HomeMy WebLinkAboutORD 2000-026 ORDINANCE NO. 2000-26
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF GRAPEVINE, TEXAS ESTABLISHING THE MAXIMUM
PERMITTED BASIC SERVICE TIER RATES CHARGED BY
PARAGON CABLE, DECLARING AN EMERGENCY AND
PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of Grapevine, Texas franchises cable television service for
the benefit of its citizens; and
WHEREAS, the City is the Grantor of a franchise ordinance by and between the
City of Grapevine and Paragon Cable ("Paragon"); and
WHEREAS, in accordance with applicable provisions of the Telecommunications
Act of 1996 (herein the "Telecom Act") and rules adopted by the Federal
Communications Commission ("FCC") and all other applicable federal and state laws
and regulations, the City has undertaken all appropriate procedural steps to regulate the
equipment and installation rates; and
a WHEREAS, in accordance with applicable FCC regulations the City adopted an
ordinance providing for the regulation of rates charged by cable television operators
within the City for the equipment and installation rates and related equipment and
installation charges and providing for a reasonable opportunity for interested parties to
express their views concerning basic cable regulations.
NOW, THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF GRAPEVINE, TEXAS:
Section 1. Findings:
1. That on or about October 1, 1999, the City of Grapevine received
Paragon's FCC form 1240 filing.
2. That the City engaged the services of C2 Consulting Services, Inc.
to provide assistance in the review of Paragon's FCC form 1240 to
determine the reasonableness of the proposed basic service tier
rates, attached hereto as Exhibit "A".
3. That Paragon instituted a rate adjustment based on its Form 1240
filing effective January 1, 2000.
4. That based upon the information received from Paragon and
recommendations from C2 Consulting Services, Inc., the City
concludes that the rate proposed by Paragon for maximum
permitted service rate is not reasonable.
Section 2. Conclusions:
The City has an obligation to timely act upon the pending rate application
consistent with current FCC rules and regulations. Paragon's submittal of the FCC form
1240 received on or about October 1, 1999, is hereby rejected, for the reason that the
proposed rate is not reasonable.
Section 3. Orders for Action:
Based on the foregoing Findings and Conclusions, the City hereby enters the
following orders:
1. Paragon's request for maximum permitted basic service rate of $9.46
included in its Form 1240 filing is hereby denied.
2. Based on the information received from Paragon and recommendations
from C2 Consulting Services, Inc. which is attached hereto as Exhibit "A"
and included herein for all purposes, the maximum permitted rate for the
basic service tier is established at $9.36 effective March 28, 2000.
3. Paragon cable is hereby required to refund to its current customers any
amounts charged to them based on the Form 1240 rate adjustment, which
were in excess of the rates approved herein.
Section 4. The fact that the present ordinances and regulations of the City of
Grapevine, Texas, are inadequate to properly safeguard the health, safety, morals,
peace and general welfare of the public creates an emergency which requires that this
ordinance become effective from and after the date of its passage, and it is accordingly
so ordained
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS on this the 28th day of March, 2000.
APPROVED:
William D. Tate
Mayor
ORD. NO. 2000-26 2
ATTEST:
A' �
Linda Huff
City Secretary
APPROVED AS TO FORM
Matthew Boyle
City Attorney
ORD. NO. 2000-26 3
•
• EXHIBIT TO
Page _.._ •- • of
ONSULTING SERVICES, INC.
•kk •aN
•
7801 Pencross (972) 726-7216
Dallas. Texas 75248 (972) 726-0212(fax)
January 28, 2000
Ms. Melisa Leal
Assistant to the City Manager
City of Grapevine
PO Box 95104
Grapevine, Texas 76099
Dear Ms. Leal:
C2 Consulting Services, Inc. ("C2") has completed its review of the FCC Form 1240 and the
FCC Form 1235 submitted to the City of Grapevine, Texas (the "City") by Paragon Cable
("Paragon" or the "Company") on or about September 30, 1999. Paragon is proposing to
combine the results of these two filings to justify its proposed basic service rates. The following
report provides a brief discussion of the issues noted during the review and C2's
recommendations regarding potential City Council actions in response to Paragon's proposed
basic service rates.
This study does not constitute an examination of the financial condition of Paragon or its parent
company. Therefore, C2 cannot and does not express any position with regard to the accuracy or
validity of the financial information provided by Paragon during the course of the analyses.
