**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | CSB-A-0731                   |
|                                  | * |                              |
| Comcast of Minnesota, Inc.       | ) | CSB-A-0732                   |
|                                  | * |                              |
| Order Setting Basic Service and  | * | CSB-A-0734                   |
| Equipment Rates                  |   |                              |
|                                  | * | CSB-A-0735                   |
| Arden Hills MN (MN0297)          | * |                              |
|                                  | ) |                              |
| Falcon Heights MN (MN0298)       | * |                              |
|                                  | * |                              |
| Lauderdale MN (MN0299)           |   |                              |
|                                  | * |                              |
| Little Canada MN (MN0300)        | * |                              |
|                                  | ) |                              |
| Mounds View MN (MN0301)          | * |                              |
|                                  | * |                              |
| New Brighton MN (MN0302)         |   |                              |
|                                  | * |                              |
| North Oaks MN (MN0303)           | * |                              |
|                                  | ) |                              |
| Roseville MN (MN0304)            | * |                              |
|                                  | * |                              |
| St. Anthony MN (MN0305)          |   |                              |
|                                  | * |                              |
| Shoreview MN (MN0306)            | * |                              |
|                                  | ) |                              |
| Comcast of Minnesota, Inc.       | * |                              |
|                                  | * |                              |
| Order Setting Basic Service and  |   |                              |
| Equipment Rates                  | * |                              |
|                                  | * |                              |
| Birchwood MN (MN 0313)           | ) |                              |
|                                  | * |                              |
| Dellwood MN (MN 0314)            | * |                              |
|                                  |   |                              |
| Grant MN (MN 0323)               | * |                              |
|                                  | * |                              |
| Lake Elmo MN (MN 0315)           | ) |                              |
|                                  | * |                              |
| Mahtomedi MN (MN 0316)           | * |                              |
|                                  |   |                              |
| Maplewood MN (MN 0317)           | * |                              |
|                                  | * |                              |
| North St. Paul MN (MN 0318)      | ) |                              |
|                                  | * |                              |
| Oakdale MN (MN 0319)             | * |                              |
|                                  |   |                              |
| Vadnais Heights MN (MN 0320)     | * |                              |
|                                  | * |                              |
| White Bear Lake MN (MN 0321)     | ) |                              |
|                                  | * |                              |
| White Bear Township MN (MN 0324) | * |                              |
|                                  |   |                              |
| Willernie MN (MN0322)            | * |                              |
|                                  | * |                              |
| Comcast of Minnesota, Inc.       | ) |                              |
|                                  | * |                              |
| Order Setting Basic Service and  | * |                              |
| Equipment Rates                  |   |                              |
|                                  | * |                              |
| Burnsville MN (MN 0439)          | * |                              |
|                                  | ) |                              |
| Eagan MN (MN 0440)               | * |                              |
|                                  | * |                              |
| Comcast of Minnesota/Wisconsin,  |   |                              |
| Inc.                             | * |                              |
|                                  | * |                              |
| Order Setting Basic Service and  | ) |                              |
| Equipment Rates                  | * |                              |
|                                  | * |                              |
| Cottage Grove MN (MN0396)        |   |                              |
|                                  | * |                              |
| Grey Cloud Island Township MN    | * |                              |
| (MN 0400)                        | ) |                              |
|                                  | * |                              |
| Newport MN (MN 0397)             | * |                              |
|                                  |   |                              |
| St. Paul Park MN (MN0401)        | * |                              |
|                                  | * |                              |
| Woodbury MN (MN 0395)            | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
+----------------------------------+---+------------------------------+

+----------------------------------+---+------------------------------+
| Comcast of Minnesota, Inc.       | * | CSB-A-0736                   |
|                                  | * |                              |
| Order Setting Basic Service and  | ) |                              |
| Equipment Rates                  | * |                              |
|                                  | * |                              |
| Coon Rapids MN (MN0373)          |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
+----------------------------------+---+------------------------------+
|                                  |   |                              |
+----------------------------------+---+------------------------------+

