**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | File No. CSB-A-0383          |
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| Falcon Community Ventures I      | ) | File No. CSB-A-0631          |
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| Appeals of Local Rate Order      | * |                              |
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| of the City of Rockmart, Georgia | * |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: January 25, 2005** **Released: January 28, 2005**

By the Deputy Chief, Policy Division, Media Bureau:

# introduction

1.  Falcon Community Ventures I ("Falcon"), the franchised cable
    operator in Rockmart, Georgia, has appealed the February 11, 1997
    Resolution of the City of Rockmart ("City").[^1] The City's local
    rate order revised basic service tier ("BST") rates over four time
    periods and established a revised hourly service charge ("HSC")
    affecting equipment and installation rates for three time periods
    and ordered refunds.[^2] The City opposed the appeal.[^3] Falcon
    replied.[^4] After considering the record, we are granting the
    appeal in part, denying it in part, and remanding some matters to
    the City for further action consistent with this order.

2.  Falcon has also appealed the May 11, 1999 Resolution of the City of
    Rockmart,[^5] so that any relief granted regarding its earlier
    appeal will be reflected in the starting point for computing the
    rates reviewed in the May 11 1999 Resolution.[^6] The City opposed
    this appeal. We are denying the appeal.

# background

3.  Rate orders issued by a franchising authority may be appealed to the
    Commission.[^7] In ruling on appeals, the Commission will not
    conduct a de novo review, but instead will sustain the franchising
    authority's decision if it has a reasonable basis.[^8] The
    Commission will reverse a franchising authority's decision only if
    it determines that the franchising authority acted unreasonably in
    applying the Commission's rules.[^9] If the Commission reverses a
    franchising authority's decision, it will not substitute its own
    decision, but instead will remand the issue to the franchising
    authority with instructions to resolve the case consistent with the
    Commission's decision on appeal.[^10]

4.  Cable operators using the Commission's benchmark methodology
    computed initial regulated BST rates using FCC Form 1200.[^11] Cable
    operators periodically adjust their BST rates for changes in
    inflation, external costs, or the number of channels. Cable
    operators initially used FCC Form 1210 for computing adjustments
    pursuant to the Commission's quarterly rate adjustment
    methodology.[^12] The Commission subsequently adopted an annual rate
    adjustment methodology computed on FCC Form 1240.[^13] Cable
    operators have the option of using either rate form. Cable operators
    annually compute cost-based equipment and installation rates using
    FCC Form 1205.[^14]

5.  When establishing initial regulated rates, cable operators computed
    their total regulated revenue per subscriber from programming tiers
    and equipment installations and leases, adjusted this based on
    benchmarks or the full differential between competitive and
    non-competitive cable systems, removed per subscriber equipment and
    installation costs computed on the FCC Form 1205 Worksheet for
    Calculating Total Equipment and Installation Costs, and allocated
    the remaining regulated revenue among then-regulated programming
    tiers to establish programming tier rates.[^15] This methodology
    established a reciprocal relationship between programming tier
    revenues and equipment costs that was severed once the cable
    operator unbundled equipment costs from regulated revenues.

# discussion

6.  In its February 1, 1997 Resolution, the City revised Falcon's BST
    rates computed on four rate forms: FCC Form 1200 for the period July
    14, 1994 through July 10, 1995; the first FCC Form 1210 for the
    period July 11, 1995 through March 22, 1996; the second FCC Form
    1210 for the period from March 23, 1996 through September 24, 1996;
    and FCC Form 1240 for the period starting September 25, 1996. The
    City also revised the hourly service charge ("HSC") on three FCC
    Forms 1205: the first for the period July 14, 1994 to July 10, 1995
    using Fiscal Year 1992 data; the second for the period July 11, 1995
    to September 24, 1996 using Fiscal Year 1994 data; and the third for
    September 25, 1996 using Fiscal Year 1995 data. In reaching its
    conclusions, revising rates, and ordering refunds, the City relied
    on a report from its consultant.[^16]