OVERVIEW OF THE FILING
According to the information provided by Paragon,the basic service tier includes twenty-two(22)
channels. Prior to the January 3rd implementation of the filed rate, ' Paragon was charging $9.06
for basic service programming based on its Form 1240 computation for the 1999 rate year.
However, this year, the Company has filed a FCC Form 1235 in an effort to collect costs related
to the cable system upgrade. Pursuant to FCC regulation, the results of a Form 1235 computation
can be added to the Form 1240 computation to develop the total basic service charge. Based on
Paragon's proposed Form 1240 filing of $9.46 and proposed Form 1235 filing of $1.45, the
Company has increased the basic service rate by $1.85 to a proposed rate of$10.91. The rate
year is January 1, 2000 through December 31, 2000.
There are three major factors that explain Paragon's proposed increase in the basic service rate:
'Based on paragraph 92 of the Thirteenth Order on Reconsideration, FCC 95-397, released September 22,
1995,a cable operator may implement a proposed rate ninety(90)days after it has filed for the rate change
with the franchising authority. However,the franchising authority has one year from the date of the filing
in which to render a final decision. Such decision is retroactive to the beginning date on which the
proposed rate was charged. Because the Form 1235 rate is added as a component to the benchmarkForm
1240 rate,the City has the same period of review for the Form 1235 as it does the Form 1240. For either
form,a decision is retroactive to the date of rate implementation.
EXHIBIT '4 TO a &I" ‘'9
Ms. Melisa Leal Page -A-- of ,
January 28, 2000
Page 2
1. Paragon proposes to use a higher inflation factor in its current Form 1240 true-up
period than what was estimated in the projected period for the prior1998 filing;
2. Paragon proposes an additional projected year of inflation in itscurrent Form 1240
that will be trued-up next year pursuant to FCC regulations; and
3. As stated above, Paragon proposes to add an additional $1.45 based on its FCC Form
1235 computation.
ANALYSES OF THE FILINGS
Project Objectives and Activities
The project objectives are three-fold:
1. Assessment of the completeness of the filings with regard to the information and
documentation that must be filed with the City.
2. Assessment of the reasonableness of the proposed computations in light of FCC
regulations, and FCC rulings.
3. Assessment of the reasonableness of the proposed computations in light of the
Company's election to opt out of certain provisions in the Social Contract.2
Given these objectives, C2 conducted the following project activities:
1. Review of the filings to assess the completeness based on the FCC Form instructions.
2. Review of the filings to identify any issues with respect to the data and/or
methodologies employed by Paragon.
3. Submission of follow-up data requests and subsequent review of Paragon's
responses.
4. Review of FCC decisions that clearly have an impact on Paragon's proposed
methodologies.
5. Development of potential alternatives available to the City in establishing maximum
permitted basic service rates.
2 Social Contract for TimeWarner Cable("Social Contract"),as approved by the FCC in Social Contract
for Time Warner,Memorandum Opinion and Order, FCC 95-478, releasedNovember 30, 1995 ("Social
Contract Order").
EXHIBIT TO 1
Ms. Melisa Leal Pane ._3____ Of ,1. ,.._..
January 28, 2000
Page 3
Summary of Findings
Form 1240:
C2 identified two main issues with respect to Paragon's proposed Fonn 1240 computation. These
issues are:
1. Paragon inappropriately included estimated costs in its true-up period computations.
2. In conjunction with correcting the true-up period, the inflation factors to be applied
during both the true-up period and the projected period need to reflect the most recent
information available.
Form 1235:
The overriding issue related to the Form 1235:
1. Paragon's proposal to recover the upgrade costs that were the primary basis for CPST
increases under application of Social Contract provisions in the last four years should
not be considered now in the development of rate year 2000 basic service rates.3
Discussion—Form 1240
1. Use of Actual Costs Only For True-Up Period
The Form 1240 methodology incorporates a series of calculations that involve an accounting of
the actual costs previously projected for the prior rate year and an allowance for projecting
certain cost increases/decreases for the upcoming rate year. In each annual Form 1240 filing, the
projections from the prior computation are to be "trued-up" to actual costs, and any over/under-
collections are taken into account in the development of the new rates.