**ORDER**

**Adopted: December 19, 2005 Released: December 21, 2005**

By the Deputy Chief, Policy Division, Media Bureau:

# INTRODUCTION

1.  In this Order, we decide five appeals filed by two Comcast companies
    against rate orders issued by five franchising authorities that set
    rates for the Basic Service Tier ("BST") of cable service in 30
    communities in Minnesota. Each appeal consists of an Appeal by one
    of the Comcast companies,[^1] an Opposition by the franchising
    authority,[^2] and a Reply by Comcast.[^3] All the appeals present
    the same material facts and issues. Accordingly, in the interests of
    administrative efficiency, we are deciding all the appeals in this
    one Order.[^4]

2.  The appeals raise two issues about what costs cable operators may
    incorporate in our Form 1240 \-- the Form on which the cable
    operator submits data to the franchising authority annually and
    based on which the franchising authority reviews proposed rates for
    the cable operator's BST. In brief, we conclude that the franchising
    authorities erred when they directed Comcast to incorporate certain
    franchise fees on Form 1240. We conclude that the franchising
    authorities were correct, however, when they directed Comcast to
    separately incorporate its federal regulatory fees on the Form.

# BACKGROUND

3.  The Communications Act of 1934, as amended ("the Act")[^5] provides
    that, where effective competition is absent, rates for the BST and
    associated equipment are subject to regulation by franchising
    authorities.[^6] Rates for the BST and equipment should not exceed
    rates that would be charged by systems facing effective competition,
    as determined in accordance with Commission regulations for setting
    rates.[^7] If the cable operator fails to meet its burden of proof,
    has improperly calculated its rates, or is unresponsive to requests
    for relevant information, the franchising authority may use the
    "best information available" to review the operator's proposed rates
    and, if appropriate, adjust them and order refunds.[^8]

4.  Rate orders issued by franchising authorities may be appealed to the
    Commission pursuant to Commission rules.[^9] 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 rational basis for that decision exists.[^10]
    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.

#  discussion

## Franchise Fees

5.  Section 622 of the Act authorizes franchising authorities, in return
    for permitting a cable operator to occupy public rights of way, to
    charge the cable operator a franchise fee of no more than five
    percent of its gross revenues.[^11] The cable operator may seek
    recovery of the fee entirely from subscribers to cable service even
    though the recovery may be based, in part, on the cable operator's
    revenues from advertising and home shopping commissions
    (collectively, "non-subscriber revenues").[^12]

6.  In preparation for the rate orders here under review, the
    franchising authorities retained a consultant who found what it
    thought were errors in how Comcast recovered from its subscribers
    the parts of its franchise fees that were attributable to
    non-subscriber revenues ("non-subscriber fees").[^13] The consultant
    opined that non-subscriber fees "are not *subscriber* franchise fees
    and therefore can be afforded franchise-related cost treatment" on
    Line 707 ("Franchise Related Costs for Period") of Worksheet 7 of
    Form 1240.[^14] The rate orders adopted the consultant's
    recommendation,[^15] finding that it would make for stability,
    uniformity, verifiability, and soundness.[^16]

7.  Comcast appeals from this decision, arguing that non-subscriber fees
    may not be included on Form 1240 -- that, in fact, no part of
    franchise fees may be included on Form 1240.[^17] Comcast also
    argues that including them there, even if it were permissible, would
    not achieve the stability and other good effects that the
    franchising authorities anticipate.[^18] Comcast emphasizes that it
    is not trying to bar inquiry into how it recovers the franchise fees
    it pays. Its only challenge to the rate orders is their moving that
    inquiry into Form 1240.[^19]

8.  The franchising authorities claim non-subscriber fees need to be
    included in Comcast's Form 1240 because the company made errors in
    calculating them.[^20] Therefore, the franchising authorities say,
    their rate orders adopted their own "reasonable, simple and
    verifiable" method, which is based on the Commission's standards and
    procedures and uses Form 1240.[^21]

