10 FCC Red No. 18 Federal Communications Commission Record DA 95-1143
Before the
Federal Communications Commission 
Washington, D.C. 20554
In the Matter of
Dynamic Cablevision 
of Florida, Inc.
Benchmark Filings 
To Support 
Programming 
Service Prices
CUID Nos. FL0202, Hialeah
FL0427, Miami Springs
FL0553, West Miami
FL0422, Sweetwater
FL0429, Medley
FL0675, Hialeah Gardens Cable
FL0428, Virginia Gardens
FL0416, Uninc. Dade County
through either a benchmark showing or a cost-of-service 
showing.4 In either case, the operator has the burden of 
demonstrating that its CPS prices are not unreasonable.5
3. The Commission's original rate regulations took effect 
on September 1, 1993.6 The Commission subsequently re 
vised Us rate regulations effective May 15, 1994.7 Operators 
with valid CPS complaints filed against them prior to May 
15, 1994 must demonstrate that their CPS prices were in 
compliance with the Commission's initial rules from the 
time the complaint was filed through May 14, 1994, and 
that their prices were in compliance with the revised rules 
from May 15, 1994 forward.8 Operators attempting to jus 
tify their prices for the period prior to May 15, 1994 
through a benchmark showing must complete and file FCC 
Form 393.* Generally, to justify their prices for the period 
beginning May 15, 1994 through a benchmark showing, 
operators must use the FCC Form 1200 series. 10
MEMORANDUM OPINION AND ORDER 
Adopted: May 22,1995; Released: May 25,1995
By the Chief, Cable Services Bureau:
INTRODUCTION
1. Here we consider complaints about the prices Dy 
namic Cablevision of Florida, Inc. ("Operator") was charg 
ing for its cable programming service ("CPS") tiers in the 
communities designated above. Operator has chosen to at 
tempt to justify its prices through benchmark showings on 
FCC Form 393. This Order addresses the reasonableness of 
Operator's prices only through May 14, 1994. At a later 
time we will issue a separate order addressing the reason 
ableness of the prices after that date.1
2. Under the Cable Television Consumer Protection and 
Competition Act of 1992,2 and our rules implementing it, 
47 C.F.R. Part 76, Subpart N, the Commission must review 
CPS prices upon the filing of a valid complaint. The filing 
of a valid complaint triggers an obligation on behalf of the 
cable operator to file a justification of its CPS prices.3 Un 
der our rules, an operator may attempt to justify its prices
PROCEDURAL MATTERS
4. For each of the communities referenced in the cap 
tion, the first complete and timely complaint was served on 
Operator on September 17, 1993. The Commission re 
ceived all of these complaints on September 28, 1993. In 
response to the complaints, Operator filed separate FCC 
Form 393s on November 16, 1993. Operator amended its 
justifications on June 24, 1994 in response to a Cable 
Services Bureau Order citing common deficiencies ob 
served in benchmark filings generally.11
5. Operator states that it restructured its service offerings 
on September 1, 1993. In addition to its basic service tier 
and a CPS tier called Basic, Operator began offering ten 
channels on an individual, or a la carte, basis. These a la 
carte channels also could be purchased collectively as one 
six-channel package (Cable Plus) and one four-channel 
package (Expanded). This restructuring was addressed in 
our letter of inquiry ("LOI") order released on December 
22, 1994, in which we resolved the regulatory status of a la 
carte packages offered by Operator in Hialeah, Florida.12 In 
the LOI order, we found that the retiering constituted an 
evasion of rate regulation. We concluded that Operator's a 
la carte packages must be treated as rate-regulated cable 
programming service tiers and that the channels composing
1 The findings in this Order do not in any way prejudge the 
reasonableness of the prices for CPS service after May 14, 1994 
under our new rate regulations. However, to the extent Oper 
ator has sought to take advantage of the refund deferral period 
under the Second Order on Reconsideration, Fourth Report 
and Order, and Fifth Notice of Proposed Rulemaking, MM 
Docket No. 92-266, FCC 94-38, 9 FCC Red 4119 (1994) ("Second 
Order on Reconsideration"), the maximum permitted CPS 
prices determined herein might also apply from May 15, 1994 
until the date on which Operator implemented its CPS prices 
under the new regulations. See para. 3, infra. Further, to the 
extent that the prices as of March 31, 1994 are found to be 
excessive, a reduction in Operator's prices for the period after 
May 14, 1994 may be required to reflect the fact that Operator's 
prices during the earlier period, which are used as the starting 
point to calculate its prices for the prospective period, were 
unreasonable. See 47 C.F.R. § 76.922(b)(4)(C).