## Equipment Basket and Hourly Service Charge

7.  After reviewing Falcon's justification for its initial regulated BST
    rate and its hourly service charge ("HSC"), the City's consultant
    advised the City that Falcon had not unbundled contract labor
    expenses when computing its BST rate on FCC Form 1200, although
    Falcon did include contract labor expenses in its equipment basket
    costs in the next two FCC Form 1205s addressed in the City
    Resolution.[^17] The consultant also advised that Falcon's equipment
    basket did not include the hours and dollars for repairing and
    maintaining home wiring, although Falcon imposed either a per-visit
    charge or a monthly wire maintenance charge for this activity.[^18]
    The consultant recommended adjusting Falcon's monthly equipment cost
    per subscriber, the figure used for unbundling equipment basket
    costs from regulated BST revenue, and recommended that the
    adjustment be computed from Falcon's monthly wire maintenance
    charge, not any particular costs.[^19] He recommended adding this
    estimate of wire maintenance costs and Falcon's estimate of its
    contract labor expenses to the other customer equipment and
    installation costs in the computation. He recommended a
    corresponding adjustment to Falcon's initial unbundled BST rate. The
    consultant also recommended adjusting Falcon's HSC to reflect his
    estimate of the hours and dollars attributable to home wiring repair
    and maintenance.[^20] Based on the consultant's analysis and
    recommendations, the City found that "the Company erroneously
    excluded contract labor and home wiring maintenance expense from its
    calculation of Monthly Equipment Cost per Subscriber and its Hourly
    Service Charge."[^21]

8.  Falcon challenges both the City's decision to increase the equipment
    basket by adding in amounts representing additional contract labor
    and home wiring maintenance expenses and the City's methodology for
    calculating the additional home wiring maintenance cost.[^22] Falcon
    argues that the City made the same mistakes in calculating the HSC
    and also argues that the City should not have calculated an HSC for
    the period covered by Falcon's initial FCC Form 1205, which it
    claims was completed for unbundling purposes only.[^23]

9.  *Contract labor expenses.* According to Falcon, it treated the
    contract labor costs associated with customer installations as part
    of the capitalized cost of a drop and, therefore, was not required
    to include this expense in the equipment basket.[^24] It argues that
    "\[i\]nstallations can involve both the connection of a subscriber
    drop and the installation of inside wiring from the drop to the
    receiver," and claims that the City acted unreasonably "\[b\]y
    treating [all]{.underline} of Falcon's contract labor installation
    costs as though they related to inside wiring."[^25] According to
    the City, Falcon's argument admits that some costs were related to
    inside wiring, so they should have been included in the equipment
    basket from the outset and unbundled from the BST.[^26] The City
    further argues that Falcon never provided support for its claim that
    a portion of the disputed contract labor expenses was incurred on
    the network side of the demarcation point.[^27] Instead, Falcon
    wrote to the City's consultant that "Falcon did not unbundle these
    costs on its Form 1200, but did do so on Form 1205's filed in 1995
    and 1996."[^28]

10. This letter and Falcon's later inclusion of these costs in the
    equipment basket support the City's finding that the disputed
    contract labor costs should have been included in the equipment
    basket from the outset. Falcon, however, capitalized those costs
    initially and later included them in the equipment basket without
    reflecting the unbundling in the BST rate. Although Falcon correctly
    states that labor costs associated with the initial installation of
    the drop up to the cable network demarcation point could either be
    included in subscriber installation charges or capitalized as part
    of the cost of drops,[^29] Falcon should not have capitalized any
    labor costs associated with equipment or inside wiring located on
    customer premises.[^30] Those costs should have been placed in the
    equipment basket at the outset and unbundled from BST rates. When
    Falcon later added those costs to the equipment basket without
    unbundling them, it recovered the same costs twice, through both the
    BST rate and the equipment basket.[^31] We conclude from the record
    before us that the City's treatment of Falcon's contract labor
    expenses was not unreasonable. Falcon's appeal on this issue is
    denied.