9.  After reviewing all the parties' contentions, we conclude that
    including non-subscriber fees in Form 1240 is erroneous. First, it
    contradicts the plain commands of the Form and a recent Commission
    decision. Page 2 of the Instructions for Form 1240 states that

    "The Commission's rules recognize seven categories of external
    costs: retransmission consent fees, copyright fees, programming
    costs, certain cable specific taxes, franchise-related costs,
    franchise fees and Commission regulatory fees. You may adjust your
    maximum permitted rate for changes in these categories of costs
    *except for franchise fees, which are not included in your permitted
    rates but rather are simply added to them*."[^22]

Page 5 of the Instructions lists "the six external costs which operators
are allowed to pass through directly to subscribers" and conspicuously
omits franchise fees.[^23] No Instruction, Worksheet, or Line in Form
1240 calls for franchise fees to be incorporated into the Form 1240
calculation in part. On the contrary, page 25 of the Instructions
includes an entry titled "Exclusion of Franchise Fees," which provides
"Franchise fees have been excluded from this analysis . . ."[^24] It is
clear that franchise fees, including the part of them that is
attributable to non-subscriber revenues, are not to be stated on Form
1240.

10. The Instruction indented above, by listing "franchise-related costs"
    and "franchise fees" separately, makes clear that they are distinct
    categories. Likewise, the Instructions for Line 707, which is for
    "Franchise Related Costs," state "Do not include franchise
    fees."[^25] These show that, contrary to the opinion of the
    franchising authorities' consultant, franchise fees are not a subset
    of the franchise-related costs to be stated on Line 707 of Form
    1240.

11. Second, around the time these appeals began, we decided *Charter
    Communications Entertainment I, LLC*, an appeal from a franchising
    authority's decision to require its cable operator to include
    non-subscriber fees in its FCC Form 1240 calculations.[^26] We
    overturned the authority's decision and granted the appeal, stating
    that "the Commission has consistently excluded franchise fee
    calculations from the maximum permitted rate calculation on the FCC
    Form 1240" and "the Commission \[has a\] long-standing practice of
    excluding franchise fees from FCC Form 1240."[^27]

12. In these appeals, the franchising authorities seek to distinguish
    *Charter* by pointing out that in that case the cable operator was
    not yet charging its subscribers for non-subscriber fees.[^28]
    Therefore, the cable operator in *Charter* had not yet committed the
    errors in calculating those fees that the franchising authorities
    found Comcast had committed here. In the present cases, however, the
    franchising authorities continue, Comcast has calculated those fees
    inaccurately and is charging them to its subscribers. The best way
    to make the necessary corrections, in the franchising authorities'
    opinion, is by following "the FCC's existing, and well-established
    rate regulation standards and procedures," namely subjecting them to
    the review that is imposed on costs that are incorporated in Form
    1240.[^29]

13. We reject the franchising authorities' distinction. *Charter's*
    outcome would have been no different if the cable operator there had
    already been charging its subscribers for non-subscriber fees. Form
    1240 has finite purposes, and the recovery of franchise fees is not
    one of them.[^30] Indeed, as noted in *Charter*, adding the
    franchising authorities' new calculations to Form 1240 would only
    complicate its application. Doing so

    "would require additional calculations to correct for the inclusion
    of non-subscriber revenue-based franchise fees as external costs in
    the maximum permitted rate. The maximum permitted rate is the basis
    for setting rates used to generate subscriber revenues upon which
    the subscriber revenue-based franchise fees are calculated. Failure
    to remove the additional franchise fees from this rate could result
    in excess subscriber revenue-based franchise fees being calculated
    and passed through to subscribers."[^31]

14. In addition, Comcast adds that the franchising authorities would add
    to Form 1240 only a small part of non-subscriber fees, namely that
    which is attributable to Basic Service.[^32] Because basic service
    revenues are only a small proportion of total cable service
    revenues, any error thus revealed and corrected would be only a
    small proportion of any harm done to subscribers.[^33] Also,
    incorporating such fees in Form 1240 would ensnare them in the
    relatively complicated process by which the cable operator prepares
    the Form and the franchising authority reviews it. This would slow
    the passing through of any change in franchise fees to subscribers'
    bills, which is supposed to occur promptly.[^34] On the whole, we
    find that incorporating franchise fees in Form 1240 as required by
    the franchising authorities would significantly complicate the
    rate-setting and fee-recovering process and would not produce any
    greater benefit for subscribers.