2 Pub. L. No. 102-385, 106 Stat. 1460 (1992); Communications 
Act, § 623(c), as amended, 47 U.S.C. § 543(c) (1993).
3 47 C.F.R. § 76.956.
4 47 C.F.R. § 76.956(b).
5 Id.
6 Order in MM Docket No. 92-266, Implementation of Sections
of the Cable Television Consumer Protection and Competition
Act of 1992: Rate Regulation, FCC 93-372, 58 Fed. Reg. 41042
(Aug. 2, 1993).
? 47 C.F.R. § 76.922(b).
8 See Second Order on Reconsideration, 9 FCC Red at 4190,
paras. 150-152.
« Id.
10 47 C.F.R. § 76.922(b)(6); see also Second Order on Reconsi 
deration, 9 FCC Red at 4189 n.195.
11 Cable Operators' Rate Justification Filings, DA 94-526, 9 
FCC Red 7752 (Cab. Serv. Bur. 1994).
12 Dynamic Cablevision of Florida, Hialeah, Florida, LOI- 
93-43, DA 94-1546 (Cab. Serv. Bur., released Dec. 22, 1994). In 
that case, Operator created two a la carte packages, one of 
which consisted of six channels that were previously offered as a 
separate CPS tier, and the other of which consisted of four 
channels that were removed from an 18-channel CPS tier.
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DA 95-1143 Federal Communications Commission Record 10 FCC Red No. 18
them must be counted as rate-regulated channels as of 
September 1, 1993, for purposes of completing the rate 
justification forms.
6. On January 23, 1995, Operator filed a Petition for 
Reconsideration of the Bureau's LOI decision regarding the 
treatment of its a la carte packages. On March 9, 1995, 
Operator filed a motion for stay of the LOI decision and a 
motion requesting the Bureau to defer action on the com 
plaints pending against its CPS rates in Florida until the 
Bureau rules on the Petition for Reconsideration. On 
March 29, 1995, the Bureau granted Operator's motion to 
stay the LOI decision.13
DISCUSSION
7. In its amended benchmark filing, Operator calculated 
a maximum permitted rate for the Basic CPS tier of $5.94 
per month (plus franchise fee). Operator did not attempt to 
justify its monthly prices of, $4,95 for the Cable Plus tier or 
$0.97 for the Expanded tier. Upon review, we have deter 
mined that Operator has not correctly calculated its maxi 
mum permitted prices, and it is therefore appropriate to 
make the following adjustments to Operator's calculations 
in Form 393:
a. In its calculations on Form 393, Part I, and Form 
393, Part II, Worksheet 1, Operator did not count the 
ten channels in its Cable Plus and Expanded pack 
ages as rate-regulated channels or as satellite chan 
nels. In accordance with the finding in the Bureau's 
LOI order that these ten channels are rate-regulated 
channels, we increased the total number of rate-regu 
lated channels from 40 to 50 and the total number of 
satellite channels from 19 to 29.
b. In Column G of Schedules A and C of Part III of 
its FCC Form 393, Operator did not correctly ac 
count for its income tax expense. By placing entries 
in these columns, Operator confirms that it is a 
tax-paying entity (i.e., a "C" corporation). However, 
Operator incorrectly calculated its income tax by 
simply applying the corporate tax rate to its return 
on investment. The Commission has stated that tax- 
paying business entities must gross-up their tax en 
tries in Column G of Schedules A and C (i.e., 
calculate the tax as a percentage of return on invest 
ment plus tax). 14 By understating its tax entries in 
Column G, an operator reduces its effective rate of 
return on equipment and installations and thereby 
could increase its CPS price. We therefore recalculate 
Column G of Schedules A and C (and subsequent 
steps) using correctly grossed-up tax entries.
c. Operator's calculations for its cable services pack 
age as of September 30, 1992 (Form 393, Part II, 
Worksheet 2, Line 202) count 20 channels on the 
basic service tier, 19 channels on the Basic Plus CPS
tier, and five channels on the Cable Plus CPS tier. 