11. *Optional Wire Maintenance Agreement*. Falcon claims that the City
    erred when adding wire maintenance agreement costs to the equipment
    basket because Falcon had already unbundled these costs and included
    them in the equipment basket. According to Falcon, it does not
    separate out expenses for installing and maintaining equipment based
    on how it charges subscribers, although it also argues that the wire
    maintenance agreement charge is unregulated.[^32] "\[T\]hus, the
    wages, vehicles, tools and overhead necessary to install and
    maintain all customer premises equipment, including inside wiring,
    are already included in Schedule B of Form 1205."[^33] According to
    the City, at the time of the rate review, Falcon told a franchising
    authority served by the same head end, "'Expenses and capital costs
    related to home wire maintenance are not included in Schedules A, B
    and C of Form 1205.'"[^34] Falcon told the City's consultant,
    however, that "Falcon has not yet completed the analysis of the
    available information needed to make this determination."[^35]
    Falcon later told the City's consultant that it had never attempted
    to establish a cost-based rate, but that actual earned revenue from
    all HSC-based charges, including wire maintenance agreements,
    approximated its previously unbundled costs for the region, and an
    analysis at the franchise level would yield similar results.[^36]
    Falcon argues here that this information is responsive to the City's
    request for home wire maintenance cost information and that the
    City's adjustment will produce an equipment basket amount it does
    not and cannot recover.[^37]

12. We agree with the City that Falcon's explanations are not responsive
    to the City's request for information about Falcon's treatment of
    home wire maintenance in FCC Form 1205 filings. Telling the City's
    consultant that it hadn't completed its analysis and that its
    regional equipment basket revenues approximate the amount it
    unbundled in the region don't answer the City's questions about how
    Falcon treated wire maintenance in the rate forms filed with the
    City. Falcon's statement here that all of its expenses were included
    in Schedule B of its FCC Form 1205 was not available to the City
    when it reviewed Falcon's rates and is unverified and
    undocumented.[^38]

13. We agree with Falcon, however, that the City's recalculation of the
    monthly equipment cost per subscriber, the amount used to unbundle
    equipment costs from regulated revenues, must be remanded. Given
    Falcon's unresponsiveness to the City's information requests, the
    City would be justified in using the best available information in
    its determination, including cost information obtained from other
    sources or derived from other information provided by Falcon.
    Because the City based its adjustment on Falcon's Wire Maintenance
    Agreement Charge,[^39] which was not cost-based and was still
    subject to review,[^40] its adjustment was not reasonable and must
    be remanded.[^41] On remand the City should determine the
    appropriate wire maintenance costs and whether Falcon unbundled
    these wire maintenance costs from its programming revenues. If the
    costs were unbundled, they should not be unbundled a second
    time.[^42] So that the City's review of Falcon's wire maintenance on
    remand can be as informed as possible, Falcon is instructed to
    provide the City with detailed information justifying its treatment
    of wire maintenance costs within a reasonable time set by the City
    for filing the information.[^43]

14. Falcon also argues that the City erroneously computed the adjustment
    by using the number of cable subscribers in the Rockmart "region"
    rather than the number for the Rockmart franchise area, which Falcon
    entered on line 11 of the Form 1205 Worksheet for Calculating Total
    Equipment and Installation Costs.[^44] Repeating the explanation in
    the consultant's report, the City explains that its consultant used
    the regional subscriber number when adjusting Line 7 of the
    unbundling worksheet because Falcon performed its calculations for
    Line 7 at the regional level.[^45] Then, like Falcon, the consultant
    allocated expenses to the franchise level on Lines 8 and 9 and
    determined the per subscriber equipment basket cost for the
    franchise area using the number of subscribers in the franchise area
    shown on Line 11.[^46] This removed the expense for subscribers who
    are not within the City of Rockmart. Falcon's argument that the
    City's consultant erroneously used the wrong number of subscribers
    is without merit and is denied.[^47]

15. *Hourly Service Charge*. Falcon argues that the City made the same
    errors in recalculating Falcon's HSC that it made in recalculating
    Falcon's equipment basket because the City's consultant added the
    same contract labor costs and home wiring maintenance costs
    discussed above to the HSC computation on each Form 1205 that Falcon
    had filed.[^48] We find no merit to Falcon's claim regarding
    contract labor costs for the reasons discussed *supra* in
    paragraph 10. To the extent that the City adjusted for home wiring
    maintenance based on Falcon's Wire Maintenance Agreement Charge,
    which was not cost-based and was pending review by the City, we
    agree and are remanding this issue for further consideration. Our
    concern with this adjustment is the same concern we have with the
    City's adjustment to the equipment basket discussed *supra* in
    paragraph 13, that a rate not based on costs and still subject to
    review is not an appropriate surrogate for actual costs. Once Falcon
    provides more responsive information about its wire maintenance
    costs, the City should take that information into consideration on
    remand.[^49]