15. Finally, including franchise fee calculations in Form 1240 would be
    inconsistent with an important policy. The primary purpose of Form
    1240 is to develop the rate for the BST. Section 622(a)(1) of the
    Act, however, permits cable operators to state franchise fees in
    their bills on a line separate from that for the BST.[^35] This
    itemization on bills "is intended to inform subscribers that local
    elected officials are imposing franchise fees so that there will be
    a measure of political accountability for fees and fee
    increases."[^36] It "permit\[s\] subscribers to be fully apprised of
    the effect of the enumerated governmentally imposed costs on their
    bills."[^37] We do not wish to undermine, or complicate the
    execution of, the policy that favors informing subscribers of how
    much they are paying for the cable operator's service and how much
    they are paying to the franchising authority for the fees it charges
    the cable operator. For all the foregoing reasons, we grant
    Comcast's appeal from the part of the rate orders that directed
    Comcast to incorporate certain franchise fees on Form 1240.

16. One group of franchising authorities asks that, if we conclude that
    nonsubscriber fees should not be incorporated in Form 1240, we give
    guidance on the correct method for calculating them.[^38] For
    example, among the issues that arose in the litigations below were
    whether it was proper for Comcast to project its payments of
    non-subscriber fees for 2004 using certain actual data from nine
    months of 2003.[^39] Another issue below was whether Comcast, in
    calculating its franchise fee based on its gross revenues, should
    exclude from gross revenues what subscribers pay towards the
    Commission's regulatory fees.[^40]

17. Comcast did not raise these issues in these appeals, claiming error
    only in the franchising authorities' mandate that Comcast
    incorporate non-subscriber fees in future Form 1240 filings.[^41]
    Also, we do not usually provide advisory opinions,[^42] especially
    on issues that the parties have not briefed. Accordingly, we limit
    our decision on this issue in this case to concluding that the
    franchising authorities erred when they ordered Comcast to include
    the recovery of franchise fees attributable to non-subscriber
    revenues in Form 1240.

##  {#section .unnumbered}

## Commission Regulatory Fees

18. Cable operators pay the Commission certain fees to maintain its
    operations.[^43] Form 1240's Worksheet 7, at line 708, calls for the
    cable operator to state "Commission Regulatory Fees For
    Period."[^44] As made clear in paragraph 9 above, the Instructions
    for Form 1240 identify seven categories of external costs, including
    Commission regulatory fees, and provide further that an operator
    "may" adjust its maximum permitted rate for changes in these costs.
    More specifically, the Instruction for Line 708 directs the operator
    to "Enter the total Commission regulatory fees for the period"[^45]
    on Line 708.

19. Four of the franchising authorities noted that Comcast, in its Form
    1240, did not include the fees it paid the Commission on Line 708.
    Comcast had chosen to "separately pass through the regulatory fees
    as a pro-rated figure on each subscriber's monthly bill."[^46] The
    four franchising authorities ordered Comcast to treat those fees as
    an external cost and to include them in Worksheet 7 for Form
    1240.[^47]

20. Comcast appeals, claiming that it has the option to treat Commission
    regulatory fees as an external cost or not, and to include them in,
    or omit them from, its Form 1240. It argues that this option is
    created by the permissive word "may" in the Instruction quoted in
    paragraph 9 above[^48] and by the Commission's *Rate Regulation
    Fourth Order on Reconsideration*.[^49] It also claims that its
    practice "has long been followed by numerous cable operators across
    the country."[^50]