However, according to the September 30, 1992 chan 
nel line-up presented in Operator's June 23, 1994 
amendment, Operator offered 23 channels on the 
basic service tier, 16 channels on the Basic Plus CPS 
tier, and seven channels on the Cable Plus CPS tier. 
We therefore adjust Line 202 to reflect Operator's 
channel line-up card.
d. Because of these errors, we conclude that Operator 
has failed to demonstrate that its prices for the CPS 
tiers were not unreasonable. We will therefore set 
prices for these tiers, incorporating the adjustments 
discussed above. In doing so, we must also recalculate 
the Inflation Adjustment Factor in Form 393, Part II, 
Worksheet 1, on the basis of the most accurate data 
currently available for the date for which Operator 
filed.15 On its amended Form 393, Operator cal 
culated the Inflation Adjustment Factor as of the end 
of September 1993 using data released on August 31, 
1993. On July 29, 1994, the U.S. Department of 
Commerce released corrected inflation data including 
Gross National Product Price Index ("GNP-PI") fig 
ures of 122.3 for the third quarter of 1992 and 125.7 
for the third quarter of 1993. Using these GNP-PI 
figures, we calculate an Inflation Adjustment Factor 
through September 1993, the base date Operator used 
in justifying its rates, of 1.028.
8. These adjustments have the effect of decreasing the 
maximum permitted monthly price for the Basic CPS tier 
to $5.16 per month (plus franchise fee). Operator's actual 
monthly charge for the tier was $5.94 (plus franchise fee). 
Therefore, the actual charge for this tier was above the 
maximum permitted rate and was thus unreasonable.
9. The same adjustments result in a maximum permitted 
rate for the Cable Plus tier of $2.38 per month (plus 
franchise fee). Operator's actual monthly charge for the 
Cable Plus tier was $4.95 (plus franchise fee). Thus, the 
actual charge for this tier was above the maximum 
permitted rate and was thus unreasonable.
10. The same adjustments result in a maximum 
permitted rate for the Expanded tier of $1.59 per month 
(plus franchise fee). Operator's actual monthly charge for 
the Expanded tier was $0.97 (plus franchise fee). Thus, the 
actual charge for this tier was below the maximum 
permitted rate, and was thus reasonable.
11. Under the Commission's rules, Operator may be 
liable for refunds to compensate subscribers for the over 
charges described above. However, since our resolution of 
the issues pending in Operator's Petition for Reconsider 
ation of our LOI decision could require revisions to our 
analysis, we will stay the effective date of this Order in 
response to Operator's motion until we have issued our 
decision in that proceeding. Since interest charges on any
13 Dynamic Cablevision of Florida, Hialeah, Florida, LOI 
93-43, DA 95-628 (Cab. Serv. Bur., released Mar. 29, 1995). 
14 First Order on Reconsideration, Second Report and Order, 
and Third Notice of Proposed Rulemaking, MM Docket No. 
92-266, FCC 93-428, 9 FCC Red 1164, 1196 n.92 (1993) ("Our 
provision to gross-up the return amount for income taxes ap 
plies to all tax paying business entities to the extent that they 
have a state or federal income tax obligation."). See also Cable 
Television Rate Regulation Questions and Answers Relating to
FCC Form 393, Question and Answer No. 14 (released July 30, 
1993) ("The federal tax expense should be calculated based upon 
a pre-tax return on investment.").
15 See 47 C.F.R. § 76.922(b)(9)(iii) (if a cable operator fails to 
justify its rates, rates must be adjusted in accordance with the 
most accurate data available at the time of analysis).
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10 FCC Red No. 18 Federal Communications Commission Record DA 95-1143
required refunds will continue to accrue during the period 
of this stay, Operator's subscribers will not be adversely 
affected.