## Minimum Installation Charges

16. The City found that Falcon charged subscribers for one-half hour of
    labor for installations, despite the fact that some installation
    types typically require substantially less than half an hour to
    resolve.[^50] The City ordered refunds of the estimated overcharges
    and ordered Falcon not to set a minimum charge for service calls and
    not to include travel time in the charges.[^51] According to the
    City's consultant, Falcon excluded travel time to a customer's home
    in calculating its HSC but was effectively recovering travel time
    from some customers by charging a minimum rate for service
    calls.[^52]

17. Falcon objects to the City's treatment of its minimum service
    charge, arguing that a cable operator is entitled to use an average
    for setting installation rates and that its installation charges
    average out because customers whose installations take up to 45
    minutes are charged for only one-half hour of time. Thus, it argues,
    its practice is not unreasonable.[^53] The City disagrees, arguing
    that Falcon elected to charge an hourly rate for each installation,
    not an average rate, and that its charges do not average out.[^54]
    According to the City, the only installations requiring more than 30
    minutes are unwired installations, which require 80 minutes on
    average. No other installation type requires more than 16.2 minutes
    on average. The City also argues that Falcon's calculation reduces
    the number of hours spent performing installations, which raises the
    HSC because it is computed as the cost of performing installations
    divided by the number of hours spent performing installations.[^55]

18. Neither the Commission's rules nor FCC Form 1205 specify any
    particular method for counting labor hours. What is required,
    however, is that an operator use the same method for counting labor
    hours both when calculating the HSC and when calculating the
    specific charges for its various installations and equipment.[^56]
    This makes an operator's choice about handling indirect and direct
    costs revenue neutral. FCC Form 1205 allows an operator to elect
    whether to bill for installations on the basis of the HSC or a
    standard charge. Having elected to bill based on the HSC, Falcon
    cannot bill some customers more than the HSC for installation and
    maintenance and rationalize it as an "average."[^57] The City was
    not unreasonable in finding that Falcon's practice could result in
    overcharges and in ordering Falcon to discontinue the practice.
    Falcon's appeal on this issue is denied.

19. Falcon also objects to the City's computation of the refund amount.
    The City based on Falcon's actual rate rather than the higher
    maximum permitted rate and, lacking installation data for the
    franchise area at issue, the City used 1992 installation data from a
    neighboring Falcon-managed system as the best available information
    for the average time for performing installations.[^58] Falcon
    argues that the City should have used 1996 data.[^59] The City
    defends its refund calculation, arguing that the relevant
    calculation is based on the amount that Falcon actually overcharged,
    not how much it could have overcharged using a higher HSC, and that
    Falcon was able to offset overcharges with undercharges.[^60]

20. We disagree with Falcon and find that the City did not act
    unreasonably by using 1992 data rather than more current data when
    determining its refund liability for Falcon's service charge. Falcon
    has not stated whether better information was available to the City
    when it issued its Resolution or even whether the number of
    installations in 1992 would be appreciably different from the number
    performed in 1996.[^61] A mere assertion that the City erred in the
    information used is not sufficient to establish that the City acted
    unreasonably. Falcon's appeal on this issue is denied.

21. We agree with Falcon, however, that refunds should have been
    determined based on the permitted rate, the rate Falcon could have
    charged, rather than the lower rate it did charge. Refund liability
    for equipment and installation charges is based on the difference
    between a cable operator's actual rate and its permitted rate.[^62]
    If an operator's revenue from its actual service charge exceeds the
    revenue computed from its permitted rate during the review period,
    the operator must refund the difference. Requiring a cable operator
    to make refunds when it has received less than the permitted rate
    for a service call is comparable to ordering the cable operator to
    charge less than the permitted rate, which a franchising authority
    may not do.[^63] Because the City determined refund liability by
    comparing the revenue Falcon received from its service charges with
    what Falcon should have received from its actual HSC for those
    installations, rather than its permitted HSC, the City's refund
    order is not reasonable and is remanded.

## Written Decision Regarding Recalculations of FCC Forms 1210 and 1240

22. In addition to adjusting Falcon's permitted rate computed on FCC
    Form 1200, the City adjusted Falcon's rates computed on the two FCC
    Form 1210s and the FCC Form 1240 it reviewed.[^64] Falcon argues
    that the City failed to adequately explain its recalculation of
    these rates. In particular, it argues that the City's inflation
    adjustment to the Form 1240 does not account for all of the
    disallowed rate increase.[^65] In opposing Falcon's arguments, the
    City explains that adjustments to Falcon's FCC Form 1200 were
    carried forward to subsequent rate forms.[^66] Falcon does not
    dispute this explanation in its Reply.