In the Thirteenth Order on Reconsideration, the FCC noted:
Because the true-up will examine what costs were actually incurred, it can only examine
costs as of the date the Form 1240 is filed. As a result, and because the Form 1240 must
be filed at least 90 days before the proposed increase is scheduled to take effect. . . and
the projections are made for the year beginning with the proposed implementation date,
the period applicable for the true up will not exactly coincide with the previous year's
projections. For example, if an operator files annually on October 1 for rates to take
effect on January 1, the true-up will cover the period from the previous October through
September, but the projections will apply to the period January to December. 4
Paragon's filing was submitted on September 30, 1999, for a rate year beginning January 1, 2000
(like the example above). However, Paragon's proposed true-up period is from January 1, 1999,
through December 31, 1999, even though the information available to Paragon at the time of the
filing was only through September 30, 1999. Therefore, the last three months of the true-up
3 See Social Contract at III.F.4.
4 See paragraph 79, footnote 151,FCC 95-397,released September 22, 1995.
EXHIBIT /9 TO 4.Z f }z)
Ms. Melisa Leal Page o
RI
January 28, 2000
Page 4
period as calculated by Paragon is based on estimated data and not on the actual data that
must be used.
The FCC has issued a number of decisions concerning this issue, many of which have been
related to filings submitted by Paragon in other jurisdictions. For example:
Upon review of the Operator's FCC Fonn 1240. . . we find that Operator has not
correctly calculated its MPR. In particular, Operator made true-up adjustments through
to the effective date of the rate increase. This is incorrect. . . The true-up data is intended
to indicate real, not projected data. This policy is reflected in instructions accompanying
FCC Form 1240.5
In C2's opinion and based on these FCC decisions, Paragon should not be authorized to include
October 1999 through December 1999 in its Form 1240 true-up period. The true-up period
should be only for the nine months ended September 1999.6 Actual data for the October through
December 1999 period should be trued-up in Paragon's next rate filing.
The impact of allowing only a nine month true-up period is to reduce the rate year 2000 Form
1240 proposed basic service calculation by approximately$.01.
2. Adjustment to Inflation Rates
The Form 1240 methodology allows for an inflation adjustment to be projected for each rate year.
Such projection becomes part of the true-up computation in the next rate filing. Based on FCC
regulations, a cable operator is to use the most recent information published by the FCC
concerning quarterly inflation factors to be applied. At the time of Paragon'scurrent Form 1240
filing, the latest published inflation factor for any of the true-up period in question was for the
first quarter of 1999. Paragon used this factor of 1.60% not only to true-up the entire true-up
period, but also to project for the twelve months ended December 2000.
On October 4, 1999, which is shortly after Paragon filed its current Form 1240, the FCC
published the second quarter inflation factor at 1.35%. In December 1999, the FCC published the
third quarter inflation factor at 1.04%.
Typically, if the inflation factor used is the only issue found in a franchising authority's review of
a Form 1240 filing, the FCC has found in favor of the cable operator using what was the most
recent data available at the time the filing was made. This policy was detailed by the FCC in the
Third Order on Reconsideration as follows:
We share National Cable Television Association's concern that rates adopted in an effort
to comply with our rules as quickly as possible may become unreasonable solely as a
5 See Order,DA 97-1852,released August 29, 1997,paragraph 9(Paragon Cable operations in Portland,
Oregon);Order, DA 97-1936,released September 9,1997,paragraph 9(Paragon Cable operations in
Multnomah County);and Order, DA 97-1936,released September 9,1997,paragraph 9(Paragon Cable
operations in Gresham et. al.).
6 Typically,a true-up period would be for twelve months. In this case,Paragon already trued-up October
1998 through December 1998,albeit inappropriately, in its prior rate filing.
7 FCC Form 1240 Instructions,Part I:Module C [Revised July 1996].
EXHIBIT It. TO 41)a
Ms. Melisa Leal Page . Of
January 28, 2000
Page 5
result of using later data to refresh the calculations. Operators should not be penalized
for making good faith attempts to comply with our rules in a timely manner.
When current rates are accurately justified by analysis using the old data (and that data
was accurate at the time), cable operators will not be required to change their rates. . .
