^ 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).

[^10]:     ^?^ 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, 9 FCC Rcd 4119, 4190
    (1994) (\"Second Order on Reconsideration\").

[^11]:     ^?^ The FCC Form 1230 is a one-page form \"on which the
    system inserts its expense, rate base, rate of return, channel count
    and subscriber count figures and then calculates its rate of
    return.\" Small Systems Order at ¶ 64.

[^12]:     ^?^ *See* Instructions for Line A11, FCC Form 1230, page 3.

[^13]:     ^?^ *See* 47 C.F.R. Section 76.934(h) (1996)

[^14]:     ^?^ Small Systems Order at ¶ 75.

[^15]:     ^?^ 47 C.F.R. Section 76.934(a). *See also* Small Systems
    Order at ¶ 38.

[^16]:     ^?^ Small Systems Order at ¶ 73 *citing* ¶ 38.

[^17]:     ^?^ The Small Systems Order was released on June 5, 1995, and
    became effective upon approval by the Office of Management and
    Budget on August 21, 1995. *See* Federal Communications Commission
    Public Notice, DA 95-1848 (August 22, 1995).

[^18]:     ^?^ *Id*.

[^19]:     ^?^ Such a system may file a petition for special relief
    seeking continued treatment as a small system. *See* Small Systems
    Order at ¶ 73 citing ¶ 36.

[^20]:     ^?^ Small Systems Order at ¶ 69.

[^21]:     ^?^ *Id*.

[^22]:     ^?^ These findings are based solely on the representations of
    the 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.