23. Commission rules require that a franchising authority reviewing an
    operator's rate filing issue a publicly available written decision
    that apprises the operator of the reasons for the franchising
    authority's actions.[^67] If the cable operator's rates are not
    approved, the decision must provide a sufficient basis for the
    rulings to inform the operator of the reasons the rate was
    disapproved so the operator may decide whether to appeal the
    decision.[^68] The City's Resolution along with the consultant's
    report meets this "written decision" standard. The Resolution
    identified problems with the Falcon rate forms under review, and the
    consultant further explained that the changes made to Falcon's FCC
    Form 1200 affected Falcon's subsequent rate forms. These documents
    show that Falcon erroneously moved a group of channels from
    regulated tiers at the onset of rate regulation and treated them as
    unregulated a la carte channels, which it offered individually or
    through a "Satellite Package."[^69] The City treated the channels as
    regulated and, consequently, increased the number of regulated
    channels shown on the form and reduced the permitted BST rate
    computed on Form 1200.[^70] The City carried this adjustment forward
    when reviewing Falcon's prescribed rates for periods covered by
    Falcon's two FCC Forms 1210.[^71] Because of the changed channel
    count, the City reduced the adjustment for new channels that Falcon
    took on both of its FCC Forms 1210 from \$0.03 to \$0.02 per
    channel. From this documentation,[^72] we conclude that Falcon knew
    and understood the reasons for the City's adjustment to its rates.
    We find that the City's Resolution meets the Commission's "written
    decision" standard and deny Falcon's appeal on this issue.

24. The City also adjusted Falcon's FCC Form 1240 to correct for
    Falcon's use of an out-of-date inflation rate when it filed.[^73]
    Falcon concedes that it filed its FCC Form 1240 with outdated
    information, but asks us to require that franchising authorities
    allow corrections for such errors to be reflected in the cable
    operator's next rate filing rather than the one under review.[^74]
    We disagree. Procedures for reviewing and issuing decisions on an
    operator's rate forms vary considerably among franchising
    authorities, and the decision about how to deal with errors in a
    cable operator's data has been left to the discretion of the
    franchising authority, as long as that discretion is not exercised
    arbitrarily.[^75] Falcon has not alleged arbitrariness on the City's
    part. Falcon's preference for the convenience of a deferred
    correction is not a sufficient reason for constraining the exercise
    of a franchising authority's discretion about how to deal with
    erroneous information in a cable operator's rate submission. We deny
    Falcon's appeal on this issue.

## Timing of Refund Order

25. The City's 1997 Resolution addressed permitted BST rates computed on
    four rate forms, starting with Falcon's FCC Form 1200 dated August
    31, 1994 and ending with Falcon's FCC Form 1240 in effect from
    September 25, 1996 forward.[^76] The City Resolution directed Falcon
    to refund that portion of previously paid BST rates determined to
    exceed the initial permitted rates approved by the City and allowed
    an offset to the extent that potential revenues from the
    City-approved permitted HSC rates would have exceeded the revenue
    generated by Falcon's published HSC.[^77] The City ordered that the
    refund period start 305 days prior to the February 11, 1997
    effective date of the City Resolution and run through the date
    Falcon implemented required rate reductions.[^78] Because the City
    Resolution acknowledged offsets but did not resolve rates for
    converters, remote control devices, and Falcon's home wire
    maintenance plan,[^79] Falcon argues that it cannot fully implement
    the offset methodology recognized in the City Resolution. It argues,
    therefore, that the City's refund order is premature.[^80]

26. Our remand of issues affecting the unbundling calculation used for
    Falcon's FCC Form 1200 may affect subsequent programming rates, so
    the City's refund order may need to be revised consistent with
    actions taken on remand.[^81] We disagree with Falcon's argument,
    however, that once initial unbundling issues are resolved, the City
    should resolve subsequent programming and equipment rates in the
    same proceeding because the City permits refund offsets. Unbundling
    ends the reciprocal relationship between programming rates and the
    unbundled equipment basket costs, and refund offsets for unbundled
    rates are not permitted.[^82] We note that the City permitted refund
    offsets for initial permitted rates but did not encompass those
    rates in its refund order.