When current rates are not justified by analysis using the old data (so that a rate
adjustment would be necessary in any event), cable operators will be required to correct
their rates pursuant to current data. In these circumstances, the resulting rates must be
based on current data.8 [emphasis added]
Clearly, if the franchising authority finds adjustments need to be made other than those
attributable to the inflation factors, the FCC has found that the inflation factors can be adjusted
with data that became available subsequent to the date of the filing. The FCC's position on this
issue is evidenced in the above cited Portland Order (DA 97-1852). In that decision, the FCC
found error with Paragon's use of estimated data in its true-up computation for CPST rates and
also made an adjustment to reflect current inflation factor data:
This adjustment required that we refresh Operator's inflation factors 9
Therefore, because Paragon's rate year 2000 Form 1240 true-up period should be reduced from
twelve months to nine months to reflect actual data, the inflation factors for both the true-up
period and the projected period need to be adjusted to include those published inflation factors
through the most current data available (third quarter 1999). The impact of making such
adjustment is to reduce the current Form 1240 proposed basic service rate calculation by
approximately$.09.
"" Discussion—Form 1235
The FCC developed the Form 1235 in order to allow cable operators an opportunity to justify rate
increases for recovery of investment in cable system upgrades. It was intended to provide an
abbreviated means of filing a"cost-of-service" showing, but only with respect to costs of upgrade
and not general operations of the system. For general operations, a cable operator could continue
to use the "benchmark" approach to developing rates reflected in the Form 1240. However, the
results of a Form 1235 analysis could be added to the development of rates under the benchmark
method for a total tier rate.
In C2's opinion, the Form 1235 should not be available to Paragon under the Social Contract.
The major components of the Social Contract that apply include:
1. CPST rates can be increased by 51.00 in each rate year over a five year period to
fund an investment of $4 billion dollars to upgrade all Time Warner's systems
(Social Contract, Section III.F.4.)
2. Basic service rates only shall be increased for changes in external programming costs
and inflation(Social Contract, Section III.A.2.)
In the Form 1235, Paragon proposes to recover its investment in the City's upgrade even though
it already has collected from subscribers during the period 1996 through 1999 based on the
s See Third Order on Reconsideration, FCC 94-40, released March 30, 1994, paragraphs 93 and 94.
,,. 9 See Order, DA 97-1852,released August 29, 1997,paragraph 10.
EXHIBIT- TO. / '22�� �'�?—�
Ms. Melisa Lea! Page (f of 64-
January 28, 2000
Page 6
provision of the Social Contract as outlined in #1 above. However, Paragon clearly already has
been compensated for this upgrade. By proposing now to spread the recovery between basic
service and CPST rate tiers, Paragon's proposal, in C2's opinion, is not only a"double dip" into
the pockets of subscribers, but also is in direct violation of the Social Contract to which Time
Warner agreed. The intent of the Social Contract is unequivocally stated in the following:
At the core of the Social Contract is the upgrade incentive plan whereby Time Warner
will rebuild and upgrade all of its domestic cable systems and in turn will be allowed to
recover the costs of the upgrade over time by adding a charge to the highest penetrated
CPST during the years of the Social Contract.t0
Clearly, the $1.00 per year increase to the CPST tier was intended to cover all the upgrade costs
to both the basic service and other regulated tiers." The Social Contract provided that Time
Warner would not seek to pass any capital costs, in addition to the already received $1.00annual
increase to subscribers.12 Paragon should be prohibited from recovering costs already recovered
and from proposing to place some of that burden on the basic service subscriber.
Paragon takes a different position arguing that it is no longer bound by the provisions of the
Social Contract as it opted out pursuant to Section III.I.1.c:
In the event of any changes to the Act or any material changes to the FCC rules
hereunder relating to rates (BST,CPST or equipment) that are favorable to TWC , any
TWC system may elect to be relieved from the relevant rate provisions(Sections III.A.2.,
IIl.A.3., III.B., III.D., III.F.4., and III.G.) of this Contract accordingly, but shall remain
bound by all other provisions of this Contract.13
44.,01
The Company further states that, as a result of exercising this option, it is no longer subject to the
10% reduction to the basic service rate, the prohibition against adding satellite channels to the
basic service rate, FCC regulation of equipment rates, and the prohibition against filing cost-of-
service showings for the basic service tier.
In an August 1999 letter to the City, Paragon indicates that the event to which it attributes its
decision to opt out of theSocial Contract rate provisions was the passage of the
Telecommunications Act of 1996 and the total deregulation of the CPST tier of service. It
appears that Paragon desires the freedom to increase its CPST rate beyond the limits provided for
is the Social Contract. Indeed, it is interesting to note that the provisions of the
Telecommunications Act related to the 1999 deregulation of the CPST tier have been known
since 1996, but Paragon continued to collect the $1.00 per year increase on CPST until such time
that this tier no longer was regulated by the FCC.
In C2's opinion,under the Social Contract there are only two circumstances under which Paragon
should be able to charge additional amounts for upgrade costs outside of what it has already
collected:
10 SeeSocial Contract Order,FCC 95-478,paragraph 19.
" SeeSocial Contract Order,FCC 95-478,paragraph 25-26.
12 Subject to the provisions discussed below concerning franchising authorities' requirements for upgrades
that exceed the requirements of the Social Contract.
tos. 13 Paragon's response to Third Request for Information for the City of Grapevine, question 2, dated January
4,2000.
EXHIBIT, 4 TO j d -4 '
Ms. Melisa Leal Page ._.. .— of
January 28, 2000
Page 7
1. In the event that the City had negotiated an upgrade that exceeded the scope of the
upgrade in the Social Contract(Section III.F.2.);and/or
2. Implementation of the favorable regulatory treatment on which the Company based
its decision provides for a incremental increase in the amounts already recovered
under the Social Contract(Section 111.1.1.c.).
Based on C2's understanding, the City did not request any additional upgrade requirements. With
respect to an allowance for the incremental increase in amounts to be recovered from the
favorable regulatory provisions (i.e. the deregulation of CPST under the Telecommunications
Act), Paragon has every right to increase the CPST more than the $1.00 that would have been
added in 2000 under the final year of the Social Contract.
In C2's opinion, Paragon has no basis to now seek total recovery of its upgrade costs pursuant to
the Form 1235 methodology. The Telecommunications Act did not establish this methodology,
nor did it provide for any new upgrade increment not already available to cable operators. It
merely provided for the deregulation of the CPST tier rates, through which Paragon could
justifiably recover the incremental amount that results under such favorable
regulatory provisions on this tier of service.
SUMMARY OF RECOMMENDATIONS
Based on the above findings, C2 recommends the following adjustments be considered by the
City in determining the maximum permitted monthly basic service rate:
1. The True-up Period should only reflect the nine months ended September 30, 1999.
2. The inflation factors should be adjusted to reflect the published factors for the first
through the third quarters of 1999.
3. The City should consider ordering a maximum permitted rate for the Form 1240
computation of$9.36 rather than the$9.46 proposed by Paragon.
4. The City should consider completely disallowing Paragon's proposed Form 1235
basic service rate increase of$1.45.
5. The City should order Paragon to issue refunds to subscribers within ninety (90) days
of a rate order based on the difference between the ordered rate and the January 3,
2000, implemented rate. Interest on the refund amount should accrue to the time the
refund is issued.
C2 greatly appreciates having this opportunity to work with the City of Grapevine. If you have
any questions regarding this report, the project activities, or any of the recommendations, please
contact Ms. Connie Cannady at(972) 726-7216.
Very truly yours,
ri5(\,,L1/4( vk-N6 avk-c-
C2 Consulting Services, Inc.
EXHIBIT 1 . ro Ado/0�- �
Federal Communications Commission Page 9 01 . p,,sed by O\fE3 30taO-0b..S5
Washington,DC 20554
8.Status of Previous Filing of FCC Form 1210(enter an"x"in the appropriate box)
YES NO
'l;an FCC Form 1210 been previously filed with the FCC? I I I
If yes,enter the date of the most recent filing: (mm/dd/yy)
YES NO
b.Has an FCC Form 1210 been previously filed with the Franchising Authority? I I
If yes,enter the date of the most recent filing: (mm/dd/yy)
9.Status of FCC Form 1200 Filing(enter an"x"in the appropriate box)
YES NO
a.Has an FCC Form 1200 been previously filed with the FCC? I I
If yes,enter the date filed: (mm/dd/yy)
YES NO
b.Has an FCC Form 1200 been previously filed with the Franchising Authority? I I I
If yes,enter the date filed: (mmldd/yy)
10.Cable Programming Services Complaint Status(enter an"x"in the appropriate box)
YES NO
a.Is this form being filed in response to an FCC Form 329 complaint? I I I
If yes,enter the date of the complaint: (mm/dd/yy)
YES NO
11.Is FCC Form 1205 Being Included With This Filing I I I
12.Selection of"Going Forward"Channel Addition Methodology (enter an"i in the appropriate box)
Check here if you are using the original rules [MARKUP METHOD).
Check here if you are using the new,alternative Hiles[CAPS METHOD].
If using the CAPS METHOD,have you elected to revise recovery for YES NO
channels added during the period May 15,1994 to Dec.31,1994? 1 I I
13.Headend Upgrade Methodology
s, 5=^7E•Opera/as roust certi(/o the Commiuioo r/cire/gibihiry to use ask upgrade methodology wdattach JR equipmrn/Ail indrkkp rise on schedule.
]Check here if you area qualifying small system using the streamlined headend upgrade methodology.
Part I: Preliminary Information
Module A: Maximum Permitted Rate From Previous Filing
a b c d e
Line Basic Tier 2 Tier 3 Tier 4 'Pier 5
Al Current Maximum Permitted Rate i.ine Description I 59.11689 I I I
Module B: Subscribcrship
a b c d e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
01 Average Subscribership For True-Up Period 1 10.110
112 Average Subscribcrship For True-Up Period 2
63 Estimated Average Subscribership For Projected Period 10.274
Module C: Inflation Information
Line Line Description
Cl Unclaimed Inflation:Operator Switching From 1210 To 1240 1.0000
C2 Unclaimed Inflation:Unregulated Operator Responding to Rate Complaint 1.13000
C3 Inflation Factor For True-Up Period l[Wks I I 10133
C4 Inflation Factor For True-Up Period 2[\Vks I I
CS Current FCC Inflation Factor 1.0104
Module D: Calculating the Base Rate
a b c d e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
Dl Current Headend Upgrade Segment 50.0000
,D2 Current External Costs Segment 502453
s
Current Caps Method Segment 50.0000
Current Markup Method Segment 50.013110
liteetai
Current Channel Movement and Deletion Segment $0.0000
iD6 Current True-Up Segment (50.1606)
FCC Form 1240
Page 2 Microsoft Excel 4.0 Version July 19%
EXHIBIT. rt , TO c1/44140 " C°
Federal Communications Commission - ._L Approved by OMB 3060-06R5 Washington,DC 20554 Pogo Of ._._
1)7 Current Inflation Segment $0.1013
138 Base Rate[Al-D1-D2-D3-04-D5-D6-D71 $8.8829
Part II: True-Up Period
Module E:Timing Information
Line Line Description
El What Type of True-Up Is Being Performed?(Answer"1"."2".or"3". See Instructions for a description of these types.) 2
If"I'.go to Module I. If"2%answer E2 and E3. If"3".answer E2.E3.E4,and E5.
E2 Number of Months in the True-Up Period 1 0
E3 Number of Months between the end of'frue-Up Period 1 and the cad of the most recent Projected Period tt
E4 Number of Months in True-Up Period 2 Eligible for Interest tJ
ES `umber of Months True-Up Period 2 Ineligible for Interest 0
Module F: Maximum Permitted Rate For True-Up Period 1
a b c d e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
Fl Caps Method Segment For True-Up Period I[Wks 21
F2 Markup Method Segment For True-Up Period 1[Wks 31 S0.0000
F3 Chan Mvmnt Dektn Segment For True-Up Period 1[Wks'4/51 50.00
F4 True-Up Period 1 Rate Eligible For Inflation[D8+F1+F2+F3[ $8.8829
F5 Inflation Segment for True-Up Period 1[(F4•C3)-F41 50.1181
F6 Headend Upgrade Segment For True-Up Period 1[Wks 61
F7 External Costs Segment For True-Up Period l[Wks 7] $0.2487
FS True-Up Segment For True-Up Period 1 ($0.1652)
F9 Max Perm Rate for True-Up Period l[F4+F5+F6+F7+F8J $9.0846
Module G: Maximum Permitted Rate For True-Up Period 2
a b c d c
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
"'" Caps Method Segment For True-Up Period 2[Wks 2]
Markup Method Segment For True-Up Period 2[Wks 3]
Chan Mvmnt Delete Segment For True-Up Period 2[Wks'4/51
G4 TU Period 2 Rate Eligible For Inflation[D8+F5+Gl+G2+G3]
05 Inflation Segment for True-Up Period 2[(G4•C4)-G4[
06 Headend Upgrade Segment For True-Up Period 2[Wks 6[
G7 External Costs Segment For True-Up Period 2[Wks 7]
08 True-Up Segment For True-Up Period 2
G9 Max Perm Rate for True-Up Period 2[G4+GS+G6+G7+081
FCC Form 1240
Page 3 Microsoft Excel 4.0 Version July 1996
EXHIBIT 4 TO Ad °
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Federal Communications Commission
Washington,DC 20554
Module H:True-Up Adjustment Calculation
a b c d e
Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
clement For True-Up Period 1
Revenue From Period I 5824.360.4306
rrK„;u
112 Revenue From Max Permitted Rate for Period 1 5826.594.2143
113 True-Up Period t Adjustment 11124111 52.233.7837
114 Interest on Period I Adjustment 5159.7134
Adjustment For True-Up Period 2
115 Revenue From Period 2 Eligible for Interest
116 Revenue From Max Penn Rate for Period 2 Eligible For Interest
117 Period 2 Adjustment Eligible For Interest 1116-1151
118 Interest on Period 2 Adjustment(See instructions for formula)
119 Revenue From Period 2 Ineligible for Interest
1110 Revenue From Max Perm Rate for Period 2 Ineligible for Interest
Hl I Period 2 Adjustment Ineligible For Interest[H10.1191
Total True-Up Adjustment
1112 Previous Remaining True-Up Adjustment
1113 Total True-Up Adjustment(113+114+117+118+1111+11121 S2.393.4970
1114 Amount of True-Up Claimed For This Projected Period 513914970
1115 Remaining True-Up Adjustment[H1341141 50.0000
Part III: Projected.Period
Module I: New Maximum Permitted Rate
a b c d e
Line Line Description Itasic Tier 2 Tier 3 Tier 4 Tier 5
I I Caps Method Segment For Projected Period[Wks 21
12 Markup Method Segment For Projected Period[Wks 31 $0.0000
Chan Mvmnt Delete Segment For Projected Period[Wks 4/51 50.00
Proj.Period Rate Eligible For Inflation[D8+F5+G5+11+12+I3] 59.001
Inflation Segment for Projected Period[(14•CS}141 $0.0936
16 Headend Upgrade Segment For Projected Period[Wks 6]
17 External Costs Segment For Projected Period[Wks 7] 50.2422
18 True-Up Segment For Projected Period 50.0194
19 Max Permitted Rate for Projected Period[14+I5+16+17+18] 59.3563
110 Operator Selected Rate For Projected Period 59.46
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Certification Statement
WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT
(U.S.CODE TITLE 18.SECTION 1001),AND/OR FORFEITURE(U.S.CODE,TITLE 47,SECTION 503).
1 certify that the statements made in this form are true and correct to the best of my knowledge and belief,and are made in good faith.
Signature I Date
Name and Title of Person Completing this Form: 11
Telephone number Fax Number
moimo
FCC Form 1240
Page 4 Microsoft Excel 4.0 Version July 1996
Federal Communications Commission Approved By OMB 3060-0635
Washington,DC 20554
Worksheet 1 - True-Up Period Inflation
For instructions,see Appendix A of Instructions For FCC Form 1240
EXHIBIT 11 BI T To Adg°/>�,� (°
Page _/L_._. of l(
Line Period FCC Inflation Factor
101 Month 1 1.60%
102 Month 2 1.60%
103 Month 3 1.60%
104 Month 4 1.35°o
105 Month 5 1.35%
106 Month 6 1.35%
107 Month 7 1.04%
108 Month 8 1.04%
109 Month 9 1.04!a
110 Month 10
I 1 1 Month 11
112 Month 12
1 l3 Average Inflation Factor for True-Up 1.0133
Period 1
114 Month 13
115 Month 14
116 Month 15
117 Month 16
118 Month 17
119 Month 18
120 Month 19
121 Month 20
122 Month 21
123 Month 22
124 Month 23
125 Month 24
126 Average Inflation Factor for True-Up
Period 2
FCC Form 1240
Page 1 Microsoft Excel 4.0 Version July 1996
Federal Communications Commission Approved By 0MB 3060-1685
Washington.DC 20554
EXHIBIT, /9 TO f a(
Worksheet.7- External Costs Page ._.1.a- of
True-Up Period
For instructions,see Appendix A of Instructions For FCC Form 1240
• True-Up Period Projected Period
•
Question 1.For which time period are you filling out this worksheet? [Put an"7C in the appropriate box.[
Question 2.How long is the tint period,in months,for which rates arc being set with this worksheet? 9
