Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | File Nos.                    |
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| TCI TKR of Georgia, Inc.,        | ) | CSB-A-0646                   |
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| Petitioner,                      | * |                              |
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| City of Moultrie, State of       | ) |                              |
| Georgia,                         | * |                              |
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| Appeal of Local Rate Order       | * |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted: January 15, 2003 Released: January 17, 2003**

By the Deputy Chief, Policy Division, Media Bureau:

# introduction

1\. TCI TKR of Georgia ("TCI-G"), the franchised cable operator serving
the community of Moultrie, Georgia, Inc. has appealed a local rate order
adopted by the City of Moultrie ("Moultrie") on January 21, 2000 ("Rate
Order"), requiring TCI-G to reduce the maximum permitted basic service
tier ("BST") rate that was scheduled to take effect June 1, 1999, and to
refund any excessive rates and charges paid.[^1] Moultrie opposes the
appeal. Based upon our review of the record, we grant TCI-G's appeal of
Moultrie's local rate order.

# II. background {#ii.-background .unnumbered}

2\. The Communications Act provides that, where effective competition is
absent, cable rates for the basic service tier (\"BST\") are subject to
regulation by franchising authorities.[^2] Rates for the BST should not
exceed rates that would be charged by systems facing effective
competition, as determined in accordance with Commission regulations for
setting rates.[^3]

3\. Rate orders issued by franchising authorities may be appealed to the
Commission pursuant to Commission rules.[^4] In ruling on appeals of
local rate orders, the Commission will not conduct a *de novo* review,
but instead will sustain the franchising authority\'s decision as long
as a reasonable basis for that decision exists.[^5] The Commission will
reverse a franchising authority\'s rate decision only if it determines
that the franchising authority acted unreasonably in applying the
Commission\'s rules. 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.

# III. discussion {#iii.-discussion .unnumbered}

4\. On March 1, 1999, TCI-G filed with Moultrie its FCC Form 1240, by
which it calculated its proposed BST rate, which included a "residual"
for adding certain channels from the system's CPST to its BST. TCI-G's
proposed rate became effective on June 1, 1999, because Moultrie did not
take action within the 90-day review period established by our
rules.[^6] Subsequently, Moultrie reviewed TCI-G's Form 1240 and adopted
a rate order on January 21, 2000. Moultrie reduced TCI-G's maximum
permitted BST rate by the amount of the "residual" credit TCI-G took for
the addition of the WB and Black Entertainment Television ("BET")
channels to the BST in August and September, 1998, respectively.
Moultrie also ordered refunds dating back to June 1, 1999 to recover the
overcharge.

5\. TCI-G filed a local rate appeal with the Commission on February 18,
2000, alleging that Moultrie erred in reducing TCI-G's maximum permitted
BST rate by failing to account for the "residual" credit for channel
movement pursuant to section 76.922(g)(5) of the Commission's rules.
TCI-G argues that it is entitled to a "residual" credit under section
76.922(g) and that the Commission never intended for the sunset
provision in 76.922(g)(8) to apply beyond subsections (g)(3) and (g)(7).
Moultrie argues that TCI-G has moved channels from the CPST to the BST
and although the residual for the moved channels to the BST were added,
no offsetting decrease was made to the CPST because it was deregulated
after TCI-G filed its Form 1240. Moultrie further argues that all of
section 76.922(g) expired on January 1, 1998, and TCI-G is not entitled
to a "residual."[^7]

6\. Subsequent to the filing of Time Warner's appeal, the Commission
issued *Revisions to Cable Television Rate Regulations, Notice of
Proposed Rulemaking and Order* ("*NPRM/Order*")[^8] in light of the
confusion resulting from the sunset language in section 76.922(g)(8) and
the intent expressed in the *Going Forward Order*.[^9] The Commission
subsequently issued a limited reconsideration ("*Reconsideration
Order*") of the *NPRM/Order* that contained an explanation of the issues
surrounding section 76.922(g) of the Commission's rate regulations and
included guidance on the appropriate regulatory response to channel
changes.[^10]

7\. TCI-G removed the WB and BET from the CPST and added them to the BST
in August and September, 1998, respectively, which was prior to the
adoption of the *Reconsideration Order*. The *Reconsideration Order*
contained an explanation of the issues surrounding section 76.922(g) of
the Commission's rate regulations and included guidance on the
appropriate regulatory response to channel movements from the CPST to
the BST under those circumstances. The Commission stated:

In reviewing appeals of local rate orders concerning rate adjustments
for the movement of channels from CPST to the BST, we will find
reasonable adjustments that are consistent with section 76.922(g)(5) and
the Commission's rate forms for CPST channels moved on or before March
31, 1999, the sunset of CPST rate regulation; provided that the rate
adjustments are computed from CPST rates that were subject to rate
regulation; and further provided that adjustments for channels moved
from the BST during this same period were computed consistently with
section 76.922(g)(5) and the Commission's rate forms. The provisions in
section 76.922(g) of the Commission's rules concerning external costs,
including the permitted 7.5% mark-up on programming cost increases,
continue to apply.[^11]

Because the Commission has not put in place another mechanism for
dealing with channel changes, it continues to apply the provisions of
section 76.922(g) as outlined in the *Reconsideration Order* pending
action on the NPRM/Order.

8\. According to the record as submitted, TCI-G shifted the WB and BET
from the CPST to the BST in 1998. TCI-G filed its Form 1240 on March 1,
1999, which proposed a new BST that included a "residual" credit for the
addition of both the WB and BET to the BST. TCI-G argues that it is
entitled to a "residual" credit for a channel movement from the CPST
tier to the BST consistent with section 76.922(g)(g) of the Commission's
rate regulation. We agree. When a channel is shifted between a BST and
CPST, "it shall be treated as if it was dropped from one tier and the
residual and programming cost associated with the shifted channel shall
be shifted to the other tier."[^12] TCI-G's movement of the WB and BET
is consistent with a channel shift because the initial deletion of the
Weather Channel from the CPST occurred in June 1998. Furthermore, the
operative timing is when the channels were moved rather than when the
Form 1240 was filed. Because both channels were shifted prior to March
31, 1999, they would come under the provision of section 76.922(g)(5).
The addition of the WB and BET in August and September, 1998
respectively are to be treated as movement of channels between tiers and
TCI-G is entitled to a "residual" credit under section
76.922(g)(5).[^13] Accordingly, we grant TCI's appeal.

# IV. ordering clauses {#iv.-ordering-clauses .unnumbered}

9\. Accordingly, **IT IS ORDERED** that the Appeal of Local Rate Order
filed by TCI TKR of Georgia, Inc. on February 18, 2000 **IS GRANTED**
and the local rate order of the City of Moultrie, Georgia **IS**
**REMANDED** for further consideration consistent with this Memorandum
Opinion and Order.

10\. This action is taken pursuant to authority delegated by § 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]: The Commission previously granted TCI-G's request for a stay of
    Moultrie's local rate order pending resolution of the operator's
    appeal on the merits. *In the Matter of TCI TKR of Georgia, Inc.*,
    DA 00-406 (February 25, 2000).

[^2]: 47 U.S.C. § 543(a)(2).

[^3]: 47 U.S.C. § 543(b)(1); 47 C.F.R. § 76.922.

[^4]: ^?^ 47 U.S.C. § 543(b)(5)(B); 47 C.F.R. § 76.944.

[^5]: ^?^ *Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation*, *Report
    and Order and Further Notice of Proposed Rulemaking*, 8 FCC Rcd
    5631, 5731-32 (1993) (\"*Rate Order*\"); *Third Order on
    Reconsideration*, 9 FCC Rcd 4316, 4346 (1994) (\"*Third
    Reconsideration Order*\").

[^6]: See 47 C.F.R. § 76.933(g)(2).

[^7]: *See* 47 C.F.R. § 76.922(g).

[^8]: MB Docket No. 02-144, FCC 02-177 (released June 19, 2002).

[^9]: *Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation* ("*Going
    Forward Order*"), 10 FCC Rcd 1226, 1260 (1994).

[^10]: *In the Matter of Revisions to Cable Television Rate Regulations,
    Notice of Proposed Rulemaking and Order, Order*, FCC 02-228 (August
    14, 2002), ¶ 2.

[^11]: *Id.*

[^12]: *Going Forward Order*, 10 FCC Rcd 1226, 1256 (1994).

[^13]: *Id*. at 1249.