# June 10, 1999 Appeal

27. Falcon asks that corrections to the starting rate on Line A1 of FCC
    Form 1240 resulting from the Commission's action on its original
    appeal be reflected in the FCC Form 1240 reviewed in the City's May
    11, 1999 Resolution. Section 76.944(c) of the Commission's rules
    provides that an operator using the annual rate adjustment method
    for computing BST rate adjustments may include in its next true up
    any amounts to which the operator would have been entitled but for a
    franchising authority decision that is not upheld on appeal.[^83]
    This should protect Falcon's interests in being able to reflect
    favorable Commission action in future rates. Falcon's appeal is
    denied.

# ordering clauses

28. Accordingly, IT IS ORDERED that the Petition for Review of Rate
    Order filed by Falcon Community Ventures I on March 13, 1997 (File
    No. CSB-A-0383) IS GRANTED IN PART AND DENIED IN PART and that
    Resolution No. 002 1997 IS REMANDED IN PART to the City of Rockmart,
    Georgia for further action consistent with this Memorandum Opinion
    and Order.

29. IT IS FURTHER ORDERED that, within a reasonable time set by the City
    of Rockmart, Georgia, Falcon Community Ventures I MUST SUBMIT to the
    City of Rockmart, Georgia detailed information justifying its
    treatment of expenses associated with its inside wiring maintenance
    plan as directed herein.

30. IT IS FURTHER ORDERED that the Petition for Stay of Enforcement
    Pending Appeal filed by Falcon Community Ventures I on March 13,
    1997 (File No. CSB-A-0383) IS DISMISSED.

31. IT IS FURTHER ORDERED that the Petition for Review of Rate Order
    filed by Falcon Community Ventures I on June 10, 1999 (CSB-A-0631)
    IS DENIED.

32. IT IS FURTHER ORDERED that the Petition for Stay of Enforcement
    Pending Appeal filed by Falcon Community Ventures I on June 10, 1999
    (CSB-A-0631) IS DISMISSED.

33. This action is taken pursuant to authority delegated by section
    0.283 of the Commission's rules, 47 C.F.R. § 0.283.

    FEDERAL COMMUNICATIONS COMMISSION

John B. Norton

Deputy Chief, Policy Division, Media Bureau

[^1]: Falcon, Petition for Review of Resolution, filed Mar. 13, 1997
    ("Falcon Petition" or "Petition"). At the same time, Falcon
    petitioned for a stay of enforcement pending appeal, which is being
    dismissed as moot.

[^2]: City of Rockmart, Georgia, Resolution No. 002 1997, found at
    Falcon Petition, Ex. A ("City Resolution" or "1997 Resolution").

[^3]: Opposition of the City of Rockmart, Georgia to Petition for Review
    of Resolution, filed Mar. 26, 1997 ("City Opposition" or
    "Opposition").

[^4]: Falcon, Reply, filed Apr. 7, 1997 ("Falcon Reply" or "Reply").

[^5]: City of Rockmart, Georgia, Resolution No. 1999-H.

[^6]: Falcon, Petition for Review of Rate Order, filed June 10, 1999. At
    the same time, Falcon petitioned for a stay of enforcement pending
    appeal, which is being dismissed as moot. The City opposed the stay.

[^7]: 47 U.S.C. § 543(b)(5)(B); 47 C.F.R. § 76.944(b).

[^8]: *Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation*, 8 FCC Rcd
    5631, 5731 ¶ 149 (1993); 9 FCC Rcd 4316, 4346 ¶ 81 (1994).

[^9]: *Id*.

[^10]: *Id*.

[^11]: *See* FCC Form 1200, Setting Maximum Initial Permitted Rates for
    Regulated Cable Services Pursuant to Rules Adopted February 22, 1994
    (May 1994). FCC Form 1200 replaced FCC Form 393 previously used for
    establishing initial regulated programming and equipment rates.

[^12]: *See* FCC Form 1210, Updating Maximum Permitted Rates for
    Regulated Cable Services (May 1995).

[^13]: *See* FCC Form 1240, Updating Maximum Permitted Rates for
    Regulated Cable Services (July 1996).