21. We disagree with Comcast's interpretation of our regulations. First,
    the word "may" in the Instructions for Form 1240 merely permits
    cable operators to refrain from passing cost increases on to their
    subscribers. The word "may" is not intended to allow a cable
    operator to omit from Form 1240 its Commission regulatory fees or
    the host of other external costs covered by the same sentence in our
    Instructions \-- retransmission consent fees, copyright fees,
    programming costs, certain cable specific taxes, and
    franchise-related costs.[^51]

22. Second, the sentences from the *Rate Regulation Fourth Order on
    Reconsideration* that Comcast relies on do not address the omission
    of Commission regulatory fees from Form 1240. Those sentences
    address the billing of subscribers pursuant to the original
    quarterly filing methodology.[^52] The *Rate Regulation Fourth Order
    on Reconsideration* preceded adoption of the Form 1240 annual filing
    methodology, which is the methodology Comcast uses in the Minnesota
    communities here. The annual filing methodology, adopted in our
    *Rate Regulation Thirteenth Order on Reconsideration*, permits an
    operator to adjust its rates to reflect projected costs that are
    reasonably certain and reasonably quantifiable.[^53] Cable operators
    who use the annual filing methodology should treat changes in
    Commission regulatory fees as reasonably certain and reasonably
    quantifiable and should project those changes through the Form 1240
    computations.[^54] This decision applies to all external costs other
    than franchise fees and is implemented in Worksheet 7 of our Form
    1240, with which the four franchising authorities directed Comcast
    to comply. The franchising authorities acted reasonably. We deny
    Comcast's appeal on this issue.

#  ORDERING CLAUSES

23. Accordingly, **IT IS ORDERED** that the Appeals filed by Comcast of
    Minnesota, Inc., in CSB-A-0731, CSB-A-0732, CSB-A-0734, and
    CSB-A-0736, and by Comcast of Minnesota/Wisconsin, Inc., in
    CSB‑A‑0735 **ARE GRANTED IN PART** and **DENIED IN PART** and **ARE
    REMANDED** for further consideration consistent with this Order.

24. 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]: Appeal of Local Rate Order ("Arden Hills Appeal"), filed Feb. 2,
    2005 by Comcast of Minnesota, Inc., in CSB-A-0731; Appeal of Local
    Rate Order ("Birchwood Appeal"), filed Feb. 15, 2005, by Comcast of
    Minnesota, Inc., in CSB-A-0732; Appeal of Local Rate Order
    ("Burnsville Appeal"), filed Feb. 25, 2005 by Comcast of Minnesota,
    Inc., in CSB-A-0734; Appeal of Local Rate Order ("Cottage Grove
    Appeal"), filed Feb. 28, 2005, by Comcast of Minnesota/Wisconsin,
    Inc., in CSB-A-0735; Appeal of Local Rate Order ("Coon Rapids
    Appeal"), filed March 3, 2005 by Comcast of Minnesota, Inc., in
    CSB-A-0736. The term "Comcast" will be used to refer to both Comcast
    of Minnesota, Inc., and Comcast of Minnesota/Wisconsin, Inc.

[^2]: Opposition of the North Suburban Commun. Comm'n to Appeal of Local
    Rate Order ("Arden Hills Opposition"), filed March 2, 2005;
    Opposition of the Ramsey/Washington Counties Suburban Cable Commun.
    Comm'n II to Appeal of Local Rate Order, filed March 2, 2005
    ("Birchwood Opposition"); Opposition of the Burnsville/Eagan
    Telecommun. Comm'n to Appeal of Local Rate Order ("Burnsville
    Opposition"), filed March 11, 2005; Opposition of the South
    Washington County Telecommun. Comm'n to Appeal of Local Rate Order
    ("Cottage Grove Opposition"), filed March 15, 2005; Opposition of
    the City of Coon Rapids, Minnesota to Appeal of Local Rate Order,
    filed March 18, 2005.

[^3]: Reply to Opposition to Appeal of Local Rate Order, filed March 11,
    2005, by Comcast of Minnesota, Inc.; Reply to Opposition to Appeal
    of Local Rate Order, filed March 11, 2005, by Comcast of Minnesota,
    Inc.; Reply to Opposition to Appeal of Local Rate Order ("Burnsville
    Reply"), filed March 11, 2005, by Comcast of Minnesota, Inc.; Reply
    to Opposition to Appeal of Local Rate Order, filed March 23, 2005,
    by Comcast of Minnesota/Wisconsin, Inc.; Reply to Opposition to
    Appeal of Local Rate Order, filed March 23, 2005, by Comcast of
    Minnesota, Inc.

[^4]: *Comcast Cablevision of Dallas, Inc.*, 19 FCC Rcd 10628, 10630 ¶
    2, *reconsidered on other grounds,* 19 FCC Rcd 22687 (2004);
    *Frontiervision Operating Partners*, 18 FCC Rcd 20416, 20417 (2003)
    ¶ 3, *application for review denied on other grounds,*
    19 FCC Rcd 23096 (2004), *appeal pending sub nom. City of Winchester
    v. FCC,* Case No. 05-3083 (6^th^ Cir., filed Jan. 13, 2005).

[^5]: 47 U.S.C. §§ 151 *et seq.*

[^6]: 47 U.S.C. § 543(a)(2).

[^7]: 47 U.S.C. § 543(b)(1); 47 C.F.R. § 76.922.

[^8]: 47 C.F.R. § 76.937(d); *Falcon Classic Cable*, 15 FCC Rcd 5717,
    5720 (2000) ¶ 10; *Western Reserve Cablevision, Inc.*, 14 FCC Rcd
    13391, 13398 (1999) ¶ 12.

[^9]: 47 U.S.C. § 543(b)(5)(B); 47 C.F.R. § 76.944.

[^10]: *Harron Commun. Corp*., 15 FCC Rcd 7901 (2000) ¶ 2;
    *Implementation of Sections of the Cable Television Consumer
    Protection & Competition Act*, 8 FCC Rcd 5631 (1993), 9 FCC Rcd
    4316, 4346 (1994) ¶ 81.

[^11]: 47 U.S.C. § 542 (b).

[^12]: *City of Pasadena, California*, 18 FCC Rcd 18192 ¶ 3, 18198 ¶ 15
    (2001)*, petition for review denied, Texas Coalition of Cities for
    Utility Issues v. FCC*, 324 F.3d 802 (5^th^ Cir. 2003).

[^13]: Resolution No. 2005-01a, Order Regarding the Maximum Permitted
    Basic Programming Service Rate Set Forth in the Federal
    Communications Commission Form 1240 Filed by Comcast of Minnesota,
    Inc. on or About March 1, 2004 ("Arden Hills *et al.* Local Rate
    Order"), adopted Jan. 6, 2005, by the North Suburban Commun. Comm'n,
    ¶¶ 6-7 at 3; Resolution No. 2005-01-13-B, Order Regarding the
    Maximum Permitted Basic Programming Service Rates Set Forth in the
    Federal Communications Commission Forms 1240 Filed by Comcast of
    Minnesota, Inc. on or About March 1, 2004 ("Birchwood *et al.* Rate
    Order"), adopted Jan. 13, 2005, ¶¶ 5-6 at 3; Resolution No. 2005-01,
    Order Regarding the Maximum Permitted Basic Programming Service
    Rates Set Forth in the Federal Communications Commission Forms 1240
    Filed by Comcast of Minnesota, Inc. on or About March 1, 2004
    ("Burnsville *et al.* Local Rate Order"), adopted Jan. 26, 2005, by
    the Burnsvile/Eagan Telecommun. Comm'n, ¶¶ 6-7 at 3-4; Resolution
    No. 1.27.05, Order Regarding the Maximum Permitted Basic Programming
    Service Rate Set Forth in the Federal Communications Commission Form
    1240 Filed by Comcast of Minnesota/Wisconsin, Inc. on or About March
    1, 2004 ("Cottage Grove *et al.* Local Rate Order"), adopted Jan.
    27, 2005, by the South Washington County Telecommun. Comm'n, ¶¶ 6-7
    at 3; Resolution No. 05-24, Order Regarding the Maximum Permitted
    Basic Programming Service Rate Set Forth in the Federal
    Communications Commission Form 1240 Filed by Comcast of Minnesota,
    Inc. on or About March 1, 2004 ("Coon Rapids Local Rate Order"),
    adopted Feb. 1, 2005, by the City of Coon Rapids, ¶¶ 6-7 at 3.

