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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Cablevision Systems ) CUID No. NY0379 (Islip) ) Complaint Regarding Cable Programming) Services Tier Rate Increase ) ORDER Adopted: September 11, 1998 Released: September 15, 1998 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a complaint against the January 1, 1998 rate increase of the above- referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. We have previously resolved all prior complaints against Operator's CPST rates in the community referenced above. This Order addresses only the reasonableness of Operator's January 1, 1998 CPST rate increase. 2. Under the Communications Act, 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") and our rules implementing the legislation ("Interim Rules"), require that a complaint against the CPST rate be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 3. The LFA for the franchise area referenced above filed a complaint with the Commission on June 30, 1998 against Operator's January 1, 1998 CPST rate increase from $15.23 to $17.16. The LFA verified that it received more than one subscriber complaint and that the first valid complaint was received by the LFA on January 8, 1998. The filing of a complete and timely complaint triggers an obligation upon the cable operator to file a justification of its CPST rates. The Operator has the burden of demonstrating that the CPST rates complained about are reasonable. If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability. 4. 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. Any incurred cost that is not projected may be accrued with interest and added to rates at a later time. 5. Upon review of Operator's FCC Form 1240, for the projected period January 1, 1998 through December 31, 1998, we find that Operator has not correctly calculated its maximum permitted rate ("MPR"). We find that Operator has failed to use the most current FCC Inflation Factors available at the time Operator prepared its FCC Form 1240. We adjusted the Inflation Factors on Operator's FCC Form 1240, at Worksheet 1 (True-Up Period Inflation) which adjusted Line C3 (Inflation Factor for True-Up Period 1) to 1.0056 and Line C4 (Inflation Factor for True-Up Period 2) to 1.0060. We also revised Line C5 (Current FCC Inflation Factor) to 1.0114. These revisions reduced Operator's MPR to $16.84 for the projected period January 1, 1998 to December 31, 1998. Because Operator's actual CPST rate of $17.16, effective January 1, 1998, exceeds its revised MPR, we find Operator's actual CPST rate of $17.16, effective January 1, 1998, to be unreasonable. 6. 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 $17.16, effective January 1, 1998, IS UNREASONABLE. 7. 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 $16.84 per month (plus franchise fees), plus interest to the date of the refund, for the period, beginning January 8, 1998 (the date of the first subscriber complaint), through the day before Operator implements the maximum permitted CPST rate of $16.84. 8. 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, Cable Services 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. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that Operator take into account our FCC Form 1240 adjustments when calculating its maximum permitted rate and performing the true-up calculation on its next FCC Form 1240. 10. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that the complaint referenced herein against the CPST rate charged by Operator in the community referenced above IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau