Before the

**Federal Communications Commission**

# Washington, D. C. 20554

In the Matter of: )

)

Cablevision of the Midwest ) CSB-A- 0602

d/b/a Telerama, Inc. )

)

Appeal of Local Rate Order of the City of Euclid, Ohio )

(CUID No. OH0756)

# 

# MEMORANDUM OPINION AND ORDER

##  Adopted: January 10, 2000 Released: January 13, 2000

By the Deputy Chief, Cable Services Bureau:

I.  introduction

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1.  Cablevision of the Midwest, d/b/a Telerama, Inc. ("Cablevision"),
    filed an appeal of a local rate order adopted by the City of Euclid,
    Ohio, on September 21, 1998. The City filed an opposition to the
    appeal, and Cablevision filed a reply.

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II. background

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2.  Under the Commission's rules, rate orders issued by local
    franchising authorities may be appealed to the Commission.[^1] In
    ruling on an appeal of a local rate order, the Commission will
    sustain the franchising authority's decision provided there is a
    reasonable basis for that decision, and will reverse a franchising
    authority's decision only if the franchising authority unreasonably
    applied the Commission's rules in its local rate order.[^2] If the
    Commission reverses a franchising authority's decision, it will not
    substitute its own decision but will remand the issue to the
    franchising authority with instructions to resolve the case
    consistent with the Commission decision on appeal.[^3]

3.  An operator proposing an increase in basic service tier (\"BST\"),
    equipment or installation rates bears the burden of demonstrating
    that the proposed increase conforms with our rules.[^4] In
    determining whether the operator\'s proposed increase conforms with
    our rules, a franchising authority may direct the operator to
    provide supporting information.[^5] After reviewing an operator\'s
    rate forms and any other additional information submitted, the
    franchising authority may approve the operator\'s requested rate
    increase or issue a written decision explaining why the operator\'s
    rate is not reasonable.[^6] If the franchising authority determines
    that the operator\'s proposed rate exceeds the maximum permitted
    rate as determined by the Commission\'s rules, it may prescribe a
    rate different from the proposed rate provided that it explains why
    the operator\'s rate is unreasonable and the prescribed rate is
    reasonable.

4.  Cable operators may justify adjustments to 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.[^7] Any incurred cost that is not
    projected may be accrued with interest and added to rates at a later
    time.[^8] If actual and projected costs are different during the
    rate year, a \"true‑up\" mechanism is available to correct estimated
    costs with actual cost changes.[^9]

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III. Discussion

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5.  At the end of September 1997, Cablevision neared the completion of a
    rebuild of its cable system serving subscribers in Euclid, Ohio.
    Although only 11 of approximately 14,000 subscribers remained on the
    "non-rebuild" portion of the system, Cablevision claims it
    nonetheless submitted separate Forms 1240 for the "rebuild" and the
    "non-rebuild" portions of the system to the City by mail on
    September 30, 1997. Cablevision, after responding to information
    requests from the City and the passage of 90 days without the
    issuance of a rate decision by the City, implemented the rate
    increases proposed in the Forms 1240 on January 1, 1998. Cablevision
    also submitted amended Forms 1240 for both the "rebuild" and
    "non-rebuild" portions of the system on March 12, 1998, at which
    time Cablevision re-submitted the September 30, 1997 Form 1240 for
    the "non-rebuild" portion of the system. On September 21, 1998, the
    City issued the rate order under appeal, which required Cablevision
    to refund the difference between Cablevision's basic service tier
    ("BST") rates in effect immediately before January 1, 1998 and its
    BST rates in effect between January 1, 1998 and June 11, 1998
    pursuant to Forms 1240 filed by Cablevision.

6.  The principal matter at issue in this appeal concerns the validity
    of the City's refund order. A subsidiary issue concerns whether
    Cablevision submitted two separate FCC Forms 1240 on September 30,
    1997, one for the "rebuild" area and a second for the "non-rebuild"
    area, as it claims; or whether Cablevision first filed a Form 1240
    for the "non-rebuild" area on March 12, 1998 when the amended Forms
    1240 for both areas were received, as the City claims. The City's
    rate order acknowledges receipt on October 1, 1997 of Cablevision's
    Form 1240 for the "rebuild" area,. The rate order also acknowledges
    receipt on March 12, 1998 from Cablevision of a Form 1240 for the
    "non-build" portion of the cable system, as well as amended Forms
    1240 for both the "rebuild" and the "non-build" portions of the
    cable system. The rate order then directs Cablevision not to
    implement BST rates proposed in the forms until June 11, 1998, and
    further directs Cablevision to make the described refunds for both
    the "rebuild" and "non-rebuild" portions of the system.