[^14]: Arden Hills Appeal, Attachment B (Front Range Consulting, Inc.,
    *Final Report to Bradley & Guzzetta, LLC Regarding the Pass-Through
    of Non-Subscriber-Based Franchise Fees by Comcast of Minnesota,
    Inc./Comcast of Minnesota/Wisconsin, Inc./Comcast Cable
    Communications, Inc.* ("*Consultant's Final Report*"), which is an
    attachment to Letter from Front Range Consulting, Inc., to Stephen
    J. Guzzetta, Esquire, Bradley & Guzzetta, LLC, dated Sept, 22, 2004)
    at 12 (italics in original). More precisely, the consultant
    contemplates incorporating only the portion of the non-subscriber
    fees that reflects the "ratio of the \[cable operator's\] Basic
    Service video tier revenues to the total video service tier
    subscriber revenues." *Instructions for completing Supplemental
    Worksheet 7 -- Line 707 -- Franchise Related Costs*, which is the
    second attachment to the *Consultant's Final Report.*

[^15]: Arden Hills *et al.* Local Rate Order, Ordering Clause #3 at 5;
    Birchwood *et al.* Rate Order, Ordering Clause #4 at 4-5; Burnsville
    *et al.* Local Rate Order, Ordering Clause #4 at 5; Cottage Grove
    *et al.* Local Rate Order, Ordering Clause #3 at 5; Coon Rapids
    Local Rate Order, Ordering Clause #3 at 5.

[^16]: Arden Hills *et al.* Local Rate Order, ¶¶ 8-10 at 3-4; Birchwood
    *et al.* Rate Order, ¶¶ 7-9 at 3-4; Burnsville *et al.* Local Rate
    Order, ¶¶ 8-10 at 4; Cottage Grove *et al.* Local Rate Order ¶¶ 8-10
    at 3-4; Coon Rapids Local Rate Order, ¶¶ 8-10 at 3-4.

[^17]: Birchwood Appeal at 2.

[^18]: Cottage Grove Appeal at 7-10.

[^19]: Coon Rapids Appeal at 2-3.

[^20]: Arden Hills Opposition at 4-5.

[^21]: Birchwood Opposition at 4.

[^22]: *Instructions for FCC Form 1240*, *Annual Updating of Maximum
    Permitted Rates for Regulated Cable Services, "Annual Update Form"*
    ("Form 1240 Instructions"), available at
    http://www.fcc.gov/formpage.html, at 2 (italics added).

[^23]: *Id.* at 5.

[^24]: *Id.* at 25.

[^25]: *Id.* at 42.

[^26]: *Charter Commun. Entertainment I, LLC* ("*Charter*"), 20 FCC Rcd
    3503 (2005).

[^27]: *Id.*, 20 FCC Rcd at 3504 ¶ 5.

[^28]: Appeal of Local Rate Order, File No. CSB-A-0720, filed by Charter
    Commun. Entertainment I, LLC, Aug. 23, 2004, Attachment A,
    *Resolution Number 100 of the Board of Aldermen of the City of St.
    Louis, Missouri, Ordering a 2004 Rate for Cable Cards Pursuant to an
    Abbreviated FCC Form 1205, an Accounting of Charges for Unreturned
    Equipment\[, and\] Methodology for Calculating Certain External
    Costs*, at 2 § E (adopted July 9, 2004) (requiring Charter "to use .
    . . Form 1240 . . . if and when . . . Charter should elect recovery
    from cable subscribers of costs of franchise fees on non-subscriber
    revenues . . .").

