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June 7, 1999 Released: June 9, 1999 Federal Communications Commission DA 99-1116 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) CUID Nos. HI0004 (Oahu) ) HIOOOS (Honolulu) Time Warner Cable ) HI0006 (Honolulu) ) HI0007 (Kailua) Complaints Regarding ) HI0014 (Waipahu) Cable Programming Services Tier ) RATE ORDER Adopted: June 7, 1999 Released: June 9, 1999 By the Acting Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints against the January 1, 1999 rate increase of the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the communities referenced above. 1 We have already issued orders in which we resolved all prior complaints against Operator's CPST rates in the communities referenced above ("Prior Orders").2 This Order addresses only the reasonableness of Operator's January 1, 1999 CPST rate increase. 2. Under the Communications Act,3 the Federal Communications Commission ("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 Telecommunications Act of 1996 ("1996 Act")4 and our rules implementing the legislation ("Interim Rules"),5 require that a complaint against the CPST rate be filed with the Commission by a local franchising authority ("LF A") that has received more than one subscriber complaint. 6 3. The LFA for the franchise areas referenced above filed complaints with the Commission on April 14, 1999 against Operator's January l, 1999 CPST rate increase from $17.63 to $18.98. The 1 The community unit identification number for Waipahu, cum No. HI0014, is inactive and has been merged with Oahu, cum No. HI0004. 2 See In the Matter of Time Warner Cable d/b/a Oceanic Cable, 13 FCC Red 16853 (1998), recon. den. In the MatterofTime Warner Cable, DA 99-621(releasedApril5, 1999) and In the Matter of Time Warner Cable, 13 FCC Red 16840 (1998), recon. den. In the Matter of Time Warner Cable, DA 99-617 (released April 5, 1999). Communications Act, Section 623(c), as amended, 47 U.S.C. §543(c) (1996). 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 Red 5937 (1996). 6 See Communications Act, Section 623(c), as amended, 47 U.S.C. Section 543(c) (1996). 9132 Federal Communications Commission DA 99-1116 LF A verified that it received more than one subscriber complaint for each franchise area and that the first valid complaint for each franchise area was received by the LF A on the date listed in the Appendix attached hereto. The filing of a complete and timely complaint triggers an obligation upon the cable operator to file a justification of its CPST rates. 7 The Operator has the burden of demonstrating that the CPST rates complained about are reasonable.8 If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability.9 4. To justify rates for the period beginning May 15, 1994, operators must use the FCC Form 1200 series. 10 Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210. 11 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. 12 Any incurred cost that is not projected may be accrued with interest and added to rates at a later time. 13 5. On November 30, 1995, we issued an Order approving a Social Contract which Operator entered into with the Commission ("Social Contract"). 14 In our Prior Order, we allowed Operator to file bifurcated FCC Form 1240s. In these bifurcated forms, Operator calculates the $1.00 annual increase permitted by the Social Contract ("Social Contract Dollar") and its true-up on an FCC Form 1240 ("SCD Form 1240") separate from its annual FCC Form 1240 calculation of its maximum permitted rate ("MPR"). 6. Upon review of Operator's FCC Form 1240s, for the projected period January 1, 1999 through December 31, 1999, we find Operator's calculated total MPR15 of $19.47 to be reasonable, effective January 1, 1999. Because Operator's actual CPSTrate of$18.98, effective January 1, 1999, does 7 See Section 76.956 of the Commission's Rules, 47 C.F.R. §76.956. 8 Id. 9 See Section 76.957 of the Commission's Rules, 47 C.F.R. §76.957. 10 See Section 76.922 of the Commission's Rules, 47 C.F.R. §76.922. 11 Id. i2 Id 13 Id. 14 See In the Matter of Social Contract for Time Warner, 11 FCC Red 2788 (1996). 15 The total MPR is the sum of Line 19 (Maximum Permitted Rate for the Projected Period) from Operator's SCD Form 1240 and Line 19 from Operator's FCC Form 1240. 9133 Federal Communications Commission DA 99-1116 not exceed its MPR, we find Operator's actual CPST rate of $18.98, effective January 1, 1999, to be reasonable. 16 7. In its complaint, the LFA requested that we review the FCC Form 1205 (Equipment Form) submitted by Operator. 17 The Social Contract provides that Operator's FCC Form 1205s shall be reviewed by the Commission and that the equipment and installation charges, as approved by the Commission, "shall be subject to enforcement by local franchising authorities. "18 Upon review of Opera,tor's FCC Form 1205, to establish equipment and installation charges effective January 1, 1999, we find that Operator did not correctly calculate its maximum permitted equipment and installation charges. Specifically, Operator entered negative deferred taxes on Schedule A (Capital Costs of Service Installation and Maintenance of Equipment and Plant), Line D (Deferred Taxes), Column 3 (Maintenance Facilities). Therefore, we recalculated Schedule A, Line D, Column 3 (and subsequent steps) using amounts which were adjusted to zero. The result of our calculation can be found in the attached Appendix. The LF A should determine if Operator's current equipment and installation charges are in compliance with the charges established on the Operator's FCC Form 1205. 8. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. §0.321, that the CPST rate of $18.98, charged by Operator in the franchise areas referenced above, effective January 1, 1999, IS REASONABLE. 9. 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 rate charged by Operator in the communities referenced above, ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Patrick A. Boateng Acting Chief, Financial Analysis and Compliance Division Cable Services Bureau 16 These findings are 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. Information regarding the specific adjustments made to Operator's FCC Forms can be found in the public files for the above-referenced community which are available in the Cable Services Bureau's public reference room, or through the Commission's copy contractor, International Transcription Services (ITS), 1231 20th Street N.W., Washington, DC, 20036, or by calling ITS at (202) 857-3800. 17 See Letter to Federal Communications Commission from Clyde S. Sonobe, Administrator, Cable Television Division, State of Hawaii, dated April 7, 1999. 18 Social Contract at Section IIl.B. 9134 Federal Communications Commission DA 99-1116 APPENDIX CUIDNO. COMMUNITY DATE FIRST VALID COMPLAINT FILED WITH LF A HI0004 Oahu 1119/99 HI0005 Honolulu 1119/99 HI0006 Honolulu 117199 HI0007 Kailua 118199 HI0014 Waipahu 1112199 Tvpe of Equip./lnstallation MPR per Filing MPR per Review Actual Rate Installation of Unwired Homes $53.56 $53.61 $50.00 Installation of Pre-wired Homes $36.02 $35.74 $35.00 Additional Connections - Install $21.32 $21.27 $20.00 Additional Connections - Separate $36.02 $35.74 $35.00 Converter Exchanges/Upgrades $15.38 $15.32 $15.00 Remote Control $0.16 $0.16 $0.16 Converter Box type 1 $0.19 $0.19 $0.19 Converter Box type 2 $2.64 $2.64 $2.60 Charge for Changing Tiers $2.00 $2.00 $2.00 9135 .
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