7.  We address first the subsidiary conflicting claims concerning the
    filing of a separate Form 1240 for the "non-rebuild" area. We
    resolve this issue in favor of the City, because the record does not
    contain substantial and credible evidence showing that a Form 1240
    for the "non-rebuild" portion was received by City until March
    12, 1998. Cablevision claims that it submitted "filings for both the
    rebuild and non-rebuild portions of Euclid on October 1, 1997."[^10]
    Cablevision also asserts that, "Each of these was attested to and
    dated, and each was accompanied by a certified mail receipt dated
    October 1, 1997."[^11] Cablevision attempted to support this claim
    by providing copies of a letter dated September 30, 1997, copies of
    a certified mail return receipt (U.S. Postal Service PS Form 3811),
    and copies of Forms 1240 for the "rebuild" and the "un-rebuild"
    areas.[^12] Our examination of the copies of mail receipt provided
    by Cablevision shows them to be two copies of the same mail receipt,
    and not copies of two different receipts. The same may be said for
    the October 1, 1997 letter submitted by Cablevision. For that
    reason, we find that Cablevision failed to carry its burden of
    providing substantial evidence that both Forms 1240 were received by
    the City on October 1, 1997. Moreover, the City provided copies of
    correspondence with Cablevision, dated October 30, 1997, November
    24, 1997, and January 21, 1998, each referring in the singular to "a
    Form 1240" or "the Form 1240" filed by Cablevision.[^13] If
    Cablevision submitted two forms on September 30, 1997, these letters
    put Cablevision on notice that only one form had been received by
    the City. Cablevision, the party with knowledge that another form
    had been submitted, failed to carry its burden of correcting the
    record before the City.

8.  We reject as unreasonable, however, the City's requirement for a
    refund with respect to the "rebuild" portion of Cablevision's cable
    system in Euclid. The City attempted to justify its total system
    refund requirement on the grounds that Cablevision's Form 1240
    filing was facially incomplete until the Form 1240 for the
    "non-rebuild" portion was received on March 12, 1998. The City's
    determination of incompleteness was based not on any difficiency of
    the Form 1240 received on September 30, 1997 for the "rebuild"
    portion. Instead, the determination of incompleteness was based only
    on the fact that a "non-rebuild" Form 1240 was not received until
    March 12, 1998. Other than this finding of incompleteness, the City
    found no other fault or need for correction of Cablevision's 1997
    Form 1240 for the "rebuild" portion. On this record we reject as
    unreasonable the City's finding that Cablevision's 1997 Form 1240
    for the "rebuild" portion of the Euclid cable system was incomplete,
    particularly since that Form 1240 covered all of the Euclid cable
    system except for 11 of approximately 14,000 subscribers served by
    that cable system. Accordingly, Cablevision's petition is granted
    with respect to this aspect of the City's refund order, which is
    remanded for further consideration consistent with this order.

9.  On the other hand, we find that the City provided a reasonable basis
    for ordering refunds with respect to the "non-rebuild" portion of
    the cable system. A cable system may not increase BST rates unless
    the proper Commission forms are filed with the local franchising
    authority and then only consistent with Commission regulations
    appropriate to the forms filed.[^14] The record before us shows that
    Cablevision's Form 1240 for the "non-rebuild" portion of the Euclid
    system was not received by the City until March 12, 1998. The City
    correctly ruled that Cablevision's BST rates for the "non-rebuild"
    portion proposed in that Form 1240 could not become effective until
    90 days later, or until June 11, 1998.[^15] Accordingly,
    Cablevision's petition is denied with respect to this aspect of the
    City's refund order.

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IV. ordering clauses

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10. For the foregoing reasons, **IT IS HEREBY ORDERED**, pursuant to
    authority delegated by Section 0.321 of the Commission's rules, that
    the Petition for Review of Ordinance No. 205-1998 of the City of
    Euclid, Ohio, adopted September 21, 1998, filed by Cablevision of
    the Midwest d/b/a Telerama, Inc. **IS GRANTED IN PART AND DENIED IN
    PART.**

11. **IT IS FURTHER ORDERED** that Section 2 of the City's Ordinance No.
    205-1998 **IS REMANDED** for further consideration consistent with
    this Memorandum Opinion and Order.

12. **IT IS FURTHER ORDERED** that the Petition for Stay Pending Review
    filed by Cablevision **IS DISMISSED AS MOOT**.

13. **IT IS FURTHER ORDERED** that the City of Euclid, Ohio shall not
    enforce Section 2 of Ordinance No. 205-1998 pending further action
    by the City on these matters.

    FEDERAL COMMUNICATIONS COMMISSION

    William H. Johnson Deputy Chief, Cable Services Bureau

[^1]: 47 C.F.R. § 76.944.

[^2]: *See Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992*, Rate Regulation, 8 FCC Rcd
    5631, 5731 (1993) (*\"Rate Order\"*); *See also Implementation of
    Sections of the Cable Television Consumer Protection and Competition
    Act of 1992*, Rate Regulation, *Third Order on Reconsideration*, 9
    FCC Rcd 4316, 4346 (1994).

[^3]: *Rate Order* at 5732.

[^4]: ^ ?^47 C.F.R. § 76.937(a).

[^5]: ^  ?^*See* *Rate Order*, 8 FCC Rcd at 5718-19.

[^6]: ^ ?^47 C.F.R. § 76.936; *see* *Ultracom of Marple Inc.*, 10 FCC
    Rcd 6640, 6641-42 (CSB 1995).

[^7]: *See* 47 C.F.R. Section 76.960; *see also Implementation of
    Sections of the Cable Television Consumer Protection and Competition
    Act of 1992;* Rate Regulation, Thirteenth Order on Reconsideration,
    (\"*Thirteenth Reconsideration Order*\"), 11 FCC Rcd 388, 391
    (1995).

[^8]: *Thirteenth Reconsideration Order* at 392.

[^9]: *Id*.

[^10]: Falcon Petition for Review at 8.

[^11]: Falcon Reply at 7.

[^12]: Falcon Petition for Review, Exhibits 2 and 3.

[^13]: City Opposition, Exhibits 4, 5 and 8.

[^14]: *See* 47 C.F.R. § 76.933(g).

[^15]: *Id*.