[^14]: *See* FCC Form 1205, Determining Regulated Equipment and
    Installation Costs (May 1994, revised June 1996).

[^15]: *See* FCC Form 1200 (May 1994); FCC Form 1205, Worksheet for
    Calculating Total Equipment and Installation Costs (May 1994 and
    June 1996), and accompanying FCC Form 1205 Instructions for
    Determining Costs of Regulated Cable Equipment and Installation at
    21-23. This worksheet is used only for unbundling.

[^16]: For the consultant's report, see Letter from Don Shanding, Local
    Gov't Operations and Assistance, Georgia Municipal Ass'n, to Emerson
    Yearwood, Director of Gov't Relations, Falcon, (Dec. 18, 1996) ("GMA
    Report"), found at Falcon Petition, Ex. B.

[^17]: GMA Report at 2.

[^18]: *Id*. at 2-3.

[^19]: *Id.* at 3 & App. A.

[^20]: *Id.* at 3 & App. B.

[^21]: City Resolution at 1.

[^22]: Falcon Petition at 3-5 & n.5.

[^23]: *Id*. at 5 & n.6.

[^24]: *Id.* at 3.

[^25]: Falcon Petition at 4 (emphasis in original).

[^26]: City Opposition at 4-5.

[^27]: *Id*. at 4.

[^28]: Letter from Marty Schwartz, Dir. Corp. Development, Falcon, to
    Greg Fender, Dir., Georgia Municipal Ass'n (Nov. 11, 1996) ("Falcon
    Nov. 11, 1996 Letter"), at 1, found at Falcon Reply, Ex. A.

[^29]: *See* Falcon Petition at 3-4; FCC Form 1205 Instructions for
    Determining Costs of Regulated Cable Equipment and Installations, at
    15 Note 2.

[^30]: FCC Form 1205 Instructions at 15 Note 2 (June 1996).

[^31]: *Id*. *See* City Opposition at 4-5 & n.7. Unbundling equipment
    costs from the regulated revenues used to set programming rates
    reduced the BST rate, because those costs were no longer recovered
    through the BST rate. Costs that were not unbundled were built into
    the cable operator's base rate and continue to be recovered through
    the base rate until unbundled. *See also* *Implementation of
    Sections of the Cable Television Consumer Protection and Competition
    Act of 1992: Rate Regulation*, 9 FCC Rcd 4316, 4365 ¶ 135 (1994)
    (evasion of Commission rate rules are prohibited); *Jones
    Communications of Georgia/South Carolina, Inc.*, 19 FCC Rcd 14814,
    14817 ¶ 10 (Media Bur. 2004) (an operator shifting costs from the
    BST to the equipment basket after the initial unbundling but without
    adjusting the BST rate may be recovering the costs twice, once
    through the BST and again through the equipment basket; an operator
    restructuring equipment costs recovered through regulated BST rates
    must make an appropriate adjustment).

[^32]: Falcon Petition at 4 & n.4.

[^33]: *Id.* at 4.

[^34]: City Opposition at 5.

[^35]: *Id*. at 6 and Ex. D, Reply to Question 5 (Letter from Falcon to
    Donald W. Shanding, Rate Analyst, GMA (Nov. 7, 1996).

[^36]: Falcon Nov. 11, 1996 Letter at 2.

[^37]: Falcon Reply at 4.

[^38]: According to the Falcon Petition at 4, these expenses purportedly
    included vehicles. FCC Form 1205, Schedule A, Capital Costs of
    Service Installation and Maintenance of Equipment and Plant, and FCC
    Form 1205 Instructions at 7, Instructions for Schedule A, provide
    for treating vehicles as capital costs.

[^39]: *See* GMA Report, App. A.

[^40]: *See* Falcon Petition at 4 n.4; Falcon Nov. 11, 1996 Letter at 2;
    GMA Report at 5.

[^41]: *See Falcon First Communications, L.P* (Whitfield County, GA)*.*,
    14 FCC Rcd 7277, 7284 (Cab. Serv. Bur. 1999), *rev. denied*, 15 FCC
    Rcd 17059 (2000).

[^42]: Unbundling the same costs twice would raise equipment and
    installation costs above actual costs, the statutory standard for
    equipment and installation rates in 47 U.S.C. § 543(b)(3), and would
    unfairly suppress programming tier rates computed on FCC Form 1200.