[^29]: Burnsville Opposition at 4.

[^30]:
    > *See* Instructions quoted *supra* ¶ 9.

[^31]: *Charter,* 20 FCC Rcd at 3504-05 ¶ 5; *see also* Arden Hills
    Appeal at 8-9.

[^32]: *See* note 14 *supra.*

[^33]: Arden Hills Appeal at 7-8.

[^34]: *See* 47 C.F.R. § 76.933(e), Arden Hills Appeal at 8.

[^35]: 47 U.S.C. § 542(c)(1); 47 C.F.R. § 76.985(a)(1).

[^36]: *Pasadena*, 18 FCC Rcd at 18201 ¶ 23.

[^37]: *Id.* at 18195 ¶ 7.

[^38]: Cottage Grove Opposition at 6.

[^39]: *See, e.g.,* Cottage Grove Appeal, Attachment A (South Washington
    County Telecommun. Comm'n, Resolution No. 1.27.05, Order Regarding
    the Maximum Permitted Basic Programming Service Rate Set Forth in
    the Federal Communications Commission Form 1240 Filed by Comcast of
    Minnesota/Wisconsin, Inc. on or about March 1, 2004) at 3 ¶ 7;
    *Consultant's Final Report, supra* note 14, at 3, 5; *id.,* attached
    Letter from John F. Gibbs, Comcast Cable Communications, Inc., to
    Steven J. Guzzetta, Creighton, Bradley & Guzzetta ("*Gibbs
    Letter*"), dated May 5, 2004, at 1.

[^40]: *Consultant's Final Report, supra* note 14, at 7-8; *Gibbs
    Letter, supra* note 39, at 2. Concerning Commission regulatory
    fees*, see infra* ¶¶ 18-22.

[^41]: *See, e.g.,* Cottage Grove Appeal at 3 n.4.

[^42]: *Time Warner Cable*, 13 FCC Rcd 13795, 13796 (1998) ¶ 3 n.9.

[^43]: 47 U.S.C. § 159.

[^44]: *See also* 47 C.F.R. § 76.922 (e)(2)(ii)(A), l (vi).

[^45]: Form 1240 Instructions, *supra* note 22, at 42.

[^46]: Arden Hills Appeal at 10.

[^47]: Arden Hills *et al.* Local Rate Order, Ordering Clause #4 at 5;
    Burnsville *et al.* Local Rate Order, Ordering Clause #5 at 5;
    Cottage Grove *et al.* Local Rate Order, Ordering Clause #4 at 5;
    Coon Rapids Local Rate Order, Ordering Clause #4 at 5.

[^48]: Coon Rapids Appeal at 11.

[^49]: Cottage Grove Appeal at 11-12, citing and quoting *Implementation
    of the Cable Television Consumer Protection & Competition Act of
    1992: Rate Regulation* ("*Rate Regulation Fourth Order on
    Reconsideration*")*,* 9 FCC Rcd 5795, 5798 (1994) ¶ 14; Burnsville
    Reply at 3.

[^50]: Arden Hills Appeal at 10.

[^51]: Arden Hills Opposition at 6.

[^52]: Burnsville Opposition at 5.

[^53]:
    > *Implementation of the Cable Television Consumer Protection &
    > Competition Act of 1992: Rate Regulation* ("*Rate Regulation
    > Thirteenth Order on Reconsideration*")*,* 11 FCC Rcd 388, 394
    > (1995) ¶ 13, 417 ¶ 68, 418 ¶ 72, 419 ¶ 74.

[^54]:
    > *Id.*, 11 FCC Rcd at 414-15 ¶ 58, note 206: "Operators that elect
    > the new annual rate filing methodology incorporate changes in
    > Commission regulatory fees into their annual filings."