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ML Media Partners, LP ) Trading As Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1337 In the Matter of: ) ) ML Media Partners, L.P. ) Trading As Multivision Cable TV ) ) Petition for Declaratory Ruling ) ) MEMORANDUM OPINION AND ORDER Adopted: June 14, 1995 Released: June 16, 1995 By the Chief, Cable Services Bureau: I. Introduction I. On November 25, 1994, ML Media Partners, L.P. trading as Multivision Cable TV ("Multivision") filed a Petition for Declaratory.Ruling requesting the Commission to resolve an issue arising out of the review of Multivision's basic tier rates by the City of Fairfield, California (the "City"). 1 A November 2, 1994, letter to the Cable Services Bureau from the City asked the Bureau to address the same issue plus an additional issue raised by the same facts. 2 Because of the commonality between these two requests, we consolidate them to address the following issues: 1.) Whether an operator may make adjustments to its 1 The City filed its Opposition to Petition for Declaratory Ruling on December 6, 1994, and Multivision filed a Reply to Opposition on December 29, 1994. 2 Letter to Meredith J. Jones, Chief of the Cable Services Bureau, from Marci Coglianese, Asst. City Attorney, City of Fairfield, CA (November 2, 1994). Multivision submitted a letter to the Cable Services Bureau dated November 15, 1994, responding to the City's letter. 3207 rates on account of inflation and increases in certain external costs pursuant to Form 1210 before its local franchising authority has determined its initial rate under Form 1200; and 2.) Whether a Form 1210 can be filed prior to the close of the quarter in which the costs claimed occurred.3 2. In this Order, we find that Commission rules allow Multivision to make adjustments to its rates on account of inflation and increases in certain external costs by filing a Form 1210 before review of its initial rates pursuant to Form 1200 is completed by the City under certain conditions. We also find that Commission rules require Multivision to file its Form 1210s after the close of the quarter in which the costs claimed occurred. Il. Background 3. The facts, as stated in Multivision's Petition and the City's letter, show that Multivision filed its 1200 series forms with the City on July 1, 1994. These forms included a Form 1200, Form 1205, two Form 1210s and a Form 1215. The two Form 1210s were for the second and fourth quarters of 1994. Multivision filed a third Form 1210 on October 3, 1994, for the first quarter of 1995. 4. On July 29, 1994, the City issued a tolling order under 47 C.F.R § 76.933(b) giving it 90 additional days to complete its review of Multivision's 1200 series forms. On October 18, 1994, under 47 C.F.R § 76.933(c), the City issued an accounting order to Multivision directing it to keep an accurate account of all amounts it received in rates for basic cable service and equipment in effect since July 14, 1994, and the names of all subscribers who paid such amounts so that if the City later determined that these· rates exceeded allowed regulated rates, it could order refunds. The City further ordered that Multivision could not "pass through any external cost increases reflected on any Form 1210" until the City determined the maximum initial permitted rate for basic service under Forms 1200 and 1205. As an exception, the City did provide that if the FCC determined that external cost increases may be passed through to subscribers prior to the City' s determination of a maximum initial permitted rate, then the Form 1210 increases for second quarter 1994 for the basic tier shall be subject to the accounting provisions of its order. The City also rejected Multivision's Form 1210s filed for the fourth quarter 1994 (filed on July 1, 1994) and first quarter 1995 (filed on October 3, 1994) as prematurely filed. The City provided that if the FCC determined that these forms were not prematurely filed, the increases claimed on them would also be subject to the accounting provisions of the order. The City then wrote to the Cable Services Bureau requesting that we verify that its actions in this resolution were in compliance with Commission rules. 5. Multivision opposed the City's letter request by letter to the Cable Services Bureau dated November 15, 1994, and by filing its Petition for Declaratory Ruling on November 25, 1994. Multivision asks that the City's order that Multivision may not 3 This action is taken by the Cable Services Bureau, pursuant to authority delegated by Section 0.321 of the Commission's Rules. 