CONCLUSIONS
12. Upon review of the record herein, we conclude that, 
for the period from September 28, 1993 to May 14, 1994, 
Operator's showing supports maximum reasonable CPS tier 
prices of $5.16 per month (plus franchise fee) for the Basic 
CPS tier, $2.38 per month (plus franchise fee) for the 
Cable Plus tier, and $1.59 per month (plus franchise fee) 
for the Expanded tier.16 We further determine that we will 
order appropriate refunds pursuant to Section 76.957 of 
the Commission's Rules, 47 C.F.R. § 76.957, in order to 
reimburse subscribers for the amounts they paid in excess 
of a reasonable price for the CPS tiers.
13. We further conclude that Operator must reflect in its 
Form 1200 rate filing for the period after May 14, 1994 the 
fact that Operator's prices for the Basic and Cable Plus 
CPS tiers during the earlier period were unreasonable. We 
reserve the right to make further adjustments to Operator's 
prices for the period after May 14, 1994, upon completion 
of our review of Operator's rate justification for that pe 
riod.
14. We further conclude that the effective date of this 
Order will be stayed until the Bureau releases a decision 
on Operator's Petition for Reconsideration of the Bureau's 
LOI decision regarding the treatment of Operator's a la 
carte packages in Hialeah, Florida.
15. Accordingly, IT IS ORDERED, pursuant to Section 
0.321 of the Commission's Rules, 47 C.F.R. § 0.321, that 
the September 17, 1993 complaints against the cable pro 
gramming service prices charged by Operator in the areas 
referenced in the caption ARE GRANTED TO THE EX 
TENT INDICATED HEREIN.
16. IT IS FURTHER ORDERED that the benchmark 
filings submitted by Operator with respect to the areas 
referenced in the caption for the period of September 28, 
1993 to May 14, 1994, justify maximum prices of $5.16 per 
month (plus franchise fee) for the Basic CPS tier, $2.38 per 
month (plus franchise fee) for the Cable Plus tier, and 
$1.59 per month (plus franchise fee) for the Expanded tier.
17. 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 for the period from 
September 28, 1993 17 to May 14, 1994, that portion of the 
amounts paid for cable programming service that exceeded 
$5.16 per month (plus franchise fee) for the Basic CPS tier 
and $2.38 per month (plus franchise fee) for the Cable Plus 
tier, and was thus unreasonable, plus interest to the date of 
the refund.
18. IT IS FURTHER ORDERED that Operator shall 
determine the overcharges to CPS subscribers for the stated 
period, and shall within 30 days of the effective date of this 
Order file a report with the Chief, Cable Services Bureau, 
stating the cumulative refund amount so determined (in 
cluding franchise fees and interest), describing the calcula 
tion thereof, and describing its plan to implement the 
refund within 60 days of Commission approval thereof.
19. IT IS FURTHER ORDERED, pursuant to Section 
76.922(b)(4)(c) of the Commission's Rules, 47 C.F.R. § 
76.922(b)(4)(c), that Operator shall, within 30 days of the 
effective date of this Order, revise its Form 1200 filings for 
the period beginning May 15, 1994, to include the Cable 
Plus and Expanded packages as cable programming service 
tiers and to reduce the monthly charge per tier as of March 
31, 1994 for Tier 2 (Line A6b) to equal the maximum 
prices determined in this Order (plus franchise fee).
20. IT IS FURTHER ORDERED that Operator shall 
place into effect, within 30 days after submission of the 
revised Form 1200 filings required above, CPS tier prices 
for the areas referenced in the caption that reflect the 
reductions in the CPS rates determined in this Order.
21. IT IS FURTHER ORDERED that Operator's motion 
to defer action on the complaints against its cable program 
ming service prices is resolved as indicated herein.
22. IT IS FURTHER ORDERED that the effective date 
of this Order will be stayed until the Commission releases 
a decision on Operator's Petition for Reconsideration of 
the Bureau's LOI decision regarding the treatment of its a 
la carte packages in Hialeah, Florida.
FEDERAL COMMUNICATIONS COMMISSION
Meredith J. Jones
Chief, Cable Services Bureau
16 These findings are based solely on the representations of 
Operator and the modifications described herein. Should in 
formation 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 ar 
gument made by any party to this proceeding not specifically 
addressed herein.
17 Our jurisdiction to order a refund dates from the earliest 
date a valid complaint -is filed with the Commission. 47 C.F.R. 
§ 76.96 l(b).
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