[^43]: *See Falcon First Communications, L.P.*, 15 FCC Rcd at 17060 ¶ 4.

[^44]: Falcon Petition at 5 n.5.

[^45]: City Opposition at 7-8; GMA Report, App. A.

[^46]: City Opposition at 8.

[^47]: *See Falcon First Communications, L.P.*, 14 FCC Rcd at 7284 ¶ 18.

[^48]: Falcon Petition at 5.

[^49]: Falcon also states that the City had erroneously computed an HSC
    for its first Form 1205 covering the period through July 10, 1995,
    which it says it submitted for unbundling purposes only. *See*
    Falcon Petition at 5 n.6. After the City responded that it based the
    HSC for the period through July 10, 1995 on Falcon's FCC Form 393,
    the rate form controlling the HSC charged through that period, and
    that Falcon had no refund liability for that period, *see* City
    Opposition at 9-10 & n.13; GMA Report, App. B, Falcon did not pursue
    this point. *See* Falcon Reply at 3 n.1 (reiterating Falcon's
    position that the City miscalculated the HSC from July 11, 1995
    forward).

[^50]: City Resolution at 1.

[^51]: *Id*. at 2, Ordering Clauses 4, 7.

[^52]: GMA Report at 4 and App. C.

[^53]: Falcon Petition at 6-7.

[^54]: City Opposition at 12-13.

[^55]: *Id*. at 13-14.

[^56]: *Falcon First Communications, L.P.*, 14 FCC Rcd at 7287.

[^57]: *Id.*

[^58]: GMA Report at App. C.

[^59]: Falcon Petition at 7-8.

[^60]: City Opposition at 14-15.

[^61]: *Compare Falcon First Communications, L.P.*, 14 FCC Rcd at 7282 ¶
    12 (franchising authority lacking information about contract labor
    rates for the period covered by the rate form under review could use
    relevant information from a rate form submitted for a different time
    period but should have adjusted those labor rates based on
    intervening changes in the price index). We are not aware of
    comparable publicly-available information relevant to estimating the
    number of installations that Falcon performed in 1996 as compared to
    1992.

[^62]: *See* 47 C.F.R. § 76.942; *A-R Cable Services-ME, Inc. v. Town of
    Lisbon*, 10 FCC Rcd 1783, ¶ 7 (Cab. Serv. Bur. 1995).

[^63]: *See TCI of Southeast Mississippi*, 10 FCC Rcd 8728, 8730 ¶¶ 13,
    15 (1995).

[^64]: City Resolution at 2 Ordering Clause 1.

[^65]: Falcon Petition at 5-6.

[^66]: *See* City Opposition at 10-11.

[^67]: *Rate Order*, 8 FCC Rcd at 5723-24.

[^68]: *Falcon Telecable*, 13 FCC Rcd 2598, 2602 ¶ 12 (Cab. Serv. Bur.
    1998).

[^69]: City Resolution at 1; GMA Report at 1-2.

[^70]: *See* *id*.

[^71]: City Resolution at 1; GMA Report at 3-4.

[^72]: *See supra* ¶ 7 for a description of unbundling adjustments made
    to Falcon's FCC Form 1200, which could also affect the rate carried
    forward.

[^73]: City Resolution at 1; GMA Report at 4.

[^74]: Falcon Petition at 6 n.7.

[^75]: *Cf*. *Michelson Media, Inc.* (Los Alamos, NM), 15 FCC Rcd 13311,
    13314-15 ¶ 9 (Cab. Serv. Bur. 2000) (franchising authorities have
    discretion to decide whether to refresh inflation data when making
    other corrections to a rate form).

[^76]: City Resolution at 1.

[^77]: *Id.* at 2 Ordering Clause 3.

[^78]: *Id*.

[^79]: *See* GMA Report at 5 (review of these matters not yet
    concluded).

[^80]: Falcon Petition at 8.

[^81]: *See* *supra* ¶ 13.

[^82]: *See Media Genera Cable of Fairfax County, Inc.*, 12 FCC Rcd
    17424, 17432 ¶ 23 (Cab. Serv. Bur. 1997), *rev. denied*, 16 FCC Rcd
    15617 (2001).

[^83]: 47 C.F.R. § 76.944(c).