Question 3.How lona is the second period,in months.for which rates are being set with this worksheet? 0
a b c d e
line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
Period I
External Costs Eligible for Markup _
Cost of Programming For Channels Added Prior to 5'15,94 or
701 510,368.60
After 5/1594 Using Markup Method For Period
702 Retransmission Consent Fees For Period 50.00
703 Copyright Fees For Period 57,297.32
704 External Costs Eligible For 7.5°4 Markup 517,665.92
705 Marked Up External Costs 518,990.8619
External Costs Not Eligible for Markup _
706 Cable Specific Taxes For Period 50.00
707 Franchise Related Costs For Period 50.00
708 Commission Regulatory Fees For Period 53,639.56
709 Total External Costs For Period 522.630.4219
710 Monthly.Per-Subscriber External Costs For Period 1 50.2487
Period 2
!real Costs Eligible for Markup
I. Cost of Programming For Channels Added Prior to 5/1594 or
After 5/15/94 Using Markup Method For Period
712 Retransmission Consent Fees For Period
713 Copyright Fees For Period
714 External Costs Eligible For 7.5°o Markup
715 Marked Up Extanal Costs
External Costs Not Eligible for Markup
716 Cable Specific Taxes For Period
717 Franchise Related Costs For Period
718 Commission Regulatory Fees For Period
.
719 Total External Coats For Period
720 Monthly,Pa-Subscriber External Costs For Period 2
aastrse
FCC Form 1240
Page 1 Microsoft Excel 4.0 Version July 1996
Federal Communications Commission Approved By()NIB 31160-0685
Washington.DC 20554
Worksheet.?- External Costs EXHIBIT__1_, TO al,,,/On A(0,
Projected Period Page /3 of , ,
For instructions,see Appendix A of Instructions For FCC Form 1240
True-Up Period Projected Period
Question 1.For which time period are you filling out this worksheet? [Put an"X"in the appropriate box] X
Question 2.How long is the first period,in months,for which rates are being set with this worksheet? 12
Question 3.How long is the second period in months,for which rates are being set with this worksheet? 0
a b c d e
line line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
Period 1
External Costs Eligible for Markup
701 Cost of Programming For Channels Added Prior to 5/15/94 or 512,403.34
Atter 5/15/94 Using Markup Method For Period
702 Retransmission Consent Fees For Period 50.00
703 Copyright Fees For Period 510,788.19
704 External Costs Eligible For 7.5°'.Markup 523,191.53
705 Marked Up External Costs S24,930.89471
External Costs Not Eligible for Markup _
706 Cable Specific Taxes For Period 50.00
707 Franchise Related Costs For Period $0.00
708 Commission Regulatory Fees For Period $4,931.75
709 Total External Costs For Period 529,862.6448
710 Monthly,Per-Subscriber External Costs For Period 1 50.2422
FCC Form 1240
Page 2 Microsoft Excel 4.0 Version July 19%
Federal Communications Commission Approved By OMB 3060-0685
Washington,DC 20554
EXHIBIT 1 To d °, ",,
Page . of , it
Worksheet 8 - True-Up Rate Charged
istructions,see Appendix A of Instructions For FCC Form 1240
Question 1.How long is the True-Up Period 1.in months? 9
Question 2.How long is the True-Up Period 2,in months? 0
a b • c d e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
801 Month 1 $9.0600
802 Month 2 $9.0600
803 Month 3 $9.0600
804 Month 4 $9.0600
805 Month 5 $9.0600
806 Month 6 $9.0600
807 Month 7 $9.0600
S08 Month 8 $9.0600
309 Month 9 $9.0600
810 Month 10
811 Month 11
812 Month 12
813 Period 1 Average Rate $9.0600
1814 Month 13
Month 14
Month 15
Athrtro Month 16
813 Month 17
819 Month 18
820 Month 19
821 Month 20
822 Month 21
823 Month 22
824 Month 23
825 Month 24
826 Period 2 Average Rate
FCC Form 1240
Page 1 Microsoft Excel 4.0 Version July 1996