3208 implement any cable rate increases pursuant to Form 1210 be held invalid. It argues that Form 1210 increases would otherwise be permitted to take effect under 47 C.F.R § 76.933(a)­ (c) of the Commission's rules, which generally allow a local franchising authority 30 days to review basic service tier rates or proposed increases to those rates (a time period that the local franchising authority can extend for an additional 90 days in a benchmark case or 150 days in a cost of service case) after which time the rates go into effect. Multi vision argues that it suffered permanent loss of significant unrecovered external cost increases and that if it did not implement its annual inflation adjustment before December 31, 1994, the adjustment would be permanently lost. It points out that no harm to subscribers will result from implementing a rate adjustment prior to a final determination of its maximum permitted rate because the City has issued an accounting order for all rates presently at issue. Further, Multivision argues that operators should be able to file quarterly Form 121 Os as soon as the necessary information is available. In its reply, Multivision advocates that it should be permitted to immediately pass through external cost increases after 30 days notice to the franchising authority but without waiting until the end of the quarter. 6. The City argues that its order should be upheld by the Commission as a lawful exercise of its jurisdiction over basic tier rates and services. It asserts that it cannot make a rate determination because additional information is required from Multivision and the maximum permitted rate used by Multivision on its Form 1200 differs from the rate established by the City in its August 2, 1994, rate order.• It argues that it prohibited passing through external costs because these pass-throughs may occur only after maximum initial rates have been set. It argues that Multivision will not permanently lose its inflation adjustment because Commission rules require that such an adjustment may be made no later that August 31 of the next calendar year. It also asserts that Multivision may not file a Form 1210 until after the quarter in which the costs claimed occurred and cites 47 C.F.R. § 76.922(d)(3)(iii) in support, which states that rate adjustments reflecting changes in external costs shall be based on changes that occurred through "the end of the quarter that has most recently closed preceding the filing of the FCC Form 1210." m. Discussion 7. The 1200 series forms are the forms an operator must use to justify the reasonableness of its cable rates since May 15, 1994, or, if the operator took advantage of the maximum refund deferral period under our rate rules, July 14, 1994. FCC Form 1200 is used to determine an operator' s initial maximum permitted programming rates for this time period. FCC Form 1205 is used to calculated an operator's permitted equipment and installation charges and costs. FCC Form 1210 is used to adjust an operator's permitted programming • This rate order represents the Cicy's review of Multivision' s Form 393. Multivision appealed this order to the Commission and requested a stay. The Cable Service Bureau issued a stay of the City's rate order. Order (Petition for Stay of Local Rate Order of the city of Fairfield, CA) DA 94-1246, 9 FCC Red 6777 (Cab. Serv. Bur. released Nov. 10, 1994). 3209 rates for changes in certain categories of external costs, the addition and deletion of channels from regulated tiers and inflation.s Form 1215 is used to collect information about a la carte packages. A. Pass Through Prior to Setting Initial Permitted Rates 8. The first issue we address is whether inflation and external cost adjustments claimed by an operator on a Form 1210 may be passed through before a local franchising authority makes a final determination of the maximum initial legal rate for the basic tier under Form 1200. The Filing Instructions included as part of Form 1210 provide that before an operator completes its first Form 1210 it must complete and file Form 1200 with the FCC or its local franchising authority. When an operator is filing its first Form 1210, the Form 1210 calculations begin with the rates calculated on its Form 1200.6 Neither the Form 1210 instructions nor Commission rules require that a local franchising authority make a final determination of the reasonableness of the basic service tier rate indicated on the Form 1200 before adjustments claimed on the 1210 may be passed through. Under our rules, after an operator submits its forms to justify its existing basic tier and equipment rates or proposed increases to these rates, the existing rate will remain in effect or the proposed increase will go into effect 30 days from the date of submission unless the local franchising authority determines that the rates are not permissible under Commission rules.
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